Commons Sitting of 23 January 1995

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

    Occupational Pension Funds
    Mr. Redmond: TO ask the Secretary of State for Social Security what is his estimate of the total value of occupational pension funds in the United Kingdom.
    The Parliamentary Under-Secretary of State for Social Security (Mr. James Arbuthnot): In 1992, the estimated total value of occupational pension funds in the United Kingdom was well in excess of £400,000 million.
    Mr. Redmond: Will the Minister confirm that the occupational pension scheme is the key pillar of pension schemes in Britain today? Is he aware, however, that half a million people will lose a total of £1 million as a direct result of Government advice to invest in the private sector? Will he give a guarantee that those who are affected will be notified so that they can claim the money due to them?
    Mr. Arbuthnot: I do not know where the hon. Gentleman gets his figures from. I had hoped that he would welcome my answer, which shows that the UK's funded personal pension provision is better than that of any other country in the European Union, but as he did
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    not do so I shall say only that the basic pillar of our pension provision is the state retirement pension, which we shall continue to uprate in line with prices. This country's occupational pension provision is very good indeed.
    Sir Donald Thompson: I warmly welcome my hon. Friend's first answer, but I remind him that occupational and private pensions have a sting in their tail. Often, having paid in for a generation, people have found that those pensions do not come up to expectations. Will he, therefore, regularly and rigorously review occupational and private pension schemes?
    Mr. Arbuthnot: My hon. Friend will be aware of the Pensions Bill, the Second Reading of which the House of Lords will debate tomorrow and which will make pension provision more secure and more flexible. It offers more choice and greater opportunity to provide for equality in pensions. All that will be good news for pension provision in this country.
    Mr. Ingram: Further to the question asked by my hon. Friend the Member for Don Valley (Mr. Redmond), does the Minister share the views expressed by the Independent Financial Advisers Association, as set out in today's edition of The Independent, which has taken court action to seek to avoid its duties and responsibilities to the 500,000 people who purchased personal pensions? Will the Minister give a guarantee, for which my hon. Friend asked, that all persons who have lost out due to the mis-selling of private pension schemes will be contacted and their schemes protected?
    Mr. Arbuthnot: This is a matter for the Securities and Investments Board. The Government have made it plain throughout that their view is that those who have suffered loss through the mis-selling of personal pensions should have redress, and that remains our position.

    Child Support
    Mr. Simon Coombs: To ask the Secretary of State for Social Security when he expects to respond to the Social Security Select Committee's fifth report of Session 1993–94 on the operation of the Child Support Act 1991.
    Mr. Mullin: To ask the Secretary of State for Social Security what plans he has for further reform of the Child Support Agency; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt): The Government have kept the operation of the Child Support Act 1991 under review for some considerable time. We have considered very carefully the recent report of the Social Security Select Committee and representations from many sources. I am sure that the House will be delighted to hear that the Government have now decided what changes are necessary, on which my right hon. Friend the Secretary of State will make a statement to the House within the hour.
    Mr. Coombs: I am grateful to my hon. Friend for that answer. I appreciate his difficulties in providing me with the information that I should like before our right hon. Friend's statement at 3.30 pm, but will he assure me that the Government have taken due notice of the fact that, too often under the present system, neither the parent with care nor the absent parent is satisfied? In particular, will he reassure me that the Government have carefully considered the need to reflect the importance of clean-break settlements and travel-to-work costs in any decision that the House may take?
    Mr. Burt: It is not possible, for reasons that, I suspect, my hon. Friend knows well, to go as far as he would like. I imagine, however, that quite a lot of my right hon. Friend's statement will meet his concerns.
    The House should be under no illusion: the Child Support Act 1991 and the agency operate in a very difficult area between former partners and their children. It was never possible for the courts to satisfy all parties. We must all doubt whether it would be possible for any legislation to do that because of the circumstances involved. The Government and the House should seek to achieve a fair and balanced settlement of maintenance between the parties and a fair settlement for the taxpayer. I sincerely believe that my right hon. Friend's statement will reassure the House on those matters.

    Incapacity Benefit
    Dr. Goodson-Wickes: To ask the Secretary of State for Social Security what progress has been made in instituting medical tests for incapacity benefit.
    The Minister for Social Security and Disabled People (Mr. William Hague): The detailed provisions of the new tests of incapacity for work are set out in the Social Security (Incapacity for Work) (General) Regulations, which were laid before Parliament on 24 November. The regulations are subject to affirmative resolution, and will be debated by both Houses of Parliament.
    Dr. Goodson-Wickes: I thank my hon. Friend for that information. Will he confirm that the medical test for incapacity is the most sophisticated of its type in the world and that it is designed to identify reduced ability to
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    perform activities and most certainly not reduced likelihood to obtain a job? Does he agree that that offers great reassurance to general practitioners, carers and, above all, disabled people themselves?
    Mr. Hague: Yes, my hon. Friend is absolutely right. No one who is genuinely sick or disabled has anything to fear from the new test. Extensive development work and evaluations have shown that the test works as intended. Full preparations are now under way for its introduction later this year.
    Ms Lynne: Is the Minister aware that a number of people have already been refused invalidity benefit and unemployment benefit? Will he reassure the House that, when incapacity benefit is introduced, those people will not fall through the net between the two benefits?
    Mr. Hague: A decision that a person is capable of work applies to unemployment benefit or the jobseeker's allowance; one cannot have separate decisions for separate benefits. People who apply for unemployment benefit or the jobseeker's allowance must make themselves available for work and be actively seeking work, but within the limits of their physical or mental condition.
    Mr. Alan Howarth: Is my hon. Friend aware of the welcome that has been given to the recognition in the arrangements for the transition to incapacity benefit that older people aged 58 and above deserve special consideration? May I therefore ask my hon. Friend to consider introducing a similarly sensitive recognition into the permanent arrangements for assessing eligibility? Will he consider whether it will really be necessary to put older claimants through the same hoops as younger claimants?
    Mr. Hague: I welcome my hon. Friend's support for the transitional arrangements. He will understand that it will be very important to ensure that the new test is fairly applied, and is seen to be fairly applied, and that incapacity benefit is awarded fairly throughout the population. That must be uppermost in our minds.
    Mr. Bradley: Can the Minister account for the huge discrepancy in the different estimates of the number of people likely to lose benefit because of the new incapacity medical test? In a written answer to my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) in December 1994, it was estimated that 220,000 people would lose over the first two years. By January, according to the Secretary of State on Second Reading, the figure had risen to 285,000 over two years. Estimates in The Daily Telegraph and the Daily Mirror only last week showed that 200,000 would lose in the first year alone. Will the Minister come clean on how many people will fail the test and lose benefit? Is it not a hollow sham when the Minister claims that there will be no losers of benefit at the point of change between invalidity benefit and incapacity benefit?
    Mr. Hague: No, the hon. Gentleman may have been confused by recent press comment, but that is because it is misinformed and certainly bears no relation to the figures published by the Government, which we stand by. In contrast to recent speculation, we expect that the majority of new applicants for the new benefit will be found to be incapable of work. However, we expect 55,000 additional cases a year out of 320,000 new claims to be found

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    capable. In the next two years, we expect 220,000 existing recipients to be found to be capable of work. Those figures will remain estimates until we see what happens over the coming years, but they are the best estimates available to us, and we stand by them.
    Mr. Evennett: I thank my hon. Friend for his original answer and for his work on this matter. Does he agree that it is absolutely essential to have standardised tests that are seen to be fair and consistent?
    Mr. Hague: Yes, my hon. Friend puts the point well. The new system will ensure the continuation of benefits for people who are sick and disabled, and it will do so in a way that is sustainable, affordable and fair and can be justified to the taxpayers who finance the social security system. That is the purpose of our reforms.

    Habitual Residence Test
    Mr. Madden: To ask the Secretary of State for Social Security how many British citizens have to date been refused benefits because of the habitual residence test.
    The Secretary of State for Social Security (Mr. Peter Lilley): One thousand six hundred and thirty-three British citizens have not satisfied the habitual residence test when claiming income support in the four months since 1 August.
    Mr. Madden: Is it not extraordinary that, when the Secretary of State announced the scheme to the Conservative party conference, he did not admit that it would apply to British citizens, whereas Irish citizens are exempt from it? Is it not extraordinary—this has been admitted to me—that the Department made a mistake in applying the test to people seeking political asylum? An application for judicial review of the whole scheme has been made, so would it not be sensible to scrap the scheme before any more British citizens are denied benefits to which they are undoubtedly fully entitled?
    Mr. Lilley: The hon. Gentleman is mistaken in saying that Irish citizens have a privileged position over and above citizens of the United Kingdom. It is perfectly reasonable that those who have made their lives elsewhere in the world who were originally British citizens or who can claim patrial citizenship should be subject to the test. Why should someone who has come over here on a backpacking holiday from Canada and who has two British grandparents have the right to top up their income on holiday with income support? No hon. Member would think that that is right.
    The Department works on the basis of advice from the adjudicating officer. It is possible that he is changing his advice on the need to apply the test to those who are seeking asylum. That would considerably ease administration of the test.
    Dr. Spink: As the habitual residence test enables this country to prevent backpackers from coming here on holiday and living off our benefits system, and thereby removing money from our benefits system on which vulnerable people rely and need, is it not extraordinary that Labour Members appear to care more for foreigners than for our own vulnerable constituents?
    Mr. Lilley: I am sure that my hon. Friend reflects the views of 99.9 per cent. of people in this country. I should
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    make it clear that we welcome backpackers from all countries, but we do not think it necessary to entice them with the offer of income support.

    Incapacity Benefit
    Mr. Miller: To ask the Secretary of State for Social Security if his Department will withdraw the Social Security (Incapacity Benefit) (Transitional) Regulations 1974 and the Social Security (Incapacity for Work) General Regulations 1974.
    Mr. Hague: No.
    Mr. Miller: In the light of the criticism that the Department has received from the ombudsman in respect of the disability living allowance and the Child Support Agency, and in the light of concerns that have been expressed by several organisations representing people with disabilities, does not the Minister think that he should withdraw the regulations and reflect on them, or is the House expected to sit back and wait for a hat trick of disasters from the Department?
    Mr. Hague: Great care has been taken to ensure that incapacity benefit is fairly and properly implemented. The training of Benefits Agency medical doctors is under way, departmental administrative procedures are being prepared carefully and I have every confidence that the necessary preparations are being made. The hon. Gentleman should reflect on the fact that great work went into the development of the medical test with an expert panel last year. The test was exhaustively tested on real cases by real doctors, and we are confident that it works as it was intended.
    Mr. Waterson: Will my hon. Friend confirm that in the past 10 years, when the health of the nation generally has progressed steadily, the number of people in receipt of invalidity benefit has more than doubled to 1.5 million? Does not that show the absolute necessity of targeting payments on the people who really need them?
    Mr. Hague: My hon. Friend is right. The number of invalidity benefit claimants has risen from 740,000 in 1983 to more than 1.6 million today. During that time, GPs have often been put in an invidious position. It is right to reform the benefit, and right to do so in the way that we have proposed.

    Bronchitis and Emphysema
    Mr. William O'Brien: To ask the Secretary of State for Social Security what plans he has to review the regulations on claims for benefit under the bronchitis and emphysema benefit scheme; and if he will make a statement.
    Mr. Hague: I am advised on the prescription of occupational diseases under the industrial injuries scheme by the independent Industrial Injuries Advisory Council. The council announced last week that it is undertaking a review of the present terms of prescription.
    Mr. O'Brien: Will the Minister join me in trying to influence the advisory body on two issues that involve the regulations on bronchitis and emphysema? The first is the X-ray, as a number of claimants who were rejected for benefit have, after death, been proved to have had pneumoconiosis. That system is unfair.

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    The second issue is the forced expiratory volume test, under which a claimant must prove a loss of a litre of breath into his lungs per second. People who are finding it difficult to breathe are being rejected for benefit because of the test, and I consider that to be callous and unfair. Will the Minister join me in pressing for the abolition of the X-ray from the procedure, and for a revision of the FEV test to make it more fair and equitable to claimants?
    Mr. Hague: The council has a difficult job in ensuring that it proposes qualifying conditions to Ministers that ensure that benefit is paid to miners and ex-miners whose disability can most confidently be attributed to coal dust, rather than to other causes such as smoking. The council has now initiated a review of the qualifying conditions and evidence can be given to that review until 14 April. I strongly encourage the hon. Gentleman to ensure that he passes his evidence—including evidence about his constituents, about whom he has written to me—to the council so that it can take it fully into account before giving advice to Ministers.

    Benefits
    Mr. Flynn: To ask the Secretary of State for Social Security what plans he has to improve benefits to widows and the elderly.
    Mr. Arbuthnot: Widows and pensioners will gain from the general uprating of benefits, in line with inflation, which will take effect in April.
    Mr. Flynn: Will the Minister explain why the widow's payment, which was announced in 1985, has never been uprated by a single penny, despite the fact that it replaced a benefit that was increased in line with inflation every year? According to an answer that I received from the Minister, the widow's payment should now be £1,881, yet it is still only £1,000. It is despicable not to increase payments at any time, but why do the Government cheat widows at a time of bereavement?
    Mr. Arbuthnot: Payment of the widow's payment is subject to a regular review by the Department. It must be borne in mind that we have finite resources, for which there are competing priorities. It is simply a question of concentrating help where it is most needed.
    Mr. Hawkins: My hon. Friend will be aware that my constituency has the largest proportion of pensioners in the country. Will he confirm that, from April, the poorest pensioner couples will receive at least £100 a week and that, on top of that, their housing costs will be paid in full? Is not that a substantial measure of the Government's concern for the poorest of our elderly people?
    Mr. Arbuthnot: My hon. Friend is right and he confirms what I said in my answer. Even the poorest pensioners—the bottom 20 per cent. of income groups—have seen significant real increases of more than 10 per cent. in their incomes since 1979.
    Mr. Flynn: On a point of order, Madam Speaker. May I give notice that, because of that atrocious reply—even by the standards of this Government—I intend to raise the subject on the Adjournment?

    Habitual Residence Test
    Mr. Purchase: To ask the Secretary of State for Social Security how many people have failed the habitual residence test since its introduction; how many of those decisions have been appealed against; and how many such appeals have been won.
    The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): Provisional figures from the Benefits Agency show that 12,571 income support claimants have not satisfied the habitual residence test in the five months from 1 August 1994. Figures for housing benefit refusals are not available. Information on appeals is not collected centrally and could be obtained only at disproportionate cost.
    Mr. Purchase: Given the cheap answer that we heard earlier to a question from my hon. Friend the Member for Bradford, West (Mr. Madden), with the gallery playing and stereotyping of backpackers, and given the number of people affected by the regulations, is not it time that we were given an opportunity to debate the matter properly and thoroughly on the Floor of the House?
    Mr. Evans: The hon. Gentleman should address that request to my right hon. Friend the Leader of the House. The Government are perfectly happy to defend the regulations at any opportunity.
    Mr. Clifton-Brown: Will my hon. Friend confirm that the cost of housing benefit will be £10 billion this year and that, until he altered the regulations, rents of up to £350 a week had been claimed under housing benefit? May I therefore welcome the reforms that he has introduced?
    Mr. Evans: Yes.
    Mr. Corbyn: Before the Minister gets carried away with his verbosity, will his Department conduct an investigation into the plight of individuals and families, but particularly children, who have failed the habitual residence test? As a result of that failure, they lose housing benefit; as a result, some of them are evicted from housing; and, as a result, some of the children face being taken into care. Instead of considering the consequences of speeches made by the Secretary of State to the Tory party conference, as a way of playing to the gallery, will he consider the consequences of the test for the poor of this country?
    Mr. Evans: The hon. Gentleman's indulgent rhetoric is a gross exaggeration. The Government obviously bear in mind and keep under review the operations of the test.
    Mr. Nigel Evans: Does my hon. Friend agree that, without the habitual residence test, British benefits would be available to any foreign scroungers who came to this country to finance their holidays? Does he believe that that is now Labour party policy?
    Mr. Roger Evans: The last part of my hon. Friend's question is not for me to answer, but, on the first part, the point is very clear: are British taxpayers to be expected to pay benefits at current levels to anybody and everybody who comes within the confines of the United Kingdom? The Government have taken the view that there must be some sensible and reasonable limit.

    Housing Benefit
    Mr. Cohen: To ask the Secretary of State for Social Security what plans he has to place a cap on housing benefit for eligible tenants.
    Mr. John Marshall: To ask the Secretary of State for Social Security if he will make a statement about spending on housing benefit.
    Mr. Roger Evans: My right hon. Friend the Secretary of State announced measures to take effect from October 1995 in his uprating statement, which will limit housing benefit paid on private sector rents where they are above the average for the area.
    Mr. Cohen: Is not Government policy on housing benefit a shambles, for which the Government look like making private tenants pay? The Government rely on the private sector for housing and have deregulated many private tenancies, but the Department of Social Security does not want to pick up the cost implications of that policy. If the Government are to change housing benefit, will they ensure that protection from eviction for tenants is included?
    Mr. Evans: The hon. Gentleman's point is a gross exaggeration and, indeed, is simply untrue. To expect the British taxpayer to subsidise rents of several hundred pounds a week is simply unreasonable and would rightly cause public outrage. Even in the Greater London area, 95 per cent. of private sector rents are lower than £85 a week. The Government say that there must be some fair reciprocity between the burdens on taxpayers and the recipients. That is why there must be some cap based on the average rent for the area in which a person lives.
    Mr. Marshall: Does my hon. Friend agree that housing benefit distorts the marketplace? Is he aware that, in my constituency, people may receive as much as £250 a week or £13,000 a year in benefits? Does not that cost taxpayers a lot of money and force up all rents in the private sector?
    Mr. Evans: My hon. Friend is absolutely right. There is no doubt whatever that there is an incentive to distort the market. That is why housing benefit has doubled in cost since 1988 and will cost £10 billion in 1994–95. It is fair and reasonable that the rents that my hon. Friend mentioned should not be wholly subsidised by taxpayers when they are out of line with average rents for the area.
    Mr. Frank Field: To what extent is the escalating housing benefit budget caused by landlords pushing up rents or making fraudulent claims?
    Mr. Evans: The hon. Gentleman will appreciate that such an estimate is extremely difficult to make. On the first of his two causations, when taxpayers write an open blank cheque, which is the danger with the existing system, there is obviously an incentive for some people to take advantage of it. The policy has been successful in terms of stimulating the private rented sector, which had been in the doldrums since 1919, when the Labour party interfered with the free market in private rents, but there must be some control for the benefit of the taxpayer, which is why we are limiting benefit to the average rent for the area.
    Mr. Congdon: Despite my hon. Friend's figures for average rents in London, does he agree that housing
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    benefit has been used to subsidise rents to the tune of up to £350 week? Does he agree that taxpayers will welcome the decision to cap housing benefit as it will represent better value for taxpayers and ensure that they do not subsidise luxury rents?
    Mr. Evans: My hon. Friend is right. The figures that he mentioned are generally believed to be far too high.
    Ms Eagle: Will the Minister admit that that position has been caused by deregulation of the private rented sector, which his Government inaugurated in the first place? Private tenants are already being ripped off for below-standard accommodation in many instances. Instead of making them pay by possible eviction, why will not the Government regulate the private rented sector to save money for taxpayers, or, better still, have a proper housing policy so that we can house our people in affordable, decent homes?
    Mr. Evans: The hon. Lady gives the game away if she really suggests that it is Labour party policy to re-impose some form of rent control in the private sector. [Interruption.] There is all the difference in the world between limiting a public subsidy and interfering with the free workings of the market. What the Government propose—
    Mr. Battle: It is called subsidising landlords.
    Mr. Evans: The elementary economic ignorance of Opposition Front-Bench spokesmen is palpable.

    Income Support
    Mr. Dunn: To ask the Secretary of State for Social Security how many persons were in receipt of income support (a) on 1 December 1992 and (b) on 1 December 1994; and if he will make a statement.
    Mr. Roger Evans: The information requested is not available in the precise form requested. However, the total number of claimants as at November 1992 was 5.5 million and, as at February 1994, 5.8 million.
    Mr. Dunn: Family credit benefits more than half a million working families by making it worth their while to work. Will my hon. Friend compare it with the minimum wage, which destroys jobs?
    Mr. Evans: My hon. Friend makes two forceful points, and I respectfully agree with him.
    Mr. Pike: If the Government accept and believe that income support is the absolute minimum that people need to live on, why is it that when people on income support need assistance from the social fund, they are given loans which the Government tell them that they have to pay back out of income support?
    Mr. Evans: The hon. Gentleman has asked me questions on that topic before. He has not appreciated the basic point that income may be regular week after week under income support, whereas people's actual needs may vary from week to week, depending on their circumstances or needs. The system of loans offered under the social fund has been strikingly successful; it has helped five times as many people with loans, which are almost entirely repaid. That is more than we could hope for if we made simple grants.

    Personal Pensions
    Mr. Duncan: To ask the Secretary of State for Social Security what proposals he has to improve the flexibility of personal pensions in retirement.
    Mr. Arbuthnot: We propose to introduce two measures: age-related rebates, which will make appropriate personal pensions attractive across a wider age range; and more flexible use of personal pensions savings, which will allow personal pension holders to draw an income from their fund each year and defer annuity purchase until a time of their choosing up to the age of 75.
    Mr. Duncan: I welcome those measures. Will my hon. Friend confirm that he has no intention of introducing the so-called minimum pension guarantee, as advocated by the Commission on Social Justice and the right hon. Member for Sedgefield (Mr. Blair)? Does he agree that a Government would never be able to deliver such a guarantee in 20 years' time? That proposal would stop people taking out flexible personal pensions, yet such pensions offer people the real guarantee of being able to provide for themselves in their old age.
    Mr. Arbuthnot: My hon. Friend is right. The Labour party's proposals amount to further means testing.
    Mr. Nicholas Brown: Is it not the case that, as well as making personal pensions more attractive, the Government are making the state earnings-related pension scheme less attractive by adjusting the outcome in the adjusted formula proposed in the Pensions Bill? People will still have to contribute the same amount of money to SERPS, but, eventually, they will receive £2.50 less as the outcome.
    Mr. Arbuthnot: The amount is not £2.50 for every pensioner. As this is the first time that he has raised the subject, the hon. Gentleman has apparently only just discovered the change to the annualisation of SERPS, which was announced in June. That change is necessary to restore the original intention behind the SERPS calculation, which provided that SERPS should be uprated in line with earnings. For various technical reasons, SERPS has gone up even faster than earnings since 1979.

    Disabled People
    Mr. Hawkins: To ask the Secretary of State for Social Security what measures the Government are taking to help disabled people.
    Mr. Hague: On 12 January, the Government introduced the Disability Discrimination Bill, which will outlaw discrimination against disabled people in employment and in access to goods and services. It will create a National Disability Council, which will be a powerful voice on matters relating to discrimination.
    We have also announced a series of measures to combat discrimination against disabled people in transport and in education.
    Mr. Hawkins: I thank my hon. Friend for that answer. Will he join me in congratulating those organisations that worked so hard in consultation with the Government on their proposals, including Action for Better Access for the Disabled, which does valuable work in my constituency
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    and in the surrounding area? Will he also confirm that the proposals contained in the Bill go much further than those contained in the consultation document?
    Mr. Hague: Yes. I join my hon. Friend in congratulating those organisations—more than 1,000 of them—which responded to the Government's consultation document, which was published in July. Many of them asked us to do things which we have, in the light of those representations, decided to do—for example, to include financial services within the legal framework that we propose and to require alterations to be made to existing premises to end discrimination against disabled people.
    Mr. Corbett: Does the Minister understand that the Bill is not mainly about services and benefits, important as they are, but about the civil rights of people with disabilities? Does he therefore agree that, although it is proposed to exclude firms with fewer than 20 employees from the need to implement the new employment rights, that threshold should be lowered over a defined period so that all job discrimination can be ended?
    Mr. Hague: The hon. Gentleman must understand that 83 per cent. of employees work for firms with 20 or more employees, so the proposed new arrangements on employment law will cover the vast majority of the work force. Of course we must have regard to the difficulties that would confront small businesses in implementing complex new legislation. We must not get into a position whereby we drive small businesses out of business to help one part of the community; that is absolutely not the intention of the legislation. However, we shall cover the vast majority of the work force and make a lasting change in the way in which disabled people are treated.
    Mr. Thurnham: Does my hon. Friend agree that, by proposing sensible, practical and fair measures, the Government's Bill will gain much wider acceptance than would be gained by proposals that have not been properly considered or consulted upon?
    Mr. Hague: Yes. It is vital that we carry the whole country with us in ending discrimination against disabled people. It is not simply a matter of changing legislation and changing rules; it is also a question of changing attitudes and changing the psychology of millions of people throughout the country. That is why it is so important to carry people with us, as my hon. Friend says.

  DUCHY OF LANCASTER

    Science and Research
    Mr. Ian Bruce: To ask the Chancellor of the Duchy of Lancaster what is his estimate of the total amount spent on science and research in the United Kingdom; and if he will list the proportions paid for by Government and by other sources of funding.
    The Chancellor of the Duchy of Lancaster (Mr. David Hunt): Approximately £13,000 million, of which 35 per cent. is paid for by Government.
    Mr. Bruce: I thank my right hon. Friend for that encouraging reply about the amount spent on research and development. Can he confirm that the Government proportion is greater than the average of our competitor nations, and that, unfortunately, the business proportion is slightly less than the average of our competitor nations?

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    What can he do to encourage businesses to realise that research and development is the cornerstone of their future prosperity?
    Mr. Hunt: I agree with my hon. Friend's assessment of the present position, but today's gross domestic product figures show that the UK is truly top of the premier league for growth in Europe, and we intend to stay there. The best way to ensure that we do so is to invest in the future, and to urge industry to do the same. Investing in the future means investing in research and development, and it is good news that industry's investment in R and D has increased, according to the latest figures, by 3 per cent. in real terms.
    Mr. Nigel Jones: Bearing in mind the fact that Britain invests less, as a proportion of GDP, than do our major competitors—France, Germany, Japan and the United States of America—what plans does the Chancellor have to help Britain do better?
    Mr. Hunt: In comparison with other G7 countries, we do reasonably well, but of course we can do better. Our approach, through the technology foresight programme and through the forward look, following up the policies set out in the science White Paper, is to continue to urge the greatest possible investment in research and development, to set an example in Government, which we have done by ensuring that the science budget is now at record levels, and to maintain those record levels in the next financial year.
    Mr. Rathbone: Will my right hon. Friend give us some idea of the way in which the Government give greater accent to developmental expenditure as opposed to pure research expenditure?
    Mr. Hunt: Yes. We have increased the science budget by 32 per cent. in real terms in the past 15 years. My hon. Friend is right that we want an increasing emphasis on a partnership between the public sector and the private sector, especially to enable that basic research, which has always been fundamental in the United Kingdom to the strength of our science base, to be translated by proper investment, in partnership with the private sector, into the developmental stage. I completely agree with my hon. Friend.
    Mr. Battle: The Minister spoke of us doing reasonably well in comparison 'with our competitors. 'Will the Minister then explain why, in spite of an overall budget cut in Japan recently, Japan's science and technology spending, through the Science and Technology Agency, was increased by 7 per cent., there was a 26 per cent. increase in funding of the human genome project and a 20.5 per cent. increase in the real world computing project, yet Britain continues to slip further behind, with overall real terms cuts in research and development this year? Does that not demonstrate that the Conservative Government only pay lip-service to science as an aid to wealth generation, and that, effectively, Ministers sit on the sidelines, while the science budget withers away?
    Mr. Hunt: I am not often driven to say, "What a load of rubbish!"; I shall riot be tempted to do so on this occasion. The hon. Gentleman, however, is not comparing like with like. We compare very favourably with investment in Japan. The hon. Gentleman talked about the science budget "wilting away". The science budget is at
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    a record level in this financial year— [HON. MEMBERS: "Overall?"] I am quoting the hon. Gentleman; he said, "the science budget is wilting away." The science budget is at a record high level; it is up by 32 per cent. in real terms. I shall take the hon. Gentleman more seriously when he comes armed with the correct information.
    Mr. Alan Howarth: Bearing in mind the amount spent on research and development in the United Kingdom and how it is spent, will my right hon. Friend think carefully, before he makes a visit to South Africa, about whether it would be appropriate for our Government to encourage, let alone assist, the South Africans to make a further major commitment to developing their arms industry? Surely that is not what we really wish for them or for the other countries that would suffer as a result.
    Mr. Hunt: As my hon. Friend knows, we have devoted an increasing proportion of our research and development budget to civil research. I welcome the opportunity to go to South Africa and to encourage it to develop the sort of policies, which we have seen in the United Kingdom, that foster an ever-closer partnership between the public and private sectors. Similarly, I have recently been to other countries, seeking to set up important relationships between our leading scientists and theirs. I hope that my hon. Friend shares my wish to see that relationship grow stronger.

    Research Council Funds
    Ms Glenda Jackson: To ask the Chancellor of the Duchy of Lancaster what proportion of research council funds in 1993–94 was allocated to the 12 institutions which are the largest consumers of those funds.
    The Parliamentary Secretary, Office of Public Service and Science (Mr. Robert G. Hughes): The amount allocated was £319 million, which is 50 per cent. of total grant awards.
    Ms Jackson: What justification can there be for allocating half the research council funds to a mere handful of institutions? Is that not a return to the, surely discredited, binary system which favoured research-based over teaching-based institutions? What plans do the Government have to ensure that future research council funds will be more widely and evenly distributed?
    Mr. Hughes: The hon. Lady is utterly wrong. The awards are made on the basis of merit, which is something that I do not expect the Labour party particularly to understand. Awards are made on the basis of a full and fair external peer review, not political diktat. That is the way in which to do it and that is the way in which we shall continue to do it.
    Mr. Fabricant: With the exciting news today that Britain may soon have the largest pharmaceutical company in the world, with the possible merger of Glaxo and Wellcome, can my hon. Friend tell us the extent to which the research councils, especially since the publication of the science White Paper, are being encouraged to co-operate with industry in research and development?
    Mr. Hughes: We always encourage full co-operation. Indeed, through the technology foresight process, there has been unprecedented co-operation between business, academics and scientists. That is very much to be

    15
    welcomed. As my hon. Friend says, the strength of Britain's pharmaceutical industry and, indeed, of all our chemical industry is impressive. It is important that we should spread that drive and enthusiasm to the rest of our science and engineering industries.

    Efficiency
    Mr. Merchant: To ask the Chancellor of the Duchy of Lancaster in what ways efficiencies in public services are being achieved.
    Mr. David Hunt: Numerous.
    Mr. Merchant: In the light of the success of the "Competing for Quality" programme and the recent report by the Select Committee on the Treasury and Civil Service, which stressed that the pursuit of efficiency and effectiveness in the civil service was never-ending, does my right hon. Friend agree that the programme should continue and that it is in the interests of the taxpayer that it should do so because it not only ensures that maximum benefit is returned from finite resources but ensures high-quality services at the same time?
    Mr. Hunt: Yes, we shall certainly do everything that we can to redouble our efforts under that very important programme, the strategic importance of which was recognised in the recent report of the Treasury and Civil Service Select Committee. The programme is producing savings of more than £400 million per year against an outlay of £23 million per year, which is very good value for money.
    Mr. McNamara: Given that, when the civil service was allowed to make in-house tenders it was successful in work to the value of 73 per cent., will the Minister lift his blanket objection to in-house tenders for all available work so that the civil service can make in-house bids? Does his savings account include the EDS contract and the Aldermaston atomic weapons agency establishment? Finally, are the more than 10,000 posts which are yet to be lost additional to, or included in, the losses that were announced by the Chancellor in his Budget statement?
    Mr. Hunt: My reply to the hon. Gentleman is that I am satisfied with the present policy. Obviously, in-house tenders should be encouraged where appropriate and they should compete on an equal basis. We shall endeavour to ensure that that occurs, but in certain cases that is not possible.
    When we have put out to open tender, it has been an extremely successful operation. If the hon. Gentleman looks at the detailed analysis that we produced on the day that we announced the very impressive results of the "Competing for Quality" programme, he will find the answers to the questions that he has raised.

    Charter Marks
    Mr. Ottaway: To ask the Chancellor of the Duchy of Lancaster how many public service units have been awarded a charter mark to date.
    Mr. David Hunt: Some 227.
    Mr. Ottaway: Is my right hon. Friend aware that three of those public service units are located in the London borough of Croydon—the consumer advisory service, the environmental health department and the continuing
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    education and training service? Does he agree that winning the mark is recognition of the high quality of those organisations and that members of the public should be encouraged to nominate those departments which provide services that deserve the charter mark?
    Mr. Hunt: I join my hon. Friend in his pride over what has been achieved in his local area. As he will know, we have decided that, as the initiative for the honours system met with a warm public response with nominations for recognising suitable people, we would now like to open up the charter mark procedure to public nominations. We will announce the detail of how we propose to proceed in due course. I welcome my hon. Friend's support for that policy.
    Mrs. Roche: Does the Secretary of State agree that the charter mark awarded to British Gas should be withdrawn immediately, given today's disgraceful news that it is considering charging £25 for home visits to elderly and disabled people?
    Mr. Hunt: I am afraid that the hon. Lady is engaging in scaremongering. With regard to the second part of her question, I am very happy to make it clear that British Gas has confirmed today that there will be no service cuts to elderly, blind or disabled customers. I am also happy to confirm that the Government are determined that all suppliers of gas will have to offer special services for elderly, disabled or blind persons.
    In relation to the first part of the question, I have received a letter from the Gas Consumers Council—which I have before me—dated 18 January. It says:
    "we have faith in British Gas as a company that puts safety first and deservedly earned the Charter Mark, for past performance, in 1993".
    The letter goes on to raise some current concerns. I am very happy to confirm that I will consider any specific concerns and seek to establish the facts before deciding on any further action.

    Research Council Funds
    Mrs. Anne Campbell: To ask the Chancellor of the Duchy of Lancaster when he expects to announce the organisations which will be expected to apply for research council funds.
    Mr. Robert G. Hughes: As soon as possible.
    Mrs. Campbell: When will the Minister honour his promise, made in the White Paper, that organisations other than universities and research council institutes will be eligible to apply for those funds? When he honours that promise, will he ensure that additional funds are transferred into research council budgets to cover the cost of the applications, or will university research funding be depleted yet again?
    Mr. Hughes: As the whole House and the science community know, my right hon. and learned Friend the Chancellor achieved stunning success in increasing the science budget. We will announce soon how that money will be used. We consulted widely on recommendations arising from the efficiency scrutiny of public sector research establishments and we will announce the outcome as soon as possible. It has not been possible to

    17
    do so yet because we agreed to include some representations that were made late—as I believe the House would have wanted us to do.
    Sir Peter Emery: Will my hon. Friend consider the case of charitable organisations, particularly in the medical sector, that raise considerable amounts of money for research? I declare an interest in the National Asthma Campaign. Would my hon. Friend consider encouraging larger donations to research by adopting a formula whereby the Medical Research Council might back by a ratio of 2:1 or 3:1 the money raised by charities and spent specifically on research into the medical problems with which they are concerned?
    Mr. Hughes: The money that comes from charities for scientific research and development is absolutely vital. We welcome it, as does the scientific community. It is important that the interrelationship between Government money, other money going into higher education institutions and funding from charities, as well as money from the private sector, is integrated and that there is no duplication. All should work together to achieve better results. I shall bear in mind my hon. Friend's remarks.

    Citizens Charter
    Sir Thomas Arnold: To ask the Chancellor of the Duchy of Lancaster what further plans he has to make the citizens charter justiciable.
    Mr. David Hunt: The citizens charter has already raised the quality of public services right across the board. Where necessary, specific provisions set out in specific charters are backed by legislation.
    Sir Thomas Arnold: Does my right hon. Friend agree that there would be greater confidence in the citizens charter if more remedies were available in the courts?
    Mr. Hunt: I have great sympathy with my hon. Friend's point. As he probably knows, the citizens charter complaints task force is, as part of its work, examining fairness and independence in the public service complaints system. It published a discussion paper on fairness last September, and it will report to me this summer on the findings of the two-year review of public service handling of complaints. Perhaps we may hold further discussions when I receive that report.
    Mr. O'Hara: Does the right hon. Gentleman recognise that that is precisely the point? I do not decry the citizens charter. As a teacher in the old days, I used to give gold stars to my pupils, and merits may act as incentives to the organisations that win them. However, does the right hon. Gentleman not appreciate that, among the people whom I represent, the citizens charter has no credibility or currency? People are more concerned with the collapse of services that they see all around them, and the citizens charter is not an adequate substitute.
    Mr. Hunt: It was clever of the hon. Gentleman to cover both extremes of view. I agree with members of the Opposition Front Bench that the citizens charter is here to stay, but I also agree with the hon. Gentleman that it must
    18
    have credibility. There is a series of complaints procedures. It is important that public services not only handle complaints fairly but are seen to do so.

    Foresight Programme
    Mr. Heald: To ask the Chancellor of the Duchy of Lancaster how the foresight programme is now developing.
    Mr. Robert G. Hughes: It is developing very well. The Government are grateful for the active support of business, academics and the wider science and technology communities. Reports on the progress will be published in the spring, and the 1995 forward look will outline the Government's initial responses.
    Mr. Heald: Does my hon. Friend agree that Britain has established a lead in high-speed fibre optic networks, which will provide great opportunities for British commerce? Can he tell the House what is being done by the foresight policy panels to take that forward?
    Mr. Hughes: My hon. Friend is absolutely right. Many aspects of work done in Britain are the envy of the rest of the world. First, some people say that we have 30 per cent. of all the fibre optic laid in the world. We also have the fastest broad-band communications system--the so-called SuperJANET system—linking many of our universities. We shall be making more use of it. As for the foresight panels, the communications panel has been giving us invaluable advice on how quickly to put in place broad-band services for United Kingdom schools. We want them linked up to the system, as my right hon. Friend the Secretary of State for Education announced earlier this month.

    Scientific Equipment
    Mr. Miller: To ask the Chancellor of the Duchy of Lancaster what percentage of scientific equipment used in Government laboratories is manufactured in the United Kingdom.
    Mr. David Hunt: I regret to inform the hon. Gentleman that the information that he has requested is not collected centrally in that form.
    Mr. Miller: I thought that that might be the Minister's answer. He ought to keep his eyes open as he goes around Government laboratories. If he did, he would notice that a huge amount of sophisticated equipment which used to be manufactured in the United Kingdom is now imported. Does he agree that that reflects one of our problems—the fact that, although we have quite a powerful science base, our innovation is failing? What is he going to do about that?
    Mr. Hunt: I want our manufacturers of scientific equipment to compete successfully right across the world. About 80 per cent. of this country's production of scientific equipment is for export—that is a high-quality export market. Instrumentation and control is a major export industry earner for Britain which produces a positive balance of payment. In the last year for which figures were available, 1992, that industry accounted for £2.1 billion. That is a success story which the hon. Gentleman ought to acknowledge.

Child Support
3.31 pm
The Secretary of State for Social Security (Mr. Peter Lilley): With your permission, Madam Speaker, I should like to make a statement about the White Paper, "Improving Child Support", which I am publishing today. The Child Support Act 1991 established the principle that parents are responsible for their children: both parents, even if they live apart. Taxpayers should pay only to the extent that parents cannot afford to do so. The whole House endorsed that principle, when it passed the Act, without a single dissenting vote. I reaffirm it today.
The whole House, however, has also had growing concerns about the practical application of that principle and the operations of the Child Support Agency. I responded rapidly to early concerns by introducing reforms last February. I promised then to keep the system under review, and I committed the Government to respond positively to the Social Security Select Committee's second report. In the light of that report and the experience of the first year and a half, I am persuaded that further significant change is required.
The proposals in the White Paper incorporate the majority of the Select Committee's recommendations, and in some cases they go further. Altogether, I believe that our proposals will enable the system to achieve its original purpose. They will make maintenance assessments fairer, improve the service offered by the agency and ensure that maintenance assessed becomes maintenance paid. I believe that that is what Parliament wants.
The major focus of criticism of the Child Support Act relates to past settlements of property or capital. Some of those criticisms are based on misconceptions. However much property was transferred, there never could be a clean break from one's children. Parents or the state always could return to court to seek increased child maintenance. Also, the current formula does indirectly reflect property transfers. None the less, it is true that the formula does not explicitly reflect the value of property or capital transfers that were intended to contribute to child maintenance. To establish how much of any past property settlement was in lieu of child maintenance is often very difficult. It involves the exercise of judgment and discretion.
To give the agency and appeal tribunals discretion to amend assessments to reflect past property settlements will require primary legislation. I therefore intend to bring in a Bill in the current Session. But primary legislation means that the new arrangements cannot be up and running before 1996–97, and I want to give some recognition now. So I propose, from this April, to introduce into the formula a broad-brush allowance for past property transfers. It will assume that half the equity belonged to each partner. Where the absent parent transferred more than £5,000 of his share of the equity, there will be set allowances in the formula for amounts falling in three broad bands. Any parents who find that the broad-brush allowance does not sufficiently reflect their property settlement may seek a departure from the formula under the new discretionary powers.
I also propose to allow strictly limited discretion to prevent hardship by taking account of some other expenses that are not in the formula. They will include
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high costs of visiting children, extra costs of supporting a disabled dependant, exceptional costs of caring for stepchildren and certain debts of the former relationship.
I also intend to make a number of amendments to the maintenance formula. First, I want to encourage people to continue working even where they have to travel long distances. Calculating actual travel costs would be burdensome for everyone. So instead, for parents who live more than 15 miles from their place of employment, I shall introduce a broad-brush allowance. An automatic calculation will avoid the need for detailed inquiries to be made about actual travel costs. If that works out much too high or too low, either parent will in due course be able to apply for a discretionary adjustment.
Secondly, I shall let absent parents who have a new partner or stepchildren deduct all their reasonable housing costs.
Thirdly, I shall put a ceiling on assessments of 30 per cent. of net income, or the minimum of £2.30 a week. So absent parents will be able to keep at least 70 per cent. of their net income after paying maintenance. Even those who are also paying off arrears will be allowed to keep at least two thirds of normal net income. That reassurance goes beyond anything recommended by the Select Committee on Social Security, and I am sure that it will be welcomed by the House.
Fourthly, the maximum amount payable under the formula can be very high, especially where there are several children. I intend to halve the maximum additional amount payable above basic maintenance.
In addition, to encourage absent parents to co-operate, where an absent parent provides basic information within four weeks, I shall defer the start of his maintenance liability for eight weeks.
Most of the measures that I have announced will make assessments fairer for absent parents. Indeed, no absent parent will now be able reasonably to refuse to pay his child maintenance. As a result, the measures will also help parents with care and their children by securing maintenance more speedily. Even where maintenance already being paid is reduced as a result of the changes, parents with care on income support will not lose money, as income support is adjusted immediately. However, awards of family credit and disability working allowance are set for six months. For those whose maintenance drops because of the changes, the Government will provide some compensation for the rest of the award period.
Some commentators have argued for maintenance to be disregarded in calculating income support. But that would make it much more difficult for a parent with care to improve her family's standard of living by returning to work. Instead, I propose that parents with care who are on income support or jobseeker's allowance will be able to build up a new maintenance credit of up to £5 a week. That will be paid as a lump sum when they leave benefit for work. It will give parents with care an increased interest in receiving maintenance and enhance their incentive to work.
The Child Support Agency has performed less well than I would wish, despite hard work by its staff. But the agency has already taken steps to improve its performance. In December, the agency announced two measures to help it to manage its outstanding cases. They involve deferring the take-on of parents with care on income support who have not asked or provided sufficient

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information for the agency to pursue maintenance. All parents with care who continue on benefit will, in due course, be taken on by the agency, and there is no question of deferring action against unco-operative absent parents.
None the less, the policy changes announced today will impose further work on the agency. I do not want it to add unnecessarily to its backlog, but I want it to devote its resources to its current work load. Cases where there was a court order or maintenance agreement before April 1993, and the parent with care is not on benefit, were due to have access to the agency at the initiative of either parent from 1996. I propose to defer take-on of those cases. I shall ensure that they retain the right to use the courts and I shall also give them the right, for a fee, to use the agency's collection and enforcement service.
Some absent parents have suffered, through no fault of their own, from delays in making assessments, resulting in huge bills for arrears. In those cases, we shall not enforce more than six months' arrears, provided the absent parent agrees to pay them and to pay his on-going liability for maintenance. After a year, it will be clear whether the absent parent is meeting his obligation and if so, we shall compensate the parent with care for any financial loss. I have decided to stop charging fees and interest for two years from April 1995. After that, fees will be reintroduced and the interest charged replaced by a late payment penalty.
On Thursday, I intend to lay a set of minor technical amendments to regulations, which will further help the administration of the scheme. Many of the changes that I am announcing today will take effect from this April. The formula will change, interest payments will be abolished and fees will be suspended. The agency will be writing to all its clients about those changes, so there is no need for parents to contact the agency.
Primary legislation is needed to introduce discretion into the maintenance formula and for other changes including deferring take-on of non-benefit cases. Subject to the approval of Parliament, those changes will take effect during 1996–97. From April 1997, the new maintenance credit scheme and late payment penalties will start and fees will be reintroduced. None of those changes will apply retrospectively.
Legislation involving children, broken families and money will always arouse strong emotions. That is certainly the experience of Australia's Child Support Agency, even after six years of operation. The changes will improve our child support scheme for both parents. They will take account of property or capital settlements, give flexibility to prevent hard cases, allow for high travel-to-work costs, help absent parents with step-families, reduce the maximum level of maintenance and ensure that absent parents normally keep more than 70 per cent. of their net income after paying maintenance. Those changes should encourage and enable more absent parents to pay child maintenance regularly. As a result, they will give more parents with care and their children the chance of a better life and I commend them to the House.
Mr. Donald Dewar: Does the Minister understand the relief that, at last, there is movement on his part, after years of inaction? Does he share my dismay, however, that the chaos and bitterness
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surrounding the Child Support Agency has seriously undermined the very principles that the system was brought into being to defend?
I recognise that the White Paper offers changes to a wide range of issues. Does the Minister agree that the test is the practical impact of the proposed reforms, and that it is in that light that the Opposition and the country will judge them?
We welcome the introduction of a discretion to depart from the over-rigid financial formula, in cases where there is real hardship. Does the right hon. Gentleman accept, however, that we shall want to study with particular care the grounds and the definition of additional expenses? If the changes do not attack the causes of discontent, the damage may well be fatal.
Why did the Minister reject the machinery of the review office system that was pioneered in Australia, which at least appeared to be administratively convenient and offered an independence of judgment that many thought lacking in his present proposals?
Does the Minister recall that, time after time, we have called for just such a reform—the introduction of a discretionary element, through an independent review procedure—only to be repulsed with a lack of sympathy and sensitivity that I hope he now regrets? It is apparently intended that so-called clean-break settlements prior to April 1993 should be in the remit of the new appeal procedure. Will the Minister, however, say a little more about future cases and the perhaps unhappily christened broad-brush approach? With that, a great deal depends on the practical effect.
The formula that illustrates bands and the impact on exempt income will not make immediate sense to everyone. Is not it important—I put particular emphasis on this—in this case and, indeed, with every part of the package, that the Minister makes the impact transparent? Will he publish examples of the impact of those various provisions on typical cases and, where necessary, on a range of assumptions? Does not he agree that that is the best way in which to inform public debate?
Will the Minister note that there will be welcome on Opposition Benches for the translation of the advisory guidelines that no liable parent will pay more than 30 per cent. of net income, or 33 per cent. including arrears, into legislative form? There is plenty of evidence that in practice the financial formula has breached those guidelines in many thousands of cases. Is not it a striking comment on the failure of the system when a total of—I think—40,000 cases was quoted to the Select Committee where the guidelines had not been met? That clearly came as a shock and a surprise to Ministers.
On other changes in the financial formula, subject to further study, we are prepared to offer support. I am thinking specifically of the change to housing costs. However, may I remind the Minister again that those tardy moves reflect pressure from hon. Members of all parties, which he has long resisted? Will he also note that, at first acquaintance, the broad-brush approach to travel costs borders on the crude?
On administration, too, the Minister is giving ground and not before time. The incentive to co-operate represented by an eight-week moratorium on liability for arrears and the protected income provision where deduction from earnings applies are useful, but I suspect that, in impact, they are very modest changes. Will he

23
note that the cap on arrears at six months, as a form of remission for good behaviour, is welcome, especially as it is linked to compensation for the parent with care, which is a particularly important safeguard and feature?
Does the Minister accept that the so-called maintenance credit, no more than a poor relation of the back-to-work bonus, will simply not do? Does not he realise that parents with care living on income support need help now, not a possible windfall at some future date? Is not there a danger that the households where work will be difficult to come by will be the least likely to pick up the divvy? Would not it have been wiser and more in line with the social purpose of the 1991 Act to establish the principle of disregard, even if at a modest level? Why is the proposal on such a slow fuse and not coming into effect into April 1997, when other changes are being introduced this April?
May I ask about the deferment of take-up of cases by the agency, when no state benefit is involved and there is a court order or written maintenance agreement? Does deferment mean that those cases will become the agency's responsibility at the earliest possible point, as soon as administrative capacity allows? Does the Minister accept that it is important to establish what is intended, as otherwise some will charge that the Child Support Agency is rough justice for those on benefit, while the courts protect the better-off? Would not that become a problem, if there were a perceived continuing differential in awards between courts and the agency?
The House will note that none of those changes will apply retrospectively. I accept that there are difficulties, but does the Minister recognise that that may cause major problems? The day before the House of Commons rose for the Christmas recess, he announced that 350,000 cases were being shelved by administrative fiat. When those cases come back into the system, are the individuals concerned to benefit from the changes announced? Is not there a danger, if that is so, that they will be seen as being advantaged as a result of the agency's own inefficiency and, in some cases, perhaps more seriously, will not it be a matter of non-co-operation unfairly rewarded?
Opposition Members want reform. We want reform that gives a better service to both sides of a broken partnership and we want reform that will take some of the stress and strain off the staff of the CSA who have been put under, at times, almost unendurable pressure. May I make it clear that we shall not unnecessarily obstruct the legislation when it comes forward? There will be no call from the Opposition Front Bench for trench warfare. However, we reserve the right to weigh the merits of the proposals, to scrutinise properly and to try to strengthen the Bill in Committee in the public interest.
The tragedy is that reform which might have made an impact 18 months ago will now have to contend with the bitterness that has built up in the system. Is not it clear to everyone involved in the argument—many of whom, honourably, are on the Conservative Benches—that the delay is deeply regretted? The fact that Ministers have had to be driven to action by public pressure and parliamentary anger is a considerable downside.
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Does the Secretary of State recall that, as recently as 4 July last year, sheltering behind the very marginal changes made the previous February, he said:
"We must not put the improvements in performance that we are achieving at risk by introducing unnecessarily disruptive changes".—[Official Report, 4 July 1994; Vol. 246, c. 43.]
That is a prime example of complacency writ large.
The Opposition believe firmly in the duty of a parent to contribute to the maintenance of his or her child. This is perhaps our last chance in this Parliament to get matters right. I hope that the changes will undo some of the damage caused by delay and restore a measure of public confidence to the child support system.
Mr. Lilley: Assuming that the hon. Gentleman was welcoming the changes, I am grateful for his welcome. I welcome the fact that he has consistently supported, as the whole House has, the underlying principle that the changes are designed to reinforce and uphold.
However, the hon. Gentleman was quite wrong to suggest that there has been inaction since the agency was established. He ignores the changes that were introduced last February and the fact that it would have been impossible to introduce a Bill in the previous Session. Had we done that, it would not have been able to undertake the changes that we are now proposing.
I share the hon. Gentleman's concern about the administrative problems that the agency has experienced, and we are doing all in our power to overcome them. He said that he would look closely at the system of departures from the formula and he seemed to want them to be as open-ended as possible. We believe that it would be wrong to have a wholly open-ended system of discretion, which would amount to going back to the courts and which would allow the system to be degraded, unfair and unsystematic. However, we believe that it is right that there should be limited discretion to deal with the hard cases that have caused hon. Members concern.
The hon. Gentleman complained about, or thought that he might have complaints about, the broad-brush approach to dealing with past property settlements. That broad-brush system cannot be satisfactory on its own. Had it been possible to deal satisfactorily with the problem of past property settlements simply through changes in the formula, I would have preferred to do it that way. However, it is necessary to have an element of discretion as well, and that requires primary legislation; that is why I am introducing it. I wanted to ensure that the change in the formula was in place as soon as possible from April, to deal with the situation as best we can in the interim.
The hon. Gentleman asked me to make available worked examples of how some of the changes will affect people. I have asked my officials to place some worked examples in the Library. I hope that they will be available by the time that I finish my comments.
The hon. Gentleman mentioned rightly the 30 per cent. limit on maintenance assessments as a percentage of net income. A proportion of people were retaining less than 70 per cent. of net income. That was never intended or expected from the simulations carried out before the agency began its operations. I thought that it would be much better to place that hard and fast cap on maintenance assessments so that when stories abound that people are being left with only a tiny fraction of their income, people

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will know that those stories simply are not true—[Interruption.] They will not be true when we have this cap. [HON. MEMBERS: "Ah."] People will know that.
The only circumstances in which people may have large assessments relative to their income will be when they have refused to co-operate with the agency and to give any details of their income. People can rapidly resolve that problem by co-operating with the agency and providing the necessary details.
The hon. Gentleman complained that the travel-to-work broad-brush element in the formula was too crude. He simply cannot have it both ways and say, on the one hand, that we are in danger of creating additional administrative problems, and then object to a simpler way of dealing with a problem without imposing a huge administrative burden such as would be required if everyone had to confirm, identify and provide bills and details to show their travel costs over the past year.
The hon. Gentleman says that the maintenance credit will not do. He is conspicuously unwilling to say what he would do in terms of a maintenance disregard, which he would like. He had previously costed his own proposal at £340 million. That is not a sensible and priority use of public money. It would act as a disincentive to work and it would be unfair as between those who did and did not have maintenance.
It is sensible to defer the take-on of pre-1993 cases where there is no taxpayer interest because those people are not on benefit and they already have an agreement or a maintenance order from the courts, and to give them continued access to the courts if they wish any changes. There will be power on the statute book to bring them into the purview of the agency, but that can be done only with the approval of the House.
The 350,000 cases that the hon. Gentleman says were shelved were not shelved. There always has been a phased take-on of people, and we are rightly trying to get the backlog down before we take on new benefit cases where the mother has not requested us to do so. Parents with care who request early help from the agency will be given priority, as now.
I welcome the hon. Gentleman's understanding of the problems that staff have often faced and the hostility and often adverse treatment that they have had, which the whole House deplores. I welcome his assurance that that. will not be a matter for trench warfare. All of us have an interest in ensuring that we improve the system of child maintenance, so that more maintenance is paid more rapidly to more parents with care and their children.
Sir David Madel: May I welcome what my right hon. Friend has said, particularly in respect of the change in the travel-to-work arrangements, which will be welcomed by my constituency and others in commuting areas? Will he say a little more about the Child Support Agency automatically writing to people? Does it mean that., when people are in dispute with the Child Support Agency, it will write to them and tell them that a new appeals system is coming in? If people trigger the appeals system, will they be entitled to legal aid?
Mr. Lilley: I am grateful to my hon. Friend for his welcome for the changes to take account of people who travel reasonably long distances to work. They will be welcomed by those who commute a long way. The agency
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will write and tell people about the changes and about how they influence them. It will, however, point out that the appeals process—the discretionary system—will not come in until 1996–97. The formula changes will be applied, wherever possible, automatically from April this year, but people may be asked to give some information to trigger off the travel-to-work changes in the formula to their benefit. There should be no question of or need for legal aid.
Ms Liz Lynne: I welcome the Secretary of State's statement, but I wish that it had come sooner, before many parents had suffered so many problems. However, he has not properly answered the question about why he did not bring in a proper maintenance disregard of, say, £15, so that parents with care would not have their benefit withdrawn pound for pound. That would have benefited the children. I welcome his taking into account the cost of visiting the child by the parent without care, but the Secretary of State does not state the distance beyond which that measure would be brought in. I would be grateful for information on that point.
Mr. Lilley: I am grateful to the hon. Lady for her welcome for the changes. The change in child contact is that it will be a ground for appeal to seek a departure from the formula when people have exceptional costs. We shall spell out that point in secondary legislation, but obviously it will not be just any costs if someone lives just around the corner. As far as a disregard is concerned, we have not proposed a disregard—let alone one of the order that the hon. Lady suggests—because it would cost about £340 million. We take seriously the remarks of her hon. Friend the Member for Gordon (Mr. Bruce), who was criticising the Labour party at the weekend for its reckless spending of public money by making promises that it could not possibly fulfil.
Mr. Michael Shersby: I am most grateful for what my right hon. Friend has said this afternoon. During his statement, he said that he wanted people to keep working. Does he accept that it is necessary for many second wives to work? Has he therefore given consideration to allowing the inescapable costs of child-minding to be taken into account when making the calculations?
Mr. Lilley: It is important to give parents with care the opportunity to work, and to remove disincentives. A great many parents have said that they wish to work, and the maintenance credit will be welcomed as simultaneously enhancing and reinforcing that incentive and enabling parents to make the move back into work.
It would not be justifiable to give the desire of a second partner to go to work— rather than staying at home to look after her children—priority over one's obligation to maintaining a first family. I cannot see how that can be done at the expense of the first family.
Mr. Frank Field: May I thank the Secretary of State for implementing many of the proposals that the Select Committee considered, including some—such as the independent appeals tribunal—which his hon. Friends voted down in Committee? As non-payment of maintenance already puts between 2p and 3p on the standard rate of tax, does the right hon. Gentleman accept that the House and many millions of mothers and children have a vested interest in making sure that the agency

27
works? Will he therefore tell us how much new money the agency is raising, and whether it is performing more effectively in raising funds than the system that it replaced?
Mr. Lilley: I am grateful to the hon. Gentleman for his welcome, and for the helpful and influential report that his Committee produced. We have endeavoured to take on board the bulk of the recommendations that the Committee put forward, or at least the substance of them.
With regard to the appeals tribunal, my reading of the report was that there was a proposal for a simple formula that would not take into account many factors that were already taken into account by our system. In turn, that formula would have required a practically open-ended discretionary system to deal with all those circumstances, which would then not have been taken into account. The last thing that we wanted to do was to go back to an open-ended discretionary system, like the courts. My hon. Friends will tell me whether that is a correct analysis of the decisions that were taken in the Committee, but a limited discretionary system— such as we propose— with fairly closely circumscribed opportunities is right and sensible.
In the first eight months of this year, savings—including benefit savings, maintenance arising from people who were coming off benefit and maintenance being paid and replacing benefit—amounted to about £280 million, as against £180 million in the same eight months of the previous year.
Mr. David Faber: May I thank my right hon. Friend for responding positively to the Select Committee's report? Does he agree that a great deal of the problems that the CSA has faced have come about as a result of the percentage of income that non-custodial parents have been asked to pay? Those figures are hard to prove and have often been exaggerated. Will not the very welcome 30 per cent. cap that my right hon. Friend announced today put an end to that confusion once and for all?
Mr. Lilley: I believe that my hon. Friend is right. The 30 per cent. cap—it is a 33 per cent. cap when the combination of an assessment and any arrears that people may have to pay off is taken into account—will be beneficial in ensuring that there is no hardship. It will be beneficial also as it will gain acceptance for the agency, as it will be seen clearly that people have at least two thirds, and normally more than 70 per cent., of their net income with which to meet other expenses not taken into account in the formula. Therefore, there will be no reason for absent parents to refuse to pay maintenance for the support of their children.
Mr. Dennis Skinner: Is the Secretary of State aware that probably only one other piece of legislation in recent years has had to be amended so often, for which Ministers have come to the Dispatch Box to apologise—the poll tax? We know that, after all the efforts to amend the poll tax, the Government finally had to withdraw it. Has he considered doing the same with the Child Support Act?
Mr. Lilley: No, certainly not. I believe that the principle—it was endorsed by the whole House, and
28
explicitly so by the Opposition when the Bill went through Parliament and became an Act—still has the support of the House and the country: that both parents are responsible for their children; that both should contribute according to their means; and that the taxpayer should pay only when the parents do not have the means to support the children. The hon. Gentleman gave his support and acquiescence to the Bill when it was going through the House, although he is normally willing to object to most things. He may now be withdrawing his support retrospectively, but he certainly did not vote against its Third Reading.
Mr. Roger Gale: I thank my right hon. Friend for agreeing to take a twin-track approach, to regulate as swiftly as possible where possible and to legislate where necessary. I thank my hon. Friend the Minister of State— [HON. MEMBERS: "Oh."]— for the unfailing courtesy with which he listened to submissions and complaints. The fact that my right hon. Friend is now willing to allow travel costs to be taken into account will be particularly welcomed by my constituents in east Kent. I express my continuing concern, however, at the level of arrears that some of my constituents must still pay and ask my right hon. Friend to look again, even at this late stage, at whether there is any way in which those arrears can be mitigated.
Mr. Lilley: I am grateful to my hon. Friend for his welcome for our attempt to make rapid changes where we can through the regulatory route and more substantive changes through primary legislation. I agree entirely with his plaudits for my hon. Friend the Under-Secretary of State and his promotion of him, which was well deserved.
My hon. Friend made a specific point about arrears. It will be widely welcomed that the agency recognises that, where it has contributed to the build-up of arrears, there should not be an attempt to go back more than six months. Therefore, that means writing off some of the money that should have been due to the parent with care. Once the system is established, compensation will be provided by the taxpayer. It will not be right to go beyond that, as my hon. Friend suggested. It will be widely welcomed that we are making the change.
Mr. Malcolm Wicks: With regard to the impact of the changes in child support on children, who are sometimes forgotten in the debate, will the Secretary of State confirm that the vast majority of children in one-parent families will continue to see the extra child support deducted pound for pound, penny for penny, from income support and that for the very poor children in Britain, it remains a Child Support Act in name only?
Mr. Lilley: I pay tribute to the hon. Gentleman for his consistent recognition that two parents are involved in the production of children. Whereas many hon. Members have talked as if it was solely a matter of concern for the absent parent, the hon. Gentleman has always recognised the interests of the parent with care. Income support is payable to help parents who do not have maintenance or other means to support their own children. It is not meant to be in addition to maintenance and it would be wrong to do so.
What we have done in introducing a maintenance credit squares the circle, in giving parents a greater interest in the system. They already have an interest inasmuch as

29
maintenance is a portable benefit that they can carry back into work and that will help them back into work. But now, in addition, the maintenance credit would build up while they remained on benefit and were in receipt of maintenance, and that will be welcomed, I hope, by those who, like the hon. Gentleman, recognise that parents with care have often had the raw deal in the whole arrangement.
Mr. Jim Lester: I thank my right hon. Friend for listening so carefully to all the representations that were made, and join my colleagues in commenting on the help given by the Under-Secretary of State.
May I be clear on the way in which this will work? My right hon. Friend said that the changes are not retrospective. Does that mean that all the consistent, continuous cases, which are already with the CSA, will be reassessed from April onwards under the new formula and that that is why nobody needs to take up a case, because the CSA will write to all its current clients and make that clear?
Mr. Lilley: I am grateful to my hon. Friend for giving me an opportunity to clarify that point. Although not retrospective, the changes will apply to those who already have maintenance assessments from the date that the new changes come in: April for the new changes introduced by regulatory means in the formula; and 1996–97 for the changes made through the exercise of discretion. Thus everybody, including those who have been paying and those in the process of being assessed, will get help.
Ms Mildred Gordon: The Secretary of State has made a considerable climbdown in the face of mounting public anger about the Child Support Act. Obviously, many of his measures will help non-resident parents, and those are to be welcomed. But as the changes are non-retrospective, the way in which people are treated will be patchy. What about non-resident parents who got into debt to pay the huge arrears assessed? Will that money be paid back to them with interest, or is it just tough for them? Although it will be better for some non-resident parents in the future, it seems to me—
Madam Speaker: Order. We have had a reasonably brisk exchange, although not as brisk as I should have liked. The Secretary of State wishes to answer a number of questions from Back Benchers, so will Back Benchers put their questions directly to him? I am sure that he will do his best to answer them equally briefly.
Ms Gordon: Will treatment be uneven? Will the Secretary of State also say a little more about the discretionary regulations, because they appear to be nowhere near an appeals system? As all cases are individual and as the voluntary agencies have listed about 40 differences that needed to be made, if it is not a proper appeals system, it will not help many people. I have said before—
Madam Speaker: Order. I ask the hon. Lady now to put her final question to the Minister. Let us be a little tolerant with each other. Many other hon. Members want to put questions, so I am sure that the hon. Lady will now come to her final point.
Ms Gordon: I apologise, Madam Speaker.
Finally, parents with care will get help only if they go to work, possibly in low-paid jobs, and if they can find work. What about parents with care who rightly want to
30
stay at home with their children? Do not they perform a service to the state, and should not they have a disregard that would help their children?
One further—[interruption.]
Madam Speaker: Order. I think that I have let the hon. Lady have a fair crack at the whip this afternoon.
Mr. Lilley: The hon. Lady appeared to want me to make the changes retrospective. That would be paradoxical when some of the resentment aroused by the changes was caused because they were thought to have retrospective implications. We would not want to pile Pelion upon Ossa. On the hon. Lady's point about arrears, there will be a limit on the combined amount of assessment and arrears that people can pay together. That will be welcomed and partly meets the point that she made.
Mr. Peter Thurnham: I welcome my right hon. Friend's continued pursuit of feckless fathers. Will he continue to pursue fecklessness within the CSA and contract out to the private sector wherever possible?
Mr. Lilley: My hon. Friend is right. I hope that the agency will continue with increasing success to trace and track down fathers who have attempted to get out of their obligation to contribute. The agency has so far succeeded in tracking down 58,000 absent fathers, who previously would have remained unknown and undetected, because of the arrangements that we have in force to trace them through national insurance numbers and other means. On improving efficiency through use of the private sector, I gave my hon. Friend an opportunity to put the points that he makes so eloquently to the agency and I know that they will have been listened to with care.
Mrs. Jane Kennedy: Given that the Parliamentary Commissioner for Administration has expressed his extreme disappointment at the fact that the CSA should repeat the systemic failures of the disability living allowance, can the Secretary of State tell us exactly what he will do to assist the CSA staff to improve the service that they give to their clients and the taxpayer, so that we might see less of the chaos that has marked the past two years' operation of the agency?
Mr. Lilley: I share the hon. Lady's desire to see continuing improvement in the administration and efficiency of the agency, which goes hand in hand with any changes that we have made to the assessment system to make it fairer.
On the ombudsman's remark about the disability living allowance, the report on the DLA was not produced until the Child Support Act 1991 had already been passed. The introduction of the CSA and the DLA was largely simultaneous, but take-on by the CSA was phased in, unlike that of the DLA—that failure was perceived as a major problem. We have phased in the take-on of cases by the CSA, but we have already received criticisms and complaints about that. It should not be assumed that those two issues are identical and that a formula could be derived from one and applied to the other.

31
I welcome the fact that the ombudsman accepted that action had been taken to deal with the complaints that he examined in his report.
Lady Olga Maitland: May I warmly welcome the explicit reference to those who have remarried and taken on extra stepchildren? Does my right hon. Friend accept that that will alleviate the great concerns felt by those with new responsibilities?
Mr. Lilley: My hon. Friend is right. There was a sense of injustice as well as a cost implication where people had a new partner and stepchildren and, as a result, did not get full allowance for their housing costs. They will now do so and that will help the formula to achieve acceptability and ease the problems that some families face.
Mrs. Margaret Ewing: While I obviously welcome the broad thrust of the paper that has been presented to the House, the Secretary of State will understand that many of its details will be explored further by individual hon. Members. On property settlements, how was the sum of £5,000 reached as the share that the parent without care would have to pass over from his equity? In the assessment of clean-break settlements, the right hon. Gentleman will understand that occupational pensions are often regarded as part of capital assets. Will they be excluded in this case?
Mr. Lilley: The hon. Lady is right: the House will obviously want to examine in detail the proposals that I have put forward. I am sure that it is right that it should do so.
On property settlements, the £5,000 threshold was set because it seemed reasonable that there should be a minimum for a broad-brush approach. The greatest concern arose where people had passed over the whole of the house rather than just slightly more than 50 per cent. of the value of it or a fairly small sum of capital. We reached that threshold after discussion with family lawyers about the array of different costs and amounts involved.
Mr. Anthony Steen: As a founder member of the all-party child support group, may I say how much I welcome the statement, which is absolutely first rate? It shows that Conservatives not only listen to what the public say, but act on what they hear. As a member of the party committed to the family, will my right hon. Friend say something about the CSA's future arrangements governing the absent parent and the child, because CSA staff have done a great deal of damage to that relationship and some reparation work is needed?
Mr. Lilley: I am grateful to my hon. Friend for his wholehearted welcome. He is right. We have tried to listen to the experience and the worries that have arisen in the first 18 months or so of the operation of the agency—an agency, I would remind everyone, which was supported by the whole House when it was established, and which all of us have been keen to improve to deal with the problems that have emerged.
I am not sure that I would entirely accept the argument that my hon. Friend appeared to make about staff of the agency and the relationship between absent parent and
32
child. It must be remembered that it is always an emotional matter when the law intrudes in matters involving children, family breakdown and money. None the less, a decision must be taken about where responsibility lies. The House has decided that it should be taken through the Act and the agency, and the staff do try to fulfil their duties as sensitively as possible.
Dr. Norman A. Godman: I am pleased to hear that this discredited system is to be improved, but why has the Secretary of State refused to accept the legitimate argument that the employers of recalcitrant absentee parents should be compelled to co-operate with the agency, and why has he failed to tackle the companies—not all of them small—that pay the moneys arrested from wages to the agency so slowly? That is causing a great deal of distress to mothers in my constituency.
Mr. Lilley: It is easy for hon. Members to speak about discredited agencies. But when they did not vote against the agency in the first place and their parties wholeheartedly supported it, they share the overall responsibility for Parliament and our overall responsibility for responding sensitively, which we are now doing through the report of the Select Committee and today's statement.
Of course, employers have an obligation to help when the agency requires them to deduct from earnings at source. The hon. Gentleman will be pleased to know that a large number of deduction from earnings orders have been made—4,000 in November alone, compared with 2,600 in the whole of last year—and they are proving a successful way of enforcing and ensuring payment.
Mr. James Couchman: I spent Friday night with a group of my constituents, all of whom pay maintenance and all of whose lives have been turned upside down by the agency. They will be as pleased as I am to hear of the improvements and changes that my right hon. Friend announced to the House today, especially with reference to housing costs, travel-to-work costs and the element of discretion to be granted to the new appeals tribunal.
I should be grateful if my right hon. Friend told me a little more about the housing costs. Does he mean that the agency will now recognise mortgages other than repayment mortgages—the ones that perhaps depend on endowment policies, personal equity plans and other methods of repaying capital?
On administration, we recognise that it will take some time for the discretion to be allowed to the appeal tribunal. In the meantime, my constituents continue to be told that, even when they are dissatisfied with the initial assessment, it might take as much as a year for it to be reviewed; that is unacceptable.
Mr. Lilley: I know that my hon. Friend has been in close contact with his constituents who have been worried about the working of the agency, so I am all the more grateful for his support.
I think that the agency does take into account more than the simple basic mortgage costs, and I should be happy to confirm details of specific types of mortgages about which my hon. Friend may have worries. The agency is devoting more resources to undertaking reviews and

33
completing them more speedily, so I hope that the length of time quoted to my hon. Friend will not apply to his constituents in future.
Mr. Mike Hall: The Secretary of State's statement follows two critical reports from the Select Committee and an even more critical report from the parliamentary ombudsman, but he nevertheless insists in the House that the principle that absent parents must pay and the principle—which he has not mentioned much this afternoon—that more money should be directed to maintenance of children, are the aims of his announcement. His refusal to budge on the disregard on income support demonstrates that he is led more by the Treasury than he is by putting more money into looking after children. Why will he not reconsider that point?
Mr. Lilley: For the 'very simple reason that I spelled out to the hon. Members for Glasgow, Garscadclen (Mr. Dewar) and for Rochdale (Ms Lynne)—that it would be a system that discouraged people, a system that made it more difficult for people to return to work and improve their standard of living, and a system that would be hugely costly to the taxpayer. We do not hand out public money like confetti without thinking where it will come from.
Mr. Iain Mills: Does my right hon. Friend recall the anguish expressed by a number of my constituents, especially one from Chelmsley Wood, whom he kindly met? Does he accept that the measures will help greatly? Will he, however, clarify how discretion would work for such a person who was seriously affected and who was well over the 70 per cent. level? Would CSA officials make judgments? Would my right hon. Friend make judgments? Who makes judgments?
Mr. Lilley: I hope that my hon. Friend will forgive me for not remembering the precise details of his constituent; I have seen a number of constituents during the relevant period. If, as he says, people are being assessed to pay more than 30 per cent. of their net income, they will benefit immediately from the cap on assessments when it comes into force in April. If, in addition, people have particular, exceptional expenses that are not taken account of in the formula and, because they are not taken account of, mean that they would suffer hardship, they will be able to apply to the agency once discretion is operational—once the Bill has received Royal Assent and the new procedures are in force. They will be able to apply to the agency and ask for such expenses to be taken into account. If the agency refuses or responds insufficiently, people will be able to appeal to the appeals tribunal and ask for the assessment to be reconsidered. In that way, proper consideration will be given to those with genuinely difficult circumstances.
Mr. Robert Hughes: Is the Secretary of State aware that there will be a great deal of dismay and anger at his statement that none of the changes announced today will apply to those whose settlements have already been concluded with the CSA, or at least not until two years—[Interruption.] That is what it says in the White Paper, as hon. Members will see if they care to read it. Is the Secretary of State aware— [Interruption.] Oh yes. It says at paragraph 5 on page 9:
"None of these changes will apply retrospectively."
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That means, for people whose settlements have already been resolved. In addition, the right hon. Gentleman's failure to deal with income support disregards means that the CSA is best known, justly, as the "Chancellor's Support Agency".
Mr. Lilley: I am grateful to the hon. Gentleman for giving me another opportunity to clarify the point that I made in reply to my hon. Friend the Member for Broxtowe (Mr. Lester). Although the changes will not apply retrospectively, they will apply to all cases, whether or not they have received an assessment, from the moment that they become legally applicable. A change in the formula from April this year will apply to people who have already had a maintenance assessment in terms of their future maintenance liability. Any changes will not, of course, alter the amounts that they were required to pay last year or the year before. That would be retrospection, which is something that the House has always turned its face against.
Mr. Michael Lord: Although I warmly welcome the changes that my right hon. Friend has announced today, I remind him that many of us thought that the principal reason for setting up the CSA was to chase fathers who contributed nothing to their children. May I remind him that many of us still believe that that should be our top priority? Will my right hon. Friend continue to carry out that task with renewed vigour?
Mr. Lilley: The agency's intention was always to chase those who were paying nothing and to ensure that everyone paid a reasonable amount. Some 77 per cent. of those taken on this year have paid not a penny of regular maintenance. As I said, we have been more successful than expected in tracking down those who had not merely paid nothing, but who had disappeared without trace. Even if there was some payment, in 96 per cent. of all cases taken on so far, the mother and children were dependent on benefit. It is only reasonable that the taxpayer should require parents to contribute first, according to their means, before the taxpayer has to contribute towards the maintenance of other people's children.
Dr. Lynne Jones: Like other hon. Members, I am disappointed that the Secretary of State has not taken the opportunity presented by today's statement to help families on benefit who are worse off as a result of the operations of the Child Support Agency. For example, a pair of children's shoes can cost about £20 or £30 and were often purchased by the absent parent who is no longer able to make such a purchase. I do not advocate a return to ad hoc measures, but they should be reflected in some kind of disregard for the parent with care.
I also take up the point made by my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche). Can the Secretary of State tell the House how he intends to ensure that the measures that he has announced today will not plunge the Child Support Agency into further administrative chaos? For example, does he intend to ensure that extra staff are taken on? Surely experience has

35
taught him that his penny-pinching attitude in the short term has resulted in a loss of money from the public purse in the long term.
Mr. Lilley: On the disregard, I have made the position abundantly clear as to cost and disincentive effects. With regard to the administrative burden that the changes may impose on the agency, as I said in my statement and elaborated on at greater length in the White Paper, I am introducing a number of regulatory changes that will enable administrative simplification and greatly ease the working of the agency to the benefit of those to whom it endeavours to provide a service. I think that the hon. Lady should welcome those changes.
Madam Speaker: We will now move on.

Private Clegg
4.31 pm
Mr. Iain Duncan Smith: Madam Speaker, I am grateful for your indulgence and that of the House in this matter.
I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the case of Private Clegg."
The case has been much reported in the newspapers and in the electronic media. As it does not involve my constituency, I have spoken to the hon. Member for Bradford, South (Mr. Sutcliffe), who is in his place, and he has made it clear that he wishes to be associated with many of my remarks.
In urging you to grant such a debate, Madam Speaker, I think that we need to consider three main factors. The first concerns Private Clegg himself, who has now been incarcerated for three and a half years awaiting the outcome of judicial manoeuvres. I am reminded by reading the Law Lords' summary judgment on the case that even they think that Private Clegg is in a somewhat different category from other murderers. They said:
"There is one obvious and striking difference between Private Clegg and other persons found guilty of murder. The great majority of persons found guilty of murder, whether they are terrorists or domestic murderers, kill from a wicked and evil motive. But when Private Clegg set out on patrol on the night of 30 September 1990 he did so to assist in the maintenance of law and order and we have no doubt that as he commenced the patrol he had no intention of unlawfully killing or wounding anyone".
The Law Lords make it clear that the case is different, but Private Clegg has been sentenced to life imprisonment, although he acted in good faith. The Law Lords also raised the matter of the yellow card. When Private Clegg set out, the yellow card instructions included the words:
"You may only open fire against a person…deliberately driving a vehicle at a person and there is no other way of stopping him".
That point was made clear in the judgment. Private Clegg had to take one other factor into consideration: a member of his own regiment had been knocked down and killed by a speeding car at a previous checkpoint.
The second and possibly the most important factor is the Law Lords' statement about the yellow card. They said:
"It is not suggested that the Yellow Card has any legal force".
We now have a situation in Northern Ireland where members of the armed forces go on patrol in some doubt as to their position and about how they will operate. This is a matter of great urgency, which must be dealt with because they may make decisions that will affect their lives and those of other people.
Thirdly, some people may say, "So what? This is one man, but big events are taking place and we must not upset one or other members of the community". Surely the House exists for one purpose, if for no other—to ensure that the rights of the individual will never be drowned by the greater issues that may be at stake.
Madam Speaker: I listened most carefully to the hon. Gentleman, and I must give my decision without stating any reasons. I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 20, so I cannot submit the hon. Gentleman's application to the House.

Points of Order
4.35 pm
Mr. Peter Hain: On a point of order, Madam Speaker. Have the Government asked for time to make a statement on Welsh national heritage? The Secretary of State for Wales is discussing with the Countryside Council for Wales proposals to privatise more than 50 nature reserves and savagely to cut wildlife protection. Those crackpot proposals are bitterly resented in Wales. Surely the Secretary of State should come before the House, to consult right hon. and hon. Members before he proceeds.
Mr. Rhodri Morgan: Further to that point of order, Madam Speaker. As far as one can tell from the documents, the proposals will also breach Britain's international obligations under the biodiversity convention signed by the Prime Minister as part of the Rio treaty just after the previous general election and, worse, under the European Union's habitats and species directive, which passed through the House just before it rose for the summer recess last July. The document of which we have had sighs: appears to have passed through the Countryside Commission for Wales on the instructions of the Secretary of State, so it would seem appropriate for him to make a statement on how Britain is to meet its international obligations.
Madam Speaker: Members on the Treasury Bench will have heard the remarks of both hon. Gentlemen, but I have not received any intimation from the Government that they will seek to make a statement.
Mr. Julian Brazier: On a point of order, Madam Speaker. I should be most grateful if you could assist me with a matter on which the Clerks have been extremely helpful, but an element of doubt remains. A number of hon. Members would like to raise the issue mentioned by my hon. Friend the Member for Chingford (Mr. Duncan Smith) on the Adjournment of the House, so that we may press the Government for a statement. The problem is that although debate on the individual case would be in order, we are advised that the legal position that creates doubt for the 19,000 soldiers still serving in Ulster could go beyond the rules of order, because hon. Members are not supposed to press for legal changes in an Adjournment debate. If an hon. Member were to raise in an Adjournment debate the specific, narrow issue of Private Clegg—which would be in order—would it be in order also to point out in general terms the gaps in the law that led to Private Clegg's problem and how they might be put right?
Madam Speaker: The matter can be raised in general terms, provided that the House does not enter into debate on the decision of the Law Lords. I would hear such an Adjournment debate on that basis.

Orders of the Day

  Finance Bill
  (Clauses Nos. 2, 5, 8, 15, 52, 64 and 91, Schedules Nos. 1, 4, 11 and 14, and any new Clause first appearing on the Order Paper not later than 19th January and designed to continue the statutory effect of any of the Ways and Means Resolutions of the House of 13th December)
  Considered in Committee.
  [MR. MICHAEL MORRIS in the Chair]
  Ordered,
  That the order in which proceedings in Committee of the whole House of the Finance Bill are to be taken shall be New Clauses 1 and 2. Clause 2, Schedule 1, Clause 5, New Clause 3, Clause 8, New Clause 4, Clause 64, Schedule 14, Clause 91, Clause 15, Schedule 4, Clause 52 and Schedule 11.—[Mr. Heathcoat-Amory.]

  Finance Bill
    New Clause 1

      FUEL AND POWER FOR DOMESTIC OR CHARITY USE
      '.—(1) The Value Added Tax Act 1994 shall be amended as follows.

      (2) In section 2 (rate of VAT) in subsection (1) the words "and paragraph 7 of Schedule 13" shall be omitted, and the following subsections shall be inserted after that subsection—

      "(1A) VAT charged on—

      (a) any supply for the time being falling within paragraph 1 of Schedule A1; or

      (b) any equivalent acquisition or importation,

      shall be charged at the rate of 8 per cent.

      (1B) The reference in subsection (IA) above to an equivalent acquisition or importation, in relation to any supply for the time being falling within paragraph 1 of Schedule AI, is a reference (as the case may be) to—

      (a) any acquisition from another member State of goods the supply of which would be such a supply; or

      (b) any importation from a place outside the member States of any such goods.

      (1C) The Treasury may by order vary Schedule Al by adding to or deleting from it any description of supply for the time being specified in it or by varying any other provision for the time being contained in it."

      (3) The following Schedule shall be inserted immediately before Schedule 1—

    SCHEDULE A1
      CHARGE AT REDUCED RATE

        The supplies
        1.—(l) The supplies falling within this paragraph are supplies for qualifying use of—

        (a) coal, coke or other solid substances held out for sale solely as fuel;

        (b) coal gas, water gas, producer gases or similar gases;

        (c) petroleum gases, or other gaseous hydrocarbons, whether in a gaseous or liquid state;

        (d) fuel oil, gas oil or kerosene; or

        (e) electricity, heat or air-conditioning.

        (2) In this paragraph "qualifying use" means—

        (a) domestic use; or

        (b) use by a charity otherwise than in the course or furtherance of a business.

        39

        (3) Where there is a supply of goods partly for qualifying use and partly not—

        (a) if at least 60 per cent. of the goods are supplied for qualifying use, the whole supply shall be treated as a supply for qualifying use; and

        (b) in any other case, an apportionment shall be made to determine the extent to which the supply is a supply for qualifying use.

        Interpretation
        2. For the purposes of this Schedule the following supplies are always for domestic use—

        (a) a supply of not more than one tonne of coal or coke held out for sale as domestic fuel;

        (b) a supply of wood, peat or charcoal not intended for sale by the recipient;

        (c) a supply to a person at any premises of piped gas (that is, gas within paragraph 1(1)(b) above, or petroleum gas in a gaseous state, provided through pipes) where the gas (together with any other piped gas provided to him at the premises by the same supplier) was not provided at a rate exceeding 150 therms a month or, if the supplier charges for the gas by reference to the number of kilowatt hours supplied, 4397 kilowatt hours a month;

        (d) a supply of petroleum gas in a liquid state where the gas is supplied in cylinders the net weight of each of which is less than 50 kilogrammes and either the number of cylinders supplied is 20 or fewer or the gas is not intended for sale by the recipient;

        (e) a supply of petroleum gas in a liquid state, otherwise than in cylinders, to a person at any premises at which he is not able to store more than two tonnes of such gas;

        (f) a supply of not more than 2,300 litres of fuel oil, gas oil or kerosene;

        (g) a supply of electricity to a person at any premises where the electricity (together with any other electricity provided to him at the premises by the same supplier) was not provided at a rate exceeding 1000 kilowatt hours a month.

        3.

        —(1) For the purposes of this Schedule supplies not within paragraph 2 above are for domestic use if and only if the goods supplied are for use in—

        (a) a building, or part of a building, which consists of a dwelling or number of dwellings;

        (b) a building, or part of a building, used for a relevant residential purpose;

        (c) self-catering holiday accommodation;

        (d) a caravan; or

        (e) a houseboat.

        (2) For the purposes of this Schedule use for a relevant residential purpose means use as—

        (a) a home or other institution providing residential accommodation for children;

        (b) a home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disablement, past or present dependence on alcohol or drugs or past or present mental disorder;

        (c) a hospice;

        (d) residential accommodation for students or school pupils;

        (e) residential accommodation for members of any of the armed forces;

        (f) a monastery, nunnery or similar establishment; or

        (g) an institution which is the sole or main residence of at least 90 per cent. of its residents,

        except use as a hospital, a prison or similar institution or an hotel or inn or similar establishment.

        (3) For the purposes of this Schedule self-catering holiday accommodation includes any accommodation advertised or held out as such.

        40

        (4) In this Schedule "houseboat" means a boat or other floating decked structure designed or adapted for use solely as a place of permanent habitation and not having means of, or capable of being readily adapted for, self-propulsion.

        4.

        —(1) Paragraph 1(1)(a) above shall be deemed to include combustible materials put up for sale for kindling fires but shall not include matches.

        (2) Paragraph 1(1)(b) and (c) above shall not include any road fuel gas (within the meaning of the Hydrocarbon Oil Duties Act 1979) on which a duty of excise has been charged or is chargeable.

        (3) Paragraph 1(1)(d) above shall not include hydrocarbon oil on which a duty of excise has been or is to be charged without relief from, or rebate of, such duty by virtue of the provisions of the Hydrocarbon Oil Duties Act 1979.

        (4) In this Schedule "fuel oil" means heavy oil which contains in solution an amount of asphaltenes of not less than 0.5 per cent. or which contains less than 0.5 per cent. but not less than 0.1 per cent. of asphaltenes and has a closed flash point not exceeding 150°C.

        (5) In this Schedule "gas oil" means heavy oil of which not more than 50 per cent. by volume distils at a temperature not exceeding 240°C and of which more than 50 per cent. by volume distils at a temperature not exceeding 340°C.

        (6) In this Schedule "kerosene" means heavy oil of which more than 50 per cent. by volume distils at a temperature not exceeding 240°C.

        (7) In this Schedule "heavy oil" shall have the same meaning as in the Hydrocarbon Oil Duties Act 1979."

        (4) In section 97 (orders etc.) in subsection (4) (orders requiring approval) the following paragraph shall be inserted immediately before paragraph (a)—
        "(aa) an order under section 2(1C);".
        (5) In Schedule 13 (transitional provisions and savings) paragraph 7 (fuel and power) shall be omitted.
        (6) This section shall apply in relation to any supply made on or after 1st April 1995 and any acquisition or importation taking place on or after that date.'.—[Mr. Heathcoat-Amory.]
        Brought up, and read the First time.
        The Chairman of Ways and Means (Mr. Michael Morris): With this, it will be convenient to discuss also amendment (a), in new subsection (IA)(b), leave out '8' and insert '5'.
        4.38 pm
        The Paymaster General (Mr. David Heathcoat-Amory): I beg to move, That the clause be read a Second time.
        New clause 1 provides for the rate of value added tax on domestic fuel and power to be held at 8 per cent.. It reflects the decision of the House on 6 December 1994 and the subsequent resolution passed by the House on 13 December. The new clause is necessary to stop the otherwise automatic move to the standard rate with effect from 1 April this year.
        Through amendments to the Value Added Tax Act 1994, the new clause establishes the 8 per cent. rate and defines the scope of its application by means of a schedule to the 1994 Act. The scope of the 8 per cent. rate mirrors exactly what prevailed before. Thus the detail of the schedule is no more than a carry-forward to the existing definition of domestic fuel and power.
        A positive rate of VAT on domestic fuel and power makes sense both for revenue and for environmental reasons. All other European countries with VAT systems tax such fuel, usually at their standard rates. In our case it is accompanied by a generous compensation package.

        41
        When linked with falling energy prices, that package did and does protect vulnerable people against the introduction of VAT at 8 per cent. to this sector.
        Prices for gas and electricity are 1 per cent. lower than they were two years ago, even allowing for the introduction of 8 per cent. VAT in April last year, so the compensation package is an addition to household incomes. It is worth more than £400 million in 1994–95, rising to about £750 million in 1995–96. That is about half the yield of the tax in a full year. All pensioners, most disabled people and all persons on income-related support have been receiving extra help since April last year through permanent additions to the relevant benefits.
        With that in mind, I commend the new clause and the 8 per cent. VAT rate on fuel and power to the House.
        Mr. Andrew Smith: The new clause carries into effect the victory—although the Minister did not put it quite like that—of the great popular campaign against the increase in VAT on fuel to 17.5 per cent. It is worth remembering that the Bill as it stands would do nothing to change that rate from 1 April. The new clause is therefore necessary to give effect to the victory that we won in December.
        It would have been nice to hear the Paymaster General acknowledge that the people of this country got it right and the Government got it wrong. The House should pay tribute to all who campaigned against the increase—many of them pensioners groups—to bring about a remarkable parliamentary defeat for the Government. It was one of only three occasions since 1979 when the Government have been defeated on a vote with a three-line Whip.
        All too often, the work of petitioning, writing to hon. Members and other forms of lobbying, although exerting influence, does not get the hearing that it should in our imperfect democracy. It is good for us all when people power, democratically expressed, makes itself felt and makes such a tangible difference. That is why we shall be happy—we are well aware that there is many a slip `twixt cup and lip—to allow the new clause safe passage into the Bill, so that people can be assured that they will not have to face 17.5 per cent. VAT on domestic fuel from April and that it will be held to 8 per cent.
        There are still some important points to explore before the House can proceed. The fact that the vote was won last year, halfway through what the Government had intended to be a staged increase to 17.5 per cent., means that we now have three rates of VAT in the system, including the zero rate. The intermediate 8 per cent. rate that the Government have chosen for VAT on fuel arose, to some extent, by chance. Perhaps the Paymaster General will therefore tell us whether he envisages that the 8 per cent. rate will have a permanent place in the VAT system.
        First, will the Minister—as he should—give an absolute and clear assurance that the Government have once and for all abandoned their ambition to put up VAT on domestic fuel to the full standard rate of 17.5 per cent.? Secondly, does he foresee the possibility of other goods or services being taxed at 8 per cent., either by way of transfer from the 17.5 per cent. band or, for that matter, from the zero-rated or exempt bands? Since the number of bands that we can have is limited by European law, the Government ought as a matter of principle to tell us whether they see the 8 per cent. band as a fully fledged, permanent fixture or as a one-off for domestic fuel only.
        42
        4.45 pm
        I also draw the Minister's attention to the strong case made by many people and organisations, including the Association for the Conservation of Energy, and by my hon. Friend the Member for Nottingham, South, (Mr. Simpson), who presented the Energy-Saving Materials (Rate of Value Added Tax) Bill, in favour of transferring to the 8 per cent. rate certain energy conservation goods, to bring them into line with the rate charged on fuel. Paradoxically, the former Chancellor—the right hon. Member for Kingston upon Thames (Mr. Lamont)—set this case out clearly at the time of the 1993 Budget when he said:
        "For the first time, the rate of VAT on domestic fuel and power will be the same as that charged on goods…which improve energy efficiency. This will bring to an end the current anomaly, which makes nonsense of any attempt to use the tax system to improve the environment."—[Official Report, 16 March 1993; Vol. 221, c. 183.]
        That was actually a ruse whereby the right hon. Gentleman tried to justify that which could not be justified—putting VAT up to 17.5 per cent.—but his point related to comparability between the rate of VAT on fuel and on energy-saving materials.
        In the House on Friday we heard many arguments about this from Conservative Members, especially the hon. Member for Eltham (Mr. Bottomley), who urged reconsideration of the rate of VAT imposed on materials for energy-saving purposes. The Association for the Conservation of Energy has suggested a number of logical candidates for an 8 per cent. rate: draught proofing materials, loft insulation, cavity wall insulation, hot water tank jackets, lower emission glazing, and domestic heating controls. The association envisages two results: increasing the market for energy saving goods, which would bring in revenue to the Treasury; and improving the environment by saving energy.
        I should be grateful if the Minister would let us know the Government's thinking on comparability as between the proposed rate of VAT on domestic fuel and the rate levied on materials that people buy to save energy. Will Sir Crispin Tickell and the Prime Minister's team be looking into this issue as part of the so-called green tax strategy described in The Observer yesterday?
        I understand that there are problems to do with European VAT laws, which do not include energy-saving materials in the category of goods on which reduced rates are chargeable. Does the Minister intend to explore this as an option to help meet our environmental commitments in Europe? When the Government launched VAT on fuel, they used the excuse of the environment as cynical cover for what was essentially a tax-raising measure. Do they now realise that that was a grave mistake? Do Treasury Ministers acknowledge that the Government were wrong to break their promises about VAT on fuel, made at the time of the general election, just as they were wrong to break their promises on other taxes and on national insurance?
        Will the Minister assure us today that the Government will not extend or increase VAT? He and his colleagues seem not to understand even now just how gravely their broken promises damaged not just themselves but democracy and public confidence in this House. At the election they said that they had no plans or intention to extend or raise the rate of VAT; yet they went on to do exactly that.

        43
        The Government owe it to the House of Commons and, more importantly, to the country, as they try to unscramble the awful mess in which they find themselves with regard to VAT on fuel, to tell us whether they now plan to extend or increase VAT. The only perpetual motion machine yet invented is the Tory propulsion of VAT: they are keeping the boundaries of VAT moving forward all the time, sometimes in huge leaps, as with VAT on home improvements and fuel, sometimes by smaller steps, as with VAT on orange juice, language schools and, most recently, certain sectors of transportation.
        The increase in VAT on fuel that the Government proposed would have been extremely damaging. Even at 8 per cent., the tax reflects a Government who have been addicted to VAT and to indirect taxation generally. Even allowing for inflation, the amount of VAT per week paid by a typical family has risen from £370 a year in 1979 to £1,140 at 1994 prices, and total indirect taxation, including VAT, has increased from £1,562 to £2,545. Those are the figures calculated by the Library.
        Even without the extra tranche of VAT on fuel, pensioners will still be hard pressed. The Paymaster General referred to the compensation package, but pensioners will still find it difficult to keep themselves warm in the cold winter months. Single pensioners will now receive only 20p per week compensation instead of the 50p that they had been promised, bringing total compensation for them to an inadequate 70p a week, while pensioner couples will receive just £1.05. In cutting the compensation package, the Chancellor of the Exchequer appears to have ignored completely the representations made so strongly by people throughout the country. There are enormous variations between regions in heating costs and in types of housing. The right hon. and learned Gentleman could and should have been more generous in living up to his initial promise to pensioners.
        We must not forget that many people will receive no compensation at all. Those who receive maximum help with housing benefit receive nothing to help them pay increased heat and power bills. The unemployed, the disabled and the most vulnerable groups in our society receive no compensation to lessen the burden of the essential cost of keeping warm. The Opposition believe that the Chancellor has failed fully to take into account the needs of such groups. In his negligence, he leaves the poorest 20 per cent. of households £44 a year worse off as a result of the imposition of VAT on fuel.
        The sorry story of VAT on fuel has brought the Conservative addiction and its costs home to people—to their pockets and their purses—in no uncertain terms. I ask the Paymaster General to give the Committee a firm assurance that the Government will extend VAT no more. As the new clause becomes part of the Bill, that is the assurance that we want to hear, as do those outside the House of Commons—the people are sick of the Government and their VAT policies.
        The proposal behind the new clause is to carry into law a great people's victory in holding down VAT on fuel at 8 per cent. and the Opposition will do nothing to put that
        44
        victory at risk. The people campaigned, petitioned and fought for month after month to hold VAT at 8 per cent. and nothing that we do today should put that at risk.
        Mr. Alex Salmond: The impact of amendment (a) to the new clause would be to reduce the imposition of VAT from 8 per cent. to 5 per cent.
        Like the hon. Member for Oxford, East (Mr. Smith), I welcome the substantial victory that was achieved late last year by a combination of parliamentary interests against the Government. Perhaps the most significant feature of today's debate has been the perfunctory way in which the Paymaster General introduced the new clause. It is clear that the Government do not want to be reminded of the circumstances of their retreat at the end of last year or indeed to dwell on the subject of VAT on domestic fuel at all.
        My party has chosen a 5 per cent. amendment partly because, as the hon. Member for Oxford, East said, it is important to tease out from the Government what will be the lower rate across the range of VAT. Secondly, 5 per cent. is probably in accordance with European Union regulations as the rate to which the Government can move without seeking a specific derogation from our partners in the Community. Once having abandoned a zero rate, it is difficult to move back to one under current regulations, although I should obviously have preferred to be arguing for a zero rate.
        It was irresponsible of the Government to take domestic fuel, an essential for all people throughout the country, and apply VAT to it, contrary to electoral promises. They did so against a background of substantial fuel poverty and the fact that every year thousands of people suffer from hypothermia and tens of thousands die from cold-related illnesses in the broader sense. Throughout the country, millions of our fellow citizens suffer from endemic fuel poverty.
        There is a specific argument that Scottish Members have advanced in the Chamber on many occasions. We say that VAT on fuel is especially unfair because it results in unequal burdens throughout the country. That is applied common sense because of temperature variations in different parts of the country. In a memorable exchange about 18 months ago, a junior Minister at the Department of Social Security tried to convince the House that it was colder in England than in Scotland. I do not know what mountain-top temperature he was comparing with temperatures in various areas in Scotland, but that was the burden of his argument.
        More recently, however, the Scottish National party was delighted to have the Government caught telling the truth. On 24 November last year, in a written answer to a question tabled by my hon. Friend the Member for Moray (Mrs. Ewing), the Department of the Environment finally owned up to the reality of temperature variations and the impact of that on fuel costs throughout the country. The Minister said:
        "The percentage of extra fuel required to heat a typical semi-detached house with gas central heating is as follows for each of the specified locations."
        Bristol is taken as the base.
        "(a) Edinburgh +28 per cent., (b) Glasgow +23 per cent., (c) Aberdeen +41 per cent., (d) Dundee +32 per cent., (e) Lerwick +53 per cent and (f)Braemar +66 per cent."— [Official Report, 24 November 1994; Vol. 250, c. 249.]

        45
        According to the Department of the Environment, those were calculated using the Building Research Establishment's domestic model—the acronym being BREDEM; that is the name given to the computerised model in the Department.
        That Government answer raises what can be called the 66 per cent. question or, in Scottish politics, the Kincardine and Deeside question. The Member whose constituents suffer most from the imposition of VAT on domestic fuel, the hon. Member for Kincardine and Deeside (Mr. Kynoch), has been an extraordinary Government loyalist in the various debates that have taken place in the Chamber over the past two years or so. However, I thought from that answer that the Government had at last owned up to what the rest of us knew from our common sense—the fact that there are temperature variations throughout the country, particularly as one moves from south to north or north to south.
        Unfortunately, however, the Government were not prepared to let the truth rest and I received a rather panicky letter from the Secretary of State for Scotland on 30 December, the day before Hogmanay, seeking to rubbish the answer supplied by the Department of the Environment. The letter reads:
        "In compiling the answer to Margaret Ewing on 24 November, the Department of the Environment used data from a computer model which is set up to calculate the hypothetical costs of heating a standard semi-detached house. It is quite wrong and misleading to draw general conclusions from this."
        And it is quite remarkable for a Cabinet Minister to try to rubbish a written answer from another Department. Are we to believe the answer from the Department of the Environment or the panicky explanation from the Secretary of State for Scotland? Or should we rely on the evidence of our own experience? Common sense tells us that it costs substantially more to heat a home in various parts of Scotland than one in the south of England.
        The Secretary of State for Scotland referred to independent studies. I have brought along one from the Sunday Mail. This excellent report was published on 7 November last year and compared heating costs in pensioners' homes in three locations, not hypothetical computerised models from the Department of the Environment. The locations were Bournemouth, Buckie and Lerwick. The heating costs of the pensioner couple in Bournemouth—Albert and Jean Clark—were £427. In Bournemouth, the average maximum temperature was 14.2 deg C, the average winter temperature was 1.7 deg C and there were seven hours 58 minutes of daylight in mid-winter. In Buckie, the heating costs of another pensioner couple, George and Mary Clark—all the couples were called Clark—were £602 and the weather facts were an average temperature of 11.1 deg C, an average winter temperature of 0 deg, and only six hours and 41 minutes of daylight in mid-winter. In Lerwick, the average bill of the pensioner couple was £630, with an average winter temperature as low as minus 1 deg and a mere five hours and 49 minutes of daylight in mid-winter.
        5 pm
        It is incredible that Ministers, including the Secretary of State for Scotland and the junior Minister responsible for social security, are denying an obvious fact to the House. Of course it costs substantially more to heat homes in parts of Scotland than it does to heat those in the south of England. Once one admits that fact, the inequity of imposing a flat rate of VAT on fuel throughout the United
        46
        Kingdom—and, more importantly, a compensation package with no geographical variations—becomes apparent.
        Yet again, the Government must tell us why they proposed such an anti-Scottish tax when there is strong evidence of crippling fuel poverty in many parts of the country. Scotland is in an unusual situation in that there is fuel poverty amid energy plenty. Scotland has about 80 per cent. of the European Union's hydrocarbon resources, but we have endemic fuel poverty unmatched in any other European country. The country with the most energy resources has the greatest problem with fuel poverty.
        Scottish local authorities have done their best to compensate for the imposition of VAT on fuel and for existing fuel poverty. Tayside regional council is controlled by the Scottish National party and Grampian regional council by an SNP-Liberal Democrat administration. In recent months, they have set up substantial efficiency and anti-fuel-poverty schemes. The scheme in Tayside costs about £500,000 and involves a variety of initiatives, such as payment holidays, meals on wheels, lunch clubs, £100,000 to the organisations dealing with fuel poverty at the sharp end, help to pensioners, free phones, energy advice booklets and active support in the front line for those agencies dealing with fuel poverty. However, even the excellent efforts of those two regional councils cannot compensate for the millions of pounds that have been taken from their communities due to the imposition of VAT on domestic fuel.
        Value added tax should not have been imposed on domestic fuel, but since it has been imposed, the better figure would be 5 per cent. rather than 8 per cent. The lower the figure, the better it will be for pensioners and others suffering from fuel poverty. I urge the House to follow last year's victory and move the goal posts further—this time, from 8 to 5 per cent. We owe it to our constituents to do that.
        The Government have made much of their compensation package, but, as the Labour Front-Bench spokesman, the hon. Member for Oxford, East, pointed out, many of the people who suffer substantial fuel poverty are not covered by that package. As Members of Parliament for Scotland, our constituents would wish us to act directly on the frightening paradox of fuel poverty amid energy plenty. In the absence of the ability to return to a zero rate of VAT on domestic fuel in the short term, we should vote today to reduce the rate to the lowest practicable level—5 per cent.
        In a private conversation, one Scottish Conservative Member, whom I shall not name, told me after the Government defeat in the vote last year, "By your actions, and by stopping a 17.5 per cent. rate for VAT on fuel, you have saved us politically," even though that hon. Member had loyally supported the Government in trying to sustain that rate. Let the Government realise today that no level of VAT on domestic fuel is acceptable in any part of the country and it is certainly not acceptable in the energy-rich nation of Scotland.
        Mr. Malcolm Bruce: We welcome the fact that the new clause has been tabled as a result of last year's vote, after which the Government were forced to accede. Nevertheless, their defeat is costing them £800 million in revenue for which they had budgeted.

        47
        The hon. Member for Banff and Buchan (Mr. Salmond) voiced some pertinent arguments about the iniquity of the variable impact of a tax on domestic fuel, and the Government have certainly shown a lack of sensitivity to the matter. Those of us who represent north-east Scotland do not need to read the Sunday Mail to know that our fuel bills are higher than those in southern England. When the bill hits the doormat, we see how significant it is, and that the VAT element is substantially larger. People feel that VAT on domestic fuel is an unjustified and unfair burden, which disproportionately affects people on low incomes, who live in colder, darker areas where the winters are longer.
        For that reason, I welcome the fact that the Government supported the private Member's Bill introduced by my hon. Friend the Member for Christchurch (Mrs. Maddock) on Friday. We undoubtedly need some practical measures to deal with fuel poverty, especially in areas where the problems of high fuel bills and inefficient heating and insulation are most acute.
        From my travels to Scandinavia, I am aware that fuel poverty is rarely discussed in Norway for two fundamental reasons: first, because Norway has abundant hydro-electric power, which is almost free, and so fuel is not a major factor in household bills; and, secondly, because the Norwegians build their houses to take account of the climate. The British seem to have been extraordinarily slow to discover that we live in a cold, windy and wet island, and many of our building standards are not designed to deal with those conditions, which is regrettable.
        The hon. Member for Oxford, East (Mr. Smith) wanted to know whether the new low rate was an anomaly that would be dealt with or a permanent fixture. If it is the latter, the arguments against extending VAT to domestic fuel apply equally to extending it to energy-saving building materials, insulation and so on. VAT on such goods could usefully be reduced to help people to combat the cost of 8 per cent. VAT on their fuel bills for the foreseeable future.
        The story of the strange behaviour of some Conservatives who represent north-east Scotland cannot be repeated too often. It is worth recording the political reality. The Conservatives lost their last remaining seat in north-east Scotland in the Kincardine and Deeside by-election. No doubt they were very pleased—we were very disappointed—that not only did they win back that seat in the general election, but they regained Aberdeen, South from Labour. I am absolutely sure, however, that if the election were held today, that result would be reversed.
        How have the people of north-east Scotland benefited from electing Conservatives? They were told that it would be handy to have people on the inside of government who could fight their cause. What did the Conservatives do to fight their cause? They voted to impose 17.5 per cent. VAT on fuel bills, they voted to change the oil tax regime to undermine the most important industry in north-east Scotland and they voted to keep our fishermen in port. That is how they have benefited from voting Conservative, and that is one of the reasons why they will not do so in a hurry again. They have learnt the error of their ways and its consequences.
        48
        Liberal Democrats certainly believe that there is a strong case for reducing VAT to 5 per cent., as proposed in amendment (a), but as part of a package that includes the introduction of a carbon energy tax partly to offset the cost of the reduction.
        That brings me to another point that I hope that the Paymaster General will address. The Government maintained, somewhat late in the day, that the real reason for their wishing to put VAT on fuel was not so mercenary and mundane as to secure revenue from the British people, but that it was part of a much higher objective to fulfil environmental commitments made at the Rio summit. How will the Government now achieve those objectives, and is there any substance to reports in yesterday's papers that they are about to adopt the idea of a carbon energy tax?
        If the Government are about to adopt the idea, I can assure Ministers that the principle will be welcomed by Liberal Democrats, since the Government's opposition to such a carbon energy tax has prevented the European Union from making progress in implementing the tax across the Union, which is clearly the right and proper way in which to implement it.
        The Government need to answer many questions. It is recognised that although VAT is not being increased to 17.5 per cent., many people will still struggle to pay VAT at 8 per cent. and that to avoid such hardship they require practical and financial assistance. I hope that the Government acknowledge that.
        I do not wish to support measures that may take us backwards, having forced the Government to change tack. I agree with the hon. Member for Oxford, East that it is good for our democracy for the Government to be defeated on an issue that is not a matter of confidence. I give some credit to the Chancellor, who, although he really had no option, at least had the grace to acknowledge immediately that he could no longer resist the view and the vote of the House. That, of course, is why we are here today considering this amendment.
        Liberal Democrats welcome the amendment. It is a triumph for the House of Commons and for those people throughout the country who campaigned to bring it about, but it still leaves many questions for the Government to answer and we shall certainly continue to press them for answers.
        Mr. Alistair Darling: This is the tail-end, in some ways, of a long debate that has taken place ever since the former Chancellor announced the imposition of VAT on fuel. As others have said, it is not surprising that the Paymaster General has had very little to say as he has simply conceded the position that the Government had forced on them because of the victory last year in managing to hold the increase of VAT to 8 per cent.
        The only point with which I shall deal briefly is that made by the hon. Member for Banff and Buchan (Mr. Salmond). It is unfortunate that, as in other matters, the nationalists insist on seeing the subject as a fight between Scotland and England and that, somehow, the tax is being imposed on Scotland but not on England. To Labour Members, the battle is not, and never will be, between Scotland and England. In this example, the battle was between the Tories and the rest of the country, and on this occasion the rest of the country won and the Tories lost.

        49
        5.15 pm
        I find it deeply distasteful that yet again a nasty element is introduced that, somehow, the measure is being imposed on Scotland by another country. I find that repulsive as a patriotic Scotsman. I wish that the nationalists would not insist on introducing that unpleasant element into Scottish politics time and again. Coldness knows no political or geographical boundaries. Of course it is generally colder in Scotland than it is in England, but it is cold in England, as any pensioner who, even as we speak, is freezing because he cannot afford to heat his house can testify.
        This nationalist amendment is another cynical ploy from an increasingly opportunist and desperate party. The nationalists know that the amendment has no chance of succeeding because there has been no campaign behind it. Indeed, the nationalists' amendment puts at risk holding VAT on fuel at 8 per cent. because they are throwing a life-line to those in the Government who want to re-open the debate and increase VAT to the full 17.5 per cent.
        Surprisingly, the nationalists have made no attempt to mobilise public support for their policy since the amendment was tabled on Friday evening. No approach has been made to other political parties seeking their support; no letters have been written to Tory rebels. It was our campaign, which had a considerable amount of thought behind it, that led hundreds of thousands of people to protest against VAT over the past 18 months. It was our campaign, which we were happy to articulate in this Chamber, that finally led to the Government being defeated on this crucial issue.
        The nationalists' amendment has been tabled for them to be able to play party politics with people's VAT bills. It is a cynical ploy from a party that sees its support slipping in the Scottish polls. Labour Members will not put our VAT victory at risk by supporting an amendment of this nature.
        Mr. Salmond: The hon. Gentleman has not fully grasped House of Commons procedures. A Division can be called on the amendment only if the new clause is passed; he had better answer that point for a start. He seems to have written his speech before he heard my speech. I referred specifically to VAT on fuel and the problems that it caused across the United Kingdom. The impact of the amendment, if it were successful, would not only reduce VAT on fuel to 5 per cent. in Scotland, but in England as well. He had better explain to his constituents and his supporters north and south of the border why the Labour party is not prepared to vote for VAT on fuel at 5 per cent. in Scotland and England.
        Mr. Darling: There we have the main point of the amendment being tabled. It is nothing to do with any honest or serious attempt to reduce VAT. Our old nationalist chums are at it again, trying to score party political points against their opponents. They tabled the amendment in the knowledge that there was never any realistic chance of VAT being reduced to 5 per cent.
        May I remind the hon. Member for Banff and Buchan about procedure? This new clause is not yet in the Bill. We are not debating a clause in the Bill. We are debating a new clause, which has to be put in the Bill to stop VAT being imposed at the full rate of 17.5 per cent.
        We are seeing yet another cynical ploy from a desperate party. The nationalists will not fool anyone. Perhaps they will get one or two commentators to jump around to their
        50
        tune, but most sensible people will see this move for what it is—a cynical ploy that could never have helped anybody. In the important vote, people will remember who managed to keep VAT at 8 per cent. and stop the full increase to 17.5 per cent., which the Conservative Government tried to impose and would try to do again if they should ever be returned to office.
        Dr. Norman A. Godman: I assure my hon. Friend the Member for Edinburgh, Central (Mr. Darling) that, as the only Yorkshire-born Scots Member of Parliament in the House who has lived in Scotland for half a lifetime, I do not intend to engage in a battle of the roses between Yorkshire and Scotland or between England and Scotland. However, I have some sympathy for amendment (a).
        Shortly after the Government were defeated before Christmas on the VAT increase, Mr. Donald McDonald, secretary of Inverclyde Elderly Forum, told me of his delight and pleasure, which was shared by many pensioners throughout my constituency, at the Government's defeat on that iniquitous measure. Since then, I have spoken to many elderly people in my constituency. They have expressed deep concern that VAT on domestic fuel at 8 per cent. represents a harsh penalty on their ordinary everyday lives.
        All Scottish Members present, and some Conservative Members, will be aware that although my constituency is 200 miles south-west of the Banff and Buchan constituency, many of my constituents live in cold, damp houses that were built before the war several hundred feet above sea level. The weather station that assesses severe weather payments is located at sea level at Glasgow airport.
        Many of my constituents, not just the elderly, and the overwhelming majority of people who live on low incomes in Gibbshill, Strone Farm and elsewhere—places well known to my honourable and old Friend the Member for Renfrew, West and Inverclyde (Mr. Graham)—suffer very badly, as they try to live on social security and to heat their inadequate homes, many of which are in the public sector. I should like to see all those houses demolished and replaced by modern, waterproof, warm homes; my constituents deserve no less from the Government.
        In the meantime, I do not believe that my constituents should be paying such sums of money to heat their homes. I visited an elderly lady recently who lives in the east end of my constituency. It was a very cold day and she was sitting over a one-bar electric fire. I do not want anyone in this place to tell me that perhaps she should have saved some money during her long life in order to provide for more adequate heating.
        That old lady is the mother of a large family and she was widowed many years ago. In this day and age, it is utterly disgraceful, and it reflects badly on all of us, not just on that odd-job lot on the Government Benches, that a woman in her late seventies should have to live in those conditions, sitting in her overcoat in her sitting room—
        The Chairman of Ways and Means: Order. I understand the sincerity with which the hon. Gentleman

        51
        is making his point, but this is the Committee stage of the Finance Bill and we are discussing specifically VAT on fuel and power.
        Dr. Godman: I am grateful to you, Mr. Morris. I was simply supporting my argument with a case study that can be replicated many thousands of times in the west of Scotland, let alone in the north and north-east of Scotland. Ordinary people on low incomes should not have that imposition placed on them to add to the burdens that they already suffer.
        Mr. Thomas Graham: My hon. Friend will recall how many times, before VAT was imposed on fuel, I told the House about the incredibly high cost of heating homes in our constituencies. I described the massive difficulties facing some of our pensioners, some of whom were found dead behind their doors as a result of hypothermia. The imposition of VAT on fuel will undoubtedly make it extremely difficult for many folk to see out a really bad winter in Scotland. As a result of the recent flooding, people do not know what kind of heating bills to expect. Value added tax on fuel will exacerbate the problems of people on very low incomes.
        Dr. Godman: I am grateful to my hon. Friend. I cannot comment on the dreadful consequences of that appalling disaster, which affected many of his constituents recently and which elicited such a hardnosed response from the Secretary of State for Scotland and his Ministers.
        The imposition of VAT on fuel creates a horrendous burden for many people on low incomes. There is a good deal of sympathy for some of the sentiments that were expressed by the hon. Members for Banff and Buchan (Mr. Salmond) and for Gordon (Mr. Bruce). Such a tax burden should not be placed on the shoulders of ordinary people. We should be giving them, especially those who are coming to the end of their lives, every possible assistance to live decent lives. That is why I have some sympathy for the amendment.
        Mr. Robert Hughes: The problem is that the pass was sold by the previous Chancellor of the Exchequer when he first introduced VAT on domestic fuel and handed the poisoned chalice to his successor. He said that it would not be introduced for 12 months and that it would not apply fully for two years. He firmly believed that the anger about its imposition would have dissipated before the first tranche of the VAT increase was implemented. His political judgment was wrong, as was his feeling about how the imposition of VAT would be received.
        I have never known anger like the anger felt throughout every part of the community in my constituency, and around it, about the application of VAT to domestic fuel. Domestic fuel is a necessity: people have no choice of whether they use it. Regardless of whether VAT is levied at 17.5 per cent., 8 per cent. or 5 per cent., the argument about VAT on domestic fuel will not go away. We must all recognise that it will continue in the years ahead.
        I hope that my hon. Friend the Member for Edinburgh, Central (Mr. Darling) will not think me too unkind if I say that he objected very strongly to the Scottish National
        52
        party making political capital. Perish the thought that we in the Labour party would ever try to make political capital.
        I would not take lessons from the SNP about how to make political capital. As my hon. Friend the Member for Edinburgh, Central said, no attempt was made to canvass the proposition for 5 per cent. until it appeared on the amendment paper. The leader of the SNP constantly tells us in the press that, especially in Scotland, the opposition parties should get together before they table amendments. This is an example of preaching one thing and doing another. That is what I object to most about the way in which the SNP behaves.
        I am quite happy to take on the SNP in respect of making political capital. A most disgraceful episode occurred about a year ago when the SNP sought to make naked political capital and gain during the regional council elections. The Scottish nationalists proposed in their manifesto that, if elected, they would pay every pensioner in the Grampian area £10—in cash, not in benefits, in kind or in a fancy scheme.
        The Scottish nationalists were told at the time that that was illegal. I recall saying at a public meeting that it was quite illegal and I was berated by the nationalists for daring to doubt their credibility. The Scottish nationalists said that everything had been checked out and the legal implications had been assessed. However, the nationalists had not been in office with the Liberals in the Grampian region for five minutes when the £10 suddenly disappeared from the agenda. The nationalists suddenly discovered that the proposal was not legal.
        The Scottish nationalists then said that they would persuade the hydro-electric companies to make discount stamps available, but that proposition also fell by the way. The nationalists apparently now have a raft of measures that they hope will help people with their winter fuel bills.
        I would be happier if the nationalists were honest and straightforward and did not make false promises that they knew to be untrue and which they had no intention of implementing. They were simply concerned with making political capital, and that is making capital in the worst possible sense.
        Mr. Salmond: If the hon. Gentleman had the extraordinary knowledge that our proposals were illegal for regional councils but not for district councils such as West Lothian, where the SNP has implemented the £.10 payment, why on earth did Labour members of the regional council table it on the regional council agenda after the regional elections? Did they do so in the full knowledge that it was illegal? Why did Labour members on Grampian regional council vote with the Conservatives to stop the substantial fuel poverty action package that has been welcomed by every pensioner organisation in north-east Scotland?
        Mr. Hughes: The hon. Gentleman is being disingenuous in saying that that action was legal for the district council. The SNP knew that it was illegal for a regional council, but it went ahead and made that promise. He cannot have it both ways. The SNP was flushed out by having to vote against its own proposition, otherwise it would have tried to let it pass.

        53
        5.30 pm
        The issue is whether we should stick to VAT at 8 per cent. or 5 per cent. I prefer zero per cent. I hope that, in the months and years that remain—I hope that it is only months—before we have a change of Government, we are able to use the mechanisms of the European Union to review the matter. That is not beyond the bounds of possibility. We are not tied to being prevented from going back to the zero rate. That matter is negotiable and we should consider it.
        The argument will not go away. I will certainly continue to argue. VAT on domestic fuel is a most unfair impost on the British people. The hon. Member for Banff and Buchan mentioned England, but the thrust of his remarks related to Scotland. He made a special appeal to Scottish Members to defend their people. My people live on both sides of the border, and they live in Wales and in Northern Ireland. They are the people whom we should seek to defend. It looks as though the nationalists have gone against their own arguments. In previous debates, they have said that they do not vote on any master that affects the people of England. That was a disgraceful attitude. I am glad that they are beginning to see the sense of their arguments, but the VAT argument will go on.
        Mrs. Margaret Ewing: I rise to speak mainly because I was surprised at what I can only call an hysterical outburst from the hon. Member for Edinburgh, Central (Mr. Darling). His remarks were slightly tempered by those of the hon. Member for Greenock and Port Glasgow (Dr. Godman)., who showed genuine concern about the issue which my party is addressing in amendment (a). We are trying to ensure that there is a reduction in VAT on domestic fuel to the extent to which that is allowable under current regulations. Thal is the point of our amendment. Our amendment applies not to one part but to all parts of the United Kingdom.
        We are concerned about fuel poverty. Some hon. Members who have served in the House longer than the hon. Member for Edinburgh, Central will appreciate that I have campaigned in respect of fuel poverty for more than 20 years. It sits uneasily on the shoulders of Labour Members to forget that when I first raised the issue of a cold climate allowance and of ensuring that people were not frightened to put on their fires or to buy bags of coal, the Labour Government accused me of being hysterical and of frightening people. It has taken a long time for many people to be convinced of the arguments. Obviously, I welcome the fact that they have.
        On the issue of VAT on domestic fuel, I have shared many platforms with many people in the United Kingdom. I have always been committed to trying to win the argument, which is as much about morality as about economy. If hon. Members cannot adopt a moral approach to the people who are needy, who are living in poverty and who are frightened to heat their homes, we are not fulfilling our roles as democratic representatives. My Cold Climate Allowance Bills, which have not always won favour with hon. Members, have always applied on a United Kingdom-wide basis, just as our amendment does.
        Given the comments by some Labour Members, I assume that peace will break out and that they will consult us every time they table an amendment. This amendment is being debated on the day when we heard about British Gas investigating possible reductions in its services to the
        54
        elderly and to the handicapped. It is even considering not sending braille bills to blind people. That makes me feel sick when we know that money can always be found for chief executives to have substantial pay increases that almost equal national lottery pay-outs. We have that moral responsibility.
        Hon. Members must recognise that the amendment can be voted on and be attached to new clause 1. That is the mechanism. If new clause 1 is accepted, our amendment can be voted on. If the amendment is accepted, the Government would have to take it on board.
        Mr. Darling: No one doubts the sincerity with which the hon. Lady has waged her campaign on behalf of those who must pay VAT on fuel. Given the constraints in this Parliament that are needed to obtain a majority, what steps did the nationalists take between Friday evening and this afternoon to see whether they would have sufficient support to command a majority? The issue is not the difference between 8 and 5 per cent., it is ensuring that the full 17.5 per cent. that the Conservatives wanted does not go ahead.
        Mrs. Ewing: The hon. Gentleman knows the SNP's opposition to the 17.5 per cent. rate. The amendment, which was tabled in my name, was not canvassed because 250 redundancies were announced in my constituency on Friday, courtesy of the Ministry of Defence, and that matter had to be dealt with. The Labour party is extremely miffed that it did not work out the possibility of tabling such an amendment to the new clause. If that is what is worrying Labour Members, it is a shame, but there was nothing to prevent the Labour party, with all its resources, from doing exactly what my party did.
        Mr. Darling: I do not wish to labour the point, but of course we considered the possibility. Given that we had to obtain a majority which, of necessity, would include some Tory rebels, we were anxious to prevent VAT from being imposed at 17.5 per cent., and we believed that the one position that we could win was to keep VAT at the present year's level. Without exception, Labour Members have always opposed VAT on domestic fuel.
        Although I have great sympathy with the hon. Lady in respect of the redundancies that were announced in her constituency on Friday night, it has been my experience that the leader of the Scottish National party has never been reticent about using the press. The reason why we did not hear a cheep between Friday evening and today was simply that the hon. Lady was otherwise engaged, no matter how understandable the situation in which she found herself.
        Mrs. Ewing rose—
        The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse): Order. It might be wise to return to the amendment.
        Mrs. Ewing: It must be recorded that the amendment was on the blues at the back of the Order Paper on Friday, if Labour Members had cared to check. I take it from the remarks of the hon. Member for Edinburgh, Central that the official Opposition plan to call a Division on new clause 1, although I had understood that new clause 1 was not opposed. There is still an opportunity to vote on the recommendation that we have placed before the Committee. All that we are asking for is hon. Members'

        55
        support. Hon. Members must make up their own minds. They must take decisions and answer to their constituents. Many people will find it very interesting if the official Opposition do not support our amendment in the Lobby tonight just because they happen to be miffed that they missed an opportunity.
        Mr. Graham: I am confused because the amendment refers only to 5 per cent.—it should be 1 per cent. My opposition to VAT on fuel is well known, Mr. Deputy Speaker, as is my opposition to the fuel poverty which is affecting constituents all over Great Britain.
        Ministers' replies to the questions that I asked before they put VAT on fuel should have had some credibility. I asked: Did they know what the price of coal was? Did they know how much it cost for a bag of coal to be delivered to a house? Did they know how much a bottle of Calor gas cost? Did they know what a gallon of paraffin cost? I never received any answers. One would think that, with all the resources which Ministers have, they could have found that out. The Minister may wish to intervene now to tell me.
        We are again speaking about fuel poverty, and the Opposition are trying to protect pensioners, the disabled and the low paid. We are constantly arguing about the issue because elderly people and others cannot heat their houses and live in comfort. The Government deny them that. The amendment aims to reduce the costs of heating the homes of the elderly and of the disabled.
        The Government should tell us how much it costs to heat a home, and then they should look at by how much they are increasing that cost. There is confusion among some Members, but I am keeping strictly to the amendment. I should like to see the abolition of VAT on fuel, and the Government should go further and make some other dramatic reductions to the cost of heating homes. We do not want the Government's penny-pinching schemes to help people who are suffering fuel poverty. We need something that is more committed and would allow folk to live in comfort.
        The House often gets caught up in minutiae which, at the end of the day, does not help anybody. I should like the Government to take some cognisance of fuel poverty. People are living in real hardship in cold and damp houses. Many of my constituents live in damp homes, and the local council does not have enough money to heat those houses. Hon. Members may ask what is the relevance of that. Clearly, if people are paying for heating, they will also be paying the additional VAT on fuel. If VAT on fuel were reduced, that would help people to live in comfort.
        My hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) rightly let the Committee know that we have too many homes in Scotland which are damp and need heating. Too many homes have condensation and have been badly built. Do the Government come up with enough money to remedy those problems? No. They come up with an increase in VAT on domestic fuel, which brings us back to square one. Ordinary men and women who are low paid or pensioners cannot heat their homes because of this Government's actions.
        Dr. John Marek: During the past hour of the debate, I have become bemused about which way hon.
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        Members in different parts of the Committee will be voting on this issue. I look at it as a simple issue. The Opposition are against VAT on domestic heating. Like my hon. Friend the Member for Aberdeen, North (Mr. Hughes), I would support a rate of zero per cent. Unfortunately, VAT on domestic fuel has been imposed for a year, and we cannot remove it without co-operation from other member states of the European Union. I suspect that such co-operation would be unlikely, given the Government's relations with the other member states.
        It is surely better to have a rate of 5 per cent., which is at the bottom of the reduced rate of VAT, than one of 8 per cent. An argument has been advanced that we should leave well alone, and that we should not move the rate to 5 per cent. Another argument is that new clause 1 might not go through, but I do not believe that. The Chancellor said that he would introduce clauses as a result of a decision of the House before Christmas regarding VAT, when the Government were roundly defeated on increasing VAT on domestic fuel to 17.5 per cent. The Chancellor then said that he would take note of that decision.
        5.45
        The Chancellor had his revenge in his mini-Budget just before Christmas, although he need not have done so, by putting up the duties on lots of other commodities. He said that he would have regard to what the House decided, and that he would propose a new clause in time for it to be discussed in Committee. This he has done. The Treasury produced draft clauses, and we have the clauses before us.
        There would be no honour on the Government side—there is some—if they incited their own Back Benchers to vote against new clause 1. I do not think that they will do that. I am prepared to accept the word of the Government that they will do their best to ensure that new clause 1 is read a second time and becomes part of the Bill.
        If that is the case, what is left? After the new clause is dealt with, we can—as an attempt to find the opinion in the Committee—ask whether we want the reduced rate of VAT to be 8 or 5 per cent. I am simple-minded on the matter. I do not believe that we should have VAT on fuel, but, if we have to have it, I would rather it was at 5 per cent. than at 8 per cent.
        It is clear that, for many people, the cost of energy is great. Members have talked about fuel poverty. It exists not just in Scotland but in England and, as a Welsh Member, I can tell the Committee that fuel poverty is present in Wales as well. Consumers of electricity have to pay high standing charges, and that again is a measure that bears hardest on those who can least afford to pay.
        Meanwhile, the regional electricity companies have so much money that it is flowing out of their ears. There is no justice. Despite the adverse effects upon the poorer people in society, we are debating whether we should leave VAT at 8 per cent or reduce it to 5 per cent. I certainly have sympathy for the amendment, and I do not care whether it has been tabled by the SNP or by the Labour party. We should look at what the amendment says and ask whether, in our judgment, it is good for the country and for the people whom we represent.
        I have no doubt that my electors would, to a man and woman, say that if I have a chance to vote for VAT on domestic fuel to be at 5 per cent. rather than at 8 per cent., that is what I ought to do. I intend to do that.

        57
        There is a problem within the Labour party. While the Scottish National party will never form a Government, the Labour party will form the next Government. I do not know what my hon. Friends on the Front Bench will suggest, but they might be worried that the Government will say that the Labour party is forgoing a certain amount of revenue. The Government may then ask where the Labour party is going to get that revenue.
        I do not how much revenue a 3 per cent. reduction in VAT would amount to—it might total £0.5 billion. The Chancellor of the Exchequer in his Budget—I am speaking from memory—said that he was expecting a public sector borrowing requirement of about £30 billion in 1995–1996. As a result of changes in the economy, he is now expecting a PSBR of £21.5 billion. Those matters are dealt with by guess and by God, and estimates of the PSBR can vary by huge amounts. If the Labour party—through its support of the amendment—were able to bring the rate of VAT down from 8 to 5 per cent., what would happen to the PSBR? It would go up from £21.5 billion to perhaps £22 billion. I do not think that that is serious. I cannot say that about many things, but on its own it is not a serious problem. On the other hand, what other tax could be put up instead?
        I recommend that the Government accept the amendment and resolve, as a quid pro quo, not to abolish tax on share transactions. That would more than compensate for any loss of revenue resulting from acceptance of the amendment. The tax that the Government will forgo voluntarily when they abolish duty on share transactions is about £1 billion. That is more than they would forgo if they accepted the amendment. I will not vote for the amendment irresponsibly and say, "Well, as it is something that my constituents would want, I'm not going to worry what happens to the economy as a result." I shall vote for the amendment and urge the Government, if it is passed, to recoup the money by retaining duty on share transactions. In itself, that abolition of duty would lead to more short-terrnism and difficulties for the economy.
        I hope that that is a reasonably logical argument. We should not try to squabble about who thought of something first. It does not matter. People do not care tuppence about who tabled the amendment. They care only about the effect that it will have. I am sure that, if it were passed, 99 people out of 100 not only in my constituency but throughout the land—would give three cheers.
        Mr. Heathcoat-Amory: The hon. Member for Oxford, East (Mr. Smith) asked about the status of the 8 per cent. VAT rate on domestic fuel and power. In my introductory remarks, I said quite clearly that we accepted the decision of the House in December of last year and have no intention of increasing the rate further. In fact, the new clause fixes the 8 per cent. rate in statute and removes its transitional status. Let us contrast what I just said with the evasive attitude of the hon. Member for Dunfermline, East (Mr. Brown), who, in the debate on the Budget, despite being asked several times by one of my hon. Friends, refused to give any assurances about the intentions of a future Labour Government on the rate and scope of VAT.
        We do not intend to bring in any more reduced rates of VAT. To do so would undermine the comparative administrative simplicity of the VAT system in this
        58
        country. It would create new boundary lines between rates and types of products and services, which would provide endless scope for disputes and difficult decisions.
        Mr. Andrew Smith: Can we be clear about precisely what the Paymaster General said? When he said that the Government have no intention of bringing in any more reduced rates, is that what he means—no rates other than 8 per cent? Or is he saying that no other goods and services will be brought to the 8 per cent. rate? Which is it?
        Mr. Heathcoat-Amory: I am saying that the VAT rate on domestic fuel and power will be a unique reduced rate in this country and we will not be adding any more products or services to the reduced rate band.
        In answer to a question about energy saving materials, I can confirm—it was apparently not understood by the hon. Member for Nottingham, South (Mr. Simpson), who introduced his Bill last Friday—that such products are not on the annexe to the sixth VAT directive and therefore we could not introduce a reduced rate for such products, even if we wished to. The Commission said that it has no intention of proposing any additions to the reduced rate to cover energy-efficient materials, and therefore I must say that that, too, falls at the first fence.
        The hon. Member for Banff and Buchan (Mr. Salmond) described the regional variations in the weather pattern in the United Kingdom and pointed out—as if we did not know—that it is generally colder in Scotland than it is in the rest of the United Kingdom. It is not quite that simple, because parts of Scotland, such as the west coast, are not as cold as certain parts of England. Therefore, any attempt to introduce regional variations in the taxation of fuel, or in the compensation package, would rapidly turn into an administrative nightmare. I am sure that the hon. Gentleman is aware that various other costs in Scotland are somewhat lower than in England, certainly in the south of England. If we were to compensate for those costs as well, in the opposite direction, the whole system of taxation and the benefit system would rapidly become bureaucratically unworkable.
        Certain payments go to Scotland more frequently than to England. Cold weather payments, which the Government introduced, go differentially to those living in Scotland. Last year, for example, Scotland received 40 per cent. of the cold weather payments that were paid, and they are due to rise. They were increased from 1 November last year from £6 to £7 per week and will increase further to £8.50 per week from 1 November this year.
        Mr. Salmond: I am well aware of the inadequacy of the emergency payments scheme. The Minister talks about an administrative nightmare for the Government. Will he just contemplate the fuel nightmare, which the imposition of VAT on domestic fuel has made worse for so many of his fellow citizens? Has he actually read the Cold Climate Allowance Bill, which has been introduced several times by my hon. Friend the Member for Moray (Mrs. Ewing), which suggested that regional variations in compensation be built-in to the social security system to bring about some alleviation of fuel poverty? Does he understand that all those questions were dealt with in that

        59
        Bill and that all that is required from the Government is some political will not to put people into a situation of desperate fuel poverty?
        Mr. Heathcoat-Amory: I well understood the points that were made by the hon. Gentleman and his colleagues, both in this and previous debates, but I am firmly of the view that any attempt to go down that road for one specific item of domestic expenditure would become administratively unworkable.
        On VAT and the climate, it is worth pointing out in passing that not only do all other EC countries have a positive rate of VAT on domestic fuel and power, but in countries that are colder than the United Kingdom the VAT rate in higher. For instance, in Sweden and Denmark, the rate of VAT on fuel and power is 25 per cent. and therefore it is not the only matter to be considered under this general heading.
        Mrs. Ewing: Does the Minister understand that, in those Nordic countries, the housing standards and the standards of insulation are much higher and that they have much lower winter death rates than we do in the United Kingdom, particularly when we compare them with northern parts of Scotland? I realise that VAT is one aspect of the argument, but at the moment we do not have a sufficient scheme to bring our housing stock up to the necessary quality. Until that is achieved, we must do everything possible in our power to avoid fuel poverty.
        Mr. Heathcoat-Amory: That is why I said that there were a number of other factors in play. I am sure that the hon. Lady would give us credit not only for introducing but for generously funding the home energy efficiency scheme, which will receive £100 million a year over the next three years and which is far and away the most comprehensive scheme for improving the insulation and draught-proofing of domestic dwellings.
        I return to the main substance of the amendment, which is the determination of the hon. Member for Banff and Buchan to force through an amendment to reduce the 8 per cent. rate of VAT on fuel to 5 per cent. That is unacceptable to the Government because of the revenue loss concerned. It would cost some £500 million a year, which would have to be made up by other taxes elsewhere or be funded by cuts in public expenditure. Under neither heading did the hon. Gentleman make any suggestions.
        The Committee was entertained by the exchanges between the Labour party and the SNP on this matter. Although I resist the amendment and disagree with it for the reason given, I concede that the hon. Member for Banff and Buchan and his party are at least consistent on the matter. He opposed VAT on fuel and now wishes to reduce it to the minimum rate permitted under EC legislation. Both he and my hon. Friends were somewhat bemused and baffled by the wriggling explanation—or non-explanation--given by the hon. Member for Edinburgh, Central (Mr. Darling) in trying to describe why he will not support the amendment. If the Labour party is against this tax—its opposition to the Budget was founded on opposition to VAT on fuel—it is strange that it would rather have VAT at 8 per cent. than at 5 per cent.
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        6 pm
        There is a clear amendment, which I understand is in order, to amend the new clause and insert 5 per cent. rather than 8 per cent., so it intrigued us that, although the Labour party and the Liberal Democrats want zero per cent. VAT on fuel, they would nevertheless prefer 8 to 5 per cent. That Mickey Mouse arithmetic and contorted logic gives us a glimpse of what a future Labour Government would be like. It clearly did not impress the hon. Member for Greenock and Port Glasgow (Dr. Godman), who said with genuine and heartfelt sincerity that he opposed the whole concept of VAT on fuel and would vote accordingly. He will certainly join the hon. Member for Banff and Buchan in the Division Lobby.
        Mr. Malcolm Bruce: The Minister is correct to say that the Liberal Democrats will not support the amendment. The reason, however, is clear. We said that we favoured the 5 per cent. rate but must show how it would be funded. We proposed that it be funded by a carbon energy tax, which the Government resisted and prevented the European Union from adopting. Are the Government in favour of a carbon energy tax, which would help to finance the 5 per cent. rate? If so, not only could we support the amendment but so could the Government.
        Mr. Heathcoat-Amory: That reasoning is highly specious. I confirm that we are not in favour of a carbon energy tax, which is unnecessary and would damage the competitiveness of British industry. If we imposed such a tax on British business, it would simply encourage industry, particularly heavy industry, to migrate away from the United Kingdom and the European Union to parts of the world like north America and the Pacific basin, which have no intention of imposing a carbon tax. So we could see carbon emissions rising globally, rather than diminishing.
        Dr. Godman: I am grateful to the Minister for showing his characteristic courtesy. He has confused me with another hon. Member because at no time did I use the phrase, "vote accordingly". I said that I had some sympathy for a 5 per cent. level of VAT on fuel. I would prefer a zero rate. Incidentally, for what it is worth, the pronunciation of my constituency is Greenock and Port Glasgow.
        Mr. Heathcoat-Amory: I apologise to the hon. Gentleman for getting the pronunciation of his constituency wrong, but I was crediting him with more logic than he has displayed. If he opposes VAT on fuel and power and wants a zero rate, it defies logic that he will not support an amendment that would reduce it to 5 per cent. and that he would rather have 8 per cent. That logic obviously impresses the hon. Member for Wrexham (Dr. Marek), who clearly said that he will support the SNP amendment. The Labour party has a mini, or perhaps a major, rebellion on its hands. I see that the hon. Member for Wrexham is now being spoken to, no doubt in stern tones, by a colleague. I doubt whether that will be sufficient to get him out of the wrong Lobby, in eyes of the Labour party, or the right Lobby in the eyes of the SNP.
        So what started as a simple amendment by the SNP has driven a dagger right the way through the Labour party. Although I have no sympathy and will invite my hon.

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        Friends to reject the amendment, I must at least congratulate the hon. Member for Banff and Buchan on his parliamentary tactics.
        The First Deputy Chairman: Order. It may assist the Committee if I advise on the order in which I intend to put the Questions. First, I shall ask whether the clause should be read a Second time; secondly, I shall put the SNP amendment; and, thirdly, I shall ask whether the clause should be added to the Bill.
        Question put and agreed to.
        Clause read a Second time.
        Amendment proposed to the proposed new clause: (a), in new subsection (1A)(b), leave out '8' and insert `5' .—[Mr. Salmond.]
        Question put, That the amendment be made:—
        The Committee divided: Ayes 7, Noes 283.

        Division No. 43]

        [6.06 pm

        AYES

        Barnes, Harry

        Marshall, jim (Leicester,S)

        Canavan, Dennis

        Skinner, Dennis

        Corbyn, Jeremy

        Tellers for the Ayes:

        Mahon, Alice

        Mr.Alex Salmond and

        Marek, Dr John

        Mrs.Margaret Ewing

        NOES

        Ainsworth, Peter (East Surrey)

        Channon, Rt Hon Paul

        Aitken, Rt Hon Jonathan

        Chapman, Sydney

        Alexander, Richard

        Churchill, Mr

        Alison, Rt Hon Michael (Selby)

        Clappison, James

        Allason, Rupert (Torbay)

        Clark, Dr Michael (Rochford)

        Amess, David

        Clarke, Rt Hon Kenneth (Ru'clif)

        Ancram, Michael

        Clifton-Brown, Geoffrey

        Arbuthnot, James

        Coe, Sebastian

        Arnold, Jacques (Gravesham)

        Colvin, Michael

        Arnold, Sir Thomas (Hazel Grv)

        Congdon, David

        Ashby, David

        Conway, Derek

        Aspinwall, Jack

        Coombs, Anthony (Wyre For'st)

        Atkins, Robert

        Coombs, Simon (Swincdon)

        Baker, Nicholas (North Dorset)

        Cope, Rt Hon Sir John

        Baldry, Tony

        Cormack, Sir Patrick

        Banks, Matthew (Southport)

        Couchman, James

        Banks, Robert (Harrogate)

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

        Bates, Michael

        Curry, David (Skipton & Ripon)

        Batiste, Spencer

        Davies, Quentin (Stamford)

        Bellingham, Henry

        Day, Stephen

        Bendall, Vivian

        Deva, Nirj Joseph

        Beresford, Sir Paul

        Dicks, Terry

        Biffen, Rt Hon John

        Douglas-Hamilton, Lord James

        Bonsor, Sir Nicholas

        Dover, Den

        Booth, Hartley

        Duncan, Alan

        Boswell, Tim

        Duncan Smith, Iain

        Bottomley, Peter (Eltham)

        Dunn, Bob

        Bowis, John

        Durant Sir Anthony

        Boyson, Rt Hon Sir Rhodes

        Dykes, Hugh

        Brandreth, Gyles

        Eggar, Rt Hon Tim

        Brazier, Julian

        Elletson, Harold

        Bright, Sir Graham

        Emery, Rt Hon Sir Peter

        Brooke, Rt Hon Peter

        Evans, David (Welwyn Hatfield)

        Brown, M (Brigg & Cl'thorpes)

        Evans, Jonathan (Brecon)

        Browning, Mrs Angela

        Evans, Nigel (Ribble Valley)

        Bruce, Ian (Dorset)

        Evans, Roger (Monmouth)

        Burns, Simon

        Evennett, David

        Burt, Alistair

        Faber, David

        Butler, Peter

        Fabricant Michael

        Butterfill, John

        Fenner, Dame Peggy

        Carlisle, John (Luton North)

        Field, Barry (Isle of Wight)

        Carlisle, Sir Kenneth (Lincoln)

        Fishbum, Dudley

        Carrington, Matthew

        Forman, Nigel

        Cash, William

        Forsyth, Rt Hon Michael (Stirling)

        62

        Forth, Eric

        Lightbown, David

        Fowler, Rt Hon Sir Norman

        Lilley, Rt Hon Peter

        Fox, Sir Marcus (Shipley)

        Lloyd, Rt Hon Sir Peter (Fareham)

        Freeman, Rt Hon Roger

        Lord, Michael

        French, Douglas

        Luff, Peter

        Fry, Sir Peter

        Lyell, Rt Hon Sir Nicholas

        Gardiner, Sir George

        MacGregor, Rt Hon John

        Garel-Jones, Rt Hon Tristan

        MacKay, Andrew

        Garnier, Edward

        Maclean, David

        Gillan, Cheryl

        McLoughlin, Patrick

        Goodlad, Rt Hon Alastair

        McNair-Wilson, Sir Patrick

        Goodson-Wickes, Dr Charles

        Madel, Sir David

        Gorman, Mrs Teresa

        Maitland, Lady Olga

        Gorst Sir John

        Mans, Keith

        Grant,Sir A (SW Cambs)

        Marlow, Tony

        Greenway, Harry (Ealing N)

        Marshall, John (Hendon S)

        Greenway, John (Ryedale)

        Marshall, Sir Michael (Arundel)

        Griffiths, Peter (Portsmouth, N)

        Martin, David (Portsmouth S)

        Grylls, Sir Michael

        Mawhinney, Rt Hon Dr Brian

        Gummer, Rt Hon John Selwyn

        Mayhew, Rt Hon Sir Patrick

        Hague, William

        Merchant Piers

        Hamilton, Rt Hon Sir Archibald

        Mills, Iain

        Hamilton, Neil (Tatton)

        Mitchell, Andrew (Gedling)

        Hampson, Dr Keith

        Mitchell, Sir David (NW Hants)

        Hanley, Rt Hon Jeremy

        Monro, Sir Hector

        Hannam, Sir John

        Montgomery, Sir Fergus

        Hargreaves, Andrew

        Moss, Malcolm

        Harris, David

        Needham, Rt Hon Richard

        Haselhurst, Alan

        Nelson, Anthony

        Hawkins, Nick

        Neubert, Sir Michael

        Hawksley, Warren

        Newton, Rt Hon Tony

        Hayes, Jerry

        Nicholls, Patrick

        Heald, Oliver

        Nicholson, David (Taunton)

        Heath, Rt Hon Sir Edward

        Nicholson, Emma (Devon West)

        Heathcoat-Amory, David

        Norris, Steve

        Hendry, Charles

        Onslow, Rt Hon Sir Cranley

        Hicks, Robert

        Oppenheim, Phillip

        Higgins, Rt Hon Sir Terence

        Ottaway, Richard

        Hill, James (Southampton Test)

        Page, Richard

        Hogg, Rt Hon Douglas (G'tham)

        Paice, James

        Horam, John

        Patnick, Sir Irvine

        Hordem, Rt Hon Sir Peter

        Patten, Rt Hon John

        Howard, Rt Hon Michael

        Pawsey, James

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

        Peacock, Mrs Elizabeth

        Howell, Rt Hon David (G'dford)

        Pickles, Eric

        Howell, Sir Ralph (N Norfolk)

        Porter, Barry (Wirral S)

        Hughes, Robert G. (Harrow West)

        Porter, David (Waveney)

        Hunt, Rt Hon David (Wirral W)

        Rathbone, Tim

        Hunt, Sir John (Ravensbourne)

        Redwood, Rt Hon John

        Jack, Michael

        Richards, Rod

        Jackson, Robert (Wantage)

        Riddick, Graham

        Jenkin, Bernard

        Rifkind, Rt Hon Malcolm

        Jessel.Toby

        Robathan, Andrew

        Johnson Smith, Sir Geoffrey

        Roberts, Rt Hon Sir Wyn

        Jones, Gwilym (Cardiff N)

        Robertson, Raymond (Ab'd'n S)

        Jones, Robert B (W Hertfdshr)

        Robinson, Mark (Somerton)

        Jopling, Rt Hon Michael

        Rowe, Andrew (Mid Kent)

        Kellett-Bowman, Dame Elaine

        Rumbold, Rt Hon Dame Angela

        Key, Robert

        Ryder, Rt Hon Richard

        King, Rt Hon Tom

        Sackville, Tom

        Kirkhope, Timothy

        Sainsbury, Rt Hon Sir Timothy

        Knapman, Roger

        Scott, Rt Hon Sir Nicholas

        Knight, Mrs Angela (Erewash)

        Shaw, David (Dover)

        Knight, Greg (Derby N)

        Shaw, Sir Giles (Pudsey)

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

        Shephard, Rt Hon Gillian

        Knox, Sir David

        Shepherd, Colin (Hereford)

        Kynoch, George (Kincardine)

        Shepherd, Richard (Aldridge)

        Lait, Mrs Jacqui

        Shersby, Michael

        Lamont, Rt Hon Norman

        Skeet Sir Trevor

        Lang, Rt Hon Ian

        Smith, Sir Dudley (Warwick)

        Lawrence, Sir Ivan

        Soames, Nicholas

        Legg, Barry

        Speed, Sir Keith

        Leigh, Edward

        Spencer, Sir Derek

        Lennox-Boyd, Sir Mark

        Spicer, Sir James (W Dorset)

        Lester, Jim (Broxtowe)

        Spicer, Michael (S Worcs)

        Lidington, David

        Spink, Dr Robert

        63

        Spring, Richard

        Twinn,Dr Ian

        Squire, Robin (Hornchuch)

        Vaughan, Sir Gerard

        Stanley, Rt Hon Sir John

        Viggers, Peter

        Steen, Anthony

        Walden, George

        Stephen, Michael

        Walker, Bill (N Tayside)

        Stern, Michael

        Waller, Gary

        Stewart, Allan

        Ward, John

        Streeter, Gary

        Wardle, Charles (Bexhill)

        Surnberg, David

        Waterson, Nigel

        Sykes,John

        Watts, John

        Tapsell, Sir Peter

        Wells, Bowen

        Taylor, Ian (Esher)

        Wheeler, Rt Hon Sir John

        Taylor, John M (Solihull)

        Whitney, Ray

        Temple-Morris, Peter

        Whittingdale, John

        Thomason, Roy

        Widdecombe, Ann

        Thompson, Sir Donald (C'er V)

        Wiggin, Sir Jerry

        Thompson, Patrick (Norwich N)

        Willetts, David

        Thurnham, Peter

        Wolfson, Mark

        Townsend, Cyril D (Bexl'yh'th)

        Yeo,Tim

        Tracey, Richard

        Young, Rt Hon Sir George

        Tredinnick, David

        Tellers for the Noes:

        Trend, Michael

        Mr. Timothy Wood and

        Trotter, Neville

        Mr. Liam Fox

        Question accordingly negatived.
        Clause added to the Bill.

      New clause 2

        SPIRITS, BEER AND CIDER: RATES
        '.—(1) In section 5 of the Alcoholic Liquor Duties Act 1979 (spirits) for "£19.81" there shall be substituted "£20.60".

        (2) In section 36(1) of that Act (beer) for "£10.45" there shall be substituted "£10.82".

        (3) In section 62(1) of that Act (cider) for "£22.82" there shall be substituted "£23.78".

        (4) This section shall be deemed to have come into force on 1st January 1995.'.—[Mr. Heathcoat-Amory.]

        Brought up, and read the First time.
        Mr. Heathcoat-Amory: I beg to move, That the clause be read a Second time.
        Mr. Deputy Speaker: With this, it will be convenient to discuss also the following: Amendment (a) to the proposed new clause, in subsection (1), leave out '"£20.60"' and insert '"£17.83"'.
        Clause 2 stand part.
        Government amendments Nos. 1 to 6.
        Amendment No. 26, in schedule 1, page 156, line 25, leave out '£19.81' and insert `£17.83'.
        Mr. Heathcoat-Amory: Clause 2, together with schedule 1, replaces the present five-band duty structure for low-strength wine and man-made wine with a two-band structure. It is a sensible, simplifying measure. The broad effect is fiscally neutral, but British producers will generally benefit from the change, as they produce proportionately more product at the higher end of the range. I am sure that the Committee will welcome that modest reform.
        The schedule also envisaged a duty standstill on wine, as on beer and spirits. That is now to be amended; I shall say why and how in a moment. The duty on fortified and sparkling wines was also reduced. In the case of fortified wine, that takes into account the third stage of the agreement with Spain, to reduce the differential between fortified wine and table wine, and to allow the name "British sherry" to be used until 1996.
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        The reduction acts to correct an anomaly whereby sparkling wines are taxed more heavily than stronger fortified wines. More than half of all sparkling wine is not champagne, and there is also a successful British production of sparkling wine, which will modestly benefit from that change.
        In his statement on 8 December 1994, my right hon. and learned Friend the Chancellor said that he had hoped to spare the alcohol industries any duty increase. However, the loss of revenue, as a result of the VAT on fuel decision, meant that he, regretfully, had to revisit those excise duties.
        Amendments Nos. 1 to 6 give effect to an increase of about 4 per cent. in each wine category. Similarly, new clause 2 raises the duty on spirits, beer and cider by about 4 per cent. They were the subject of resolutions passed by the House on 13 December 1994.
        Those increases are not as we originally wished. However, even with those increases, the duty on spirits, beer and wine has decreased in real terms since 1985 by 16.1 per cent., 7.7 per cent. and 2.2 per cent. respectively.
        Ms Dawn Primarolo: We will vote against new clause 2, which seeks to increase duty on beer, wine and spirits. A 4 per cent. increase in alcohol duties is contained in that new clause, imposed on the industry following the Chancellor's acknowledgment in his Budget speech of the problem confronted by the beer and pub industry in relation to the increase in legitimate cross-border shopping and illegal smuggling.
        The Chancellor said:
        "one of the most widely publicised other effects of the single market has been the increase in legitimate cross-border shopping in alcohol and tobacco, and in smuggling.
        Both of these have inevitably meant some loss of duty to the Exchequer, pressures on the British drinks industry and some damage to British business. No Chancellor can remain unmoved in the face of this".—[Official Report, 29 November 1994; Vol. 250, c. 1095–96.]
        We did not realise that he meant that no Chancellor could be moved for more than seven working days, faced with that problem. Despite the assurances that he gave the House in trying to persuade us that he understood the problems of the industry, he chose to increase alcohol duties about nine days later. Moreover, in the Budget itself, the Chancellor reduced duties on sparkling wine and champagne by 27p a bottle. Even with those changes, there is a reduction of 20p on champagne, making it cheaper than it was before the Budget in 1994.
        The Labour party believes that the Government should act urgently in several respects. In opposing the new clause, I shall describe how the Government could have reacted differently.
        I note with some interest, reading Licensee and Pub Food Monthly, that the Paymaster General's uncle, Derek Heathcoat-Amory, was Chancellor in 1959, and he understood then the need to control duty on beer to prevent damage to the British industry. He reduced the duty on beer—a step that the hon. Gentleman did not feel able to take this year.
        Beer smuggling is an enormous threat to the industry. It is a relatively new trade, if I may call it that, and we cannot estimate the extent to which the gradual build-up in the past 18 months has led to the undermining of the industry. The problems that are visible now are a fraction of the problems that will confront us in a few years' time if action is not taken.

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        The Government, in deciding their panic measures—having lost the VAT vote—sought only to plug holes in the short term, rather than to consider changes in taxation to preserve the industry for the medium and long term. We are witnessing the emergence of a whole new subculture—a black market sub-culture, whereby smuggled drink, and indeed tobacco, is easily obtainable. It would be putting it politely to say that it is remiss of the Chancellor to take little notice of that danger—that undermining of the tax base and the industry. I am not speaking about legitimate cross-border shopping; I am speaking about the very expensive occupation of smuggling, and the damage that that does to the industry.
        Mr. Nigel Forman: Do I take it that the hon. Lady will base all her arguments on illegal cross-border imports of alcohol, or will she take account of the point of view that I think that I remember her expressing when she was shadow spokesman on health—that there are sound grounds for increasing the price of alcohol, in all its various categories, to discourage people from the problems associated with alcoholism?
        Ms Primarolo: The hon. Gentleman is mistaken in his memory of what I may have said about reducing the consumption of alcohol, although I obviously agree that the balance of people's consumption of alcohol is an important health consideration. We are talking not about encouraging a greater consumption of alcohol but about arranging a tax system that does not create the opportunity for smuggling, which undermines the legitimate market. The difference between taxation here and taxation in France is so great that it provides that opportunity. The illegal entry of alcohol cannot be regulated by our health policies or controlled by our legitimate methods of dealing with alcohol consumption. That means that the Government's health policy on alcohol consumption is undermined by a tax policy that cannot deliver controls on that consumption.
        6.30 pm
        Mr. John Carlisle: The hon. Lady mentioned that she took basically the same attitude to the cross-border smuggling of alcohol as she did to the smuggling of tobacco. Does that mean that she will oppose new clause 4, which introduces an increase in taxation, using the same argument? I assume that the Opposition will vote against new clause 4, just as they will vote against new clause 2.
        Ms Primarolo: I shall deal with that point when we discuss new clause 4. The point about the balance between taxation and the control of a product is important, as is the question of how the Government could not only prevent illegal imports which undermine our industries but provide for an increased consumption of, for example, cigarettes which clearly we do not want.
        Mr. Michael Stern: I take the hon. Lady back to what she was saying before the intervention by my hon. Friend the Member for Luton, North (Mr. Carlisle). She rightly drew attention to the substantial difference between duties in France and duties in this country. When the matter was discussed during the Finance Bill Committee last year, one Front-Bench Labour Member drew from that the conclusion that the British
        66
        Government's policy should be substantially to reduce duty to levels much closer to the French levels. Is that now Labour party policy?
        Ms Primarolo: On the question of duty levels and the ability to prevent smuggling, the Danish example gives us a good idea of how duties need to be balanced to secure income for the Treasury and to ensure that there is no loss through smuggling. The point is— [Interruption.] Does the hon. Member for Bristol, North-West (Mr. Stern) want to hear the answer to his question or shall I move on to my next point?
        The differences between excise duties in France and those in Britain are so great that to ignore them undermines the industry. The problem is how income to the Treasury would be replaced. The Government have not come forward with any suggestion or plan to deal with that gap. In fact, they have done the opposite. In their desperation to raise taxation, they have exacerbated the problem. When the Chancellor made his comments about freezing duty in his original Budget, he was acknowledging those problems and the need to correct them. If that policy was good enough on 29 November, it is certainly good enough now.
        The importation and sale of undutied alcohol are criminal activities. At the lower end of the market, there are enormous opportunities for people to engage in that enterprise. On one trip, a large van carrying 25 cases can deliver profits of more than £700. Once a sales network has been established, smuggling can become a regular "business"—not a legitimate business. With a network of friends and friends of friends, the "business" is developed and the Government's whole strategy is undermined. The Government tell us that they are engaged in a thorough assessment of how to secure money for the Treasury. The truth is that they are saying that they can raise some taxes and lose some taxes and that, in the short term, they simply have to raise them.
        I give two examples. One individual was making three trips a week and clearing a profit of more than £2,000 a week, which was not taxed. Another gang was doing seven to 10 runs a week. About 15 people were involved and they had been carrying out that work for 11 months or more; they were making £10,000 a week of untaxed profit. In the beginning, opportunists were involved. Organised professionals are beginning to enter the "business". Yet again, the Government's free market ideology provides an opportunity for criminal activity.
        The Government originally told us that they would take the cheap option in dealing with the problem of excise duties. They said that they would go for controls on trade as the likeliest means of getting a grip on this illegal activity. Against the background of there being only 200 excise verification officers, the results achieved are good. The Government, however, have now announced that they will cut the number of Customs and Excise officers, the front-line officers who investigate those illegal activities. The Government need to explain why they are doing that—why they are going back on promises made to the House.
        How can only 200 excise verification officers deal with the problems of bootlegging? In the Leeds collection area, only 10 staff cover York, Leeds, Bradford, Halifax and Hull. In the south-west of England—I draw the attention of the hon. Member for Bristol, North-West to this—eight staff cover the area from Bristol to Land's End,

        67
        which is a lot of coastline. In the Birmingham collection area, 12 staff cover the entire west midlands. The Government intend to reduce those figures through further cuts in Customs and Excise.
        The cuts in the number of Customs and Excise staff break a promise, given in the House on 2 February 1993 by the then Paymaster General, the right hon. Member for Northavon (Sir J. Cope), to my hon. Friend the Member for Oxford, East (Mr. Smith), that there would be no reduction in the number of Customs and Excise officers. The Paymaster General went on to say:
        "I can readily undertake to keep matters under close review, particularly in the early stages of the single market—indeed, we are already doing so. As I have told the House before, we are determined to ensure that smuggling, bootlegging and the resale of goods brought back without UK duty having been paid are pursued with the utmost vigour of the law by all the customs officers that it requires."
        After being challenged by my hon. Friend, the Paymaster General said:
        "Yes. The customs and the Government must determine how we define necessary … and see what we determine to be necessary in order to police such matters firmly."—[Official Report, 2 February 1993; Vol. 218, c. 287–88.]
        He said that the Government would keep the position under review and that there would be no cuts in the number of Customs and Excise officers. In the same Budget in which the Government have increased the excise duty on alcohol and declared a "prevention" strategy—with the option of increasing the number of customs officers to tackle smuggling—they have announced a 16 per cent. cut in the number of customs officers. Those cuts have immense implications for preventing the illegal importation of alcohol. Furthermore, the brewing industry has said that the future growth of the market in illegal alcohol products will lead to job losses in pubs, off-licences, supermarkets and cash-and-carry stores.
        The Government explained that they were cutting the number of customs officers in order to increase surveillance and ensure greater flexibility by deploying officers in vans. Officers will no longer need to perform routine inspections and front-line work; yet it is those routine inspections and spot checks of off-licences and cash-and-carrys that ensure that illegally imported alcohol does not find a retail outlet.
        The Government must implement a clear policy which respects the rights of individuals to engage in legal cross-channel shopping but which uses Customs and Excise to control the ports and ensure that alcohol does not enter the country illegally. The Government must also develop a clear strategy to deal with the problems caused by our European partners' differing levels of alcohol duty.
        The Government must strengthen Customs and Excise; tackle the illicit sale of contraband, including drugs and tobacco as well as alcohol; ensure that the negotiations in Europe bring about a reasonable and acceptable package of solutions to protect our industry; and urgently undertake a comprehensive review and present to the House ways in which taxation and Customs and Excise can work together to reduce smuggling and ensure the protection of British industry.
        A taxation system must work in the short, medium and long term. It must deliver revenue to the Government without creating unemployment or undermining their position in certain areas by allowing smuggling to continue.
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        The Government have picked on duty on beer and spirits as a soft target which will provide a "quick fix". They are undermining our industry. We are opposed to all the increases in duty—unlike the Scottish National party, which is opposed only to the increase in duty on whisky. We will vote against the increases in duty on whisky, beer and cider.
        Sir Ivan Lawrence: As the representative of the brewing centre of England and the universe, I am angry on my constituents' behalf at the proposed increase in the duty on beer. It shows that the Government have paid scant attention to my last two speeches which called for a reduction in excise duty on beer because of the inevitable consequences for the brewing industry and my constituency. Nobody is convinced that the taxation measures might not ultimately prove far worse for the industry, for the reasons given by the hon. Member for Bristol, South (Ms Primarolo). The Government will suffer if bootlegging and smuggling continue to leach revenue from the tax take, and I am not convinced that they have taken that factor accurately into account when doing their sums.
        I understand, of course, that there are very important reasons for increasing the duty on alcohol: it is the only way in which the deficiency in the value added tax take can be remedied. I am angered by the attitude of Labour Members. They are responsible for the increase in the cost of beer, and we must ensure that the finger is pointed at them. If, as the hon. Lady said, the increase in the excise duty on beer is a "quick fix", it is the Opposition who have forced the Government to come up with that remedy. They have forced the Government to extract VAT in this way. I do not think we need listen to any lectures on the subject from Labour Members, who have certainly not offered any alternatives.
        6.45 pm
        Dr. Marek: Will the hon. and learned Gentleman give way?
        Sir Ivan Lawrence: I shall give way in a moment. We must look to the future and to reducing the excise duty yield from the brewing industry, so that it can flourish without that heavy taxation burden imposed by this or any other Government. However, it is difficult to see how we can achieve that aim. My right hon. and learned Friend the Chancellor has talked about getting our European partners to come into line with us. If it were a matter of a few pence difference in excise duty, it would be easy to see how that might be achieved. But the gap is enormous—the excise duty on a pint of beer is about 4p in France and 32p in Britain. It is difficult to see how my right hon. and learned Friend can be optimistic about getting our European partners to come into line with us, and he has not explained how that can be done.
        Do we not make achieving that aim still more difficult by setting the appalling example of increasing the duty on beer to boost the VAT take? With this measure, it is even more difficult for my right hon. and learned Friend the Chancellor to advance his argument with our European partners.
        The persistent hon. Member for Wrexham (Dr. Marek) has something to contribute to the debate.
        Dr. Marek: I am grateful to the hon. and learned Gentleman for giving way. In the last debate I said that,

        69
        if the rise in value added tax were forgone, the Government would be faced with raising an extra £500 million; but that sum could have been recouped by not withdrawing the duty on share transactions. The Government could have easily gained £1 billion from that measure. The hon. and learned Gentleman would not suggest that because it does not affect his friends; he is seeking to make political capital from this issue. Will he persuade the Minister to accept that the Government should aim for long-term harmonisation of duties? If the Minister accepts that, we can make some progress.
        Sir Ivan Lawrence: My right hon. and learned Friend has already suggested that harmonisation is his aim—it must be, if we are to stay part of the European Community. If the share transfer tax that the hon. Gentleman mentioned were as easy to impose as he suggests, I am sure that it would have been adopted. The fact remains that it has not and cannot be done. The imposition of duty on alcohol is the simplest way, but it has dealt another blow to jobs and to the success of a great industry that is at the root of so much of our social life, never mind our industrial, economic or any other kind of life. We know as a party how the industry feels when we open the newspapers and learn how much of the industry's former support is ebbing away, which I deplore.
        My right hon. and learned Friend the Chancellor and my hon. Friend the Paymaster General should seriously address constructive ways of reducing this appalling duty burden. I look forward to hearing what my hon. Friend the Paymaster General will say to reassure not just the Committee but the people who send us here—a high proportion of whom drink in our pubs, clubs and restaurants, and many of whom are employed in the brewing industry. My hon. Friend the Paymaster General should make no mistake about it. I shall, of course, support him in the Lobby tonight, because the blame for all this lies on the other side of the Chamber, but that does not mean that I am any the less angry or will not continue my fight against the Government to bring down this inequitable, iniquitous and harsh measure against the industry that is the heart of the constituency that I represent.
        Mrs. Ewing: Amendments (a) and (b) would reduce by 10 per cent. the duty levied on all British spirits, but I wish to speak particularly of the Scottish whisky industry. I remind the Committee that this is the Burns season, when a fair amount of uisqe beatha will be consumed not only in Scotland but throughout the world. Last night, I attended a Burns supper in my constituency hosted by a major distillery organisation and attended by representatives of independent distilleries and other interests. When I replied on behalf of the lasses, I received the biggest cheer when I said that I was introducing these amendments, because those present appreciated the industry's significance to not only my constituency but the whole economy.
        The present boundaries of Moray contain more than 40 distilleries. They do not provide a huge number of jobs in direct employment but provide employment in farms, maltsters, warehouses, cooperages, transportation companies and tourism. Anyone who knows my constituency will be aware that it is a great pleasure to follow the whisky trail. All right hon. and hon. Members would receive a warm welcome in my constituency and learn a great
        70
        deal about the industry. That is true even of the Chancellor, although I would not advise him to show his face too soon in the light of his December statement.
        Right hon. and hon. Members often regard speeches about the whisky industry as frivolous, but in the areas in question, it is as significant as mining or shipbuilding to other parts of the country, and equally symbolic. If there is a depression in the whisky industry, there is a depression in our communities. That has nothing to do with consumption but has to do with the local as well as the national economy.
        The industry is a huge earner, particularly in exports, raising more than £2 billion last year. Ministers may argue that the 26p per bottle increase in duty will not be imposed abroad—but at a time when the industry is arguing to break down international tariff barriers and arguing for a level playing field in the European Union with other alcoholic drinks such as wines and beers, the Government have sent a signal that they do not care. Why should the industry try to persuade the Japanese to treat it with more respect and to get rid of the internal discrimination that exists in many far eastern countries?
        Mr. John McFall: Does the hon. Lady agree that the most pressing aspect is tax harmonisation in Europe? The Chancellor's action, in a moment of petulance, of imposing 26p on a bottle of whisky means that harmonisation is further away than ever. Seventy thousand jobs in Scotland depend on the whisky industry, and many will be jeopardised as a result of the Chancellor's decision. The need for harmonisation in Europe is, more than anything, the message that should be put across to the Government.
        Mrs. Ewing: I much agree with the hon. Gentleman. I know that he has a substantial interest in the subject because Allied Distillers has its headquarters in his area and provides a great deal of employment. He appreciates, as I do, the importance of harmonisation, for which we have argued for some time. We thought that the Government had begun to listen and to accept the need for cuts in the duty levied on whisky.
        On 20 November 1994, The Sunday Times in Scotland published a substantial article on the arguments made by the Scotch Whisky Association and the all-party group for a 10 per cent. reduction in duty. It stated:
        "Ministerial colleagues are convinced that Kenneth Clarke, the chancellor, is set to deliver a long-awaited boost to the scotch whisky industry."
        It was said that he had closely scrutinised the issues and was "particularly impressed" by the argument
        "in favour of countering the anomaly that the UK taxes home product scotch at almost twice the rate of imported wine …Ministerial sources said that the full 10% cut is 'expecting too much at one stroke' but they also pointed to a treasury briefing document published at the last budget which said: 'The UK duty on spirits …is already relatively high and seriously out of line with the rates of duty elsewhere in the single market'."
        That showed that the Treasury was listening. The Chancellor's action in quickly attacking the industry could only have been a fit of pique resulting from the vote on an increase in VAT on domestic fuel. The duty on alcohol already brings substantial amounts into the Treasury's coffers every year. The last time UK duty on whisky was increased, there was a net reduction in Treasury income, so the Treasury cut off its nose to spite its face, rather

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        than boost an industry that generates so much money for the Government and provides thousands of jobs in Scotland and many other parts of the United Kingdom.
        The Treasury should have shown more respect and devised something simpler—such as the tax suggested by the hon. Member for Wrexham (Dr. Marek). If it had examined the public sector borrowing requirement, it would have realised that an increase in VAT on domestic fuel was unnecessary in the first place.
        I cannot emphasise enough how angry is the Scotch whisky industry at what has become known as the mini-bar Budget. The industry is furious because it is working hard to promote its products. I know people who fly from my constituency every week to far-off parts of the world to promote Scotch whisky. That is sometimes difficult, but the industry was making progress. Now it sees that the Government do not care about its wonderful product.
        Mr. Forman: In what sense does an increase in duty on a bottle of scotch damage the industry's export prospects?
        Mrs. Ewing: The domestic market is damaged—sales have fallen—but it is the message sent out that really matters. It shows our attitude to a unique industry, the quality of whose product is unrivalled in the world. The industry brings in money to the Treasury directly and it attracts as many international tourists a year as a great many other attractions put together.
        Recently, Macallan whisky chairman Allan Shiach met Clint Eastwood's production company
        "on the day Kenneth Clarke did his Dirty Harry act on the Scotch industry. It did not make his day. 'If the government shoots itself in the foot, I am not sure why everybody else has to limp'".
        The Government have wounded the Scotch whisky industry and the whole UK spirit industry. I trust that hon. Members will seriously consider supporting our amendments; we shall certainly vote with the official Opposition on the new clause.
        7 pm
        Mr. James Couchman: It may be for the convenience of the House to know that although I ran public houses until the beginning of last November, and had been doing so in London for 25 years, I have now disposed of those interests, although I briefly remain a non-executive director of the company in question.
        I have listened carefully to the speeches so far, in which several hon. Members have mentioned the fact that bootlegging has been on the increase since the barriers went down on 1 January 1993. I should be interested to hear from the Minister whether expectations of the duty to be collected have been met or, if they have not been met, what the shortfall in the year to April 1994 was. What was the shortfall, if any, for the first three quarters of this year? I believe that the House needs that information, because the mini-Budget has proved to be profoundly unhelpful to an industry that has suffered greatly in the past three years.
        The public house in London is under threat, not just from bootleggers—although they are undoubtedly a factor—but from the fact that people's drinking habits are dramatically changing. Bootlegging is one thing; people's consciousness of health is another. In London and the
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        south-east there has been a dramatic decline in trade over the past three years, and the industry shows no sign of recovering from the recession.
        It would have been far better if my right hon. and learned Friend had listened to the case put to him by the Brewers and Licensed Retailers Association in the middle of last year, when it suggested that progressive harmonisation with rates of duty on the continent would lead to increased employment in this important industry—in production, and in wholesale and retail. That should have been done instead of putting a relatively small additional burden on top of the duty already charged.
        There were expectations that the first Budget might have taken a modest step in the right direction by reducing duty. That was not to be, and the trade was duly disappointed. But it was horrified by the mini-Budget, which put a 4 per cent. increase on duties and which sent out the wrong messages. So trade will continue to be depressed and many jobs will be lost, as will many drink outlets in the retail, wholesale and off-licence sectors.
        I look forward to the day when my right hon. and learned Friend will be able to tell us that we are about to move towards the duty levels that prevail on the continent.
        Mr. Alan Meale: I, too, oppose the increased levies on beer. I declare an interest, as chairman of the all-party parliamentary beer club—an unpaid post, I might add.
        It was not just pique but cheek on the part of the Government to introduce such an increase. They are trying to keep wage increases down to 1 or 2 per cent. at the same time as inflicting the increase on the beer trade, which is so important to the Treasury. I understand that the industry, directly and indirectly, supplies the Treasury with about £12 billion a year. An increase of 4 per cent. will inevitably be passed on to the customer. Furthermore, jobs linked directly and indirectly to the industry will be lost.
        The beer trade has already lost about 70,000 jobs—including jobs in other sectors related to the industry—in the past six years. That important industry generates about 750,000 jobs in Britain. My constituency is the location for both the Mansfield brewery and the Tom Cobleigh retail outlet. The constituency has suffered 6,000 job losses because of mine closures; if we now lose the brewery and Tom Cobleigh, the situation will be serious indeed.
        Dividing up the 750,000 jobs in the industry among the 650 seats in the House gives a figure that shows that the industry is just as important to most other hon. Members. A 4 per cent. increase in duty would lead to another 10,000 jobs, direct and indirect, being lost to the industry. The Opposition Front-Bench spokesperson described the scale of the problem facing the beer industry in Britain due to a lack of action. Cross-border imports are flooding in from Europe at a rate of about a million pints a day because of the huge duty differential, which the Government have done nothing to remedy it. That represents 3.5 per cent. of all United Kingdom beer sales and 15 per cent. of all UK take-home sales. It also amounts to the same as the sales from every single pub in Kent, the west midlands and west Yorkshire, and the output of 18 regional brewers.

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        Many hon. Members have been on official day trips by bus to the continent— [Interruption.] They are not jollies; I do not know anyone who wants to go to Calais for a day just for a jolly. Be that as it may, heavy advertising by cross-channel ferry companies has led to people going across with their vans—to such an extent that our beer club discovered, in November 1993, that there were no vans for hire in Kent until the following February. They had all been booked by people who hired them to make two or three trips a day to the continent, to make thousands of pounds a week.
        The lack of Government action to close the differential has rendered the situation extremely serious. In France I can buy a small bottle of beer for 11p, a price that includes the tax and duty. In Britain, we would pay 15p or 16p in duty and excise alone for the same bottle. We cannot compete on those terms.
        The Government increase taxes and duties on beer while cutting the number of staff at Customs and Excise, whose unions have been told by the Government that they intend to cut 4,000 jobs in the Department. That represents 16 per cent. of the entire Customs and Excise operation. How can that be reconciled with helping the beer industry to make progress or with retaining those 750,000 jobs? We cannot stand up in Europe for our beer industry unless we start to tackle some of those problems.
        The Chancellor admitted in his Budget speech that no Chancellor could remain unmoved in the face of the evidence that had been presented. If we are not willing to recognise what he said and do not start to take on board the seriousness of the problem, the British pub will be lost for ever.
        Mrs. Jacqui Lait: I am sure that the hon. Gentleman will want to correct the wrong impression that he is certainly giving me, which is that every person who goes abroad and returns with cheap drink is evading duty. Most of that activity is completely legal trade and part of being in the European Union, which I understand his party supports.
        Mr. Meale: The hon. Lady is right. Much of the activity that we are talking about is legal trade. In a way, that is the problem. Unfortunately, there is an ever-growing trade in smuggling. If she has any doubts, she might like to talk to those of her hon. Friends who have visited France and seen queues of vehicles stretching for half a mile. I am talking of not only vans but half-empty or empty lorries, which are being loaded with pallets of beer. Those vehicles will return to the United Kingdom across the channel. Perhaps she will choose to talk to those of her hon. Friends who have visited pubs and clubs, or to those who have talked to brewers in Scotland, the north-east, the north-west, the midlands, the east and west and London. Over the past 18 months, 12,000 pubs have been lost, mainly in the south and south-east. The direct cause has been the beer and spirits that have come into the country from across the channel.
        Mrs. Lait: I have made three speeches making precisely those points. It is clear that the hon. Gentleman has not been following proceedings during debates on the Budget and the Second Reading of the Finance Bill.
        Mr. Meale: I feel sorry that I allowed the hon. Lady to intervene. She made an irrelevant point.
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        If the hon. Lady believes in what she said when discussing the Finance Bill on Second Reading and if she believes in the arguments that are being advanced to explain why an increase in duty is wrong for the beer industry—I have in mind those who depend upon the industry for their employment and an industry that is paying such a great deal of money to the Chancellor year after year—she will vote in the Opposition Lobby.
        If we do not change the price differentials between buying beer in this country and abroad, we shall lose the British pub. That will have serious consequences for all communities.
        Mrs. Lait: I am grateful to have the opportunity to take up the remarks of the hon. Member for Mansfield (Mr. Meale) and to repeat some of the arguments that I have advanced in other debates. I apologise to my right hon. and hon. Friends on the Government Front Bench because this is the fourth time that I have spoken on this subject since the Budget statement. I find no comfort in hearing Opposition Members make precisely the points that I have already made. I suppose that I can comfort myself by thinking that at least they are learning something.
        The increase in excise duty that we are facing on alcohol and tobacco will result in job losses. It will have an effect on the nation's health and will quite significantly undermine the rule of law. There are various options. My hon. Friend the Paymaster General has assured me on many occasions that the Government are planning to approximate our rates of duty with those of our European partners. My hon. and learned Friend the Member for Burton (Sir I. Lawrence) drew attention to the huge differentials between the United Kingdom and our European partners.
        I understand that my hon. Friend the Paymaster General is pressing for changes, and I would like to know what progress he expects to make. I would like also to know that he is encouraging other members of the Government, such as my right hon. Friend the Secretary of State for Health, to press her opposite numbers in the EU so that they, too, are putting pressure on their Chancellors to increase duties because of the damage to health that is happening in countries such as France, Germany, Italy, Spain, Portugal and Greece.
        I re-emphasise that while I make no criticism of our excise officers, who do a good job, it must be recognised that prevention is not paying. We are already spending more on preventing the smuggling of beer, wine and tobacco than on the products that are being recovered. History re-emphasises that argument. I wish very much that the Treasury would do its sums and work out the excessive cost of prevention over the cure, which is approximation of duties. The Treasury should stop regarding excise as the milch cow of first resort—when in trouble, first increase excise duties.
        Mr. Salmond: While the hon. Lady is waiting for other European countries to change their policies to get the Government off the hook, and given that this is the fourth time that she has made her points to the Government Front Bench— those on the Government Front Bench seem not to be taking much notice of her— is she proposing any stronger action such as voting against the actions of which she disapproves?
        Mrs. Lait: I see no point in voting against an increase in duties that has had to be put in place because of the irresponsible behaviour of Opposition Members.

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        I hope that my hon. Friend the Paymaster General will give me an assurance that the Treasury will think more strategically about the use of excise duty and stop regarding it as the milch cow that will solve any problem when we need to raise revenue quickly. I hope that that is the direction in which the Treasury is planning to move.
        7.15 pm
        Mrs. Helen Liddell: I do not have the same constituency interest as the hon. Member for Moray (Mrs. Ewing) or my hon. Friend the Member for Dumbarton (Mr. McFall). However, like many Scots Members, I have whisky interests within my constituency.
        We are faced with an issue that spans the United Kingdom. The action of the Chancellor of the Exchequer in imposing increased duty on alcohol has an impact on major manufacturing industry. During the lifetime of the Government we have seen repeated attacks on manufacturing industry, and the Scotch whisky industry is a major part of the manufacturing sector. It is of great strategic importance to the United Kingdom because it draws heavily on indigenous suppliers. Its United Kingdom valued added is estimated to be about 70 per cent. It is sold in 190 overseas markets. It is very much a standard bearer for quality goods from the United Kingdom.
        It is appalling that United Kingdom tax treatment limits the ability of the industry to have the same impact in Britain as it has in other countries. It is ironic that in his first Budget statement the Chancellor of the Exchequer took measures to ensure that the price of a bottle of champagne was reduced by 27p. Even after his second go at presenting the Budget, a bottle of champagne will be 20p cheaper. It is appalling that we do not recognise the impact on our industries and manufacturing businesses of moves that were made by the Chancellor following the shambles of his initial Budget statement on 29 November.
        There can be no case for increasing tax discrimination by fiscally hitting spirits in general more harshly than tobacco in the mini-Budget. The Chancellor excluded hand-rolling tobacco from the mini-Budget specifically because of the European dimension. Why could he not extend that commonsense attitude to the spirits industry?
        I have no hope that we shall hear any common sense from the Treasury Bench tonight. When the Government last increased duty on whisky—there was a 25p increase in the price of a bottle of whisky—the net impact was an £80 million decrease in the revenue available to the Exchequer following the slump in the industry as a result of that increased taxation. It is appalling to think that a critical and strategic industry should be treated in that way.
        Scotch whisky is one of the United Kingdom's top five export-earning industries and shares top billing with cars, aircraft, North sea oil and its derivatives, and high-tech products. As the hon. Member for Moray pointed out, in 1993 its export earnings topped £2 billion for the first time, and 40 per cent. of whisky sales are in the European Union. Our other spirits contributed another £175 million to the United Kingdom's export earnings.
        My hon. Friend the Member for Dumbarton pointed out that, directly and indirectly, the whisky industry employs 70,000 people—four times more than the 15,000 who are directly employed. The industry generates more than £
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        1 billion of business with suppliers, yet the tax levied on Scotch whisky and other spirits is virtually twice the rate per unit of alcohol applied to wine and beer. I recognise the arguments that my hon. Friend the Member for Mansfield (Mr. Meale) employed on behalf of beer brewing, however, which is also important to the economy of many communities.
        The two Budgets of 1993 set no increase in the excise duty on Scotch whisky, yet when the Chancellor was backed into a corner by his own lack of foresight and by the shambles that the Government created in his first Budget, the first people he chose to attack were workers in a valuable manufacturing industry who play a key part in our economy.
        What are the growth prospects for the Scotch whisky industry? After a slump following the previous tax increase, great marketing efforts gave the industry an increased profile—especially in its bicentenary—in the United States, Japan and throughout the European Union. A British industry has the option to grow, but the Government are directly attacking that option. They are so shortsighted that they do not realise the opportunities for a crucial industry.
        Scotch whisky is price-sensitive. There is no doubt that the increase of 26p on a bottle of Scotch whisky will affect the fragile recovery in the industry. Many people in the whisky communities suffered directly as a consequence of the previous attacks on the industry. Jobs and distilleries were lost as a result. We are throwing away the heritage of large communities in Scotland and the associated industries involved in the distribution and marketing of Scotch whisky, throughout the United Kingdom.
        We must narrow the tax discrimination against Scotch whisky throughout the Community. We were led to believe that the Chancellor would be vociferous in his support for the industry and for tax harmonisation. I have heard nothing from the Treasury Bench today to convince me that that promise will be kept. I am worried that there will be a negative impact on the United Kingdom economy and that the Government are being short-sighted.
        I am not merely concerned about the impact on the Scotch whisky industry. Whisky blenders in my constituency also manufacture gin. The gin manufacturers association just celebrated its 50th anniversary and it, too, is worried about the impact of the increase in duty on such a crucial manufacturing industry.
        Mr. Nigel Evans: I have spoken on this topic on several occasions and I thought it important not to let this opportunity pass without saying a few words.
        Last year, I and several other members of the Standing Committee on the Deregulation and Contracting Bill—including my hon. Friend the Member for Surrey, East (Mr. Ainsworth), who cannot speak in today's debate—tried to save the great British pint of beer, including its head. Today we want to save the great British pub, which is vitally important, as we heard from the hon. Member for Mansfield (Mr. Neale).
        How many pubs have closed partly as a result of the massive differentials in duty on British and French beer? It is estimated that a million pints a day are being brought into this country. Something has to be done to stem that massive tide, and the problem is growing.

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        One can travel very cheaply across the channel to Calais because of the many special offers. The channel tunnel has opened since I last visited the town, so the problem will get worse. It is estimated that beer from Calais accounts for 15 per cent. of United Kingdom take-home sales. My hon. Friend the Member for Hastings and Rye (Mrs. Lait) mentioned the illegal trade, but much of it is legal. Many people want to travel to Calais and try different beers, and I do not condemn them for that.
        Last year I went to Dover to see at first hand the problem faced by Customs and Excise officers due to the amount of beer being imported into this country illegally. On the morning of my visit, two transit vans were stopped. One was packed to the roof with beer that had been brought in with some sort of documentation to show that it was for a party to celebrate winning a contract, which was illegal as it was a business deal. Someone else had brought in a transit van full of alcohol supposedly for personal consumption, but the owner had a list of addresses in the United Kingdom where the alcohol was to be sold.
        I was very impressed with the work of Customs and Excise officers in Dover. I informed my hon. Friend the Member for Dover (Mr. Shaw) that I was visiting the port, as he also has done, because of the problem. The problem is indeed massive, and it can only get worse.
        I also visited Calais, with the hon. Member for Mansfield, as a member of the all-party beer group. We saw at first hand the problems that the British brewing industry is experiencing. It is not just a matter of people bringing in a few extra cans in their cars. We saw heavy goods vehicles loading pallets of beer at the cash and carry stores which entice such trade. Judging by the tarpaulins, the vehicles came from all parts of Britain. People think that illegal imports are a problem only in the south-east of England, but that is not so: beer is being transported throughout the United Kingdom and the massive tax differentials make this worth while.
        The alcohol is being distributed in many ways. It is not merely a matter of Arthur Daley characters shoving one or two cases here and there. It has become a trade for many people and the alcohol is distributed through all kinds of outlets, including car boot sales, and so forth. Indeed, I have raised in an Adjournment debate the problem of car boot sales and the amount of beer coming into this country.
        I am concerned because I have brewing interests in my constituency—Thwaites, Whitbread and Samlesbury are on the edge of it and are all vital for job creation, as well as being particularly good beers— and because brewing is important throughout the United Kingdom. All the breweries, both small and large play a vital part in the United Kingdom brewing industry and I do not want them to suffer any more damage.
        The British pub has become a social centre—a place where the local villagers can gather and talk—and I do not want the great British pub to be damaged. Pubs are one of the first places that many tourists want to visit when they come here because they are famous throughout the world. Many, however, have closed. The hon. Member for Mansfield mentioned the figure of 2,000. One can only estimate how many jobs were involved. If the differential is allowed to continue and if the amount of beer that one is allowed to bring back into this country is not changed,
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        that problem will only worsen. More pubs will close, more breweries will be damaged and more jobs will be lost.
        During my visit to Calais, I noticed that Sainsbuiy's had opened its own off-licence in one of the hypermarkets to sell alcohol to British customers because it thought that it knew British customers best. That off-licence is part of a much larger hypermarket where the sale of British and continental beers is going on apace and where the marketing is directed towards the British consumer. The signs are not just in French but in English, the prices not just in francs but in pounds, and the signs show how much cheaper it is to buy beer there to bring back into this country.
        One can only imagine how cost-effective it is for people, especially those living towards the south of England, to make regular trips across the channel. The number of people going over to France and buying large amounts of beer, which they would normally buy in British off-licences or in British pubs, was a considerable problem over the Christmas period.
        With the hon. Member for Mansfield, I was part of a delegation to the Paymaster General about the problems. We thought that we had won the battle before the initial Budget statement. At least we had taken a step in the right direction. This new clause, however, is a step in the wrong direction. A penny extra tax is neither here nor there, of course: the problem is much bigger than that, and my right hon. and learned Friend the Chancellor has said that he is looking at the greater problem of the differential.
        7.30 pm
        As a matter of urgency, we should try to approximate tax on beer on the continent with that in the United Kingdom. In the mean time, since that may take a number of years and we cannot afford to wait that long for the problem to be rectified, will the Treasury team assure us that the number of Customs and Excise officers operating at ports of entry is built up to ensure that the chances of people being stopped when trying to bring back beer are greater and that the chances of prosecuting them are also greater? Can we ensure that the excise verification officers operating in the United Kingdom, who look around shops and car boot sales, also look at the amount of beer brought through customs and that more prosecutions are brought? If we stand back and do nothing, the problem will only worsen. We need to take action, and we need to take it now.
        Mr. Malcolm Bruce: There are two basic arguments that the Government seemed to have ignored. The first is about smuggling, which the Chancellor of the Exchequer said in his Budget speech was a major reason for not widening the duty. A week later, he promptly widened the duty. The second is that brewing and especially distilling are major British industries in terms of employment and exports. The Government do not seem to have addressed the importance of those industries at all.
        The hon. Member for Moray (Mrs. Ewing) made the point that the Chancellor of the Exchequer, up to the second Budget, had given a clear indication that he had understood the argument, taken it on board and was going to do something about it. That is why I maintain that he took the decision in the mini-Budget simply out of political pique. He had been beaten on the first vote, so he wanted to be vindictive on the second. There was no intellectual credibility to his decision.

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        The most effective authority to put against the Chancellor's decision is the Chancellor himself. He can be quoted his own record of saying that widening the duty would not work and that it would damage the home industry, increase the problems of smuggling and probably damage Exchequer revenues. Yet the Government are going ahead with the decision to widen the duty.
        Yet again, the Opposition parties together are trying to save the Government from themselves. Conservative Members have made speech after speech agreeing with the arguments put forward by Opposition Members but then saying that they intended to vote with the Government. We are told that that is because they hope and believe that the Government will address the problem, but in the meantime the problem will become worse.
        The Government are in a ridiculous situation. It is indefensible and shows a total lack of understanding of the fact that our industries require a tax regime which gives them the confidence from which they can build up an export market. The hon. Member for Carshalton and Wallington (Mr. Forman) knows perfectly well that a strong home market is an essential precondition of a successful export market. It is not that firms cannot export when there is a declining home market, but that the home market provides the base and the profit to finance the export drive.
        When I was newly elected to the House, because I was the hon. Member for Gordon and because I spoke about the spirits industry, I was described by one columnist as "the hon. Member for Gordon, the home of malt gin." I remind the Committee that the gin industry is a significant producer as well—we are not just pleading for the scotch whisky industry, but for the whole home-produced spirits industry.
        It is odd that the Government seem to have regarded the wine industry as deserving a fairer tax deal than the beer, whisky and gin industries, although this country produces relatively little wine. We make some wine, and some of it is quite good, but it is not a significant national industry. In contrast, we make an enormous amount of gin and whisky and we export it. We also make an enormous amount of beer. Yet the Government tax it more heavily than wine.
        If we were not in a single market scenario, I would suggest that the Government considered putting up the duty on wine and reducing the duty on spirits. There is a very good argument for that, not least because the alcohol content per unit in relation to the tax is such that whisky and gin are taxed at double the rate of wine, which is an unfair and distorted mix. Raising duty on wine and reducing duty on spirits would appeal to everyone because it would ensure that we protected our own industry and taxed imports. The trouble is that the single market does not make that a viable, long-term and sustainable proposition.
        If the Government are serious about taking the argument of the major brewing and distilling industries on board, they should abandon the new clause and at least freeze the duties. If they are to try to restore the industry's confidence, which has been seriously damaged by the Budget, they should quickly tell the House, the country and the industry exactly how they intend to resolve the matter and narrow the differentials. In reality, that can be
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        done only by recognising that duties in the United Kingdom will have to go down; no matter what agreement we may secure with our partners in the European Union about raising their duties to narrow the differential, there is no chance whatever of their coming anywhere near our rates.
        The health factor was raised by one hon. Member, but there is not a fair comparison between alcohol and tobacco. All the evidence is clear that tobacco is fundamentally harmful to all users. It is a health hazard and a health risk. That is a justifiable reason for increasing the duties on tobacco, even though I acknowledge the smuggling problem. With alcohol, there is not such an absolute health factor to consider. The abuse of alcohol, not its existence, is a problem. It can be argued that alcohol used in moderation is positively good for us. Indeed, a slogan used to tell us that Guinness was good for us and many a doctor will tell patients that a nip of whisky before bed will enhance their sleep and prolong their life. Not enough people are taking that nip, and the Chancellor has made it that little bit more difficult and expensive.
        For all those reasons, my colleagues and I will vote against new clause 2 and we look to the Government to indicate how and when they intend to do something not to make the problem worse, but to tackle it and narrow the differential.
        Mr. Stern: I wish to make a few brief comments. First, I should emphasise my continuing interest in these debates over the years. I represent part of the city of Bristol, which contains the Courage brewery, a considerable number of substantial wine importers and a major centre for the manufacture of cider. As a result, it is rightly twinned with Bordeaux, which itself is not unknown for its wine.
        Before considering the broad argument which has been rehearsed by many hon. Members today, I want to follow up a point that was raised in last year's debate. When my hon. Friend the Paymaster General replies to the debate, I hope that he will be able to take this point on board. There has been much doom and gloom today about the low level of seizures of smuggled alcohol. However, the level of seizures is increasing substantially and is now a real deterrent in certain parts of the country.
        Nothing has been said today about what should happen to the very valuable product being seized. It irks me, and I believe that it irks many people, that the beer, wine and spirits seized as a result of smuggling are simply poured into a hole in the ground. From the point of view of sheer waste, that is not acceptable. In Committee last year, I raised with my right hon. Friend the Chief Secretary, who replied to that debate, the question of whether the seized wines, spirits and beer could be re-exported so that they would not affect the home market. In reply, the Chief Secretary said that the Government were considering vinegarising or denaturing the seized alcohol and recycling the glass and metal involved. Although there is provision in later clauses for a new tax regime for denatured and vinegarised alcohol, there is no provision for taking the matter forward. Our job of selling the public the idea of a continuing tough regime on imports will be much more difficult if the Government are engaged in a vast waste of the products that they are seizing.

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        I want now to consider the more general argument. Although the Opposition may be heartened by some of my remarks, I must begin by totally dismissing the comments from official and unofficial Opposition spokesmen today. As the hon. Member for Barnsley, Central (Mr. Illsley) made clear in last year's debate, their only solution to the problem is to throw substantial sums of money at it. They cannot think of anything else to do about it. I totally reject the absence of policy from the Opposition: simply saying, "We must do something about this", is not a solution.
        The Government have a policy which they had to breach in part this year because of the irresponsible vote by the Opposition on VAT on domestic fuel. I am not entirely happy with the Government's position. It is all very well to say, as my hon. and learned Friend the Member for Burton (Sir I. Lawrence) said, that the long-term solution is harmonisation of duties, but if we consider the level of harmonisation required and the time scale involved, one is clearly looking at 50 years of cloud cuckoo land.
        We must understand that we are asking our European allies and partners to disadvantage their own home producers in favour of our producers and to decrease their market share in favour of ours. It is increasingly unlikely that we shall make any substantial progress on harmonisation. It just will not happen. If that is the Government's only alternative policy for a long-term solution to the problem of the skewing of the single market against our producers because of the existing pattern of duty, I must tell my hon. Friend the Paymaster General that that is not good enough, so please go away and think again. Simply to rely on our European allies to disadvantage themselves for our benefit is unlikely to prove to be a successful policy in the long term.
        We need to think again about the problem. Clearly the Chancellor cannot forgo the kind of revenue that we are talking about this year, or in the long term, by a consistent and steady reduction down to something approximating European levels of excise duty. But if substantial duty reduction is not available to us, what is?
        Mr. Thomas Graham: I remember the Chancellor of the Exchequer standing at the Dispatch Box not that long ago lambasting Scottish Members who had voted against the imposition of VAT on fuel. He said that we were to blame for the increase in duty on whisky. That was lamentable. It was not a wee grouse; it was a big grouse, and that big grouse could cost thousands of jobs in the whisky industry.
        7.45 pm
        The Chancellor was being punitive. He did not realise what damage he was going to inflict on the whole of Britain. He had not considered the earnings that the whisky industry generates and the more than £1 billion that is involved in supplying the industry to ensure that it survives.
        I have already said that 15,000 people are employed directly in the industry and that nearly 70,000 folk are employed indirectly. As a former engineer, I recall working in the industry. I did not produce whisky, but I did produce engineering machinery for the industry. Thousands of folk produce machinery for the whisky industry.
        82
        Some of those engineering companies are involved in other aspects of manufacturing, for which they require the support of the whisky industry. For example, the chemical industry benefits from engineering companies involved in the whisky industry. Some pipe-fitting companies in the whisky industry supply other industries in Britain. If the whisky industry is affected, those companies will be punished.
        The brewing industry is very much like the whisky industry; it relies on the same engineering skills and development. I am not separating my support between the beer industry or the whisky industry, which are an important part of life in Great Britain and which play an important role in attracting much-needed revenue to this country.
        I recognise the terrible problem caused by the illegal importation of drink from the continent. As a Scotsman, I do not benefit too much from that. We are told that there are supposed to be convoys of vans travelling to Glasgow. I am a car boot lover; I like to go to car boot sales. The hon. Member for Ribble Valley (Mr. Evans) said that people can buy whisky and spirits at car boot sales. I have never seen them for sale at car boot sales. However, I must confess that I have seen cigarettes and cigars for sale.
        The Chancellor has not thought this out, but that is typical of the Government. They have thought nothing out in relation to taxation. If they had, we would not be in the trouble that we are in now. The 17.5 per cent. VAT charge on domestic fuel was incredible. I am glad to say that the combined power of the House destroyed that rise, but we have now been hit by this tax increase.
        Hundreds of people in my constituency work directly in the whisky industry. They work in the Chivas Regal factory and in the Johnny Walker bottling plant, which is in the constituency of my hon. Friend the Member for Paisley, North (Mrs. Adams). They rely on the industry to provide them with their daily bread and to ensure that at the end of the week they get their wages and, at the end of the month, they get their salaries. It is very important to have dignity and to be paid.
        The Government will deny those people through their punitive tax system and possibly their anti-Scottish feeling. They will impose an additional 20 per cent. duty on whisky, yet they have reduced duty on champagne. Hon. Members should think about that; it is absolutely mind-boggling. I have mentioned before that the Chancellor supports champagne Charlie. He is making it easier for folk who are stinking rich to buy their champagne cheaper. Ordinary men and women who love a wee tipple, a pint of beer or a wee hauf of whisky must pay through the nose because the Chancellor could not run a bus to Saltcoats, which is not very far from where I live.
        I hope that this is the Chancellor's last Budget. I hope that it is a case of that famous saying of Bell's, 'afore ye go. I am happy for the Chancellor to have his last whisky 'afore ye go. I hope that he pours a further wee double and drinks to a new whisky, SS Politician. We all know how that went—down the hole—but it created great work for Scottish folk.
        The Government have an opportunity to save the scotch whisky industry and the brewing industry from further redundancies by turning from the disastrous route of

        83
        increasing duty on our daily tipple. They should look for more sensible ways to raise taxation without creating further redundancies and unemployment in our country.
        Mr. Nigel Forman: I enjoy a wee dram as much as I enjoyed the speech of the hon. Member for Renfrew, West and Inverclyde (Mr. Graham), and I pay tribute to the robust way in which he represents his constituents' interests.
        There has been a bit of Scottish and, indeed, English hyperbole, and I should like to pour a little cold water on some arguments—I shall be a bit of a spoil-sport, in fact.
        When members of the Treasury and Civil Service Select Committee recently considered differential duties, we were not completely convinced by the arguments that were put to us by licensed retailers of alcohol or by publicans. We listened carefully to what they said, but we concluded that the arguments were somewhat overstated.
        Opposition Members in particular have stressed what they allege to be the damaging and, indeed, almost terminal effects of a fairly small duty increase in the Budget, but, bearing in mind changes in the drinks industry and in many other manufacturing industries, one is bound to conclude that in recent times new, changing technology and improved productivity have been at least as important, and probably much more so, than any marginal changes in duty.
        Hon. Members have made great play of the problems facing many pubs. I know from experience that pubs in London and in the south-east have had a hard time, but the reasons for that go far wider than the subject of this rather narrow debate. Changing social habits, the growth of off-licences, the tendency of supermarkets to sell large quantities of alcohol to people to drink at home with friends and the drink-driving laws have had a major influence on pubs, not to speak of the temptation of some large breweries to kit out their pubs in a standard manner that makes them look more like building societies than pubs and has detracted from the character and individuality of many traditional British pubs.
        There are other factors, such as the longer-run arguments about alcohol consumption and points that I have tried to raise with the hon. Member for Bristol, South (Ms Primarolo). There is no doubt from the figures that the average industrial worker now has to work significantly fewer hours to be able to afford a bottle of scotch or a pint of beer than 20, 30 or 40 years ago. The real price of alcohol has fallen, with some adverse consequences for medical and health problems, which is the point that I raised with the hon. Lady.
        It is rather surprising that the hon. Member for Bristol, South has made such a swift, easy transition from her shadow health duties to the shadow Treasury portfolio. She has clearly forgotten many of her party's arguments about the desirable health effects of discouraging excessive alcohol consumption by raising the real price of alcohol.
        Ms Primarolo: That is exactly the point. Large amounts of alcohol are being smuggled into the country. The Treasury statistics on how much is coming in illegally and how much duty is lost are disputed. If alcohol is
        84
        coming in unregulated, children and young people have greater access to it. Therefore, health problems are increased, not decreased.
        Mr. Forman: The hon. Lady has a small point. According to the best estimates of Customs and Excise, the amount of alcohol that is imported illegally is not significant—less than a fifth—compared with the total volume of alcohol consumed.
        Mr. Malcolm Bruce: I understand the hon. Gentleman's point, but, leaving aside the smuggling issue, does he accept that the price of drinks over the bar is a relevant calculation because in every other European country drink is cheaper than it is at home, which encourages more British holidaymakers to go abroad rather than to stay at home and discourages others from coming here? That fact should be taken into account.
        Mr. Forman: That might be a factor for keen drinkers, particularly those who enjoy continental wine, for example, but I doubt whether it is a determining factor when most families decide whether to go abroad or to stay at home, or perhaps not to go on holiday at all.
        Opposition Members have been remarkably coy in stating where the revenue would come from if their amendment was successful. There is no doubt that my right hon. and learned Friend the Chancellor needed to find the extra revenue in fairly short order. I have heard no suggestion of how Opposition Members would make up the shortfall. Would they simply allow it to be added to the public sector borrowing requirement, with all the unforeseen consequences that that could have for interest rates?
        Sir Ivan Lawrence: The hon. Member for Renfrew, West and Inverclyde (Mr. Graham) suggested that perhaps the evil was that the Government have not taxed champagne enough. Perhaps Opposition Members propose to tax champagne socialists more.
        Mr. Forman: That might be so. Perhaps certain future gatherings in Brussels will prove less attractive if that policy is followed.
        I wish to end my speech on a fairly serious and contained point, on which I would appreciate a comment by my hon. Friend the Minister. Has he heard from the Opposition how they would make up the revenue shortfall?
        Mr. George Stevenson: I am a sponsored member of the Transport and General Workers Union, and I represent many people employed in the brewing industry. As a result of the proposed tax, many of them are likely to lose their jobs in the near future.
        Just before 29 November, I met representatives of the Midlands Brewery Society in my constituency. They were at pains to say once more to me, as they had said to many other hon. Members, that, if there was no movement in the duty on beer, they would face a serious and disastrous situation. I asked them to clarify what they would experience if there was an increase. They said that, after detailed consideration—they did not pluck the figure out of the air—10,000 jobs in the industry would be lost, either directly or indirectly. I have heard no Conservative Member challenge that figure.

        85
        8 pm
        Every speech that I have heard this evening has suggested that the duty will cost jobs in the whisky and beer industries and elsewhere. It is a tax on jobs. The Government continually tell my hon. Friends that the Opposition's taxation policies will cost jobs, so it is ironic that tonight the same Government— with the support of their Back Benchers— will vote for a tax that will certainly cost jobs.
        I was fascinated and intrigued by Conservative Members who suggested that they were seriously concerned about the tax. The hon. and learned Member for Burton (Sir I. Lawrence) and the hon. Member for Hastings and Rye (Mrs. Lait) made that suggestion, but then scurried into their bolthole and camouflaged their concerns by blaming the Labour party for the tax. We are proud that we were able to play a significant role in thwarting the imposition of 17.5 per cent. VAT on fuel, which the country supported. Conservative Members who say that it is the Labour party's fault that taxation has been put up to levels that we have never experienced in modern peacetime, when it is a result of the incompetence of the Chancellor and of the Government, are pushing credibility to the extreme.
        I asked my constituents what they thought about the Chancellor of the Exchequer not putting any duty on beer in his original Budget statement. They did not believe it—they were incredulous about it. They did not believe that the Government meant anything that they said about taxation. They thought, too, that the Government were trying to discourage them from drinking beer and to encourage them to drink champagne. The Government failed on the latter aim, and within nine days they had failed my constituents on the former one.
        Hon. Members have stated that the Government should urgently seek dialogue with other European Union member states to try to equalise the taxation regime so that we can make progress on what is undoubtedly a serious problem— the massive difference between tax regimes. The problem has been described by many hon. Members on both sides, and I have no wish to repeat their comments.
        The Government cannot be serious about any such moves. In a previous life, I was a Member of the European Parliament and I clearly remember the Commission making proposals to harmonise excise duties on alcohol and tobacco. I remember that the first Government to reject any such moves was the British Government. I do not think that the assurances that the Government have apparently given can be serious.
        Let us speculate on the negotiating position of the Government if they told other member states that they wanted to debate harmonising excise duties on alcohol and tobacco. They would be asked why they wanted to do so, and they would reply, "We have just increased ours and we expect you to do the same." I must challenge that negotiating position, as it is absolutely incredible.
        I can well imagine the Prime Minister or the Chancellor saying from the Dispatch Box that such moves were to be made. The independent Tory party— those hon. Members who described themselves at the weekend as the real Tory party— would not stand for that. Given the Government's current policy on the European Union, there is no possibility that any move will be made on the crucial issue of harmonising taxation, even if it were the right thing to do.
        86
        Given that scenario and the concerns expressed by hon. Members about the Government's panic measure, two things should be done. The first is that the House should vote against new clause 2; the second is that the Government should urgently propose measures that would enhance Customs' ability to stop the illegal trade. Instead, they are making cuts in Customs and Excise. If we can do those two things, the House will be able to face the arguments that are being put outside with some credibility.
        The Paymaster General: The Opposition have announced their opposition to the measures before the House. At other times, the Labour party certainly has supported higher taxes on alcohol and tobacco on health grounds. That is an interesting reversal of a long-standing policy. [Interruption.] I am responding to a point made by the hon. Member for Bristol, South (Ms Primarolo), who quoted with approval the example of Denmark. The Danish Government cut alcohol duty in response to large-scale cross-border shopping across its land border with Germany. They made a cut of 48 per cent. in beer and wine duty, yet consumption rose only slightly. The Danish Government then had to find compensatory tax increases elsewhere. If the hon. Lady is suggesting that we emulate Denmark, she must propose alternative sources of revenue.
        That brings me to the point of costs. We would forgo £155 million if we were to accept what has been urged on us by the Labour party, which would create a large hole in Government revenue. If the Labour party wants to pose as a party of financial responsibility, it must tell us what new taxes it would replace the duty with, or what public expenditure cuts it would make.
        The hon. Member for Gordon (Mr. Bruce) is quoted in today's newspapers rightly castigating and criticising the Labour party for constantly making expenditure promises without saying how they would be paid for. Yet the hon. Gentleman and his party support a reduction in revenue of £155 million a year— a spectacular example of the pot calling the kettle black.
        Another point made by the Labour party, and echoed partly by some of my hon. Friends, concerned the efforts made by Customs and Excise to counter the smuggling of alcohol products. The hon. Member for Bristol, South got into a muddle about the Inland Revenue and Customs and Excise staff who are supposed to be deployed in anti-smuggling efforts. She said that there were to be cuts in staff. I can confirm that the number of excise verification officers deployed in anti-smuggling duties will not be cut.
        Mr. David Shaw: Will my hon. Friend confirm that the Government intend to maintain the levels of prosecutions and of Customs officers at Dover port who check on smuggling? Will he further confirm that the Government will do everything possible to fight smugglers and to stop smuggling?
        Mr. Heathcoat-Amory: I can confirm that, and inform my hon. Friend— if he does not know already—that an extra 12 excise verification officers have been deployed to Dover in response to concerns expressed by industry and representations made by my hon. Friend.

        87
        My hon. Friend the Member for Bristol, North-West (Mr. Stern) asked what is to happen to the increasing quantity of seized goods. We are considering a policy of sale without undermining the legitimate trade that we are seeking to protect.
        The general point that I should like to make to my hon. Friend and in particular to my hon. and learned Friend the Member for Burton (Sir I. Lawrence) and my hon. Friend for Hastings and Rye (Mrs. Lait), both of whom have persistently raised it with me, is that we are concerned to protect the legitimate trade and will pursue harmonisation through the European Union, although we would not want to lose our essential fiscal sovereignty over our excise duties.
        We have ensured that the biennial review, the first report of which was due by the end of last year but which was delayed, includes, at our insistence, a clause that requires the council to
        "take into account the proper functioning of the internal market and competition between the various categories of alcoholic drinks."
        Sir Ivan Lawrence: Will my hon. Friend give way?
        Mr. Heathcoat-Amory: Will my hon. and learned Friend forgive me if I do not do so? I know that the House wishes to come to a resolution, but I want to respond to a point made by the hon. Member for Moray (Mrs. Ewing).
        I assure the hon. Lady that we have the interest of the spirits industries firmly in mind. That is why we froze excise duty on spirits in the past three Budgets and, if we had had our way, we would have done so in this Budget too. But because of the House's decision to reject the 17.5 per cent. VAT rate on fuel, we needed to look elsewhere to restore revenue. The Government do not have the luxury of seeing revenues reduced without the obligation to replace them, but I remind her and the House that the duty on spirits will have reduced in real terms by more than 16 per cent. since 1985, even with the increase proposed in the new clauses.
        The Chairman of Ways and Means (Mr. Michael Morris): For clarification, I should say to the Committee that I shall put a minimum of five Questions: first, That the new clause be read a Second time; secondly, the amendment; thirdly, That the new clause be added to the Bill; fourthly, That new clause 2 stand part of the Bill; and, fifthly, the amendments.
        Question put, That the clause be read a Second time:—
        The Committee divided: Ayes 290, Noes 251.

        Division No. 44]

        [8.11 pm

        AYES

        Ainsworth, Peter (East Surrey)

        Baldry, Tony

        Aitken, Rt Hon Jonathan

        Banks, Matthew (Southport)

        Alexander, Richard

        Banks, Robert (Harrogate)

        Alison, Rt Hon Michael (Selby)

        Bates, Michael

        Allason, Rupert (Torbay)

        Batiste, Spencer

        Amess, David

        Bellingham, Henry

        Ancram, Michael

        Bendall, Vivian

        Arbuthnot, James

        Beresford, Sir Paul

        Arnold, Jacques (Gravesham)

        Biffen, Rt Hon John

        Arnold, Sir Thomas (Hazel Grv)

        Bonsor, Sir Nicholas

        Ashby, David

        Booth, Hartley

        Aspinwall, Jack

        Boswell, Tim

        Atkins, Robert

        Bottomley, Peter (Eltham)

        Baker, Nicholas (North Dorset)

        Bottomley, Rt Hon Virginia

        88

        Bowis,John

        Gorst, Sir John

        Boyson, Rt Hon Sir Rhodes

        Grant,Sir A (SW Cambs)

        Brandreth, Gyles

        Greenway, Harry (Ealing N)

        Brazier, Julian

        Greenway, John (Ryedale)

        Bright, Sir Graham

        Griffiths, Peter (Portsmouth, N)

        Brooke, Rt Hon Peter

        Grylls, Sir Michael

        Brown, M (Brigg & Cl'thorpes)

        Gummer, Rt Hon John Selwyn

        Browning, Mrs Angela

        Hague, William

        Bruce, Ian (Dorset)

        Hamilton, Neil (Tatton)

        Budgen, Nicholas

        Hamilton, Rt Hon Sir Archibald

        Burns, Simon

        Hampson, Dr Keith

        Burt,Alistair

        Hannam, Sir John

        Butler, Peter

        Hargreaves, Andrew

        Butterfill, John

        Harris, David

        Carlisle, John (Luton North)

        Haselhurst Alan

        Carlisle, Sir Kenneth (Lincoln)

        Hawkins, Nick

        Carrington, Matthew

        Hawksley, Warren

        Carttiss, Michael

        Hayes, Jerry

        Cash.William

        Heald, Oliver

        Channon, Rt Hon Paul

        Heath, Rt Hon Sir Edward

        Churchill.Mr

        Heathcoat-Amory, David

        Clappison, James

        Hendry, Charles

        Clark, Dr Michael (Rochford)

        Heseltine, Rt Hon Michael

        Clarke, Rt Hon Kenneth (Ru'clif)

        Hicks, Robert

        Clifton-Brown, Geoffrey

        Higgins, Rt Hon Sir Terence

        Coe, Sebastian

        Hill, James (Southampton Test)

        Colvin, Michael

        Hogg, Rt Hon Douglas (G'tham)

        Congdon, David

        Horam, John

        Conway, Derek

        Hordem, Rt Hon Sir Peter

        Coombs, Anthony (Wyre For'st)

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

        Coombs, Simon (Swindon)

        Howell, Rt Hon David (G'dford)

        Cope, Rt Hon Sir John

        Howell, Sir Ralph (N Norfolk)

        Cormack, Sir Patrick

        Hughes, Robert G (Harrow W)

        Couchman, James

        Hunt, Rt Hon David (Wirral W)

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

        Hunt, Sir John (Ravensbourme)

        Curry, David (Skipton & Ripon)

        Jack, Michael

        Davies, Quentin (Stamford)

        Jackson, Robert (Wantage)

        Day, Stephen

        Jenkin, Bernard

        Deva, Nirj Joseph

        Jessel, Toby

        Dicks, Terry

        Johnson Smith, Sir Geoffrey

        Douglas-Hamilton, Lord James

        Jones, Gwilym (Cardiff N)

        Dover, Den

        Jones, Robert B (W Hertfdshr)

        Duncan Smith, Iain

        Jopling, Rt Hon Michael

        Duncan, Alan

        Kellett-Bowman, Dame Elaine

        Dunn, Bob

        Key, Robert

        Durant. Sir Anthony

        King, Rt Hon Tom

        Dykes, Hugh

        Kirkhope, Timothy

        Eggar, Rt Hon Tim

        Knapman, Roger

        Elletson, Harold

        Knight, Mrs Angela (Erewash)

        Emery, Rt Hon Sir Peter

        Knight, Greg (Derby N)

        Evans, David (Welwyn Hatfield)

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

        Evans, Jonathan (Brecon)

        Knox, Sir David

        Evans, Nigel (Ribble Valley)

        Kynoch, George (Kincardine)

        Evans, Roger (Monmouth)

        Lait, Mrs Jacqui

        Evennett, David

        Lamont, Rt Hon Norman

        Faber, David

        Lang, Rt Hon Ian

        Fabricant, Michael

        Lawrence, Sir Ivan

        Fenner, Dame Peggy

        Legg, Barry

        Field, Barry (Isle of Wight)

        Leigh, Edward

        Fishburn, Dudley

        Lennox-Boyd, Sr Mark

        Forman, Nigel

        Lester, Jim (Broxtowe)

        Forsyth, Rt Hon Michael (Stirling)

        Lidington, David

        Forth, Eric

        Lightbown, David

        Fowler, Rt Hon Sir Norman

        Lilley, Rt Hon Peter

        Fox, Sir Marcus (Shipley)

        Lloyd, Rt Hon Sir Peter (Fareham)

        Freeman, Rt Hon Roger

        Lord, Michael

        French, Douglas

        Luff, Peter

        Fry, Sir Peter

        Lyell Rt Hon Sir Nicholas

        Gale, Roger

        MacGregor, Rt Hon John

        Gardiner, Sir George

        MacKay, Andrew

        Garel-Jones, Rt Hon Tristan

        Maclean, David

        Garnier, Edward

        McLoughlin, Patrick

        Gillan, Cheryl

        McNair-Wilson, Sir Patrick

        Goodlad, Rt Hon Alastair

        Madel, Sir David

        Goodson-Wickes, Dr Charles

        Maitland, Lady Olga

        Gorman, Mrs Teresa

        Mans, Keith

        89

        Marlow, Tony

        Shersby, Michael

        Marshall, John (Hendon S)

        Sims, Roger

        Marshal, Sir Michael (Arundel)

        Skeet Sir Trevor

        Martin, David (Portsmouth S)

        Smith, Sir Dudley (Warwick)

        Mawhinney, Rt Hon Dr Brian

        Soames, Nicholas

        Mayhew, RtHon Sir Patrick

        Speed, Sir Keith

        Merchant, Piers

        Spencer, Sir Derek

        Mills, Iain

        Spicer, Sir James (W Dorset)

        Mitchell, Andrew (Gedling)

        Spicer, Michael (S Worcs)

        Mitchell, Sir David (NW Hants)

        Spink, Dr Robert

        Moate, Sir Roger

        Spring, Richard

        Monro, Sir Hector

        Stanley, RtHon Sir John

        Montgomery, Sir Fergus

        Steen, Anthony

        Moss, Malcolm

        Stephen, Michael

        Needham, Rt Hon Richard

        Stem, Michael

        Nelson, Anthony

        Stewart, Allan

        Neubert, Sir Michael

        Streeter, Gary

        Newton, Rt Hon Tony

        Sumberg, David

        Nicholls, Patrick

        Sykes, John

        Nicholson, David (Taunton)

        Tapsell, Sir Peter

        Nicholson, Emma (Devon West)

        Taylor, Ian (Esher)

        Norris, Steve

        Taylor, John M (Solihull)

        Onslow, Rt Hon Sir Cranley

        Taylor, Sir Teddy (Southend, E)

        Oppenheim, Phillip

        Temple-Morris, Peter

        Ottaway, Richard

        Thomason, Roy

        Page, Richard

        Thompson, Sir Donald (C'er V)

        Paice, James

        Thompson, Patrick (Norwich N)

        Patrick, Sir Irvine

        Thurnham, Peter

        Patten, Rt Hon John

        Townsend, Cyril D (Bexl'yh'th)

        Pawsey, James

        Tracey, Richard

        Peacock, Mrs Elizbeth

        Tredinnick, David

        Pickles, Eric

        Trend, Michael

        Porter, Barry (Wirral S)

        Trotter, Neville

        Porter, David (Waveney)

        Twinn, Dr Ian

        Portillo, Rt Hon Michael

        Vaughan, Sir Gerard

        Powell, William (Corby)

        Viggers, Peter

        Rathbone, Tim

        Walden, George

        Redwood, RtHon John

        Walker, Bill (N Tayside)

        Renton, Rt Hon Tim

        Waller, Gary

        Richards, Rod

        Ward, John

        Riddick, Graham

        Wardle, Charles (Bexhill)

        Rifkind, Rt Hon Malcolm

        Waterson, Nigel

        Robathan, Andrew

        Watts, John

        Roberts, Rt Hon Sir Wyn

        Wells, Bowen

        Robertson, Raymond (Ab'd'n S)

        Wheeler, RtHon Sir John

        Robinson, Mark (Somerton)

        Whitney, Ray

        Roe, Mrs Marion (Broxbourne)

        Whittingdale, John

        Rumbold, Rt Hon Dame Angela

        Widdecombe, Ann

        Ryder, Rt Hon Richard

        Willetts, Sir Jerry

        Sackville, Tom

        Willetts, David

        Sainsbury, Rt Hon Sir Timothy

        Wolfson, Mark

        Scott, Rt Hon Sir Nicholas

        Wood, Timothy

        Shaw, David (Dover)

        Yeo, Tim

        Shaw, Sir Giles (Pudsey)

        Young, Rt Hon Sir George

        Shephard, Rt Hon Gillian

        Tellers for the Ayes:

        Shepherd, Colin (Hereford)

        Mr. Sydney Chapman, and

        Shepherd, Richard (Aidridge)

        Dr. Liam Fox

        NOES

        Abbott, Ms Diane

        Benn, Rt Hon Tony

        Adams, Mrs Irene

        Bennett, Andrew F

        Ainger.Nick

        Benton, Joe

        Ainsworth, Robert (Cov'try NE)

        Bermingham, Gerald

        Allen, Graham

        Berry, Roger

        Alton, David

        Betts, Clive

        Anderson, Donald (Swansea E)

        Blair, Rt Hon Tony

        Anderson, Ms Janet (Ros'dale)

        Blunkett David

        Armstrong, Hilary

        Boateng, Paul

        Ashdown, Rt Hon Paddy

        Boyes, Roland

        Ashton, Joe

        Bradley, Keith

        Barnes, Harry

        Bray, Dr Jeremy

        Barron, Kevin

        Brown, Gordon (Dunfermline E)

        Battle, John

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

        Bayley.Hugh

        Bruce, Malcolm (Gordon)

        Beckett, Rt Hon Margaret

        Burden, Richard

        90

        Byers, Stephen

        Heppell, John

        Caborn, Richard

        Hill, Keith (Streatham)

        Callaghan, Jim

        Hinchliffe, David

        Campbell, Mrs Anne (C'bridge)

        Hodge, Margaret

        Campbell, Ronnie (Blyth V)

        Hoey, Kate

        Campbell-Savours, D N

        Home Robertson, John

        Canavan, Dennis

        Hood, Jimmy

        Cann, Jamie

        Hoon, Geoffrey

        Carlile, Alexander (Montgomery)

        Howarth, George (Knowsley North)

        Chidgey, David

        Howells, Dr. Kim (Pontypridd)

        Chisholm, Malcolm

        Hoyle, Doug

        Church, Judith

        Hughes, Kevin (Doncaster N)

        Clapham, Michael

        Hughes, Robert (Aberdeen N)

        Clarke, Eric (Midothian)

        Hughes, Roy (Newport E)

        Clarke, Tom (Monklands W)

        Hutton, John

        Clelland, David

        Illsley, Eric

        Coffey, Ann

        Ingram, Adam

        Cohen, Harry

        Jackson, Glenda (H'stead)

        Connarty, Michael

        Jackson, Helen (Shef'ld, H)

        Cook, Frank (Stockton N)

        Jamieson, David

        Cook, Robin (Livingston)

        Janner, Greville

        Corbett, Robin

        Jones, Lynne (B'ham S O)

        Corbyn, Jeremy

        Jones, Martyn (Clwyd, SW)

        Corston, Jean

        Jones, Nigel (Cheltenham)

        Cousins, Jim

        Jowell, Tessa

        Cunliffe, Lawrence

        Kaufman, Rt Hon Gerald

        Cunningham, Jim (Covy SE)

        Keen, Alan

        Cunningham, Rt Hon Dr John

        Kennedy, Jane (Lpool Brdgn)

        Dalyell, Tam

        Khabra, Piara S

        Darling, Alistair

        Kilfoyle, Peter

        Davidson, Ian

        Kirkwood, Archy

        Davies, Bryan (Oldham C'tral)

        Lestor, Joan (Eccles)

        Davies, Rt Hon Denzil (Llanelli)

        Lewis, Terry

        Denham, John

        Liddell, Mrs Helen

        Dewar, Donald

        Litherland, Robert

        Dixon, Don

        Livingstone, Ken

        Dobson, Frank

        Llwyd, Elfyn

        Donohoe, Brian H

        McAllian, John

        Dowd, Jim

        McCartney, Ian

        Dunnachie, Jimmy

        Macdonald, Calum

        Dunwoody, Mrs Gwyneth

        McFall, John

        Eagle, Ms Angela

        MacKinlay, Andrew

        Eastham, Ken

        Maclennan, Robert

        Enright, Derek

        McMaster, Gordon

        Etherington, Bill

        McNamara, Kevin

        Evans, John (St Helens N)

        MacShane, Denis

        Ewing, Mrs Margaret

        McWilliam, John

        Fatchett Derek

        Madden, Max

        Field, Frank (Birkenhead)

        Maddock, Diana

        Flynn, Paul

        Mahon, Alice

        Foster, Rt Hon Derek

        Mandelson, Peter

        Foster, Don (Bath)

        Marek, Dr John

        Fraser, John

        Marshall, Jim (Leicester, S)

        Fyfe, Maria

        Martin, Michael J (Springburn)

        Galbraith, Sam

        Martlew, Eric

        Galloway, George

        Maxton, John

        Gapes, Mike

        Meacher, Michael

        George, Bruce

        Meale.Alan

        Gerrard.Neil

        Michael, Alun

        Gilbert, RtHon Dr John

        Michael, Bill (Sheffield Heeley)

        Godman, Dr Norman A

        Michie, Mrs Ray (Argyll & Bute)

        Godsiff, Roger

        Milburn, Alan

        Gordon, Mrs Llin

        Miller, Andrew

        Gordon, Mildred

        Mitchell, Austin (Gt Grimsby)

        Graham, Thomas

        Moonie, Dr Lewis

        Grant Bemie (Tottenham)

        Morgan, Rhodri

        Griffiths, Nigel (Edinburgh S)

        Morley, Elliot

        Griffiths, Win (Bridgend)

        Morris, Rt Hon Alfred (Wy'nshawe)

        Grocott, Bruce

        Morris, Estelle (B'ham Yardley)

        Gunnell, John

        Morris, Rt Hon John (Aberavon)

        Hain, Peter

        Mudie, George

        Hal, Mike

        Oakes, Rt Hon Gordon

        Hanson, David

        O'Brien, Mike (N W'shire)

        Hardy, Peter

        O'Brien, William (Normanton)

        Harvey, Nick

        O'Hara, Edward

        Henderson, Doug

        Olner, Bill

        91

        O'Neill, Martin

        Spearing, Nigel

        Orme, Rt Hon Stanley

        Spellar, John

        Pearson, Ian

        Squire, Rachel (Dunfermline W)

        Pickthall, Colin

        Steinberg, Gerry

        Pike, Peter L

        Stevenson, George

        Pope, Greg

        Stott Roger

        Powell, Ray (Ogmore)

        Strang, Dr. Gavin

        Prentice, Bridget (Lew'm E)

        Straw, Jack

        Prentice, Gordon (Pendle)

        Sutcliffe, Gerry

        Primarolo, Dawn

        Taylor, Mrs Ann (Dewsbury)

        Purchase, Ken

        Taylor, Matthew (Truro)

        Radice, Giles

        Thompson, Jack (Wansbeck)

        Randall, Stuart

        Timms, Stephen

        Raynsford, Nick

        Tipping, Paddy

        Redmond, Martin

        Turner, Dennis

        Reid, Dr John

        Tyler, Paul

        Rendel, David

        Vaz, Keith

        Robertson, George (Hamilton)

        Walker, Rt Hon Sir Harold

        Robinson, Geoffrey (Co'try NW)

        Walley, Joan

        Roche, Mrs Barbara

        Wareing, Robert N

        Rooker.Jeff

        Watson, Mike

        Rooney, Terry

        Wicks, Malcolm

        Ross, Ernie (Dundee W)

        Wigley, Dafydd

        Ruddock, Joan

        Williams, Rt Hon Alan (SW'n W)

        Salmond, Alex

        Williams, Alan W (Carmarthen)

        Sedgemore, Brian

        Wilson, Brian

        Sheerman, Barry

        Winnick, David

        Sheldon, Rt Hon Robert

        Wise, Audrey

        Shore, Rt Hon Peter

        Worthington, Tony

        Short, Clare

        Wray, Jimmy

        Simpson, Alan

        Wright, Dr Tony

        Skinner, Dennis

        Young, David (Bolton SE)

        Smith, Andrew (Oxford E)

        Tellers for the Noes:

        Smith, Liew (Blaenau Gwent)

        Mr. Jon Owen Jones and

        Snape, Peter

        Mr. John Cummings

        Question accordingly agreed to.
        Clause read a Second time.
        Amendment proposed to the proposed new clause: (a), in subsection (1), leave out '"£20.60"' and insert '"—£17.83"'—.—[Mrs. Ewing.]
        Question put, That the amendment be made:—
        The Committee divided: Ayes 3, Noes 288.

        Division No. 45]

        [8.25 pm

        AYES

        Ewing, Mrs Margaret

        Tellers for the Ayes:

        Skinner, Dennis

        Mr. Elfyn Llwyd and

        Wigley, Dafydd

        Mr. Alex Salmond

        NOES

        Ainsworth, Peter (East Surrey)

        Batiste, Spencer

        Aitken, Rt Hon Jonathan

        Bellingham, Henry

        Alexander, Richard

        Bendall, Vivian

        Alison, Rt Hon Michael (Seby)

        Beresford, Sir Paul

        Allason, Rupert (Torbay)

        Biffen, Rt Hon John

        Amess, David

        Bonsor, Sir Nicholas

        Ancram, Michael

        Booth, Hartley

        Arbuthnot, James

        Boswell, Tim

        Arnold, Jacques (Gravesham)

        Bottomley, Peter (Eltham)

        Arnold, Sir Thomas (Hazel Grv)

        Bottomley, Rt Hon Virginia

        Ashby, David

        Bowis, John

        Aspinwall, Jack

        Boyson, Rt Hon Sir Rhodes

        Atkins, Robert

        Brandreth, Gyles

        Baker, Nicholas (North Dorset)

        Brazier, Julian

        Baldry, Tony

        Bright Sir Graham

        Banks, Matthew (Southport)

        Brooke, Rt Hon Peter

        Banks, Robert (Harrogate)

        Brown, M (Brigg & Cl'thorpes)

        Bates, Michael

        Browning, Mrs Angela

        92

        Bruce, Ian (Dorset)

        Hampson, Dr Keith

        Budgen, Nicholas

        Hannam, Sir John

        Burt, Alistair

        Hargreaves, Andrew

        Butler, Peter

        Harris, David

        Butterfill, John

        Haselhurst, Alan

        Carlisle, John (Luton North)

        Hawkins, Nick

        Carlisle, Sir Kenneth (Lincoln)

        Hawksley, Warren

        Carrington, Matthew

        Hayes, Jerry

        Carttiss, Michael

        Heald, Oliver

        Cash,William

        Heath, Rt Hon Sir Edward

        Channon, Rt Hon Paul

        Heathcoat-Amory, David

        Churchill,Mr

        Hendry, Charles

        Clappison, James

        Heseltine, Rt Hon Michael

        Clark, Dr Michael (Rochford)

        Hicks, Robert

        Clifton-Brown, Geoffrey

        Higgins, Rt Hon Sir Terence

        Coe, Sebastian

        Hill, James (Southampton Test)

        Colvin, Michael

        Hogg, Rt Hon Douglas (G'tham)

        Congdon, David

        Horam, John

        Conway, Derek

        Hordem, Rt Hon Sir Peter

        Coombs, Anthony (Wyre Forest)

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

        Coombs, Simon (Swindon)

        Howell, Rt Hon David (G'dford)

        Cope, Rt Hon Sir John

        Howell, Sir Ralph (N Norfolk)

        Cormack, Sir Patrick

        Hughes, Robert G (Harrow W)

        Couchman, James

        Hunt, Rt Hon David (Wirral W)

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

        Hunt, Sir John (Ravensbourne)

        Curry, David (Skipton & Ripon)

        Jack, Michael

        Davies, Quentin (Stamford)

        Jackson, Robert (Wantage)

        Day, Stephen

        Jenkin, Bernard

        Deva, Nirj Joseph

        Jessel, Toby

        Dicks, Terry

        Johnson Smith, Sir Geoffrey

        Douglas-Hamilton, Lord James

        Jones, Gwilym (Cardiff N)

        Dover, Den

        Jones, Robert B (W Hertfdshr)

        Duncan, Alan

        Jopling, Rt Hon Michael

        Duncan Smith, Iain

        Kellett-Bowman, Dame Elaine

        Dunn, Bob

        Key, Robert

        Durant, Sir Anthony

        King, Rt Hon Tom

        Dykes, Hugh

        Kirkhope, Timothy

        Eggar, Rt Hon Tim

        Knapman, Roger

        Elletson, Harold

        Knight Mrs Angela (Erewash)

        Emery, Rt Hon Sir Peter

        Knight, Greg (Derby N)

        Evans, David (Welwyn Hatfield)

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

        Evans, Jonathan (Brecon)

        Knox, Sir David

        Evans, Nigel (Ribble Valley)

        Kynoch, George (Kincardine)

        Evans, Roger (Monmouth)

        Lait, Mrs Jacqui

        Evennett, David

        Lamont Rt Hon Norman

        Faber, David

        Lang, Rt Hon Ian

        Fabricant, Michael

        Lawrence, Sir lvan

        Fenner, Dame Peggy

        Legg, Barry

        Field, Barry (Isle of Wight)

        Leigh, Edward

        Fishbum, Dudley

        Lennox-Boyd, Sir Mark

        Forman, Nigel

        Lester, Jim (Broxtowe)

        Forsyth, Rt Hon Michael (Stirling)

        Lidington, David

        Forth, Eric

        Lightbown, David

        Fowler, Rt Hon Sir Norman

        Lilley, Rt Hon Peter

        Fox, Dr Liam (Woodspring)

        Lloyd, Rt Hon Sir Peter (Fareham)

        Fox, Sir Marcus (Shipley)

        Lord, Michael

        Freeman, Rt Hon Roger

        Luff, Peter

        French, Douglas

        Lyell, Rt Hon Sir Nicholas

        Fry, Sir Peter

        MacGregor, Rt Hon John

        Gale, Roger

        MacKay, Andrew

        Gardiner, Sir George

        Maclean, David

        Garel-Jones, Rt Hon Tristan

        McLoughlin, Patrick

        Garnier, Edward

        McNair-Wilson, Sir Patrick

        Gillan, Cheryl

        Madel, Sir David

        Goodlad, Rt Hon Alastair

        Maitland, Lady Olga

        Goodson-Wickes, Dr Charles

        Mans, Keith

        Gorman, Mrs Teresa

        Marshall, John (Hendon S)

        Gorst, Sir John

        Marshall, Sir Michael (Arundel)

        Grant, Sir A (SW Cambs)

        Martin, David (Portsmouth S)

        Greenway, Harry (Ealing N)

        Mawhinney, Rt Hon Dr Brian

        Greenway, John (Ryedale)

        Mayhew, Rt Hon Sir Patrick

        Griffiths, Peter (Portsmouth, N)

        Merchant Piers

        Grylls, Sir Michael

        Mills, Iain

        Gummer, Rt Hon John Selwyn

        Mitchell, Andrew (Gedling)

        Hague, William

        Mitchell, Sir David (NW Hants)

        Hamilton, Neil (Tatton)

        Moate, Sir Roger

        93

        Monro, Sir Hector

        Spicer, Sir James (W Dorset)

        Montgomery, Sir Fergus

        Spicer, Michael (S Worcs)

        Moss, Malcolm

        Spink, Dr Robert

        Needham, Rt Hon Richard

        Spring, Richard

        Nelson, Anthony

        Squire, Robin (Hornchurch)

        Neubert, Sir Michael

        Stanley, Rt Hon Sir John

        Newton, Rt Hon Tony

        Steen, Anthony

        Nicholls, Patrick

        Stephen, Michael

        Nichholson, David (Taunton)

        Stem, Michael

        Nicholson, Emma (Devon West)

        Stewart, Allan

        Norris, Steve

        Streeter, Gary

        Oppenheim, Phillip

        Sumberg, David

        Ottaway, Richard

        Sykes, John

        Page, Richard

        Tapsell, Sir Peter

        Paice, James

        Taylor, Ian (Esher)

        Patrick, Sir Irvine

        Taylor, John M (Solihull)

        Patten, Rt Hon John

        Taylor, Sir Teddy (Southend, E)

        Pawsey, James

        Temple-Morris, Peter

        Peacock, Mrs Elizabeth

        Thomason, Roy

        Pickles, Eric

        Thompson, Sir Donald (C'er V)

        Porter, Barry (Wirral S)

        Thompson, Patrick (Norwich N)

        Porter, David (Waveney)

        Thurnham, Peter

        Portillo, Rt Hon Michael

        Townsend, Cyril D (Bexl'yh'th)

        Powell, William (Corby)

        Tracey, Richard

        Rathbone, Tim

        Tredinnck, David

        Redwood, Rt Hon John

        Trend, Michael

        Renton, Rt Hon Tim

        Trotter, Neville

        Richards, Rod

        Twinn, Dr Ian

        Riddick, Graham

        Vaughan, Sir Gerard

        Rifkind, Rt Hon Malcolm

        Viggers, Peter

        Robathan, Andrew

        Walden, George

        Roberts, Rt Hon Sir Wyn

        Walker, Bill (N Tayside)

        Robertson, Raymond (Ab'd'n S)

        Waller, Gary

        Robinson, Mark (Somerton)

        Ward, John

        Roe, Mrs Marion (Broxbourne)

        Wardle, Charles (Bexhill)

        Rumbold, Rt Hon Dame Angela

        Waterson, Nigel

        Ryder, Rt Hon Richard

        Watts, John

        Sackville, Tom

        Wells, Bowen

        Sainsbury, Rt Hon Sir Timothy

        Wheeler, Rt Hon Sir John

        Scott, Rt Hon Sir Nicholas

        Whitney, Ray

        Shaw, David (Dover)

        Whittingdale, John

        Shaw, Sir Giles (Pudsey)

        Widdecombe, Ann

        Shepherd, Rt Hon Gillian

        Wiggin, Sir Jerry

        Shepherd, Colin (Hereford)

        Willetts, David

        Shepherd, Richard (Aldridge)

        Wolfson, Mark

        Shersby, Michael

        Wood, Timothy

        Sims, Roger

        Yeo,Tim

        Skeet, Sir Trevor

        Young, Rt Hon Sir George

        Smith, Sir Dudley (Warwick)

        Soames, Nicholas

        Tellers for the Noes:

        Speed, Sir Keith

        Mr. Sydney Chapman and

        Spencer, Sir Derek

        Mr. Simon Burns

        Question accordingly negatived.
        Motion made, and Question put, That the clause be added to the Bill:—
        The Committee divided: Ayes 289, Noes 248.

        Divison No. 46]

        [8.36 pm

        AYES

        Ainsworth, Peter (East Surrey)

        Atkins, Robert

        Aitken, Rt Hon Jonathan

        Baker, Nicholas (North Dorset)

        Alexander, Richard

        Baldry, Tony

        Alison, Rt Hon Michael (Selby)

        Banks, Matthew (Southport)

        Allason, Rupert (Torbay)

        Banks, Robert (Harrogate)

        Amess, David

        Bates, Michael

        Ancram, Michael

        Batiste, Spencer

        Arbuthnot, James

        Bellingham, Henry

        Arnold, Jacques (Gravesham)

        Bendall, Vivian

        Arnold, Sir Thomas (Hazel Grv)

        Beresford, Sir Paul

        Ashby, David

        Biffen, Rt Hon John

        Aspinwall, Jack

        Bonsor, Sir Nicholas

        94

        Booth, Hartley

        Gillan, Cheryl

        Boswell, Tim

        Goodlad, Rt Hon Alastair

        Bottomley, Peter (Eltham)

        Goodson-Wickes, Dr Charles

        Bottomley, Rt Hon Virginia

        Gorman, Mrs Teresa

        Bowis, John

        Gorst, Sir John

        Boyson, Rt Hon Sir Rhodes

        Grant, Sir A (SW Cambs)

        Brandreth, Gyles

        Greenway, Harry (Ealing N)

        Brazier, Julian

        Greenway, John (Ryedale)

        Bright, Sir Graham

        Griffiths, Peter (Portsmouth, N)

        Brooke, Rt Hon Peter

        Grylls, Sir Michael

        Brown, M (Brigg & Cl'thorpes)

        Gummer, Rt Hon John Selwyn

        Browning, Mrs Angela

        Hague, William

        Bruce, Ian (Dorset)

        Hamilton, Rt Hon Sir Archibald

        Budgen, Nicholas

        Hamilton, Neil (Tatton)

        Burt Alistair

        Hampson, Dr Keith

        Butler, Peter

        Hannam, Sir John

        Butterfill, John

        Hargreaves, Andrew

        Carlisle, John (Luton North)

        Harris, David

        Carlisle, Sir Kenneth (Lincoln)

        Haselhurst, Alan

        Carrington, Matthew

        Hawkins, Nick

        Carttiss, Michael

        Hawksley, Warren

        Cash, William

        Hayes, Jerry

        Channon, Rt Hon Paul

        Heald, Oliver

        Chapman, Sydney

        Heath, Rt Hon Sir Edward

        Churchill, Mr

        Heathcoat-Amory, David

        Clappison, James

        Hendry, Charles

        Clark, Dr Michael (Rochford)

        Heseltine, Rt Hon Michael

        Clifton-Brown, Geoffrey

        Hicks, Robert

        Coe, Sebastian

        Higgins, Rt Hon Sir Terence

        Colvin, Michael

        Hill, James (Southampton Test)

        Congdon, David

        Hogg, Rt Hon Douglas (G'tham)

        Conway, Derek

        Horam, John

        Coombs, Anthony (Wyre For'st)

        Hordem, Rt Hon Sir Peter

        Coombs, Simon (Swindon)

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

        Cope, Rt Hon Sir John

        Howell, Rt Hon David (G'dford)

        Cormack, Sir Patrick

        Howell, Sir Ralph (N Norfolk)

        Couchman, James

        Hughes, Robert G (Harrow W)

        Currie, Mrs Edwina (SD'by'ire)

        Hunt, Rt Hon David (Wirral W)

        Curry, David (Skipton & Ripon)

        Hunt, Sir John (Ravensbourne)

        Davies, Quentin (Stamford)

        Jack, Michael

        Day, Stephen

        Jackson, Robert (Wantage)

        Deva, Nirj Joseph

        Jenkin, Bemard

        Dicks, Terry

        Jessel, Toby

        Douglas-Hamilton, Lord James

        Johnson Smith, Sir Geoffrey

        Dover, Den

        Jones, Gwilym (Cardiff N)

        Duncan, Alan

        Jones, Robert B (W Hertfdshr)

        Duncan Smith, Iain

        Jopling, Rt Hon Michael

        Dunn, Bob

        Kellett-Bowman, Dame Elaine

        Durant, Sir Anthony

        Key, Robert

        Dykes, Hugh

        King, Rt Hon Tom

        Eggar, Rt Hon Tim

        Kirkhope, Timothy

        Elletson, Harold

        Knapman, Roger

        Emery, Rt Hon Sir Peter

        Knight, Mrs Angela (Erewash)

        Evans, David (Welwyn Hatfield)

        Knight, Greg (Derby N)

        Evans, Jonathan (Brecon)

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

        Evans, Nigel (Ribble Valley)

        Knox, Sir David

        Evans, Roger (Monmouth)

        Kynoch, George (Kincardine)

        Evennett, David

        Lait, Mrs Jacqui

        Faber, David

        Lamont, Rt Hon Norman

        Fabricant, Michael

        Lang, Rt Hon Ian

        Fenner, Dame Peggy

        Lawrence, Sir Ivan

        Field, Barry (Isle of Wight)

        Legg, Barry

        Fishbum, Dudley

        Leigh, Edward

        Forman, Nigel

        Lennox-Boyd, Sir Mark

        Forsyth, Rt Hon Michael (Stirling)

        Lester, Jim (Broxtowe)

        Forth, Eric

        Lidington, David

        Fowler, Rt Hon Sir Norman

        Lidington, David

        Fox, Dr Liam (Woodspring)

        Lilley, Rt Hon Peter

        Fox, Sir Marcus (Shipley)

        Lloyd, Rt Hon Sir Peter (Fareham)

        Freeman, Rt Hon Roger

        Lord, Michael

        French, Douglas

        Luff, Peter

        Fry, Sir Peter

        Lyell, Rt Hon Sir Nicholas

        Gale, Roger

        MacGregor, Rt Hon John

        Gardiner, Sir George

        MacKay, Andrew

        Garel-Jones, Rt Hon Tristan

        Maclean, David

        Garnier, Edward

        McLoughlin, Patrick

        95

        McNair-Wilson, Sir Patrick

        Shersby, Michael

        Madel, Sir David

        Sims, Roger

        Maitland, Lady Olga

        Skeet Sir Trevor

        Mans, Keith

        Smith, Sir Dudey (Warwick)

        Marshall, John (Hendon S)

        Soames, Nicholas

        Marshall, Sir Michael (Arunrdel)

        Speed, Sir Keith

        Martin, David (Portsmouth S)

        Spencer, Sir Derek

        Mawhinney, Rt Hon Dr Brian

        Spicer, Sir James (W Dorset)

        Mayhew, Rt Hon Sir Patrick

        Spicer, Michael (S Worcs)

        Merchant Piers

        Spink, Dr Robert

        Mills, Iain

        Spring, Richard

        Mitchell, Sir David (NW Hants)

        Squire, Robin (Hornchurch)

        Moate, Sir Roger

        Stanley, Rt Hon Sir John

        Monro, Sir Hector

        Steen, Anthony

        Montgomery, Sir Fergus

        Stephen, Michael

        Moss, Malcolm

        Stephen, Michael

        Needham, Rt Hon Richard

        Stewart, Allan

        Nelson, Anthony

        Streeter, Gary

        Neubert, Sir Michael

        Sumberg, David

        Newton, Rt Hon Tony

        Sykes, John

        Nicholls, Patrick

        Tapsell, Sir Peter

        Nicholson, David (Taunton)

        Taylor, Ian (Esher)

        Nicholson, Emma (Devon West)

        Taylor, John M (Solihull)

        Norris, Steve

        Taylor, Sir Teddy (Southend, E)

        Onslow, Rt Hon Sir Cranley

        Temple-Morris, Peter

        Oppenheim, Phillip

        Thomason, Roy

        Ottaway, Richard

        Thompson, Sir Donald (C'er V)

        Page, Richard

        Thompson, Patrick (Norwich N)

        paice, James

        Thumham, Peter

        Patrick, Sir Irvine

        Townsend, Cyril D (Bexf'yh'th)

        Patten, Rt Hon John

        Tracey, Richard

        Pawsey, James

        Tredinnick, David

        Peacock, Mrs Elizabeth

        Trend, Michael

        Pickles, Eric

        Trotter, Neville

        Porter, Barry (Wirral S)

        Twinn, Dr Ian

        Porter, David (Waveney)

        Vaughan, Sir Gerard

        Portillo, Rt Hon Michael

        Viggers, Peter

        Powell, William (Corby)

        Walden, George

        Rathbone, Tim

        Walker, Bill (N Tayaside)

        Redwood, Rt Hon John

        Waller, Gary

        Renton, Rt Hon Tim

        Ward, John

        Richards, Rod

        Wardle, Charles (Bexhill)

        Riddick, Graham

        Waterson, Nigel

        Robathan, Andrew

        Watts, John

        Roberts, Rt Hon Sir Wyn

        Wells, Bowen

        Robertson, Raymond (Ab'd'n S)

        Wheeler, Rt Hon Sir John

        Robinson, Mark (Somerton)

        Whitney, Ray

        Roe, Mrs Marion (Broxbourne)

        Whittingdale, John

        Rumbold, Rt Hon Dame Angela

        Widdecombe, Ann

        Ryder, Rt Hon Richard

        Wiggin, Sir Jerry

        Sackville, Tom

        Willetts, David

        Sainsbury, Rt Hon Sir Timothy

        Wolfson, Mark

        Scott, Rt Hon Sir Nicholas

        Wood, Timothy

        Shaw, David (Dover)

        Yeo,Tim

        Shaw, Sir Giles (Pudsey)

        Young, Rt Hon Sir George

        Shephard, Rt Hon Gillian

        Tellers for the Ayes:

        Shepherd, Colin (Hereford))

        Mr. Simon Burns, and

        Shepherd, Richard (Aldridge)

        Mr. Andrew Mitchell,

        NOES

        Abbott, Ms Diane

        Bennett, Andrew F

        Adams, Mrs Irene

        Benton, Joe

        Ainger, Nick

        Bermingham, Gerald

        Ainsworth, Robert (Cov'try NE)

        Berry, Roger

        Allen, Graham

        Betts, Clive

        Alton, David

        Blunkett David

        Anderson, Donald (Swansea E)

        Boateng, Paul

        Anderson, Ms Janet (Ros'dale)

        Boyes, Roland

        Armstrong, Hilary

        Bradley, Keith

        Barnes, Harry

        Bray, Dr Jeremy

        Barron, Kevin

        Brown, Gordon (Dunfermline E)

        Battle, John

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

        Bayley, Hugh

        Bruce, Malcolm (Gordon)

        Beckett, Rt Hon Margaret

        Burden, Richard

        Benn, Rt Hon Tony

        Byers, Stephen

        96

        Caborn, Richard

        Heppell, John

        Callaghan.Jim

        Hill, Keith (Streatham)

        Campbell, Mrs Anne (C'bridge)

        Hinchiffe, David

        Campbell, Menzies (Fif NE)

        Hodge, Margaret

        Campbel, Ronnie (Btyth V)

        Hoey, Kate

        Campbel-Savours, D N

        Home Robertson, John

        Canavan, Dennis

        Hood, Jimmy

        Cann, Jamie

        Hoon, Geoffrey

        Carlile, Alexander (Montgomery)

        Howarth, George (Knowsley North)

        Chidgey, David

        Howells, Dr. Kim (Pontypridd)

        Chisholm, Malcolm

        Hoyle, Doug

        Church, Judith

        Hughes, Kevin (Doncaster N)

        Clapham, Michael

        Hughes, Robert (Aberdeen N)

        Clarke, Eric (Midlothian)

        Hughes, Roy (Newport E)

        Clarke, Tom (Monklands W)

        Hughes, Simon (Southwark)

        Clelland, David

        Hutton, John

        Coffey, Ann

        Illsley, Eric

        Cohen, Harry

        Ingram, Adam

        Connarty, Michael

        Jackson, Glenda (H'stead)

        Cook, Frank (Stockton N)

        Jackson, Helen (Shef'ld, H)

        Cook, Robin (Livingston)

        Jamieson, David

        Corbett, Robin

        Janner, Greville

        Corbyn, Jeremy

        Jones, Lynne (B'ham S O)

        Corston, Jean

        Jones, Nigel (Cheltenham)

        Cousins, Jim

        Jowell, Tessa

        Cunliffe, Lawrence

        Kaufman, Rt Hon Gerald

        Cunningham, Jim (Covy SE)

        Keen, Alan

        Cunningham, Rt Hon Dr John

        Kennedy, Jane (Lpool Brdgn)

        Dalyell, Tam

        Khabra, Piara S

        Darling, Alistair

        Kilfoyle, Peter

        Davidson, Ian

        Kirkwood, Archy

        Davies, Bryan (Oldham C'tral)

        Lestor, Joan (Eccles)

        Davies, Rt Hon Denzil (Llanelli)

        Lewis, Terry

        Denham, John

        Liddell, Mrs Helen

        Dewar, Donald

        Litherland, Robert

        Dixon, Don

        Livingstone, Ken

        Dobson, Frank

        Llwyd, Elfyn

        Donohoe, Brian H

        McAllion, John

        Dowd, Jim

        McCartney, Ian

        Dunnachie, Jimmy

        Macdonald, Calum

        Dunwoody, Mrs Gwyneth

        McFall, John

        Eagle, Ms Angela

        Mackinlay, Andrew

        Eastham, Ken

        Maclennan, Robert

        Enright, Derek

        McMaster, Gordon

        Etherington, Bill

        McNamara, Kevin

        Evans, John (St Helens N)

        MacShane, Denis

        Ewing, Mrs Margaret

        McWilliam, John

        Fatchett, Derek

        Madden, Max

        Field, Frank (Birkenhead)

        Maddock, Diana

        Flynn, Paul

        Mahon, Alice

        Foster, Rt Hon Derek

        Mandelson, Peter

        Foster, Don (Bath)

        Marek, Dr. John

        Fraser, John

        Marshall, Jim

        Fyfe, Maria

        Martin, Michael

        Gallbraith, Sam

        Martlew, Eric

        Galloway, George

        Martlew, Eric

        Gapes, Mike

        Maxton, John

        George, Bruce

        Meacher, Michael

        Gerrard, Neil

        Meale, Alan

        Gillbert, Rt Hon Dr John

        Michael, Alun

        Godman, Dr Norman A

        Michael, Bill (Sheffield Heeley)

        Godsiff, Roger

        Michie, Mrs Ray (Argyll & Bute)

        Golding, Mrs Llin

        Milburn, Alan

        Gordon, Mildred

        Miller, Andrew

        Graham, Thomas

        Mitchell, Austin (Gt Grimsby)

        Grant, Bemie (Tottenham)

        Moonie, Dr Lewis

        Griffiths, Nigel (Edinburgh S)

        Morgan, Rhodri

        Griffiths, Win (Bridgend)

        Morley, Elliot

        Grocott, Bruce

        Morris, Rt Hon Alfred (Wy'nshawe)

        Gunnell, John

        Morris, Estelle (B'ham Yardley)

        Hain, Peter

        Morris, Rt Hon John (Aberavon)

        Hall, Mike

        Mudie, George

        Hanson, David

        Oakes, Rt Hon Gordon

        Hardy, Peter

        O'Brien, Mike (N W'kshire)

        Harvey, Nick

        O'Brien, William (Normanton)

        Henderson, Doug

        O'Hara, Edward

        97

        Olner.Bill

        Spearing, Nigel

        O'Neill, Martin

        Spellar.John

        Orme, Rt Hon Stanley

        Squire, Rachel (Dunfermline W)

        Pearson, Ian

        Steinberg, Gerry

        Pickthall, Colin

        Stevenson, George

        Pike, Peter L

        Stott, Roger

        Powell, Ray (Ogmore)

        Strang, Dr Gavin

        Prentice, Bridget (Lew'm E)

        Straw, Jack

        Prentice, Gordon (Pendle)

        Sutcliffe, Gerry

        Primarolo, Dawn

        Taylor, Mrs Ann (Dewsbury)

        Purchase, Ken

        Taylor, Matthew (Truro)

        Radice, Giles

        Thompson, Jack (Wansbeck)

        Randall, Stuart

        Timms, Stephen

        Raynsford, Nick

        Tipping, Paddy

        Redmond, Martin

        Turner, Dennis

        Reid, Dr John

        Tyler, Paul

        Rendel, David

        Vaz, Keith

        Robertson, George (Hamilton)

        Walker.Rt Hon Sir Harold

        Robinson, Geoffrey (Co'try NW)

        Walley.Joan

        Roche, Mrs Barbara

        Wareing, Robert N

        Rooker, Jeff

        Watson, Mike

        Rooney, Terry

        Wicks, Malcolm

        Ross, Emie (Dundee W)

        Wigley, Dafydd

        Ruddock, Joan

        Williams, Rt Hon Alan (Sw'n W)

        Salmond, Alex

        Williams, Alan W (Carmarthen)

        Sedgemore, Brian

        Wilson, Brian

        Sheerman, Barry

        Winnick, David

        Sheldon, Rt Hon Robert

        Wise, Audrey

        Shore, Rt Hon Peter

        Worthington, Tony

        Short, Clare

        Wray, Jimmy

        Simpson, Alan

        Wright, Dr Tony

        Skinner, Dennis

        Young, David (Bolton SE)

        Smith, Andrew (Oxford East)

        Tellers for the Noes:

        Smith, Llew (Blaenau Gwent)

        Mr. Jon Owen Jones and

        Snape, Peter

        Mr. John Cummings

        Question accordingly agreed to.
        Clause added to the Bill.
        Clause 2 ordered to stand part of the Bill.

    Schedule 1

      TABLE OF RATES OF DUTY ON WINE AND MADE-WINE
      Amendments made: No. 1, in page 156, line 8, leave out '22.46' and insert '23.41'.
      No. 2, in line 10, leave out '40.44' and insert '42.14'.
      No. 3, in line 12, leave out '134.77' and insert '140.44'.
      No. 4, in line 15, leave out '192.53' and insert '200.64'.
      No. 5, in line 18, leave out '192.53' and insert '200.64'.
      No. 6, in line 25, leave out '19.81' and insert '20.60'.—[Mr. Bates.]
      Schedule 1, as amended, agreed to.

    Clause 5

      RATES OF DUTY
      Question proposed, That the clause stand part of the Bill.
      The Chairman: With this it will be convenient to take Government new clause 3—Hydrocarbon oil rates: further provisions.
      Mr. Heathcoat-Amory: Clause 5 increases the excise duty on hydrocarbon oils by between 6.4 and 9.9 per cent. The differential between leaded and unleaded petrol has been frozen at 5.7p per litre, including VAT. The overall increase in taxation at the pump is between 2.5p and 3.2p per litre on road fuels. The duty increases came into effect, as usual, on Budget day. Duty on aviation gasoline increases automatically by 6.4 per cent., because it is set at half the leaded petrol rate.
      Gas oil used for industrial heating and power, and heavy fuel oil for industrial heating and furnaces, both increase by 0.5p per litre. The duty on road fuel gas is unchanged, but it is now expressed in pence per kilogram rather than pence per litre. Kerosene, which is used as aviation turbine fuel and for domestic heating purposes, is not charged with duty.
      My right hon. and learned Friend the Chancellor also reaffirmed his support for the commitment to increase road fuel duties by an average of at least 5 per cent. in real terms per year. This sends a clear signal to manufacturers to build more fuel-efficient vehicles and a clear signal to customers to buy them. The announcement of our intentions for future increases in fuel duties will give manufacturers and customers a longer-term context in which to plan their investment decisions.
      The 5 per cent. real increases are also an important part of our strategy to reduce carbon dioxide emissions. The fuel duties policy should reduce carbon dioxide emissions by around 2.5 million tonnes of carbon by 2000. This, together with other measures already announced, should enable us to meet our targets of reductions arising from the Rio agreement.
      New clause 3 raises the excise duty on road fuels by between 2.5 per cent. and 2.9 per cent. This arises from the statement by my right hon. and learned Friend the Chancellor on 8 December and was approved by the House on 13 December. The differential between leaded and unleaded petrol has again been frozen at 5.7p a litre. The increase in taxation at the pump, including VAT, will be 1p per litre. This increase came into effect on I January 1995.
      Ms Primarolo: As a result of new clause 3—the increases in excise duty on hydrocarbons—the Chancellor has imposed an extra tax of £51 a year on a typical car owner. This is the latest rise and it means that the duty on a litre of leaded petrol has gone up by 9.8p in the three Budgets since March 1993. The increases, which represent the Tories' one-club response to the Rio environmental targets to which they signed up, are a

      99
      further blow to the many people living in rural areas—[HON. MEMBERS: "Hear, hear."] They all seem to be sitting in the Chamber.
      Mr. John Home Robertson: And why not?
      Ms Primarolo: Indeed, why not. In the absence of a decent integrated public transport system, those living in rural areas are forced to rely on cars as their only means of transport. The increase in petrol duties is another example of the Government's hidden tax increases. In 1979, about 45 per cent. of the retail price of a gallon of petrol went in tax, excise and VAT. From January this year, 75 per cent. of the retail price will go in taxes.
      The Government have claimed that this use of only one mechanism to reach the Rio targets is acceptable. The Chancellor, however, speaking in the House on 8 December 1994, said:
      "I also propose that the duties on road fuels will rise by a further 1p per litre. I have kept these increases to a minimum to limit the burden on businesses and the rural motorist … The increases will also play a part in our strategy for curbing emissions of carbon dioxide."—[Official Report, 8 December 1994; Vol. 251, c. 475.]
      Transport-related air pollution is known to affect people's health adversely. The object must be to change polluting behaviour—to reduce the number of journeys made by car. Emissions of carbon dioxide from motor vehicles increased by 50 per cent. during the 1980s, but the use of above-inflation fuel tax increases may help only as part of a package. In itself, it is insufficient and will not satisfy the environmental targets.
      People will not be persuaded to use cars less by this mechanism, because of the absence of public transport, unless there is an efficient, reliable and affordable alternative. Everything that the Government have done in public transport has undermined that arm of public policy; that continues to be the case. Funding for local government packages for transport in 1995–96 has been cut by 8 per cent. in real terms. The cut for London is 4 per cent. in real terms and will be 37 per cent. in real terms by 1997–98. Those are not the actions of a Government who claim to pursue an environmentally friendly policy on transport. The increases must be seen not as a contribution to a strategy on the environment but as another piece of the jigsaw in which the Government seek indirect taxes to replace direct taxes. They seek to take from people through indirect taxes so that they can save up to give tax cuts, perhaps, in future.
      It is, of course, important to curb carbon dioxide emissions, but that will not be achieved simply by using this type of tax increase. People living in rural areas will be badly affected. They will find it difficult to understand why they must pay for the Government's taxes while receiving little in return in public transport. Pitching the tax and the tax rise as an environmental measure is cynical and no more convincing than the case that the Government tried to make for imposing VAT on fuel.
      This is what needs to be done. We need an urgent shift of investment away from road building and towards public transport. We need to encourage bus priority measures, and we need a network of safe cycle routes and better provision for pedestrians. We need to promote clean air technology, setting minimum standards for fuel efficiency and exhaust emissions. We need to ensure that
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      new developments are sited to minimise the need for the individual to rely on private motoring and an individual car. That, not the spurious case that the Government try to make tonight, which involves taking more taxes from the electorate to save their own skin now, while selling the environment of our children and the future, is the formula for dealing with the environment.
      Mr. Salmond: I endorse everything that the Labour spokesperson, the hon. Member for Bristol, South (Ms Primarolo), said. These are vital matters which will affect rural communities, so it is all the more surprising that the Labour Whips have sent the troops home and they will not be able to vote against the Government if Divisions are called later this evening.
      I turn to proposed new clause 3. When the Government were forced by the joint action of a variety of parties in the House to abandon the second tranche of the value added tax on fuel, they replaced one anti-Scottish measure with two anti-Scottish measures: the mini-Budget tax on whisky, which we have just debated; and the additional taxation imposed on road fuel duty, which will fall heaviest on rural communities, many of which are located in Scotland.
      In the past couple of years, Scotland has been sheltered from the Government's yearly real terms 5 per cent. increase in those duties because of the prevailing low oil prices. That has meant that the pump price of petrol and DERV has not shot up astronomically in the past two years. However, oil is a cyclical market. Western economies are experiencing a general recovery and many economists are forecasting a sharp upturn in the price of oil—certainly a stabilisation and an increase in the current levels. If a real increase of 5 per cent., which the Chancellor has forecast for the indefinite future, and the impost in the mini-bar Budget of additional VAT on fuel is added to the expected upturn in the oil price, the outlook for many rural communities is extremely serious.
      Mr. Dafydd Wigley: Does the hon. Gentleman accept that in many rural communities—certainly in Wales, and, I dare say, in Scotland and in parts of England—the price of petrol is already substantially higher than in urban areas? We are seeing an additional imposition on an already burdensome level of cost, which will hit poorer people very hard indeed.
      9 pm
      Mr. Salmond: The hon. Gentleman is right; he anticipates the point that I was about to make. There will be an increase not just in the road fuel duty but in pump prices generally in rural areas. The increase in VAT on fuel will mean that people in rural communities will pay more tax because the fuel prices are higher. They will lose at every turn.
      The point has been made that in many rural communities the car is not a luxury, but a necessity; it is often the only form of transport available. If the Government continue to pursue them, the measures will impact on transport costs in rural communities and they will hit rural industries by pricing them out of the market. It is academic to talk about competing in a single market of almost 400 million people if rural communities in this country are effectively priced out of accessing that major market because of the huge increases in fuel duties imposed by the Government.

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      The hon. Lady made several suggestions for formulating a more sophisticated, sensitive and environmentally friendly policy, and I shall make a few more. Given the importance of industry to rural economies, the Government should think seriously about increasing the differential between DERV and petrol.
      If they had any imagination, the Government would think carefully about congestion pricing. Singapore intends to experiment in the near future with automatic pricing increases for people who take cars into areas of traffic congestion. One of the great ironies of imposing penalties on rural communities is that people caught in city traffic jams, with cars belching exhaust fumes, impact more on the environment than those people travelling by car in non-congested areas.
      It may be argued that the road tax should be increased for second cars. By and large, if duties must be paid, families with a second car are in a better position to pay them than those families who rely on a single car as their only available form of transport. It can certainly be argued that the adequate provision of public transport—which has been decimated in many rural areas—shouldbe argued that the adequate provision of public transport—which has been decimated in many rural areas—should be a prerequisite of any move sharply to increase petrol and DERV duties.
      As evidence of the pent-up demand for public transport, I cite the experiment that has been run in the Grampian region—it was begun by the SNP Labour-controlled council two years ago and has been continued by the SNP Liberal administration—offering a 10p bus fare. An old-age pensioner can travel in the north-east of Scotland from Dundee to Inverness for l0p. That experiment has been extraordinarily successful, and buses that were once empty are now full of people taking the opportunity to use rural public transport. The Government's measure will price people out of private transport in rural areas.
      At the beginning of my brief remarks, I said that the Government had effectively replaced one anti-Scottish tax with two anti-Scottish taxes. Given that my colleagues and I have already voted against the general taxation measure in the Budget debate proper, given the opportunity this evening we will certainly divide against the Government's proposed new clause 3. I hope that on this occasion the other Opposition parties will join us in the Lobby.
      Mr. Malcolm Chisholm: My hon. Friend the Member for Bristol, South (Ms Primarolo) rightly said that the way to deal with CO2 emissions is to develop public transport, but new clause 3 will further punish public transport because of the increase that it will make in diesel fuel. That was not highlighted in previous debates. That percentage increase is far higher than the 5 per cent. that the Chancellor highlighted as official policy, because of the freezing of fuel rebate in last year's Budget.
      Until November 1993, local bus companies paid about 10p per litre of fuel. When the rebate was frozen last year, that amount was added to their costs. There was an increase of nearly 3p after last year's Budget, and after the two Budgets this fiscal year, users will have to pay an additional 3.62p. A local bus company will, in effect, face a 60 per cent. increase in fuel costs as a result of new clause 3. We must highlight the effect that that will have on public transport costs.
      102
      My local bus company, Lothian Regional Transport, said that the increases would add £600,000 to its costs in the forthcoming year, which is 1 per cent. on its total overheads. There were similar increases last year, although they were cushioned to some extent because oil prices were static and declined for part of the year. I am told that the reverse is likely in the forthcoming year because of the rise in the value of the dollar.
      Bus companies will begin to feel the effects of the increased tax and the freezing of the rebate in the course of the next year. It is an anti-environment tax in respect of bus companies. The consequence will be higher fares and fewer people using public transport. That is usually the case when fares increase.
      The Government presented last year's rebate freeze as a green measure, but that is typical of the hypocrisy that we saw when they introduced VAT on domestic fuel. The Government argued that buses would be forced to use more fuel-efficient engines if diesel became more expensive. The reality is that cutting emissions often means less fuel efficiency and more diesel being used.
      Mr. Salmond: Is not one effect of Government policies, which is evident to any driver, that they result in a large number of older buses in use because of lack of investment?
      Mr. Chisholm: I was about to make that point. Higher fuel costs mean less money available for investment. Since deregulation, there have been many more older buses on the road. We are seeing another example of the Government not thinking seriously about the environment. It is time Government Departments started paying attention to the recommendations of the Royal Commission on environmental pollution. If they did, they would start fully rebating amounts spent by bus companies on fuel. Because the Government are not doing that, I totally oppose the increase in duty on bus fuel.
      Mr. Home Robertson: My hon. Friend said that the Government are imposing an anti-environment tax. I endorse also the point made by my hon. Friend the Member for Bristol, South (Ms Primarolo) that it is a ferociously anti-rural tax. The Government and the Paymaster General, who represents a rural constituency, ought to explain the reasons for their action.
      My hon. Friend the Member for Bristol, South said that this measure will involve an extra tax take of £51 from every car owner in Britain. I suspect that my rural constituents will pay much more because they must travel greater distances and use more fuel. All the goods and services that they purchase are also subject to the tax. The tax certainly discriminates heavily against people living in rural areas.
      Sometimes, people have no choice in this matter. Last week, I received a letter from a constituent who, until recently, used the railway service to commute to work in Edinburgh. Because of the lack of investment in that service, however, it has become so unreliable that she now finds it necessary to travel by road. Other Government policies are pushing more and more people on to the roads, and now the Government are taxing them for something that they did not want to do in the first place.
      As my hon. Friend the Member for Bristol, South said, the measure has been dressed up as something to do with the Rio environmental objectives. Clearly, that is bogus. If there is one group of motorists who do not significantly

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      contribute to carbon dioxide pollution, it is rural motorists. The pollution of the environment caused by people driving around the highlands of Scotland, rural Wales or the south-west of England is hardly an important factor in atmospheric pollution. Far more important is the pollution generated by—largely stationary—vehicles in traffic jams in urban Britain. If, as the hon. Member for Banff and Buchan (Mr. Salmond) and other hon. Members have suggested, the Government dealt with that problem, I am sure that the House of Commons would support them.
      I hope that the Minister's constituents in Wells are aware of what he is doing. This is a ferociously anti-rural tax, and the Government should not be allowed to get away with it.
      Mr. Heathcoat-Amory: I have listened carefully to this debate and to the opposition to the proposal from Opposition parties. Those same Opposition Members have in the past supported the idea of increasing taxes on environmentally unfriendly products—there are plenty of quotes on file to support that contention. Once a lobby group is assembled to complain about a particular increase in duty on environmentally unfriendly products, however, they cave in and vote against it. In fact, I am not sure whether they will tonight. We shall see who—and how many of them—votes against the measure.
      The fact is that 20 per cent. of carbon emissions in the United Kingdom come from road transport, and a large increase in emissions is forecast by the end of the century; so transport must contribute to any strategy to reduce carbon dioxide emissions. Under the Rio convention, we agreed to reduce our emissions by the year 2000. The hon. Member for Bristol, South (Ms Primarolo) is wrong to say that this is our only policy to achieve that end. The increase in road fuel duty contributes to only a quarter of the carbon dioxide reductions that we are planning. There are plenty of other measures in place which will deliver the bulk of our commitment.
      Of course I recognise the position of those living in rural areas. As the hon. Member for East Lothian (Mr. Home Robertson) reminded the Committee, I represent a rural constituency and I am alert to its interests. I know that a car is often a necessity, but all motorists must think about the environmental consequences of what they do. We have ensured in other ways that the cost of motoring is kept down whenever possible—
      Mr. Salmond: As the Minister has recognised the interests of his own constituents, may I ask him whether the Government have made any study of the differential effect of their policy of blanket increases on rural motorists and rural incomes? Have they made any study of the impact on rural industries of the road—pardon the pun—down which they are travelling? Were any studies done before the policy was put in place? Do the Government know the implications for rural communities of the policies that they are imposing on them?
      Mr. Heathcoat-Amory: Yes, a well-known study of the pricing of petrol and of petrol products throughout the United Kingdom has been done. The hon. Gentleman will concede that petrol and fuel costs are but one component in the budgets of those who live in rural areas. Plenty of other things are cheaper in rural areas—certainly in
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      Scotland, where housing costs are generally lower than they are in my constituency. I am not asking for the Government to intervene to try to correct that imbalance; it would be impossible for the Government to lay down by some prescriptive formula what petrol and fuel companies should charge in various parts of the country. I am rather surprised that the hon. Gentleman advances that proposition. Why should such an approach be limited to fuel costs? Why should it not apply also to every item on which our constituents spend their money? I accept that some things are more expensive in rural areas. Some things are more expensive in urban areas. That is the interplay of a market and the inheritance of the past.
      Dr. Godman: Will the Minister give way?
      Mr. Salmond: Will the Minister give way?
      Mr. Heathcoat-Amory: I shall give way to the hon. Member for Greenock and Port Glasgow (Dr. Godman). The hon. Member for Banff and Buchan (Mr. Salmond) has already spoken.
      9.15 pm
      Dr. Godman: Will the Minister confirm that such increases in the price of fuel oil have nothing to do with the oil used by fishing vessels to power those vessels?
      Mr. Heathcoat-Amory: If I am wrong, I shall write to the hon. Gentleman, but my understanding is not. If the hon. Gentleman will forgive me, I shall not give a definitive answer from the Dispatch Box. The structure of fuel duties is complicated. In my opening remarks, I referred to vehicle fuels and to heavier fuels, some of which are taxed more lightly and some of which are not taxed at all.
      I shall pursue the argument about the overall cost of motoring. I remind the Committee that the abolition of car tax by the Government has made cars somewhat cheaper. That, in turn, has filtered through to the second-hand market. Although we see increases in the price of petrol, petrol is still cheaper in real terms than it was a decade ago. It is certainly cheaper here than in most other European Community countries.
      We have resisted calls from some quarters for the doubling of duties on transport fuels. Such calls occasionally crop up from various environmental groups and others, which seek the abolition of vehicle excise duty and a transfer to fuel tax. That is attractive to some. It would equate costs more closely with usage. Precisely for the reason that it would disproportionately damage and hit the rural motorist, we have resisted that approach. For all the reasons to which I have referred, I must ask the Committee to accept the clause in its original form.
      The Chairman: For the convenience of the Committee, I shall put the Question on the new clause after the Question on clause stand part.
      Question put and agreed to.
      Clause 5 ordered to stand part of the Bill.

    New clause 3

      HYDROCARBON OIL RATES: FURTHER PROVISIONS
      '.—(1) In section 6(1) of the Hydrocarbon Oil Duties Act 1979, as amended by section 5 above, for "£0.3526" (duty on light oil) and "£0.3044" (duty on heavy oil) there shall be substituted "£0.3614" and "£0.3132" respectively.

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      (2) This section shall be deemed to have come into force on 1st January 1995.'.—[Mr. Heathcoat-Amoty]

      Brought up, read the First and Second time, and added to the Bill.
      The Chairman: We now come to clause 8 stand part, with which we shall take new clause 4.
      Mr. Salmond: Have you overlooked new clause 3, Mr. Morris?
      The Chairman: I have already put the Question on new clause 3 clearly. I do not think that the hon. Gentleman was paying full attention. The Clerk read out the title of the new clause.

    Clause 8

      RATES OF DUTY
      Question proposed, That the clause stand part of the Bill.
      The Chairman: With this it will be convenient to discuss Government new clause 4—Tobacco rates: further provisions.
      Mr. Heathcoat-Amory: The clause raises the duty on tobacco by between 5 and 6.4 per cent. It adds 10p to the price of a packet of cigarettes, including VAT. It fulfils a commitment given in the previous Budget to raise tobacco taxes by at least 3 per cent. in real terms. That is for revenue purposes and health reasons, since evidence shows that price is an important factor in persuading people to give up smoking. The increase came into effect from 6 pm on Budget day.
      New clause 4 increases tobacco duties by 3.7 per cent., other than for hand-rolling tobacco. The sole reason for that increase is that it will recoup some of the revenue lost by dropping the second stage of VAT on domestic fuel and power.
      The increase will yield £205 million in 1995–96, and will increase the cost of a packet of cigarettes by 6p, including VAT.
      Ms Primarolo: In new clause 4, the Government propose a 4 per cent. increase in tobacco duties, which will mean an extra 6p on the price of a packet of cigarettes, on top of the 1 Op increase announced In the main Budget.
      While the Opposition accept that increasing duties is one way to reduce smoking, we cannot close our minds to the distributional effect, especially as the increase will hit low-income earners hardest, as they smoke most. A recent analysis by the Policy Studies Institute concluded:
      "Smoking is greatest among the most disadvantaged families: nearly three quarters of council tenants receiving means-tested benefits smoke, spending £16 a week or £1 in every £7 of their net disposable incomes. The children of poor families who smoke are three times more likely to be going without essential items than the children of similar poor families who do not smoke."
      For that reason, a ban on tobacco advertising is the most effective educational and preventive measure and a crucial aspect of any anti-smoking campaign.
      This evening, the Minister tried to hide behind a health priority to justify the increase in tax. Smoking-related diseases account for about 110,000 premature or avoidable deaths a year. It is estimated that 50 million
      106
      working days are lost annually through smoking. Recent evidence shows that about one non-smoker a day dies as a consequence of inhaling other people's tobacco smoke.
      During the Second Reading debate on the Tobacco Advertising Bill, the then Minister for Health said:
      "We are taking action on price because we know that there is a good, solid evidence that price influences consumption."—[Official Report, 11 February 1994; Vol. 237, c. 611.]
      As they did during the debate on alcohol, the Government completely close their eyes to the implications of their tobacco taxation policy and the way in which it will provide opportunities for tobacco smuggling. Smuggling not only undermines the industry here, and therefore will eventually weaken what tax base there is, but undermines the Government's health policy, because the contraband goods are unregulated and available to the very groups for whom the Government's health policy, "The Health of the Nation", sets targets to reduce smoking—the 11 to 15-year-old age range.
      By pursuing the tobacco industry, through taxation, the Government are undermining that. We have made clear our views on the health aspects, on curtailing smoking and encouraging people not to smoke, but taxation is not the way to do that.
      Dr. Godman: My hon. Friend will recall that the Minister suggested that an increase in tobacco tax led to a reduction in the consumption of cigarettes and other tobacco-related products. Is it the older smoker who is deterred by such increases or the younger, newer smoker?
      Ms Primarolo: There is not sufficient detailed evidence available on that subject. Clearly, what my hon. Friend calls the older smoker may be deterred by the increase in taxation. Our concern is also to prevent young people starting to smoke in the first place. The problem is that, because of the Government's taxation policy, smuggled tobacco goods are being sucked into the country, undermining the industry and, through the sales networks, providing access to smoking for young people.
      Other countries have experienced similar effects. I shall use the example of Canada especially, which sought to use simply taxation on tobacco products as its method of introducing and policing a health policy to encourage people not to smoke. Two things happened. First, there was massive importation across the United States border into Canada and, secondly, Canadian-produced cigarettes were exported to the US and smuggled back in and sold. It undermined the health policy and proved to be totally ineffective. In the end, the Canadian Government had to reassess their position on imposing high taxation on tobacco products.
      In this country, apart from the smuggling, mail order cigarette companies are emerging. I should correct myself. They are not cigarette companies, they are sellers of tobacco products through mail order, which thereby avoid taxation and undercut the existing industry. As yet, the Government have not come up with any proposals to deal with that. Several other problems are being experienced too, such as the smuggling of huge quantities of hand-rolling tobacco, especially the product Drum. Of all detected smuggling, 67 per cent. is of tobacco.
      The industry itself has produced substantial and convincing arguments. I say that as a committed anti-smoker. The information provided by the tobacco industry shows only too clearly the disastrous route down

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      which the Government's taxation policy is taking us. We will lose control of tax. We will lose control, through tobacco products, of our health policy and we will undermine considerably the country's industry.
      We always return to the same arguments. There is no proper commitment, through the Government's policy on Customs and Excise, to preventing illegal importing of products. There is no clear commitment to balancing a health policy of taxation, education and banning of advertising as a way in which to pursue our health needs. The Government's taxation policy will undermine their own woefully inadequate health policy, which demonstrates clearly, yet again, that the Government have a series of Departments contradicting and working against each other, rather than collaborating and taking the country forward.
      Mr. Harry Greenway: I cannot go down the same road as the hon. Member for Bristol, South (Ms Primarolo). Hon. Members are well aware that Labour Front-Bench Members have in their sights punitive levels of taxation on tobacco. They have always wanted higher taxation than the Government have ever proposed, including the measures in the current Budget; 10p and 6p is not as much as Labour would like to see and the industry is aware of that. The 600 people in my constituency who work for Gallaher Tobacco in Northolt are aware of that—[Interruption.] It is no good the hon. Member for Bristol, South trying to interrupt me from a sedentary position.
      My constituents are aware that the Labour party is completely illiberal in the sector that I have described. Labour Members do not accept people's right to choose whether to smoke. We are a responsible society. I am not a smoker, but I defend the right to choose.
      The hon. Member for Bristol, South and her Opposition Front-Bench colleagues might care to reflect that, whether we like it or not, some people are comforted by smoking. To hide behind the smokescreen of a call for a ban on tobacco advertising is the most obviously crude tactic that I have seen. It will not convince anyone. The hon. Member for Bristol, South should be ashamed of what she said.
      9.30 pm
      Dr. Godman: I can understand the hon. Gentleman's desire to defend the interests of his 600 constituents who are employed in the industry. However, how would he campaign for a dramatic reduction in the consumption of cigarettes and other related products?
      Mr. Greenway: Certainly not in the way that the Labour party is campaigning for it. As a result of Labour's pressure, cigarettes are being imported from such countries as France and Germany. That is undermining the sales of companies in this country and it led a few weeks ago to the loss of 209 jobs in my constituency. Those jobs have been exported to France and Germany. It is not that people are smoking less, it is that they are smoking differently. Our people are losing their jobs and Labour Members think that that is clever. They should think again.
      My constituents and others who work in the industry are good, honest and honourable people. They are not pleased—I am not pleased—with the double whammy
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      that they have received in the Budget—[Interruption.] The Labour party has aided and abetted such a policy for many years and it continues to do that. People in my constituency and elsewhere will not be deceived by the hypocrisy that we have heard this evening from the hon. Member for Bristol, South.
      In 1995, the United Kingdom tobacco industry will lose sales to the continent as a result of high UK tobacco taxes. Excise duties on the continent are markedly lower. The United Kingdom is at a serious competitive disadvantage and the Government are losing revenue. Since 1993, there has been a significant increase in the level of legal, and more noticeably illegal, cross-border shopping for tobacco products. That must be noted.
      The Chancellor's decision to increase tobacco duties twice in a fortnight—in his 1994 Budget and subsequent mini-Budget—has significantly widened the tax-induced price differentials between UK tobacco products and their European Union equivalents. That policy will exacerbate the problems caused by legal and illegal cross—border tobacco trading in 1995.
      The Treasury and Civil Service Select Committee, in its cross-border shopping inquiry last year, and the Government, have acknowledged that cross-border trading for tobacco, particularly for hand-rolling tobacco, is a major cause for concern. The United Kingdom tax burdens on tobacco are among the highest in the European Union. United Kingdom tax on hand-rolling tobacco—HRT—is the highest in the European Union while UK tax on cigarettes is the second highest.
      Tax levels are the prime determinant of price and the tax incidence on UK cigarettes is more than 76 per cent. of the retail price. Large savings can be made by shoppers travelling to low-tax European Union countries and stocking up on duty-paid tobacco goods, particularly cigarettes and HRT. Opportunities for bargains have attracted shoppers for the savings and bootleggers for the profits.
      The latest official estimates of revenue loss from tobacco goods—[Interruption.] My constituents will note that the hon. Member for Bristol, South and Opposition Front-Bench Members are laughing. They think that it is funny, but my constituents are not amused. The latest official estimates of revenue loss from tobacco goods, relating to 1993, totalled £120 million. That comprised £100 million from shopping and £20 million from bootlegging, no less, based on an assumed 5 per cent. detection rate. Revenue losses from tobacco bootlegging were about 65 per cent. of the total revenue loss on all excise goods.
      Industry data and market research demonstrate a steady growth in personal cross-border shopping. More significantly, there appears to be a rapid and worrying increase in smuggling or bootlegging, particularly for HRT. Evidence suggests that detection rates could be as low as only 1 per cent. for bootlegged goods. The retail value of United Kingdom sales losses on tobacco goods to continental companies is estimated to be £375 million in 1994. Revenue losses on tobacco have therefore been badly underestimated by Her Majesty's Government and could be as much as £275 million a year, comprising legal shopping at £100 million and bootlegging at £175 million.
      It is now believed that more than 25 per cent. of the HRT market is sourced from the continent. Twelve per cent. of HRT smokers in the United Kingdom now say that Drum, which has been mentioned and which, for

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      trademark reasons, is not sold in the United Kingdom, is the brand that they smoke most often. A further 6 per cent. smoke Drum regularly. A great many cross-channel van traders are now buying HRT because of its profitability, in addition to beer. Also, 67 per cent.. of all seizures by Customs in the 12 months to June 1994 were made up of tobacco products. HRT alone accounted for more than half of all seizures.
      There is a wide discrepancy between a reduction in United Kingdom retail sales of HRT and an increase in sales of cigarette rolling papers. In fact, the HRT market may even be growing, despite official statistics showing a rapid fall in sales. Unless the Government moderate their tobacco excise policy, the significant growth in HRT cross-border trading will trigger similar activity for cigarettes, with associated serious social consequences from criminal activity.
      Tobacco revenue accounts for 12 per cent. of all Government taxes on consumer goods. Any reduction in that revenue would have serious implications for the Treasury, which is already facing losses on cross-border trading. [Interruption.] We do not need the Opposition chorus to support the brief to which I am referring. I just wish that they actually believed in what I have been saying and supported it, but they do not. We know that, and the industry knows that. The 209 people in Northolt in my constituency whom I mentioned know that, in this matter, the Labour party is their bitter enemy, and so do I.
      Mr. Michael J. Martin: When I first came to the House, 3,000 tobacco industry employees worked in Springburn. Only a few weeks ago, Gallaghers announced that the last 50 employees have left my constituency. It is interesting to note that my native city of Glasgow made its name during the industrial revolution. The tobacco lords, who made their money from the tobacco industry, were able to finance the industrial revolution in Glasgow. In a sense, Glasgow was made because of the tobacco industry.
      This debate highlights the tobacco industry, but the Government could hammer another industry with tax tomorrow. I do not know how many people have been employed in the tobacco industry since the Government came to office. There must have been many thousands of employees, but the number is dwindling every day.
      When the Government took over in 1979, I heard a lot about the Luddite attitude of workers. The Government could never say that about the workers in the tobacco industry. Tobacco firm owners— even the notorious Hanson— would be able to say that not one worker in the tobacco industry ever turned his back on the new technology that played a big part in those workers losing their jobs.
      It is to the credit of the tobacco employers and the trade union movement that they were able to negotiate for the workers excellent wages and conditions and retirement for workers in their early 50s. The industry set an example in equal pay; in fact, there was equal pay in the industry before the Trades Union Congress and other wings of the trade union movement had begun their campaign for equal pay. Those who visited tobacco factories saw that the workers enjoyed excellent cafeteria facilities, pensions and other fringe benefits.
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      No one can defend the effects of tobacco on health. Anyone who has met a person suffering from emphysema or bronchitis must say that we should never have had cigarettes. If only we could have stopped cigarettes, we might have helped prevent the terrible lung cancer which— while I am not a medical man— I understand is a form of cancer that cannot be cured. No one can defend the health situation and if it means putting up taxation to stop someone smoking, I am all for that.
      My hon. Friends mentioned that the smuggling that is going on across the channel has been helped because the Government have taken it upon themselves to sack Customs and Excise officers. Customs and Excise was a dedicated service, and it was considered to be a highly professional service in which a person could get a career, but morale now is terrible.
      If people can smuggle tobacco across the channel, it must be the case that cocaine and heroin can also be smuggled. If the Government are getting more money from people who smoke, they should be reinforcing customs facilities, rather than breaking them down.
      There are housing estates in poor areas—it always seems to be poor areas that are hit—where people turn to alcohol and tobacco because of despair. Many of the early socialists were teetotal or in favour of prohibition because they saw the terrible effect that alcohol and tobacco could have on ordinary working men and women. In those housing estates, the people who are smuggling beer are selling it from the back of a van and saying as an incentive that if a person buys two dozen cans of beer, he will get a free pack of hand-rolling tobacco. The people smuggling beer are also smuggling tobacco.
      If anything can be learned from the tobacco industry, it is that the Government have killed the goose that laid the golden egg. They have destroyed the work force, but not the employers. Hanson will never be out of a job, but he went into the W.D. and H.O. Wills factory in my constituency and took every job there. That was a factory where people had worked loyally for generations, and they had built up the industry. He took away the tradition that the tobacco owners—the Mitchells and the Gallaghers—had. They had a reputation for doing good in the community.
      The Mitchells built the Mitchell library in Glasgow. Gallaghers did a great deal, particularly during the troubles in Northern Ireland, to try to break down the sectarian problems, when it used its finance. But Hanson did not. He came into a factory, a list B building of special design and architecture, sacked the work force and moved the machinery down to Bristol. Then he had the brass neck to send some of his minions to see the local Member of Parliament—me—who said, "We would like to develop this building into a lovely office block, take away the offices from the centre of Glasgow and bring them into our new office block." I told them—I will not use the language here—where to go.
      People such as Hanson and many others make such a lot of money. They can diversify, but the work force in Glasgow cannot. They cannot go into other industries. When I spoke to the tobacco owners, I said, "If you get into insurance, potato crisps or restaurants"—or many of the other things that the tobacco industry does—"take some of the new services in which you are investing and put them where you made your money: in Glasgow, Nottingham, Bristol and Liverpool." They would not do that.

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      9.45 pm
      Therefore, my constituents feel bitter about some of the tobacco owners, but not Gallahers, which has been decent. Okay, there must be redundancies. We accept that the tobacco industry has had a difficult time, but keep putting up the taxes on it and we shall not be able to tax producers who are in Italy, France, Germany or even further afield, because the tobacco will be smuggled in. This country will have no tobacco industry. I know that the health people will say three cheers, but if Britain does not have a tobacco industry, that does not mean that we shall lose the health problems, because they will be brought in from somewhere else. We must tackle the problem through education and other things.
      I despair that if the Paymaster General can do that to an industry in which the work force did not turn its back on new technology, were loyal and had excellent industrial relations, he can start on another industry and give it the same problems that he gave the tobacco industry.
      Mr. Peter Griffiths: My hon. Friend the Paymaster General commended the measures to us tonight, I felt, without great enthusiasm. In his comments, he did not seek to analyse their likely fiscal effect. Rather, he made a simple statement that the Government needed more money because they do not have the tax on domestic fuel. He went on to say that there is a powerful health lobby outside, which would applaud what we are doing today. That is not a reason to develop the Budget of the nation.
      Those arguments will probably carry the day. I do not know whether we will accept the measures, but I assume that we probably will. I ask my hon. Friend to give thought to what he is doing tonight. He may simply be speaking on behalf of others, but what he is doing is very serious. I do not wish to repeat what has been said, but mention has been made of employment, and if we simply buy tobacco that is processed overseas, we lose jobs in our tobacco industry. That cannot be to the advantage of our economy.
      An important sector, although it has not been mentioned, is the retail tobacconists—the wholesalers, too, but the retailers in particular—very few of whom nowadays are the specialists they were in my youth. Nowadays, they are often part of a local social service that provides a range of products, sold during long hours throughout the day, of which tobacco profits are an essential factor. If those shops close, not only will the Government lose revenue, but local people will lose services. Surely that cannot be to the benefit of the economy, which is what the Budget should be about.
      My hon. Friend the Minister prayed in aid the health factor. I was a teacher for 30 years. I do not smoke cigarettes and strongly believe that, as the hon. Member for Glasgow, Springburn (Mr. Martin) said, it would be wonderful if tobacco smoking had never been invented. But it has and millions of people in this country smoke, either by choice or because they are addicted. The measures that my hon. Friend the Minister has proposed will not protect their health, which can be dealt with only by a process of education. What is happening goes against all the principles of educating young people. Many young
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      people smoke not because they like the taste of tobacco or are addicted to nicotine, but because they think that it makes them appear grown up and sophisticated and because smoking is not approved of by older people.
      The taxation of tobacco products has reached the point where it is creating a massive flow of smuggled tobacco. I represent a south coast port, so I know about that problem. As far as we know, only 1 per cent. of the smuggled tobacco is being stopped and 99 per cent. is getting through. How else do we explain the fact that most tobacconists sell very little hand-rolling tobacco compared with five years ago, but 20 per cent. more tobacco papers? The Minister must deal carefully with that question between now and the next Budget, and ask whether his proposal assists the health education programme of other Departments.
      I accept that the Government need money, but adding an excitement factor to smoking by making young people feel that they are getting hold of contraband goods makes smoking even more exciting. That is directly opposed to every part of health education.
      The bulk of tobacco that enters the country carries no health warning. Packets from overseas carry health warnings in foreign languages, and youngsters cannot necessarily understand them.
      So this is not a health measure and it is not right for my hon. Friend the Minister to say that it is about health. It is intended to raise money, which is the Budget's purpose. I am prepared to accept that it is necessary for the Government to receive revenue, but we have now reached the position where marginal increases in the price of tobacco do not bring in proportionate increases in revenue. That is why, in his opening speech, my hon. Friend drew attention to the fact that he was making different arrangements for hand-rolling tobacco and cigarettes. He must recognise the effect that such measures have on the marketplace and realise that the great feature of this Budget was the public revolt against what was seen as an unfair tax. Tobacco smokers are unlikely to rise up against the tax, as old-age pensioners did against VAT on fuel. But they have a sense of what is fair and decent. There are millions of them and they have votes. They will remember whether they were treated unfairly.
      I suggest that, in the next Budget, the Government carefully consider a reasonable and fair tobacco regime that is geared to persuading our colleagues on the other side of the channel to raise their taxes on tobacco, so that there is more equality to get rid of the smuggling that now takes place. My hon. Friend the Minister would then be able to tell the House that he would be able to collect his revenue. He would also be able to tell us, and look us in the eye as he did, that he was working in the interests of public health.
      Dr. Godman: I wish to ask the Minister a couple of questions about new clause 4, to which I give a guarded welcome. I say "guarded" because I believe that the tax increase on tobacco products should have been much higher. I say that as someone who began smoking at the age of 12 and who, over time, became a 40-a-day man. I now speak as a convert. Just a few weeks ago, I was in the company of a young couple with a two-year-old son. I was horrified when those otherwise mature, sensible youngsters smoked in the company of their tiny son. I thought that that was disgraceful and told them so.

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      Can the Minister estimate—(Interruption.] I hope to ask him a couple of questions when he stops chatting to the Government Whip.
      Mr. John Carlisle: Get on with it.
      Dr. Godman: I shall get on with it for quite some time if I am pushed.
      Is the Minister able to estimate the reduction in the number of smokers that results from an increase in the tax on tobacco products? Can he estimate what proportion of the tax increases will be used to invest in and support health education programmes designed specifically to dissuade youngsters from smoking cigarettes?
      Mr. Heathcoat-Amory: The policy of the official Opposition is now apparently to resist tobacco duty increases—a reversal of their previous position. They now intend to rely, almost entirely, on supporting a total ban on tobacco advertising.
      We should think long and hard before the House does something as illiberal as statutorily banning something that is legally on sale. The Government have, instead, pursued voluntary controls. A number of moves have recently been made to reduce the permitted level of outdoor advertising and to improve the size and impact of health warnings.
      If anyone thinks that statutory controls are the answer, perhaps he could explain why the United Kingdom has a better record than Norway and Finland in reducing smoking in the very period since those countries introduced a statutory ban on advertising. The two European Community countries with the best record in reducing smoking—ourselves and the Netherlands—both operate voluntary controls on advertising.
      Price rises are an effective way in which to reduce consumption when they are combined with voluntary controls on advertising. Since we took office in 1979, the consumption of tobacco has fallen by about 38 per cent.
      I agree with my hon. Friend the Member for Ealing, North (Mr. Greenway) that we need take no lectures from the Labour party, which is no friend of the tobacco industry and which, until about an hour ago, has consistently, year by year, supported higher taxes on tobacco products. I take seriously the arguments about smuggling, particularly those put by my hon. Friends the Members for Portsmouth, North (Mr. Griffiths) and for Ealing, North. That is why we exempted hand-rolling tobacco from the secondary tax increase, which was necessitated by the decision of the House not to proceed with 17.5 per cent. VAT on domestic fuel and power.
      To answer the hon. Member for Glasgow, Springburn (Mr. Martin), I can assure the House that the fundamental review of Customs and Excise and staffing levels in customs have not and will not affect the number of excise verification officers, who are deployed to counter smuggling. We are determined to take vigorous action against smoking, and nothing that we do in Customs will put those staffing levels at risk. Indeed, there has recently been a modest redeployment and enhancement of the number of such officers on duty, especially at the main port concerned, that of Dover.
      Cross-border shopping is a feature that is a natural consequence of the single market, but it has not overwhelmed the legitimate trade. We know that from the duty take. The amount of excise duty that we receive from
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      that sector has not been significantly affected by the advent of the single market. However, I shall examine and dwell on the other arguments made, especially by my hon. Friends, about the cross-border shopping and smuggling issue.
      If I may, I shall write to the hon. Member for Greenock and Port Glasgow (Dr. Godman) about the final two questions that he asked.
      Question put and agreed to.
      Clause 8 ordered to stand part of the Bill.

    New clause 4

      TOBACCO RATES: FURTHER PROVISIONS
      '.—(1) For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979, as substituted by section 8 above, there shall be substituted—

      Table

      1. Cigarettes

      An amount equal to 20 per cent. of the retail price plus £57.64 per thousand cigarettes.

      2. Cigars

      £85.61 per kilogram.

      3. Hand-rolling tobacco

      £85.94 per kilogram.

      4. Other smoking tobacco and chewing tobacco

      £37.64 per kilogram."

      (2) This section shall be deemed to have come into force on 1st January 1995.'.—[Mr. Heathcoat-Amory.]
      Brought up, read the First and Second time, and added to the Bill.
      To report progress and ask leave to sit again.—[Dr. Liam Fox.]
      Committee report progress: to sit again tomorrow.

SCOTTISH GRAND COMMITTEE
Motion made, and Question put forthwith pursuant to Standing Order 94H(1) (Scottish Grand Committee (sittings)),
That the Scottish Grand Committee shall meet:

1. on Wednesday 8th February at half-past Ten o'clock to take Questions for oral answer and to consider a substantive Motion for the Adjournment of the Committee;

2. in the Edinburgh City Chambers on Monday 13th February at half-past Ten o'clock to consider a substantive Motion for the Adjournment of the Committee;

3. on Wednesday 1st March at half-past Ten o'clock to consider a substantive Motion for the Adjournment of the Committee.—[Mr. Liam Fox.]

Question agreed to.

Private Clegg
10.2 pm
Dr. Robert Spink: I have a petition to free Private Lee Clegg, a soldier whose
"strength, dignity and composure are awesome",
to quote the Daily Mail of today. I congratulate the hon. Member for Bradford, South (Mr. Sutcliffe) on his support for his constituent, but this most important petition has national implications. It was led by Councillor Peggy Grant, the mayor of Castle Point, and signed by a nominal 100 people in Castle Point, but it could easily have been signed by 1 million patriotic British citizens.

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The signatures are essentially a sample of the congregation of St. Mary the Virgin church, Benfleet, and the petition was organised this weekend by Father Michael Galloway and his wife, Carol, who have a specific interest. My constituents believe that the new forensic evidence should be considered and the yellow card embodied in the law. The material allegations are:
That we, the undersigned, are deeply concerned by the imprisonment of Private Lee Clegg of the Parachute Regiment and vigorously protest that he should be freed. The Government place a duty upon people in the Armed Services and Police to protect society and train and arm them to carry out this responsibility and set out rules by which they must operate. Sometimes, as in the case of Private Clegg, these people are young men who must make an almost instant decision. We do not believe that Private Clegg was a wilful murderer, but that he took what his training and experience and rules of engagement led him to believe, in a split-second decision, was appropriate action. At worst we believe that Private Clegg may have been guilty of misjudgment. The Armed Services and Police must be confident that, in such circumstances, the Government will take all possible action to protect those individuals whom it places in dangerous situations, to protect society.
Wherefore your Petitioners pray that your honourable House do urge the right hon. John Major MP, Prime Minister, to seek the early release of Private Lee Clegg from prison and to seek a change in the law as foreshadowed in Lord Lloyd of Berwick's judgment in this case and to secure Private Clegg's pardon.
To lie upon the Table.

Traffic (Bedford)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lightbown.]
10.4 pm
Sir Trevor Skeet: I am grateful to the Minister for coming to listen to the debate, which is very important for my constituents in Bedford. Greater Bedford comprises 134,000 people and the figure is expected to grow to 150,000 by the end of the century. Bedford has traffic problems beyond belief and it is not surprising that the transport element affects employment prospects in the north of the county.
The town has had the problem for decades. Due to stupidity, disagreement over an acceptable route and lack of funds, completion of a satisfactory bypass has been prevented. Bedfordshire, Hastings, Wigan, Gateshead and Carlisle, have the distinction of accommodating populations of roughly the same size without bypass relief.
There is now under construction the southern route from the A428 east of Bedford to a point near Elstow, where the traffic to and from eastern ports may link with the A421, which joins the MI at junction 13. That is a welcome development and I congratulate the Government on contributing the money to it. It is, however, only part of the mosaic necessary to complete an effective bypass of the town. Currently, major routes such as the A428 and A6 pass through the centre of Bedford, causing maximum disruption.
Due to years of frustration caused by Government and local authority differences, a campaign has been initiated by local industrialists and public authorities, supported by the media, to persuade the Government to face reality and to give priority rating to the bypassing of the town. A substantial pamphlet, entitled "Get Bedford Moving", has already been produced and a petition supported by 15,000 constituents is ready for presentation. We have had the opportunity of having a word on the matters involved with the Minister, who has been most patient.
The reasons for the campaign are obvious. They are to improve employment by making it possible for existing firms to expand in the town and by attracting new investment into the local economy. Other reasons are to benefit the town centre environment by reducing the appalling traffic congestion which is a daily occurrence, to unfold the amenity of the riverside, to enhance road safety, especially for pedestrian shopping in the area, to strengthen the quality of life for those who live in Bedford and the adjoining areas, to lace together the several parts of the town which have been cut in two by the River Ouse, and thus balance the local road network, and to reduce the load on the three bridges across the river, which are already overstretched.
Current traffic conditions in Bedford are notoriously bad. Serious blockages occur on the A6 and in St. Johns street, south of the river, and also at Union street in the north. Other hazardous locations are in Goldington road and on the A428 at a variety of other spots. Nationally, the British chambers of commerce calculate that road congestion is costing small companies more than £6 billion per year.
The traffic cauldron in Bedford is a reality which must be recognised. Some 150,000 vehicles travel into the town centre daily, one quarter of them passing through to other

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destinations. Of the lorries entering Bedford, at least 50 per cent. pass through. The problem has been exacerbated by the growth in the size of heavy goods vehicles, making it difficult for them to negotiate bends within the town. Traffic is expected to increase by between 90 per cent. and 150 per cent. by the year 2025. That is not surprising, as Bedford is located within reach of two major universities—Oxford andl Cambridge—and is sited near the A14, which is the vital highway to eastern ports. With the growth of new developments in Milton Keynes and Northampton, the volume of vehicle traffic must remain on an upward curve. Birmingham lies 50 miles to the north and London a similar distance to the south.
With Bedford's key location, it is not surprising that car ownership in the town is above the national average and that commuting by Bedford residents to outside areas has increased substantially from 9,000 in 1971 to 14,000 in 1991. The rate of change is apparent from the statistics and it is up to local administrators and the Department of Transport to appreciate the extent and direction of growth so that complete paralysis of vehicle movement can be avoided before developments are overtaken by events.
There is evidence that some firms have left Bedford because of the absence of transport infrastructure and that others are worried by the increased costs involved in dealing with local traffic congestion. Wincanton Distribution gave as a reason for its move to Huntingdon the fact that Huntingdon had a much better transport system and was proximate to the national distribution network.
A 1994 Bedford college survey of 350 local firms found that 20 per cent. of the firms surveyed had considered moving as a result of traffic congestion, 17 per cent. were likely to relocate within three years for the same reason and 13 per cent. had cancelled expansion plans. They are rather surprising findings, but it is apparent to me—as it must be to the Minister—that Bedford is in a straitjacket. I sincerely hope that the Government will help to ease the problem relatively quickly.
Bedfordshire county council is experiencing difficulty recruiting new firms since mobility of operations is one of the leading criteria that they consider before reaching a decision. Bedford has to compete with industry in other counties. Both Milton Keynes and Northampton have new town status and are therefore able to mobilise funds more easily to provide grants to inveigle firms to locate in their areas. That option is not available to Bedford.
In 1994 I attended a lunch at the Hyde Park hotel arranged by the Automobile Association at which a Transport Minister was the guest speaker. He announced that the Government and the Treasury would look favourably on any application in which the private sector was minded to make a significant contribution to major road works. That was the key to a scheme being advanced to enhance priority ratings, thus allowing completion of proposals at a date earlier than had been envisaged.
To complete a major part of the link in the bypass chain around Bedford, three local enterprises have agreed to contribute a substantial part of the cost: Bovis, the construction company; Bedfordia, part of a local conglomerate farm and property developer; and Bedfordshire county council. In view of that, Bedford has subscribed to the conditions laid down by the Minister and I sincerely trust that the upgrading of the route will flow from that sequence of events. Can my hon. Friend
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the Minister give an assurance today that he will take into account what I have said and tell the relevant Minister and the Treasury that we have fulfilled our part and that we await a return?
It was recently argued in the report of the standing committee on trunk road assessment that the building of roads would spread the congestion of traffic. That proposition does not apply to Bedford, which aims to get rid of bottlenecks which have blighted the town for years and have been exacerbated by the increase in traffic from both within and outside the county.
Bedford requires completion of essential bypasses and improved links with the M1 and with the A 1 and A 14 routes to eastern ports. That Bedfordians earnestly desire that is evidenced partly by their persistence over the years and partly by the petition that will be presented to the House in due course. Bypassing is essential to solving Bedford's traffic problems, and that means completing the several parts of the bypass rather than deferring them.
Can my hon. Friend the Minister say what volume of traffic the Department expects to be carried on the A 14 and A45 to and from eastern ports, and by how much the Department estimates that the number of vehicles using the A6 and A48 will be reduced as a consequence? To what extent has the Department assessed the difficulties created for Bedford by the increased flow of vehicles across too few bridges over the River Ouse and the lack of road infrastructure in the town itself? I have concentrated on the Bedford area's rational road system. The bypass system is also vital, but I shall be constructive and mention other matters for consideration by the Department.
The Bedford area urgently requires two additional stations: one to the south of the river and one to the north would help matters considerably. An improved bus service should also be considered, as increased use of public transport would be useful. I am aware, however, that people like to use their own vehicles, as has been the case for decades. Subsidiary issues such as park—and—ride schemes, improved car parking, highway development within the town, and cycle lanes, are all constructive, but I shall not dwell on them as I wish to concentrate on the major issues. Perhaps my hon. Friend the Minister will be able to make a contribution to the general debate.
10.16 pm
The Minister for Railways and Roads (Mr. John Watts): I am grateful to my hon. Friend the Member for Bedfordshire, North (Sir T. Skeet) for drawing the attention of the House to the support that his constituents have expressed for the Government's proposals for the trunk road network around Bedford and to the Getting Bedford Moving campaign promoted by the Bedford Employers Forum. My hon. Friend brought members of the forum to meet me shortly before Christmas, when they explained in detail the importance of all the schemes to Bedford's economy and to the comfort of its residents. So assiduous is my hon. Friend in his efforts that if I am opened up at some time in the future the word "Bedford" may well be found emblazoned on my heart, along with the names of many towns represented by other hon. Friends who have pressed on me the urgent need for road schemes.
My hon. Friend the Member for Bedfordshire, North mentioned the large petition that will shortly be presented to the House, which is further proof of Bedford's strong

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support for important road improvements. It is gratifying to find the people of an important town such as Bedford taking such a keen and active interest in the development of their community and in road planning in particular. It is encouraging to find a community in which residents, businesses and local government are fully behind proposals for improving the road network rather than ignoring the benefits that new roads can bring, as is all too often the case.
The Attorney-General (Sir Nicholas Lyell)indicated assent.
Mr. Watts: My right hon. and learned Friend the Member for Mid-Bedfordshire (Sir N. Lye11) gives silent but eloquent support to the needs of Bedfordshire for improved road infrastructure.
I know that my hon. Friend is fully aware of our proposals for the Bedford area, but for the benefit of the House I will explain our plans in short detail.
The national roads programme includes a series of integrated schemes aimed at removing through traffic from the town. These proposals will improve the quality of life in the bypassed communities and provide a better climate for local business.
Schemes have been included in the programme to provide a southern and a western bypass for Bedford, a link to the Norse road roundabout on the existing A428 St Neots road from the southern bypass, bypasses for the villages of Clapham and Great Barford, and improvements to the A421 between the M1 and Bedford. We also have proposals to widen the M1 through Bedfordshire and to upgrade the Al to motorway status. I am firmly of the opinion that the inclusion of those schemes demonstrates a real commitment on our part which will make the trunk road network around Bedford suitable for the 21st century, although I appreciate that my hon. Friend would like it made a little more suitable for the 20th century.
As a first major step towards implementation of this package of schemes, work began in August last year on the construction of the Bedford southern bypass. The £39 million contract represents a significant public sector investment in the Bedford area. We expect the road to open to traffic in the summer of next year and I look forward to celebrating that event with my hon. Friend. Once complete, the bypass will make an appreciable difference to the levels of through traffic in Bedford and to journey times between the Al and M1 through Bedfordshire, benefiting both local business and residents. To make the advantages of this route apparent, it will be renumbered A421 throughout, from junction 13 of the M1 motorway to the Al junction at the Black Cat roundabout, when the Bedford southern bypass is completed.
One of the stated aims of the Getting Bedford Moving campaign is to secure priority 1 status for all the schemes that I have mentioned. In April last year my right hon. Friend the then Secretary of State for Transport announced the results of his review of the roads programme, which considered the relative merits of all road schemes on a national basis.
The review examined all proposals in terms of their benefits to the trunk road network and impact on the environment, so that they could be given appropriate
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priority Most of the schemes around Bedford were placed in the priority 2 category following the review. This means that they are recognised as sufficiently important to be taken forward but that where there is competition for resources priority 1 schemes will have first call on them. However, that does not mean that no priority 2 scheme can be progressed before all priority I schemes have been completed: some priority 2 schemes may be in a state of readiness which allows them to go ahead, while some priority 1 schemes may not be ready to take the resources available.
Sir Trevor Skeet: As I said earlier, if funding were provided, would that not allow priority 2 schemes to become priority 1? The scheme would be ready for development. I do not suggest that all the bypasses be built immediately, but the one around Bedford, a major necessity, certainly should be.
Mr. Watts: I shall deal shortly with the proposal for private finance.
We are making good progress on the statutory procedures for many of our schemes around Bedford. I am pleased to say that the decision following the public inquiry into the Clapham bypass, which gives approval to the scheme, was issued just before Christmas. A start of works is now dependent on completion of the remaining procedures and the availability of funds for the works. The public inquiry into the Norse road link began on Tuesday 17 January to hear objections to that scheme. We are also consulting local people on an option to upgrade the Al to motorway status through Bedfordshire, which for some journeys provides an alternative to passing through the town itself.
The section of the proposed Bedford western bypass between the A421, which leads sout-west from Bedford to the M1 motorway and beyond, and the A428 Northampton road is the only scheme around the town to have been placed in the longer-term category following the review of the road programme. However, as my hon. Friend has made me aware, a consortium of local development interests has suggested that it could provide, at its own expense, a single carriageway link between the A421 and the A428 within the preferred route corridor for the bypass on land in its control, subject to approval of new development on the land on the Bedford side of the link. The initiative is most welcome and accords fully with the Government's desire to involve the private sector in infrastructure projects. Further progress is in the hands of the consortium and would, of course, be subject to completion of the usual local authority planning procedures. I understand that the consortium is currently preparing a detailed planning application for the development, which includes the road, for submission to Bedford borough council, the local planning authority.
The Highways Agency will continue to liaise with the consortium to ensure that its proposals are compatible with our preferred route for the Bedford western bypass and will allow for the possible future addition of a second carriageway in line with the longer-term proposals for the route. Subject to the proposals meeting those requirements, the Highways Agency would not object to any planning application and would welcome the early start of the scheme with private finance to fund it. Private sector involvement will undoubtedly enable a Bedford western bypass to be implemented far more quickly than if the project were to rely on the public sector alone.

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My hon. Friend referred to the problems of bridges and traffic flows over them. The Department recognises that traffic flows on the bridges in the town centre are high and that there is a need to provide additional crossings of the Great Ouse for strategic traffic around Bedford. To this end, our schemes will provide three additional bridges: the Bedford southern bypass includes a 'viaduct over the river at Castle Mill; another crossing in the same vicinity, to the east of the town, will be provided by the Norse road link; and the A421 to A428 section of the Bedford western bypass will provide a crossing at the western side of the town. More importantly, in recognition of the importance of bridges in Bedford, the Government helped to fund Bedfordshire county council's reconstruction of County bridge at a cost of £1.6 million. We shall also be further supporting the reconstruction of Longholme bridge at a cost of £3.5 million. Both are key crossing points of the River Ouse in Bedford.
In addition to promoting trunk road schemes around Bedford, we have committed funding to several local road and public transport proposals during this year's spending round. The county council is promoting a package of proposals for Bedford as part of its integrated transport strategy for the town. This package approach accords with Government policy, and initially we have allocated £300,000 in the next financial year for a number of measures designed to improve the town centre environment, reducing car use and easing congestion,
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including further pedestrianisation, bus priority schemes and parking controls, all of which my hon. Friend mentioned.
I thank my hon. Friend for raising the subject on behalf of his constituents and I hope that I have been able to demonstrate our commitment to improving the trunk road network around Bedford. In the past 10 years, £31 million has been spent on new trunk road schemes in northern Bedfordshire, and the work now in hand on construction of the important Bedford southern bypass means that the total will have more than doubled by the end of next year.
I welcome the strong groundswell of support for our proposals among the people and the business community of Bedford. I hope that they will continue to make their views known to the local councils and to any relevant local public inquiries. I know that my hon. Friend will continue to advocate strongly the need for these schemes until eventually we are able to deliver them. My job would clearly be much easier if I were able to say yes to rather more of the schemes that my hon. Friends and their constituents want, and if I were less often in the position of having to argue to try to gain their acceptance of schemes that they think that they do not want—but such is life.
My hon. Friend raised a couple of questions on traffic flows. Unfortunately, I do not have accurate figures at my fingertips today, but I undertake to write to my hon. Friend with the information that he seeks shortly after the conclusion of the debate.
Question put and agreed to.
Adjourned accordingly at twenty-eight minutes past Ten o'clock