Commons Sitting of 5 July 1995

Preamble
The House met at Ten o'clock
PRAYERS
[MADAM SPEAKER in the Chair]

Grant-Maintained Schools
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Conway.]
10.2 am
Mrs. Angela Knight: I am grateful for this opportunity to debate the future of grant-maintained schools and to enliven this calm and quiet week. I am also grateful to my hon. Friends who have torn themselves away from speculation and their telephones to join me this morning.
With more than 1,000 grant-maintained schools across the country, some 500,000 pupils attending them, and one in five secondary schools gaining GM status, the GM sector is undoubtedly a principal player in education.
The good news is that parents have been voting with their feet and sending their children to grant-maintained schools. The bad news is that, too often, a dirty fight has ensued when a school has chosen to go grant-maintained. I do not object to a battle in which people put forward the arguments, but I object to battles in which Labour party members in particular employ a series of scare tactics and untrue statements.
There have been a great many examples of such battles—there were two in my constituency which were not particularly horrendous, but which I found very disquieting, as did the parents involved. The first example arose when a Catholic school decided to ballot for grant-maintained status, and a Labour politician went round telling the parents that GM status was against their religion. That is the sort of statement that one should not make to a Catholic.
Mr. Peter Atkinson: I congratulate my hon. Friend on the honour that has been bestowed upon her. Did she notice that the Annunciator said that she was Dame J. Knight?
Mrs. Knight: Since I am not wearing my glasses this morning, could my hon. Friend tell me whether it is now correct?
Mr. Atkinson indicated assent.
Mrs. Knight: Thank you very much.
The second example in my constituency occurred when two schools in Long Eaton decided to ballot for grant-maintained status. There was a ferocious anti-grant-maintained campaign run by a lady who described herself as "just a concerned parent". She called her campaign SOLES: Save Our Long Eaton Schools—
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from what, I have no idea. Misinformation abounded; those who were in favour felt themselves unable to put their heads above the parapet, and the ballots were lost.
Only a few months later, that so-called concerned parent turned up as a Labour party activist, then a Labour councillor and then on the shortlist for selection as the Labour party candidate in Erewash for the next general election. What was wrong with her declaring her credentials in the first place? If she had wanted a clean fight, she could have had it. She fought a dirty campaign to sway parents. It was misleading, misinformed and wrong.
Those two examples, although minor, have been mirrored across the country. The real purpose of a school becoming self-governing is to enhance its ability to serve the people who really matter: the pupils. A school may serve its pupils by having control over all its budget, and using it in the interests of the children and the school.
As the head of Shennington primary school in Oxfordshire—a recent opt-out—said:
"If a school does decide to become GM the reason should not be money. A school should do it for the freedom because it wants complete control".
That is quite right. Interestingly, when the head of Baverstock school—an early opt-out—was recently interviewed, he said:
"We quickly discovered by handling our own budget, which came direct from Whitehall, we could buy materials and fuel at up to half the price that the council could supply them. Today we have … brand-new classrooms … And instead of having to cut teachers we actually have more staff than the local authority would have allowed."
By having entire control of their budgets, GM schools have achieved such good results, yet too many Opposition Members have overtly and covertly campaigned against GM status.
Mr. David Jamieson: Does the hon. Lady agree that some of the schools which opted out early on have been able to provide some extra staff and some extra facilities because of double funding, which was opposed by the Public Accounts Committee two years ago? Is it not true that £1 extra for a grant-maintained school is £1 less for a local education authority school?
Mrs. Knight: The hon. Gentleman and his friends have tramped that argument all over the place for many years. If it is true, why does he not go home and tell all the schools in his constituency to opt out? If he alleges that GM schools get more money, in their best interests he should tell all schools to opt out and obtain that extra money. I also urge the hon. Gentleman to look at a more general survey of teachers, which was conducted in the past few months.
Three quarters of teachers in GM schools said that their class sizes had not increased, whereas the majority of teachers in LEA schools said that they had. Of those in grant-maintained schools, 90 per cent. said that in-service training was good and special needs provision had improved. An overwhelming majority did not want grant-maintained schools to be abolished. That is a very important survey, revealing interesting results.
There is great interest in GM status: it is a big issue, and grant-maintained schools deserve a secure future. I suggest three ways in which to help secure their future, which I hope that my hon. Friend the Under-Secretary of State for Schools will take on board.
First, the grant-maintained schools need to know that there is no possibility of local education authority control returning. They need financial security for the future, and

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they need to plan for more than one year ahead. They need to have an assurance that their budget will no longer be fixed by the LEA's decision about its schools budget. The common funding formula addresses that point to a certain extent, but there are areas that do not have a common funding formula, as the trigger threshold has not been reached.
Mr. Patrick McLoughlin: I fully support what my hon. Friend has just said. Does she agree that one of the strange ironies of grant-maintained schools is that, although they have become grant-maintained to be free of local education authority control, their funding is, unfortunately, still in some ways controlled by local education authorities, whose interests are not in the grant-maintained sector?
Mrs. Knight: I agree entirely. What is happening with too many schools is that the global purse strings are still held by the LEA—the organisation from which the school has opted out. That is an anomaly which I should like to see addressed.
The second area that needs further consideration is more general. There are considerable differences in the amounts spent per pupil in different areas. We all accept that differences arise, but in some instances, the differences are worryingly large. One reason, of which I and my hon. Friends who represent Derbyshire constituencies are aware, is the way in which the LEA decides to allocate its money.
From the latest figures I have obtained from the House of Commons Library, it is clear not only that Derbyshire allocates less than the average of its education budget to the general schools budget, but that the authority is one of the worst delegators in the country in terms of money diminishing as it filters down through the potential schools budget to the aggregate schools budget. Yet it is the aggregate schools budget that equates with the money that gets into the classroom.
Let us take three similar counties in terms of standard spending assessments: Derbyshire, Suffolk and North Yorkshire. One finds that, in terms of the aggregate school budget per pupil, Derbyshire gives £200 less than the other two counties. That means that the authority is not getting money where it is needed—in the classroom.
An aspect over which authorities have no control is the area cost adjustment. As a result of the ACA, about £100 more per primary school pupil and about £200 more per secondary school pupil is aggregated into the SSAs of the 12 south-eastern counties. Although extra costs are recognised, those large sums, distributed on an all-or-nothing basis, are difficult to justify.
There is merit in ensuring that future area cost adjustments do not have those large discrepancies. I also believe that there is merit in looking at a common funding formula for all schools in the country. Those points are easy to make, but the difficulty is getting from A to B. I ask my hon. Friend the Minister, however, to look at my suggestions.
Mr. Nigel Spearing: On the area cost adjustment, does the hon. Lady realise that the discrepancy is as great or even greater for maintained schools in local authorities? There is a difference of several hundred pounds between the per head expenditure
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in primary and secondary schools of Newham and Tower Hamlets, both very needy east London boroughs, because of the arbitrariness of the current ACA formula. Does the hon. Lady realise that funding for nursery schools, of which the SSA does not take proper account, automatically reduces the per capita amount for locally managed schools? There are lots of things wrong with the present formula.
Mrs. Knight: To a certain extent, I agree with the hon. Gentleman. Clearly, I cannot talk about the situation in London, because Erewash is not a London constituency. However, I point out to the hon. Gentleman that the SSAs are made up of a series of hugely complicated items. That is why I would like there to be a common funding formula for all schools which would be easy to understand. I would like to ensure that the schools get more money than they do at present, and that far less money is held back as, sadly, is the case with too many LEAs.
The third way in which to secure the future of grant-maintained schools is better use of the private finance initiative. "PFI" is not a particularly sexy-sounding trio of letters, but it is an initiative that can be useful to grant-maintained schools. It means that they do not have to wait for public money to carry out the repairs or to build the extensions they need; they can do such work much earlier. We all recognise that many school buildings that were thrown up in the 1960s are in a sorry state of repair.
I ask my hon. Friend the Minister to look again at the PFI. At present, the rules are complicated and the procedures are not very clear to anyone. They have only just been circulated to governing bodies.
Ockbrook Redhill, a school in my constituency, spent considerable time and effort trying to determine whether its proposals were acceptable in principle under the PFI scheme, and on getting the nooks and crannies right. For the PFI to be a useable option, the rules need to be simple, understandable, easy to get going and quick; those are the essential ingredients for a scheme that will be an extremely important route for grant-maintained schools. I should like my hon. Friend the Minister to look at those three points, which would improve and secure the future of grant-maintained schools.
The possibility of an insecure future lies elsewhere. In December, the hon. Member for Sheffield, Brightside (Mr. Blunkett), the shadow Secretary of State for Education, wrote a secret letter to Labour Members. It began, "Dear Colleague", and was headed, "Urgent—GM Schools". It was the sort of message that one gets in Herge's "Adventures of Tintin", which my children watch avidly on television. The letter continued:
"We are opposed to schools opting out and remain committed to the white paper pledge to bring such schools back … I thought it would be helpful for you to know that there has been no change of policy in relation to events in the last few days."
After 200 days had passed, lo and behold, there were considerable changes to the policy. What else did the hon. Member for Brightside say in December? He said:
"There is no plan to have a paper on GM schools, nor is there any intention that GM status should continue."
Let us see what happened.
A Labour party policy document turned up, warmly entitled "Diversity and Excellence—a New Partnership for Schools". It talks about grant-maintained schools on just about every page. I understand the Labour party's

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problem, because, when the Leader of the Opposition chose to send his son to a grant-maintained school, as did one or two of his colleagues, he not only pulled the rug out from underneath the shadow Secretary of State for Education and 90 per cent. of the parliamentary party, but took the floor away.
The party was left with two questions which it had to answer. The first was how to reconcile the irreconcilable in a new policy document, and the second was how to pass off the new policy as both changed and unchanged. That is probably why the Labour party has had more changes of mind on its education policy than there are steps in the hokey-cokey; I doubt whether it has finished that dance yet.
So we have this document, "Diversity and Excellence—A New Partnership for Schools", which has been referred to as
"the sort of soft-sell slogan that possesses all the meaningless charm of a detergent commercial."
I wish that I had thought of that myself. In fact, the person who wrote those words was the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), the former deputy leader of the Labour party.
In December, this document was not going to happen. Although it was not going to mention grant-maintained schools, it in fact uses the words "grant-maintained" on just about every page.
When the document is not talking about grant-maintained schools, it is talking about fairness—fair this, fair that, fair funding, fairness to parents and fair admissions. Presumably all the teachers will be instructed to mark "fair" against every entry in pupils' reports. When the word "fair" is used as extensively as it is in that document, there is more than a fair chance that it is covering up more than its fair share of rubbish. It is worth examining Labour policy a bit more closely, and for real.
Independent grant-maintained schools are not compelled to have politicians on their governing bodies, but the Labour party would force them to include two councillors. We can all imagine which two would be chosen. Secondly, grant-maintained schools receive resources directly from the Funding Agency for Schools, which is also independent. The Labour party would abolish that. In view of the amount of money now being held back from schools by local education authorities, how much would the schools get if the money for grant-maintained schools were directed no longer through the independent funding agency but through LEAs? A lot less than they do now.
The document then says:
"We will set a new national target of 90 per cent. of the school's budget to be delegated from LEAs to the schools".
If that is what the Labour party believes, why does it not ring up all its Labour-controlled local education authorities now, and tell them to delegate 90 per cent. of the education money to schools tomorrow? The Labour party has not done that, and its real policy has been to hold back as much money as possible in LEAs, not to give it out to schools.
Even if 90 per cent. of the money went to schools, that would mean that a secondary school with a budget of £1.5 million would have £150,000 taken away, and a primary school with a budget of £200,000 would have £20,000 taken away. Teachers would have to be taken out of those schools. That is what the Labour policy really means when one translates it out of the fudge in which it is written.
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The Labour party would also interfere in the way in which schools are run. Independent grant-maintained schools are now allowed to apply to the Secretary of State for permission if they wish to expand, but Labour would make them apply to their LEA. That would mean that a popular school would not be allowed to expand. We should return to the same fudge that happened when popular schools were penalised in an attempt to force parents to send their children to schools to which they did not want to send them.
The language in the document is different from what we have seen before; it is a fudged language that has shimmied around one or two edges to please the Islington chatterati. None the less, the document is as great a threat to grant-maintained schools as any previous Labour proposal.
The debate is about grant-maintained schools, but I emphasise the fact that, whether schools are grant-maintained, voluntary, run by the local education authority or independent, they are equally important, equally valued and equally distinctive in their own way. I always hope one day to see the return of direct grant schools, in which I was educated as a child, which were abolished when the Labour party was in control. All types of schools are important, and in the programme of education reform, the watchword must be stability.
We must continually ask what schools, teachers and parents want. Parents want high standards. They want to get the best out of their children. They want good English, good grammar and a decent grounding in maths, and they want their children to know their historical and geographical place in the world. That is easy to say but hard to produce, but we are currently achieving it.
survey of 500 grant-maintained schools whose results were published recently in The Times Educational Supplement showed that the huge majority of schools were in no doubt about the advantages of going grant maintained. Ninety-two per cent. had appointed more staff, a similar percentage had increased spending on books and equipment, and they were achieving consistently good exam results and attendance rates. That is what parents are looking for.
Mr. Don Foster: The hon. Lady has just listed all the advantages of grant-maintained schools. Can she tell the House whether there is any hard evidence that, as a result of those advantages, standards have been levered up?
Mrs. Knight: In 1993, 41 per cent. of 15-year-olds in grant-maintained comprehensive schools achieved five or more GCSEs at grades A to C compared with 36 per cent. in LEA-controlled schools. So schools in the grant-maintained sector are producing better grades for pupils than were achieved under LEAs. [Interruption.] Whether Opposition Members like it or not, that is the case.
Ms Estelle Morris: The hon. Member for Bath (Mr. Foster) asked whether the schools had improved, given the extra funding that they gain from their grant-maintained status. It is no good giving us raw figures for examination passes. The hon. Member for Bath is right; there is no evidence that standards have improved. That is the key question, given the amount of resources that have been put into those schools.
Mrs. Knight: I appreciate that nothing will convince the hon. Lady and her hon. Friends, because of their constant hostility to grant-maintained schools. In fact, I have not heard her express any genuine interest in standards.

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Parents want their children to be taught well, and to get good grades in their examinations and a good start in the world. In practice, they are voting with their feet and sending their children to grant-maintained schools because they know that that is what they will get. There are now 1.3 million parents with children in grant-maintained schools. Those schools are popular with parents, and they are here to stay. We need to recognise that and to secure their future—and we need to abolish proposals such as those of the Labour party.
10.26 am
Mr. David Jamieson: The speech by the hon. Member for Erewash (Mrs. Knight) was interesting, but packed with inaccuracies and false statements. The fundamental flaw in Conservative policy in recent years has been its concentration on the education of the few rather than of the many. Over many years in this country, we have been successful in educating very well indeed the brightest and the best, but we have failed to educate those in the next group down. We have failed to educate the mass of the people to high standards.
Grant-maintained schools were created to destroy local education authorities. Throughout the 1980s and 1990s, the debate has been peppered with denigration of the work of LEAs and of locally elected councils in general. The former Secretary of State for Education, the right hon. Member for Oxford, West and Abingdon (Mr. Patten), lost no opportunity to attack local education authorities throughout the country.
As the Conservatives have lost more and more seats on local councils, until they have only a tiny rump of councillors left, their desperation has increased to grasp back control of schools. Essentially, grant-maintained status has nationalised schools and put them under state control.
The hon. Member for Erewash and I served on the Standing Committee on the Education Act 1993—for nearly 180 hours, I believe. At every stage, nearly every clause gave the Secretary of State for Education more and more direct powers over grant-maintained schools, so they are no longer locally accountable.
Grant-maintained schools join other failed enterprises such as city technology colleges, which were supposed to spread across the country raising standards. We have seen what has happened to many of them. One, in Birmingham, had lower standards in technology, mathematics and science than the local comprehensive school.
So much for jacking up standards. We heard in a debate the other day that just 32,000 pupils were involved in the assisted places scheme, but they received twice as much funding as children in LEA schools.
The Parliamentary Under-Secretary of State for Schools (Mr. Robin Squire): I intervene briefly, as I suspect that discussion of city technology colleges at great length would be rightly ruled out of order by you, Madam Speaker. The hon. Gentleman makes his point in the shadow of last week's announcement that we have reached 100 schools which are either CTCs or technology colleges, the latter being built substantially upon the success of CTCs.
Mr. Jamieson: The Minister has not answered the question. I made the point that the 15 CTCs have had
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highly preferable funding, yet have not proved that that funding has led to improved standards in the schools. Perhaps the Minister can give evidence later that standards have increased as a result of the extra funding that CTCs have received.
I have no argument with the teachers, parents or pupils in grant-maintained schools, but the system is failing. There are three main areas where I object to grant-maintained schools. First, the early opt-outs received considerable extra funding. The hon. Member for Erewash glossed over the point I put to her in an intervention, and did not answer it. If she looks at the 9 June edition of The Times Educational Supplement, she will see the headline "MPs defied over £40m bonus for GM schools".
If the hon. Lady reads the Public Accounts Committee report published on 19 January 1994, she will see that the Committee recommended that the Department for Education progressively withdrew from existing grant-maintained schools the excess funding of central services, with a view to that funding being removed completely within two years. An all-party report made that recommendation, which is being totally ignored by the Government. They say that they may rule out the double funding by 1999.
Mr. Robin Squire indicated dissent.
Mr. Jamieson: The Minister shakes his head, as if to say that the Government will not rule out the double funding at all.
A small primary school in Tower Hamlets has found that it receives £200,000 extra funding because it is grant-maintained. My point is that every pound extra received by a grant-maintained school is a pound that is not received by a LEA school. The hon. Lady made the point that grant-maintained schools have kept their class sizes as they were, while class sizes had increased in LEA schools. I am glad that she accepts that class sizes have increased in LEA schools, but that must be because funding is being withdrawn from the LEA schools and put into grant-maintained schools.
On capital, the hon. Lady may want to refer to evidence received by the Department for Education on the capital funding of grant-maintained schools. The figures clearly show that, two years ago, grant-maintained schools were receiving three times as much per pupil in capital spending as LEA schools. That extra funding is just a cheap political bribe. Schools and parents do not want to opt out. The hon. Lady failed to tell the House how few schools had opted out last year, or that the majority of ballots were now resulting in no votes. Some ballots in my county are producing a very substantial no vote.
My second objection to grant-maintained status was touched on by the hon. Lady, who said that grant-maintained schools had far more control over their own affairs. I have no problem with schools having internal control of the running of their day-to-day business. That is right and proper, and I have always said in the Chamber that I support the local management of schools. Such local management has given autonomy to individual schools.
A self-perpetuating coterie of governors that has formed in grant-maintained schools has the power of decision-making about the admissions policy of schools. We have discovered in parts of London and in other parts of the country that admissions policies arranged by governing bodies sometimes deny local children—who

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live in what used to be the catchment area of a school—a place in that school. The decisions are being made solely by the governors of the school. It is not right that a small unelected group is able to make that decision.
Mr. Squire: I am trying not to interrupt the hon. Gentleman's flow, but this is an opportunity to correct two of the misstatements that he is making. First, 66 per cent. of ballots on grant-maintained status this year have recorded yes votes, so one of his statements has been shot down in flames. Secondly—as he well knows—every admissions policy that is proposed by grant-maintained schools must be approved by my right hon. Friend the Secretary of State. It is simply not the case that grant-maintained schools can change their admission policies willy-nilly.
Mr. Jamieson: I am pleased that the Minister has confirmed my earlier point that admissions policies are in the hands of the governors, and can only be ratified by the Secretary of State for Education. Local people who have been elected to sit on councils have no say in the policy at all. The governing bodies make a decision that is rubber-stamped by the Secretary of State. In other words, we have a quasi-nationalised education admissions policy.
Mr. Spearing: These debates allow a constructive shooting match to take place. Does my hon. Friend agree that a fundamental flaw in the grant-maintained system is that schools are not seen as possessions of the community, area or town they serve, but only of the parents or potential parents of the day? Do not such schools reflect the divisive education structure that this country tried to get rid of in the middle of the last century, and reflect also the aspirations, social background and financial resources of different groups within society?
Mr. Jamieson: That is exactly my point. The school ceases to be the property of the local community, and becomes the property of an individual governing body that will serve its own interests. That is the total antithesis of the choice which the hon. Lady and so many Government Front-Bench Members talk about. What is happening in many grant-maintained schools is that the school is choosing the pupils rather than the pupils choosing the school.
I turn now to my third main objection. The hon. Lady is wrong to say that the money provided to the Funding Agency for Schools is coming out of LEA budgets. The money is moving in a circle, from the LEA to the Funding Agency for Schools—a quango in York—and back to the grant-maintained schools. As most of that money is raised locally, it should be accountable locally through the councils.
The money moving in the circle through the LEAs and the agency and back to the schools is producing another layer of bureaucracy and wasteful inefficiency into the system. The Funding Agency for Schools alone is costing £11 million to run. That £11 million is not going to schools to provide more books, teachers or services, but is providing jobs for people shuffling paper in York.
Those are my objections to grant-maintained schools. There is no upsurge of desire in this country for schools to become grant-maintained, and parents are now deciding to stay with LEAs. Later today, a report by the Education
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Select Committee will be published which raises many important issues to do with the important role of LEAs in the running of schools.
I noticed that the hon. Member for Erewash mentioned LEAs only in a derisory manner. She attacked her own LEA, even though it is running the schools and the education system for children in her constituency. If she looks at that report, she will see that Members of Parliament have recognised, on a cross-party basis, that local authorities have a powerful role to play in running schools, and that they are needed to ensure accountability and the success of our schools.
The hon. Member for Erewash failed to say what would happen should a grant-maintained school start to spiral downwards and fail. That has manifestly happened to some of them, just as it has to certain local education authority schools. In the case of such schools, the LEA steps in to provide assistance. In the most extreme circumstances, it can send in an education association—that weapon has not yet been used by the Department for Education.
What happens when things go wrong in a grant-maintained school? Who will oversee the education of those children when the governors degenerate into a squabbling mass, like those at the school in Stratford? In such circumstances, the school is referred back to the Secretary of State for Education. There is no local accountability, and no local body able to provide assistance.
This useful debate, albeit a brief one, has enabled me to set out my views on grant-maintained schools and why I oppose them. My party will continue to advocate changes to them, which are designed to deliver fair funding and proper accountability.
10.40 am
Mr. Patrick McLoughlin: I congratulate my hon. Friend the Member for Erewash (Mrs. Knight) on securing this important debate. It has exposed the fallacy that somehow the Labour party has changed its mind on grant-maintained schools.
I wish that the Labour party could be consistent. The hon. Member for City of Durham (Mr. Steinberg) served with me on the Committee considering the Education Reform Act 1988, which set up grant-maintained schools. The current shadow Home Secretary was then Opposition spokesman on education, and I was left in no doubt about his vehement opposition to grant-maintained schools.
The right hon. Member for Yeovil (Mr. Ashdown) was then the education spokesman for the Liberal party. His venom against such schools was plain for all to see, and was expressed in speeches that were officially recorded. I note that the hon. Member for Bath (Mr. Foster) is nodding his head, so I assume that that venom against grant-maintained schools is still apparent in the Liberal party.
I support the concept of grant-maintained schools, because it has offered diversity of choice in state education. Those who are wealthy are able to send their children to the private school of their choice. Before the introduction of grant-maintained schools, those without such wealth had to leave that choice to the local education authority, which directed where children should be sent. There was no choice in the state system, because it lay with the LEA.
My one great pleasure is that the grant-maintained system has introduced diversity of choice to the state education system. That should be embraced and

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welcomed. The Labour party may argue that fewer schools are opting to become grant-maintained. I do not believe that the figures prove that, but should that be so, I am sure it is due to schools' uncertainty about the future.
Schools are unclear whether the Labour party will follow its leader, who has taken advantage of the grant-maintained system. I suppose he is one of those middle-class people about whom the hon. Member for Sheffield, Brightside (Mr. Blunkett) used to talk so much. Certainly, if my wife was a leading barrister, I might be even be middle-class.
Although the grant-maintained system has delivered essential diversity of choice, it is high time we introduced a national funding formula for education, because far too much confusion is caused by the different amounts of money held by education authorities and their various expenditure. It has taken me some time to obtain a breakdown of the relevant figures, but they are revealing.
For example, according to its 1994–95 central budget, Staffordshire, which has a total pupil number of 159,000, spent £2,975,000 on management. Derbyshire, with 84,000 pupils, spent £3,787,000 on management. That is a great difference.
I recently tabled a question
"To ask the Secretary of State for Education if she will list in ascending order the difference between income and expenditure for school meal services for all counties over the last seven years."— [Official Report, 7 June 1995; Vol. 261, c. 208.]
I was surprised by the answer from my hon. Friend the Under-Secretary of State for Schools. It revealed that Derbyshire county council had spent £115 million on subsiding school meals, whereas Lancashire, the next closest on the table provided, had spent £94 million—a £20 million difference. Those differences become more apparent when one considers that Lincolnshire, a Conservative-controlled council, spent just £11 million in those seven years on subsidising school meals.
I do not mind that local education authorities should be able to decide to spend that money, but that expenditure should be open to scrutiny. If an authority is spending money on subsidising school meals, it is clear that it is not available to be spent on other education services. The expenditure may be simple and straightforward, but too many of the relevant figures are hidden, and the purpose of that expenditure is not easily identified.
Mr. Peter Kilfoyle: The hon. Gentleman will recall from a previous debate that, for 9 per cent. of children, the only hot meal they get in the course of a day is the subsidised school dinner provided by local education authorities. Is he suggesting that needy children should be deprived of that hot meal, which they would otherwise not get?
Mr. McLoughlin: No. I am not suggesting anything, I am simply revealing figures and facts—Lincolnshire spent £11 million on subsidising school meals, whereas Derbyshire spent £115 million. I accept that a comparison between Lincolnshire and Derbyshire is not a good one, but it is worth comparing Staffordshire and Derbyshire, which are roughly the same size.
In those seven years, Staffordshire spent £47 million on subsidising school meals, which is still £60 million short of that spent by Derbyshire. The hon. Member for
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Liverpool, Walton (Mr. Kilfoyle) must accept that a lot could be done with that £60 million. I accept that education authorities decide what they want to spend their money on. The county breakdown and the differentials revealed by my hon. Friend's answer were, however, extremely interesting.
The other great benefit of grant-maintained schools—I plead with the Opposition to think carefully about it—is that they have made LEAs act more responsibly, because there is now an alternative available to parents. When I entered the House in 1986, the sixth form of Ecclesbourne school, in my constituency, was under threat of closure, because the LEA wanted to close all sixth forms in the centre of Derby and replace them with a tertiary system of education.
The school launched a massive campaign to save its sixth form, which was supported by all the parents. The LEA's proposal was sent to the Secretary of State for consideration. After a very vigorous campaign, I am glad to say that the Secretary of State rejected the proposal to close the sixth form.
I attended a public meeting at Ecclesbourne school at which one governor said, "I believe that the school should keep its sixth form, but because I am a socialist—and the county council's socialist—I must do what the county council wants me to do". County councils and local education authorities can no longer impose their views upon schools quite so easily, because schools now have an alternative.
I turn to the suggestion that somehow grant-maintained schools are unaccountable. A sad but true fact is that the voter turnout at local government elections averages about 40 per cent. The voter turnout when a school ballots to become grant-maintained is usually more than 70 or 80 per cent. Parents who are involved in the school and in the community want to ensure that there is a good grant-maintained schools system in place for their children.
Mr. Gerry Steinberg: Does the hon. Gentleman think that it is democratic that parents can vote to take a school out of the local education system and into the grant-maintained system for ever? Under the present rules, there is no way that a school can ballot to re-enter the local education system. The hon. Gentleman is saying that parents who send their children to a primary feeder school will have no choice whatsoever about whether their children should attend a grant-maintained school. They have no option because that decision has been taken for them. Is that accountability?
Mr. McLoughlin: I am grateful to the hon. Gentleman. We spent many long hours taking the legislation through Committee when my right hon. Friend the Member for Mole Valley (Mr. Baker) was Secretary of State for Education. The hon. Gentleman misses the point entirely. If he had his way, parents would have no choice at all. They would be forced to send their children to LEA schools, and the local education authority would determine the admissions policy, irrespective of parents' wishes.
Parents now have a choice. If they do not wish to send their children to grant-maintained schools, they do not have to do so. Parents can be certain that grant-maintained schools will remain, and that we will continue to have the diversity and choice in the state education system that I have talked about and believe in passionately only by ensuring that the party in government supports the grant-maintained policy.

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Unlike Labour Members, the Conservatives do not mouth one thing and then another because a senior party member chooses to take advantage of the grant-maintained system. I will give way to the hon. Gentleman once more, but I am conscious that time is short.
Mr. Steinberg: I wish that the hon. Gentleman would be honest with the House and with the country. The majority of parents, whether they send their children to grant-maintained or local education authority schools, have absolutely no choice in the matter. The majority of schools choose the children who attend those schools. Parents who live in certain catchment areas have no choice but to send their children to the nearest school. It is the schools and the local education authorities which allow parents to send their children to those schools. It is a misnomer to say that parents have any choice; they do not. Will the hon. Gentleman please be honest with the House and with the country?
Mr. McLoughlin: If the hon. Gentleman does not believe that choice exists, he should take up the matter with the Leader of the Opposition, who has exercised that choice, as have a good many Members on the Labour Front Bench. The Labour party is displaying grand hypocrisy on the issue. I have asked questions about grant-maintained schools in the past.
Mr. Don Foster: Will the hon. Gentleman give way?
Mr. McLoughlin: I will not give way, as time is short. The number of admissions to grant-maintained schools has increased. Schools that were threatened with closure by local education authorities have gone grant-maintained, and they have flourished. They are run by the local community, and they are part of the local community. They provide a diversity of choice in education.
The Labour party would offer a choice only to those people who could afford to go to the private system. The Government believe that every parent should be able to choose what kind of school their children will attend. There is a choice in the state system: between the local education authority schools and those that are independently grant-maintained but part of the state education system.
Mr. Kilfoyle: Will the hon. Gentleman give way?
Mr. McLoughlin: Time is short, or I would give way willingly—although the hon. Gentleman has a bad record for giving way when he is at the Dispatch Box.
That is why I am passionately committed to grant-maintained schools, the grant-maintained sector and the state education sector. The element of choice that we have introduced into the education system has also brought many of the loony local education authorities under control. Before we introduced the grant-maintained system, schools had no escape route; they had nowhere to go. Schools now have an alternative to being run by local education authorities; as a consequence, those authorities have become more responsible. All hon. Members should welcome that development.
10.56 am
Mr. Don Foster: I begin by congratulating the hon. Member for Erewash (Mrs. Knight) on securing the debate. Perhaps somewhat surprisingly, I agreed entirely with one or two of her remarks, to which I shall return in a moment.
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Of course, I disagreed entirely with a number of her comments—not least the paeans of praise that she heaped upon the grant-maintained schools sector. She seemed to suggest that the Government's grant-maintained policy has proved a tremendous success. However, anyone who has examined the figures will know only too well that it has not been a success—indeed, it is an ailing policy that has failed almost completely.
Towards the end of her remarks, the hon. Lady referred to the 1.3 million parents whose children attend grant-maintained schools. She failed to point out that fewer than 50 per cent. of those parents voted in favour of grant-maintained status. It is worth recording that only 500,000 people in this country voted for grant-maintained status, and that very few people are currently voting for grant-maintained status. The number of ballots for grant-maintained status has declined markedly, and the number of schools that opt out of the local education sector has also decreased significantly.
Ms Estelle Morris: Many parents did not vote to opt out in many local areas. In some schools that have been opted out for four or five years, none of the parents whose children currently attend the schools exercised their vote, because their children did not attend the schools at the time the ballot was taken. Is that not even more despicable than the figures cited by the hon. Gentleman?
Mr. Foster: The hon. Lady is absolutely correct. She also draws attention to the welcome remarks of the hon. Member for City of Durham (Mr. Steinberg), who pointed out that the grant-maintained system is not the system of democratic choice that the Government would have us believe.
It is perhaps worth recording the figures for opting out. From Easter 1994 to Easter this year, there have been only 48 secondary school ballots, and only 13 schools voted to go grant-maintained. That compares with 171 ballots in the previous year, when 107 schools voted to opt out. There has been a similar decline in the number of primary school ballots.
As the hon. Member for Plymouth, Devonport (Mr. Jamieson) said, the grant-maintained policy has failed, despite the many bribes that the Government have offered. The Government have promised to phase out double funding gradually, but it is interesting to note that, in the process, a number of grant-maintained schools will receive additional money this year for the first time. I suspect that many local education authority schools will be pleased with such phasing out, despite the various bribes in respect of capital funding.
Grant-maintained schools are a failed policy in terms of the number of people voting for it and its ability to lever up standards. The hon. Member for Erewash was unable to answer when I asked her whether, despite all the financial advantages that had been given to grant-maintained schools, there was any hard evidence that standards had been levered up. The Minister is now about to give us some figures.
Mr. Robin Squire: It would be invidious to run down a list of schools, but the hon. Gentleman will remember, as will the hon. Member for Birmingham, Yardley (Ms Morris), who is about to speak from the Labour Front Bench, that the evidence from Baverstock school—the solid accounts of achievement and its turnaround from a

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school that was failing in virtually every respect to what we now have—has been attributed by the head overwhelmingly to its grant-maintained status.
Mr. Foster: If the Minister can cite only one school, that is extremely worrying. We can swap school for school, and I could start talking about Stratford school, for example.
However, if we look at the base starting point for grant-maintained schools, taking into account the number of children with free school meals and the selective nature of many grant-maintained schools and we then look at the examination results, the SAT figures or anything else, we realise that there is no clear evidence that all that additional support—the uneven playing field provided for grant-maintained schools—has led to a levering up of standards.
The hon. Member for West Derbyshire (Mr. McLoughlin) said—I have forgotten his precise words—that Liberal Democrats totally hated grant-maintained schools. When I nodded to him, he implied that I accepted what he said. I should like to put it clearly on record that we dislike not the schools, but their grant-maintained status and the two-tier education system which has grown up because some schools have that status.
Mr. McLoughlin: As we understand there is a coming together between the Liberal party and the Labour party, would part of that be an undertaking to abolish the system of grant-maintained schools?
Mr. Foster: I was about to answer that point. Having criticised the two-tier system that grant-maintained schools have introduced, it is important that I make it absolutely clear where my party stands.
We have a simple policy. We would bring grant-maintained schools and city technology colleges back into a light-touch strategic planning framework of the LEA, which would be responsible for the fair allocation of resources, establishing the pupil admission procedure, sorting out such issues as special educational needs, and determining, for example, whether a school needs to close or a new school needs to open. The LEA would also be responsible for issues relating to quality monitoring and levering up standards, and would have a role to play in the arbitration of disputes. Individual schools would decide which LEA services they wished to provide.
We believe that all schools in Britain should be given maximum freedom to make decisions that affect their own day-to-day running. Our approach does not pander to old-style corporatist, centralist, domineering local education authorities; it is a system that frees up individual schools within a local, democratically accountable, strategic planning framework.
Ms Estelle Morris: Can the hon. Gentleman confirm that his party's policies would continue to allow some schools 100 per cent. delegated funding?
Mr. Foster: The hon. Lady uses 100 per cent., and her document uses 90 per cent. Those figures do not make sense without identifying the base line. We are saying that some money would be retained at the LEA level to fund the various functions that the LEA would carry out.
I agree with the hon. Member for Erewash about Labour party policy. At least the hon. Lady, the Minister and the hon. Member for West Derbyshire have a clear
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policy. They would like the continuation of grant-maintained status, and they have introduced legislation to force every school to consider it on an annual basis; and, if possible, they will continue to make as many arrangements as possible to help grant-maintained schools to become established.
My party is also clear about where it stands. We would bring grant-maintained schools back into a light-touch LEA strategic planning framework. The hon. Member for Erewash was absolutely right to point out that the Labour party now has a totally fudged policy that satisfies nobody. Despite all the efforts of its spin doctors, the Labour party is unable to convince schools in the grant-maintained sector that it is now being nicer to them; nor can it convince Labour activists, many of them with roots in local government, that Labour has not gone soft on grant-maintained schools.
The big anomaly in the Labour party's proposal is that, having totally opposed grant-maintained status and undertaken to bring those schools into the local strategic framework, Labour now says that schools that opted out will be allowed to continue their special status as foundation schools. They will have a different governing body and composition, and they will be able to retain access to their own assets by way of a trust. That makes nonsense of the ability of local education authorities to plan properly and strategically.
Mr. Kilfoyle: Will the hon. Gentleman give way?
Mr. Foster: I shall happily give way to hon. Member. I hope that, in the intervention that he is about to make, he will remind the House of what he said in the House on 9 December last year:
"One of the problems with GM schools is that they increasingly complicate the sort of strategic provision that needs to be made."—[Official Report, 9 December 1994; Vol. 251, c. 542.]
Will not the Labour party's latest fudge proposal make that strategic planning almost impossible?
Mr. Kilfoyle: It is obvious that the hon. Gentleman has not read the document in question. We made it absolutely clear that schools choose from the three categories that we have designated in our paper on the local democratic framework. The hon. Gentleman's final point concerned strategic planning and admissions policy. If he looks at appendix 3 of "Diversity and Excellence", he will see that it is carefully spelt out.
The hon. Gentleman made much play of underlining the clarity of the Government's view, particularly in terms of the 100 per cent. delegation that they would afford to grant-maintained schools, but he failed to address the question from my hon. Friend the Member for Birmingham, Yardley (Ms Morris) on the implications of the Liberal Democrat proposal, which in theory would allow every school to opt for 100 per cent. delegation of the ASB.
Mr. Foster: With respect, the hon. Gentleman is talking absolute nonsense. I have just explained that, if the LEA is carrying out some central functions, funds need to be retained to pay for them. That is clearly set out in our document.
The hon. Gentleman fails to recognise that his party is trying to put a precise, specific figure of 90 per cent. on it. That is nonsense, because the central services that are needed vary from one LEA to another. For example, the

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costs of transport in a rural area differ from those in an urban area. The hon. Member cannot have it both ways, but that is what his document "Diversity and Excellence" tries to do.
The hon. Gentleman was as critical as I was when the Government brought out their document "Choice and Diversity". We used to jokingly call it, "Chaos and Confusion". I believe that the Labour party's document is "Chaos and Confusion—the sequel".
11.9 am
Ms Estelle Morris: The Opposition welcome the chance to debate what has often been called a Government flagship policy. This has been an interesting opportunity to try to shed some light on why that flagship policy has gone so badly wrong.
It was the former Secretary of State for Education who said, on Second Reading of the 1993 Education Bill, that he was setting
"in place a new framework for primary and secondary schools that will endure well into the next century."—[Official Report, 9 November 1992; Vol. 213, c. 627.]
He went on to predict that, by April of last year, there would be 1,500 grant-maintained schools. He could not have been more wrong. Seven years after GM status was introduced, only 5.6 per cent. of all schools have chosen to go that way. Only 16 schools in Wales have GM status, and 28 local authorities throughout England and Wales still have no GM schools at all. No one—not even the most optimistic Government supporter—can possibly claim that, numerically speaking, the policy has been a success.
The hon. Member for Erewash (Mrs. Knight) has a cheek to come to this House and try to give us the impression that schools are still queuing up to opt out. Every prediction made by the Government has proved false; every target that they have set for GM opt-outs has been missed.
We could just dismiss GM status as a failed policy, had the consequences and costs for all schools and for all pupils not been so serious. In its first year of operation, £11 million was spent by the Funding Agency for Schools; 261 officials administer GM schools from York; 77 more officials help to administer GM schools from Sanctuary Buildings. Almost £1 million—£800,000 in fact—has been spent on the Grant-Maintained Schools Foundation.
All this amounts to millions of pounds spent, not on reducing class sizes or on putting more equipment and resources into schools, not on the £4 billion school buildings maintenance backlog, but on administering a bureaucracy that merely duplicates the work being done by local education authorities.
Wasteful though that is, what people find most offensive about the financial aspect of GM schools is the way in which schools that do not choose GM status are deliberately discriminated against. Why should not children attending schools whose governing bodies and parents have decided to stay in partnership with local authorities get the same funding? It is not just the £25 million that has been lost to locally maintained schools through double funding: it is the 2.7 times more spent on capital projects in GM schools which causes such harm.
It is all very well for the hon. Member for Erewash to say that schools which want the money can just opt out, whereupon they will be given it. The hon. Lady is parliamentary private secretary to the Chancellor of the Exchequer—
Mr. Robin Squire: As of this moment.
Ms Morris: Indeed. Still, I wonder what he would say if he knew that the hon. Lady wants every school in the country to opt out so as to get additional resources. That would mean that the national pot of money spent on education would have to grow—but it has never done that under this Government. As more GM schools have come into existence, the amount of extra money given to them has steadily decreased. If all schools opted out, they would, of course, not be funded at the enhanced rate given to the first opt-out schools.
Mr. McLoughlin: The fact is that the amount of money spent on education has substantially increased under this Government. The reductions took place between 1974 and 1979. The figures since then show a steady, consistent increase on the money spent on education.
Ms Morris: Why does no one believe the hon. Gentleman? Why do parents not believe him? Because their children are in classes with more than 30 pupils. Why do teachers not believe him? Because they are being asked to do their job without the necessary resources. The hon. Gentleman might believe what he says, but he and his colleagues are probably the last people left in the country who think that way.
What sort of message does the Minister think he is sending to children and parents when he seems to value one child, in financial terms, more than he does another? No one except the Government—not parents associations, not local authority associations, not, to their great credit, even GM schools themselves—continues to defend this sort of inequity of funding. As our Public Accounts Committee said, it is unacceptable.
Unacceptable though the financial arrangements for GM schools are, the greatest damage is the damage that has been done to the local partnerships in which schools operate. The whole GM notion was based on the belief that schools and parents shared Tory Ministers' dislike of locally elected education authorities. On Second Reading of the 1993 Education Bill, the then Under-Secretary of State found himself unable to make a single positive statement about local authorities. He showed no inkling of understanding of the good that local authorities can achieve.
What Conservative Ministers have never understood, but what parents and schools have always understood, is the fact that, to succeed, a school needs not just to compete but to co-operate. To succeed, it needs to share ideas. It needs to learn from others. To succeed, it needs quality information about its performance and its targets. It must pool its resources so that important areas such as special needs, music and sport can flourish.
Schools, in short, do not exist as separate competing units. They need strong, stable local partnerships, and good local education authorities can provide them.
Mrs. Angela Knight: As the hon. Lady is so obviously against GM schools and in favour of LEA schools, will she urge her leader to send his son to an LEA school instead of a GM one?
Ms Morris: I am not against GM schools: I am in favour of all schools that raise standards for their children. I am not here to criticise schools, teachers or pupils. I welcome high standards in every school, no matter what

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its status. Parents base their decision about where to send their children on a number of aspects. The leader of my party would have sent his child to the school in question whether or not it had grant-maintained status.
The Government's whole approach has been divisive. It is no good Conservative Members such as the hon. Member for Erewash complaining about the alleged behaviour of some local councillors. I do not condone bad behaviour by councillors on either side of the political divide, but the Government have a lot of gall, given that Ministers have approached GM status in a way that meant that a divisive mess was bound to ensue. We warned the Government that their approach would lead to divisions and bitterness, but they took no notice.
The Government talk about choice, but they have failed to offer schools different but equally valued options. The Government have been so committed to the GM option that they have almost made enemies of those who did not follow in their wake.
Conservative Members of Parliament have campaigned hard on every opt-out ballot, so that they can come here and wear each new opt-out in their constituencies as a badge of pride. Time and again, they have stood up during education questions and asked Ministers whether they welcome the decision of a school in one of their constituencies to go grant-maintained. Certainly every Labour councillor has campaigned hard against GM status ballots, because not to do so would have threatened the status of other schools in their areas.
This is no way to run schools; but the legislation was framed in such a way that it was inevitable that these problems would follow. We have wasted valuable money, time and ideas talking about structures, when the real issue facing us is how to raise standards.
We must end the divisions and the turmoil of the past 15 years. Our task is to rebuild partnerships and restore trust. We can do that only if we move forward and stop looking back; if we listen and learn from what we hear; and if we seek change through consensus. That is what Labour does in its paper "Diversity and Excellence: a New Partnership for Schools".
It has been interesting today to see which side of the Tory divide Conservative Members put themselves on. Do they belong to the category who try to tell us that we have changed our minds on GM schools and will keep them? Or do they belong to that brand of Tory who tries to tell us that we, the Labour party, have it in for GM schools? Within three days, the Prime Minister has said one thing and the Secretary of State for Education another.
We shall offer schools a choice within a framework that strengthens crucial local partnerships. We shall ensure that funding is fair and open. Labour accountability will exist locally, to parents in the community, as well as nationally, to central Government. Parents will know that admission procedures will be fair, with no return to selection through the 11-plus. Above all, schools will know that they are responsible for managing themselves, and that local authorities are there to support them in raising standards.
A notion much favoured by Ministers is that local authorities control schools. That control vanished with the introduction of local management of schools. Schools control themselves, but local Labour education authorities
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throughout the country are showing a new role for LEAs that involves raising and monitoring standards and supporting schools in their vital task of improving the performance of their pupils.
Labour will root all schools in that locally accountable and supportive partnership. It will offer them the choice of being community, foundation or aided schools. We shall preserve the best of the changes, which is independence for schools. But we shall restore local accountability, which has been so badly damaged.
A debate about a failing Government policy has been useful, but we, the Opposition, look forward to our agenda, which will focus on success.
11.21 am
The Parliamentary Under-Secretary of State for Schools (Mr. Robin Squire): In the time available to me, I shall try to cover as many points as possible. The House will understand that I do not have a significant amount of time.
I begin by echoing the congratulations that have come from both sides of the House to my hon. Friend the Member for Erewash (Mrs. Knight) on the splendid way in which she opened the debate. It was a typically rumbustious speech. She was backed by my hon. Friend the Member for West Derbyshire (Mr. McLoughlin). My hon. Friends are a credit to their county. I listened with great interest to their contributions.
Inevitably, the debate has generated heat as well as light. That, perhaps, is scarcely surprising. Every one of our education reforms has aroused hostility within the Opposition parties. The grant-maintained initiative has probably ruffled more feathers than most others. The reason is simple. Opposition Members belatedly pay lip service to parental preference and to school diversity and autonomy, but they do not really believe in them. Yet putting these ideals into practice is precisely what self-government is all about.
Only six years ago, local authorities had a monopoly of state schooling. We do not need a PhD in economics to know that monopolies rarely serve the best interests of the consumer. The GM initiative broke that monopoly. It gave parents a high-quality alternative to local education authority schools within the state sector. It also gave parents a direct and decisive say in the future of their children's schools.
Five years ago, there were only 30 GM schools. There are now well over 1,000 in the primary, secondary and special sectors, and the number continues to grow. Incidentally, whenever a percentage is quoted by Opposition Members, they never tell us that, at secondary level, after only six years, one in five of all secondary school children is at a GM school. That is some progress.
Mr. Dennis Skinner: Not in Bolsover.
Mr. Squire: The hon. Gentleman says from a sedentary position—he kindly joined us nine minutes ago—"Not in Bolsover." That is Bolsover's loss.
There is no mystery about the rapid growth of the GM sector. It has taken place because self-government is good for schools, pupils and parents. In other words, it works. Self-government gives a school control of its total budget, not only the portion that is delegated by the LEA. Some of the additional funding is used to buy services that were previously provided free by the LEA.

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But GM schools have freedom to shop around and get better value for money. That means that most GM schools have money left over to pay for additional staff, books and equipment. These are important practical benefits of GM status, which pupils, teachers and parents can see and feel. But there is much more to self-government than that.
As my hon. Friend the Member for Erewash said, self-government is about being in control of one's own destiny. It is about getting rid of dual controls and the back-seat driver. A self-governing school is free to preserve and develop its existing character. These freedoms, combined with total control of resources, give GM schools much greater responsibility to respond to the needs and aspirations of the communities that they serve. They do so without getting bogged down in the mire of LEA policies and procedures.
We know that GM schools are popular with parents. That echoes and enlarges what my hon. Friend the Member for Erewash said in response to an intervention. For three successive years, GM comprehensive schools have, on average, achieved better GCSE results than their LEA counterpart comprehensives. We know that GM primary schools achieved better results than LEA primary schools in last year's key stage 1 tests. So the GM sector is flourishing as well as growing. It is a clear example of a successful initiative that has attracted interest throughout the world.
I believe that, in due course, all maintained schools will be run on GM lines—indeed, not only maintained schools. The Education Act 1993 extended opportunities to independent promoters to propose the establishment of new GM schools. I am delighted to say that we have given approval in principle today to the first of such proposals, from St. Anselm's Roman Catholic college for boys and Upton Hall Roman Catholic convent school for girls, both in Wirral. They will be the first independent schools to come in from the new route. I look forward to welcoming them to the GM sector.
I shall deal briefly with Labour's plans. We did not hear too much about them from the hon. Member for Birmingham, Yardley (Ms Morris) when she summed up on behalf of the Opposition.
What is the Labour party's response to the success of GM? Anyone who read the press reports of a fortnight ago might well think that the Labour party is now supportive of the policy. The hon. Lady rightly confirms that, throughout the country, Labour councillors and Labour Members are opposing GM schools wherever there is a ballot, but she says that, in theory, they are supportive of GM schools. That is an interesting policy combination.
The detail behind the policy document tells a rather different story. Behind that public relations facade—the exciting talk about new relationships, partnership and trust—is a much duller reality. The Labour party proposes only three types of barely distinguishable state school. It assumes that most GM schools will become foundation schools. Some have seen this as a U-turn on the GM issue.
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In fact, it is nothing of the kind. Foundation schools would hold their own premises and employ their own staff, but voluntary aided schools do that now, and they are not self-governing.
The essence of self-government is a school's ability to control its total budget, and to manage its own development without LEA interference. Foundation schools would have neither of those characteristics. All three categories of school proposed by Labour—the hon. Member for Bath (Mr. Foster) highlighted this—would have up to 10 per cent. of their budget held back by the LEA. All three would have LEA representatives on their governing bodies. As my hon. Friend the Member for Erewash said, we can imagine the nature of one, if not both, of the councillors who would turn up on the governing bodies. At least one of them would be ideologically opposed to the schools' very existence.
All three types of school would have to negotiate their admission policies with the LEA. Again, all three would be subject to an LEA planning regime. So all three would, in slightly varying degrees, be LEA-controlled. Labour proposals for the GM sector boil down to the abolition of self-government.
Labour has invented the O-turn; an elaborate manoeuvre which leaves it facing in exactly the same direction as it has always faced. Labour's policy remains what it has always been: to return GM schools to LEA control. Although it is easy to accuse the Labour party of malice in this respect, its policy could even be the result of simple ignorance.
It is not too long ago that a Labour Member, whose name I shall protect, said during an informal discussion with my right hon. Friend the Secretary of State that he could not possibly support GM schools, because at heart he did not agree with fee paying. Is that the level of knowledge of the Labour party? For those who have not followed, there is no fee paying in GM schools. I make that clear in case there any other hon. Member thinks there is.
There is insufficient time to reply to the very wise and detailed comments of my hon. Friend the Member for Erewash on funding. I assure her that we will continue to look carefully at the national funding formula. She has heard me say before from the Dispatch Box that there are some problems in that respect. I assure her that we are considering the matter with the best will in the world.
The hon. Member for Bath spoke of a policy that had failed. He should ask the grant-maintained schools about it; he should visit them. Labour Members can contemplate visits only when armed with a cross and clove of garlic, but I would have hoped that Liberal Democrat Members might visit the schools. If they did, they would find that the schools, far from having failed, are popular and successful.
We are grateful to the hon. Member for Bath for having affirmed his party's continuing outright opposition—
Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Order. We must now move to the next debate.

Opencast Mining
11.30 am
Mr. Bill Etherington: I should like to offer you my belated public congratulations on your being honoured, Mr. Deputy Speaker. As you know from our discussions in the Tea Room, I do not have a high regard for the honours system. If more people like you were honoured, I might begin to have a rather different attitude.
I was interested by the comments of the Under-Secretary of State for Schools at the end of the last debate when he mentioned the O-turn. I have heard of the U-turn but now we have the O-turn. I regard Government policies as being more of a Q-turn; they go around in circles and have a let-out for themselves with a little squiggle. That is true of this debate.
Before I run away with myself, to which I am prone, I ask hon. Members to keep their contributions short, as I shall. That will give everyone with an interest in the subject a chance to say what they have to say. Unfortunately, we are not too good at that in the House. I have often sat long and patiently, wanting only a few minutes while people have rambled on for 25 minutes saying what could have been said in five. If that is a criticism of both sides of the House, so be it.
This is an important subject that causes great concern to all constituencies that have the continuing problem of opencast mining. I am fortunate, because although there is one opencast site in the local authority that covers my constituency, there is none in my constituency because the mining would be too deep for current technology. The Permian bed that covers the coal measures under my constituency makes it an impossible task.
You are well aware of the problem, Mr. Deputy Speaker, because your constituency has more than its share of such problems. It is interesting that when such matters are debated, we find the normal divide in British politics: those who have the problem on either side of the House want to do something about it; those who do not have the problem are often not very interested or are willing to advocate a process that makes other people's lives miserable. It is a case of not in my backyard.
There is considerable interest in the subject throughout the country. As one of the constituents of my hon. Friend the Member for City of Durham (Mr. Steinberg), I appreciate that he has a great problem. I know what it is like. Luckily, in the village where I live we had a narrow escape a couple of years ago. There was not enough coal in a pit heap to make it viable and it was decided not to take the mineral beneath it before the site was landscaped. I was eternally grateful.
Next Thursday in the Jubilee Room, there will be a meeting of the Biddulph Action Group organised by my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley). Many things are coming together. That campaign is not from my constituency but from the miners parliamentary group, which is concerned about the issue. I know that many other mining Members who do not belong to the miners group have the problem, including some Conservative Members.
Opencast coal mining is absolutely unnecessary. We have it only because certain groups of people are doing very well financially from it. No benefits accrue to the population in general. If I was still burning coal, which
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fortunately I am not, and went to a coal merchant and said, "I hear opencast coal is cheaper, can I have some?", I would not get a reduction. All coal is the same price for domestic consumers. The opencast market is a scandal and disgrace.
At one time in the north-east, both Northumberland and Durham county councils had sound policies of considering opencast output as a percentage of deep-mined output. It was rightly felt that, as deep mining capacity was reduced, so should opencast capacity be. Over the years, we have heard all sorts of arguments about the necessity for opencast coal, such as how it was needed to be blended with deep-mined coal. In the north-east that is no longer true because there are no deep mines left in County Durham: only one survives in Northumberland on a wing and a prayer. There is tremendous opencast mining output and no sign of it reducing.
I remind hon. Members who have studied the subject, and I see that there are some here, of the Flowers commission in the late 1970s, which recommended that opencast mining should be gradually phased down to—I use its term—a tick-over level. Some tick-over. It seems to me that it is going on at a fair speed and shows no sign of reduction.
At the time of the Flowers report, legislation from the Department of the Environment stated in effect that a need for coal would be a consideration when local authorities decided whether to grant planning permission for opencast mines. I know, for example, that at that time I appeared at no fewer than six hearings where applicants had appealed to the Department of the Environment after the local authority had decided to turn down their applications. On all six occasions the appeals were turned down. The late Nicholas Ridley later overturned one of them, but five out of six was not bad.
However, that was not the way in which the Government preferred to work because they changed the guidance and introduced mineral planning guidance 3, MPG3, one of the worse items of legislation ever. I call it legislation because, in effect, it is legislation. If local authorities do not abide by it, they face great cost disadvantages should they be unsuccessful against the applicant for a licence.
MPG3 stated that it would be assumed, without any sort of analysis, that opencast mining was a good thing. An application for a licence would be refused only if the local authority thought that there were pressing environmental reasons for doing so. Overnight, that changed the emphasis. The operator previously had had to prove a need for coal and the desirability of the site. Suddenly, the deal would go ahead and it was up to local authorities and anyone else who opposed such a move to prove environmental grounds.
The statistics after that new guideline was introduced show a quick change and that many more opencast appeals were successful. As a result, councils initially were reluctant to take operators on because they knew that they had little chance of success on appeal. They would not only have to bear the cost of the hearing but pay operators' damages for loss of trade—talk about one-sidedness; that is appalling.
Two years ago, we had the cataclysmic deep mine closure programme. We were told that regardless of price, there was no market for a vast amount of coal. I should have thought that if there was no market for coal, opencasting would be gradually phased out. That has not

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been the case. What is happening is what we always believed would happen. Evidence has been given over many years to the effect that opencast coal would replace, not supplement or assist, deep-mined output. That is precisely what has happened.
I understand that MPG3 has been modified slightly, but it does not appear to have altered much. No consideration is given to need. Anyone can approach a local authority, say that he wants to mine coal and present his plans. The coal may never be disposed of—the firm could go bankrupt—but there is no procedure for monitoring.
We should like a return to pre-MPG3 times. I should have thought that, if there were a need for opencast coal, operators would not have too much difficulty in proving it. I know that previously, they had some difficulty, which is why they lost so many appeals. That showed that the system was working.
I do not speak a great deal on environmental matters because I am not an authority on them, but I know a little about markets. I know that for every employee in the opencast sector, five people would have been working in the deep-mined sector. Taking into account all the mining communities, the ratio would be about seven or eight to one. The coal costs the same but the difference is between employing one or eight people. That, it appears, is no longer the issue; the real issue now is why are deep mines continuing to be run down and closed with a subsequent reduction in manpower?
The situation will get worse because more gas and nuclear-powered stations will undoubtedly come on stream, despite what the Government say to the contrary. There will therefore be less demand for coal. Unless something is done, we shall end up with no deep mines, and the bulk of our coal will come from opencast sites, for as long as they last—I understand that we are now down to the final 20 or 25 years of potential supplies. Some might be pleased about that; it is only a pity that we had to lose so many deep mines and import coal to bring that about. In addition, we have lost an industry and the skills of tens of thousands of people. There are 3 million people unemployed, but the scandal continues.
I am now going to say something a little unusual. I was a member of the Standing Committee that considered the Coal Industry Bill when the industry was being denationalised, which was another disaster. Members of the Committee were heavily lobbied by the National Farmers Union, and I found that it had a fair case. It will want to know what is being said today so I shall make my remarks loud and clear. I am prepared to help the NFU as a decent and responsible Member of Parliament and I want it to reciprocate. When it has heard what I have to say on its behalf, I hope that it will seriously consider changing its attitude about access to the countryside so that when I and others go for a walk we do not face an obstacle course. Members of Parliament are reasonable and we try to help people; it is not unreasonable to ask the NFU to reciprocate.
One of the problems that farmers have, as they have made clear for a long time, is that the land which is returned to them is not satisfactory for agricultural purposes for a long time, if ever. They say that, following statutory reinstatement of the land, a period of five years is not the end of the matter and that some work might still need to be done afterwards.
Almost 15 years ago, there was an arrangement between farmers and landowners and what was then the National Coal Board. It was called a post-release
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rehabilitation scheme. That sounds good—it reminds me of the miners' rehabilitation centres. "Rehabilitation" is an interesting word. Under the scheme, land would be examined after a given period, and any remedial work required would probably be done by the landowner if he or she so desired and paid for by the coal board. It appears, however, that that did not happen very often.
One has to ask why the land is not returned to its original condition. Is it because it might affect profit margins, or because it might make opencast mining less attractive? When all is said and done, deep mines, which could produce more cheaply than opencast sites, have been closed.
Wearmouth colliery in my constituency was heading towards producing coal for £1 a gigajoule. Coal was mined in a 7 ft high seam, the highest that had been worked for about 90 years. However, it was closed because it was said that there was no market for its coal, even at £1 per gigajoule.
I have done my bit for the NFU, and I hope that the Minister will consider the matter seriously.
Mr. John Home Robertson: I am grateful to my hon. Friend for giving way to a farmer on his own side. He mentioned the need to reinstate land. Will he say a word or two about the apparent failure of opencast operators to deal with the problem of ground water from opencast sites? A substantial site at Blindwells in my constituency is about to stop work in October or November this year. We have been advised by the Coal Authority that the mining operators are not going to be required to continue pumping the water out of the site, which means that when the water table reaches its original level the surrounding areas will be severely affected by badly polluted ground water. What on earth can be done about that?
Mr. Etherington: I thank my hon. Friend for his helpful intervention. He will be well aware that we tried to get something done about that when the Coal Industry Act 1994 was being passed. We were given all sorts of assurances but no specific legislation. The same is happening with the Environment Bill, which is currently going through its final stages. In other words, we are no further forward—it is all promises but no legislation. I am sure that until we have a change of Government things will remain the same because such legislation would mean interfering with commerce. We all want commerce to do well and we all want wealth to be created, but not to the exclusion of everything else.
Ms Joan Walley rose—
Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Order. The hon. Gentleman is not giving way. Before I call another hon. Member, I hope that the House will take note of the hon. Gentleman's generosity in leaving time for others. This is a short debate in which there is a great deal of interest. I hope that speeches will be kept short to enable as many hon. Members as possible to speak.
11.46 am
Mr. Richard Alexander: I must apologise to the House and the Minister because I might have to leave before the debate ends. I undertook another engagement before I knew that this debate was to be held. I shall, however, be here for most of it.

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I join the hon. Member for Sunderland, North (Mr. Etherington) in congratulating you, Mr. Deputy Speaker. The honour has given great pleasure to your many friends of all parties.
That, however, is the only point on which I agree with the hon. Gentleman. His thesis was that opencast coal was unnecessary. My thesis is to the contrary, but I believe that we must deal properly with its environmental aspects.
A few old Labour party workhorses were trotted out and exercised today. The Labour party was hostile to opencast mining because it was largely run by the private sector whereas the nice, benevolent British Coal looked after coal miners and provided safe jobs. I do not think that those arguments are relevant any more.
I regret that while we are—quite properly—talking about the environment, the Opposition seem thus far to be dressing up the environment to use it as an argument against opencast coal. That would be a disservice to a fine industry and those who work in it. We must spell out the fact that surface-mined coal is provided at a low and predictable cost whereas deep-mined coal is high cost and carries an even higher risk factor.
Ms Walley rose—
Mr. Alexander: If the hon. Lady wishes me to give way I shall do so, but it will extend the time that I take. Hon. Members cannot have it both ways.
Ms Walley: I shall be brief. How does the hon. Gentleman believe that the true and full cost of opencast coal mining can be measured? He talks about economic appraisal and opencast coal being cheaper, but has he taken into account the blight on property and, for example, the effect of dust on health? How does he ensure that the true cost is known?
Mr. Alexander: The hon. Lady makes an absolutely fair point. That is why the debate is relevant. Such equations must be considered, and I hope that my hon. Friend the Minister will give reassurances on those points when he replies.
If I may, I shall continue my thesis about the benefits of surface-mined coal, and point out to the House that surface-mined coal, as I am sure many Opposition Members are aware, can be blended with deep-mined coal, which has a higher moisture content. With that blend, it is more acceptable, more manageable. It reduces the high chlorine content that exists in many seams of deep-mined coal. It has one tenth of the average amount of chlorine of deep-mined coal. It is has a low ash content and a high calorific value, particularly in the north-east and in parts of Scotland. Those are all environmental considerations. Surface-mined coal is part of the overall equation that we are discussing. It is not helpful to the argument and to one's knowledge to rubbish it as an aspect of the mining industry before reaching a conclusion.
Ms Joan Ruddock: Will the hon. Gentleman give way?
Mr. Alexander: Just once more.
Ms Ruddock: It is an extremely simple question. Will the hon. Gentleman comment on the sulphur content? Is it not true that opencast coal often has a much higher sulphur content than deep-mined coal?
Mr. Alexander: That may be so. I make no apology for the fact that I am listing the advantages of surface-mined coal. We should recognise that the properties of surface-mined coal improve the handling characteristics and the saleability of deep-mined coal. We now have acceptable blends for shipment abroad; we still export a lot of coal. If we make our deep-mined coal more acceptable to people who buy from us, we are helping the industry as a whole.
Sometimes, when deep-mined coal cannot be washed further, the addition of surface-mined coal will make it saleable. In Nottinghamshire, for example, each tonne of high-chlorine deep-mined coal needs to have about I tonne of opencast added to it to make it acceptable to purchasers. If the implications of the comments of the hon. Member for Sunderland, North were followed through, they would cast a grave burden on the acceptability and the saleability of the coal, which is Britain's coal and which we are trying to sell to people in this country and abroad. It will harm British industry and British jobs if we go down the hon. Gentleman's route.
We are still competing against imported coal. I shall not go into the arguments about how the imported coal is acquired, as those are yesterday's arguments, but the fact is that we are still in competition. There are certain commercial facts about opencast that cannot be denied, the first of which—this deals with the point made by the hon. Member for Stoke-on-Trent, North (Ms Walley)—is that those who are involved in its extraction will say that it is far cheaper to extract coal from the surface rather than from deep mines. I should have thought that that logically follows and does not need a great deal of proof.
The second point is that we must produce coal to sell abroad. The third and vital point—I am astonished that the hon. Member for Sunderland, North did not concentrate on this—is that the coal industry and the surface-mined coal industry provide a great many jobs in various communities. Those are very important points. I have the honour, with the hon. Member for Sherwood (Mr. Tipping), of representing a north Nottinghamshire seat, and jobs are important in coal mining areas. It is a dirty and a dangerous job, and we should accept that it has already suffered a great deal from contraction. Opencast is a key element in the objective of sustaining a large economically viable United Kingdom coal industry. It is a significant contributor to the bottom-line profits of the rest of the coal industry and hence the maintenance of jobs in it.
To my hon. Friend the Minister, I say, as do other colleagues here, that it is important that the new guidelines for MPG3 should work with the grain and ensure that coal from the surface is economically and environmentally acceptable. The environment is extremely important, and the environmental effect of opencasting on local communities is a matter of great responsibility for my hon. Friend and, indeed, for MPG3.
We must accept that the Coal Industry Act 1994 imposes such a duty on developers, which they accept. They in turn must ensure that they mitigate the worst effects of their operations on communities, and planning authorities must ensure that they do. Local people must accept that surface mining is about not just profits and shareholders but jobs in communities. There are many examples of former opencast coal mining operations being restored to great benefit in our communities. There is one not far from north Nottinghamshire, the Rother Valley

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country park in south Yorkshire. There are excellent examples of environmental attraction once coal surface mining has been concluded.
The call for opencasting to be closed down because there is surplus of deep-mined coal elsewhere is shortsighted. It has merit in the short-term, but to close down a significant part of the coal industry cannot be a good long-term proposition. Competitive disadvantage, if my earlier thesis is followed, will certainly be brought about from short-term expediency. One cannot just turn on and off surface mining like a tap. It is a five-year programme, and that is why the environmental aspect of it is so important. We must remember that the employers, the major contractors, have invested £1,000 million in their surface mining activities. It is not a fringe activity. They employ 15,000 people, directly and indirectly, often in areas that have suffered drastically from coal mining closures.
Planners must give opencast a fair wind. It can do without the hostility of some hon. Members and some people outside. It must be allowed to produce low-cost indigenous coal, which will enable the industry to thrive and continue to export. I suggest to my hon. Friend the Minister that more drastic constraints will put that at risk, as will the ideological opposition of some Opposition Members. I hope that my hon. Friend will resist going down that particular route.
11.58 am
Mr. Gerry Steinberg: I congratulate you, Mr. Deputy Speaker, on your knighthood, and my hon. Friend the Member for Sunderland, North (Mr. Etherington) on securing this debate on a subject which is so vital for my constituency.
Mine is not an ideological argument, but a purely practical argument about the horror that my constituents have to put up with. I have long campaigned against opencast mining, which has expanded with increasing alarm in my constituency, because of the horror that it brings. As well as being directly related to pit closures, which have destroyed our pit communities and led to high unemployment, it has had a dreadful impact on the environment in my constituency.
First, heavy lorries thunder through villages and local communities from the early hours of the morning, past residential properties and the main pedestrian walkways where parents are often taking small children to school. The increase in the number of heavy lorries is making conditions intolerable for residents and exacerbating the dangers that pedestrians have to endure all the time.
Secondly, there has been widespread damage to the landscape, which is visible to both commuters and visitors to the beautiful city of Durham from virtually every main approach as more and more opencast sites are agreed. Both tourism and local industry have been increasingly affected. The open countryside is being ravaged, conservation areas are being damaged and the dust and debris resulting from mining operations threaten the local flora and fauna.
Thirdly, there is the dust and nuisance that people have to endure. Residents are inevitably subject to dust and diesel pollution. Last year, residents of Bowburn in my constituency had to put up with opencast mining at the R J Budge (Mining) Ltd. site at Whitwell, which is approximately half a mile from their homes—less than that in some cases. There have been significantly greater dust deposits in their gardens, and many more cases of asthma, particularly among children.
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There are no guarantees that the implementation of dust control measures can avoid the hazard. Moreover, there is no control over exhaust emissions from the plant. Dust pollution is far more than just a nuisance. In a recent answer to a parliamentary question from me, the Parliamentary Under-Secretary of State for Health accepted that an independent advisory committee had confirmed research findings showing an association between opencast mining and the increase in asthma.
Mr. William O'Brien: The hon. Member for Newark (Mr. Alexander) may not still be present when I make my speech. My hon. Friend speaks of the effects on health, welfare and the environment in his constituency; will he now condemn the hon. Member for Newark for not taking those effects into consideration?
Mr. Steinberg: I said at the beginning of my speech that my reasons for objecting to opencast mining were not ideological, but motivated by a desire to protect my constituents from environmental damage. The hon. Member for Newark (Mr. Alexander) gave purely ideological reasons for supporting an industry which is making millions of pounds for certain people. When he speaks of ideology, he should look to himself rather than Opposition Members. Many thousands of people's health, as well as their everyday lives, are being dramatically affected.
Opencast mining is detrimental to the quality of life. It affects both the environment and the general morale of local communities. The effect on those communities is traumatic. Former mining villages in my constituency are only now recovering from the scars left by the industry. In recent years, the area has been subject to considerable environmental improvements, including the reclamation of former colliery sites and the creation of new industries, jobs and recreational facilities. The establishment of new mining operations in those areas is a dreadful retrograde step—and it could go on for 30 years.
As well as the new applications, there are the "while we are here" applications. For example, R J Budge started work on the Whitwell site on 1994. In January 1995 the firm applied for a variation to build an additional 20 m mound on the same site because there was not enough room to pile up all the overburden. By April, less than a year after coaling had started, RJB admitted that it had already extracted 100,000 tonnes from the site, although the permission granted on appeal was for only 250,000 over five years. RJB has also warned that it is seriously considering opencasting an area twice the size of the existing site, across the road from it, although the initial application stated that it was not viable. If the site is agreed it will be operational in my constituency for 30 years, which would be catastrophic.
R and A Young's original application and permission at Cocken Lodge, Leamside, was to extract 36,000 tonnes. It produced 90,000. The site grew and grew; permission was given for the extraction of a further 46,700 tonnes, but 60,000 were actually taken out. A further extension was granted to extract 324,000 tonnes, and then another 65,000. R and A Young later returned with another application, this time to opencast a further 670,000 tonnes. After appeals and High Court action, the site is now being mined by R J Budge, which is exactly what it wanted.
Opencasters cannot be trusted: that is the lesson that we must learn from today's debate. At this moment, there is a threat of another application at Park Hill and Old

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Quarrington in my constituency. The strength of local opposition is enormous. At a public meeting about a month ago, hundreds of people expressed their determination that the application should be refused. The proposed work would constitute an unjustifiable intrusion into open and highly visible countryside; it would be a major cause of pollution, and would seriously damage amenities that local people have a right to expect.
There are 260 houses within 250 m of the proposed site. It is incredible that the firm should want to apply for a site so close to those houses. The applicants themselves accept that there would be an adverse impact on nearby residents, but they are going ahead with the application. Given the sheer numbers of residents affected, the pollution caused by dust, diesel, noise and traffic and the inevitable severe visual intrusion, allowing the application would constitute a huge departure from the county structure plan.
I am sure that the application will eventually go to appeal, but what will happen then? In a recent parliamentary answer, the Minister acknowledged that nationally, since 1985, a staggering 40 per cent. of all opencast sites which had been run on appeal against the wishes of the community had been in County Durham. The north-east bore an amazing 57 per cent. of all such planning consents approved on appeal. That is an appalling statistic, not just for the people of Durham but for those in the north-east generally.
The hon. Member for Newark constantly claimed that the industry brought many jobs into the area, but that claim is not substantiated. I am not aware that more than one job has been created by RJB on the most recently approved working site in my constituency for a so-called local—that is, someone living within 10 miles of the site.
On 15 November 1991 The Journal, a local newspaper, carried the headline, "Appeals inspectors 'swayed by misleading employment claims'—Opencast bosses fail to deliver promised work". It was reported that
"hundreds of jobs promised at controversial opencast coal sites have not been delivered",
including Stobswood where 500 jobs had been promised and 76 people were employed, Plenmeller where 120 jobs had been promised and 26 people employed, and Chester House where 160 jobs had been promised and 101 people employed. A British Coal official admitted that job predictions had not been met, but attributed that to technological advances. As I said, one cannot trust the opencasters. Moreover, potential and existing jobs are threatened by the new ugly opencast sites which have developed, particularly in my constituency.
In an amazing and shocking confession, the Government have acknowledged that they have blighted Durham with unwanted opencast sites; they have also been forced to accept the growing body of evidence of health risks associated with such sites. Those facts alone must force a rethink of the Government's disgraceful attitude to opencast sites, not just in my constituency but throughout the country.
12.9 pm
Mr. Spencer Batiste: I, too, congratulate you on your honour, Mr. Deputy Speaker, which has brought much pleasure to all of us in west Yorkshire. It is also
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appropriate that you should be in the Chair for this debate as over many years you have contributed so significantly to our debates in the House on mining, especially in relation to opencasting. Having said all that, I am bound to honour your admonition to be brief, so I shall not repeat things that I have said on previous occasions.
It is clear that there are some circumstances in which opencasting is acceptable and sensible, and others in which it is not. In my constituency, we have clear examples of both those positions. In the south of my constituency at St. Aidans, there is a huge site which was derelict, an eyesore and dangerous. Opencasting was the only practical way of solving that problem and of creating good countryside and a good environment for local people. It produced a great deal of community gain in terms of cash, as well as the long-term benefit that will come to the environment. In such a situation, opencasting makes sense.
Further north in my constituency, in the sensitive green belt area between the town of Garforth and the conurbation of Leeds, one finds a situation in which opencasting cannot make any sense. At Austhorpe, in the constituency of the hon. Member for Leeds, East (Mr. Mudie), and at Garforth, communities are capable of attracting high-quality inward investment, both in commerce and in industry. There are established communities and a crucially sensitive area of environmental green belt. The problem that we face in such a region is that individual applications for opencasting are made and each case is considered on its own merits without any real strategic overview of what is right for the region.
My hon. Friend the Minister will rightly point out that mineral planning guidance No. 3 states that there should be local minerals plans which highlight where opencasting is appropriate and where it is not. Around the country, a number of local minerals plans make precisely that sort of judgment. That does not help us in Leeds, however, where no local minerals plan is in place and where the process of obtaining such a plan is inevitably some years away as the whole exercise is bound up with the unitary development plan inquiry, which will take years.
In that region, we faced an application from one company, H J Banks, for a site on the line of the A1-M1 link road. Inevitably, there will be sterilisation, so the company has made a very short-term application. Against the wishes of the local communities and of the Department of Transport, which feared that the site would delay the building of the road, the company received planning permission on a one-off basis. The moment it has that application and is into production, however, it comes forward with another application for another site nearby which will enable it to continue its mining even though that site has nothing to do with the line of the road or sterilisation and is on green fields. A further three, four or potentially five applications are known to be already on the table or in the pipeline for consideration. The problem that we face when we come to a planning inquiry is that each of those applications is considered in isolation and we do not have the protection of a local minerals plan.
MPG3 stresses the importance of the concept of sustainable development. The real core problem for constituencies such as mine is that it is unclear what sustainable development actually means. In Garforth, it must mean the attraction of modern high-quality investment which is coming on the back of the excellent

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communications and the skilled work force. In that region, unemployment is not high. The region is expanding and attractive and many high-quality companies are seriously considering locating there. If sustainable development means anything, it must mean that, for that region, we should promote a planning environment which attracts and is helpful to that programme. We should not put in opencasting which, whatever safeguards are put in place, will produce some measure of dust. One company which has built a £20 million factory in my constituency says that opencasting causes problems for the purity of its product.
The real core of the problem that a constituency such as mine faces is that if one does not have a unitary development plan there is no opportunity for a strategic overview to be taken of what is right for that region.
Mr. John Gunnell: Will the hon. Gentleman give way?
Mr. Batiste: Perhaps I may finish this point; then of course I shall way to the hon. Gentleman, whose constituency suffers problems not dissimilar to those in my own.
Between Garforth and the Leeds conurbation, a number of opencast applications are coming forward which clearly do not fit into the pattern of development of that region. It must be right for a strategic overview to be taken. Such an approach cannot be taken within the time frame of these planning applications because the local minerals plan inquiry is caught up in the unitary development plan. It must therefore be right for the Minister and the Department to call the applications in and inject a strategic overview into the structure.
Mr. Gunnell: Because the hon. Gentleman represents a marginal seat, he was able to get the Secretary of State for the Environment to visit his opencast site. The hon. Gentleman is talking about the cumulative effects of application after application in the same region. Was his right hon. Friend the Secretary of State taking note of what he had to say about that, and would the Secretary of State be prepared to see the cumulative effect of sites in nearby constituencies which are not marginal and therefore not of such interest to him in the next election?
Mr. Batiste: I am delighted that my right hon. Friend the Secretary of State for the Environment came to my constituency to consider the situation and to discuss with local action groups and local representatives the issues that are involved. If I have been more successful in attracting Ministers to consider problems in my constituency than the hon. Gentleman has, that is perhaps just a fact of life, but—I say this without making party political mischief between us—the issue that the hon. Member for Morley and Leeds, South (Mr. Gunnell) faces in his constituency and that which I face in Elmet are not dissimilar. Both of us are exposed to a position in which there is no local minerals plan in place, a number of opencast applications are either on the table or in the pipeline, and some opencast mining is already under way.
What I am saying to my hon. Friend the Minister is specific not just to my constituency, but to the hon. Gentleman's as well; exactly the same issues would apply. When the Secretary of State was in my constituency, I specifically made the point that this issue affected the whole of the green belt around the south of Leeds, where sensitive green belt regions have been designed to maintain the separation of different communities, where
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communities are able to attract good quality investment, and where opencasting is not suitable in terms of the sensible economic development of those regions.
I therefore say to my hon. Friend the Minister that, within the context of MPG3 and with all sensible economic planning criteria, in regions such as ours, a strategic judgment must be made as to whether applications should be granted. They should be based on a strategic overview of what is right for that region, rather than put forward one by one, whereby individual companies chip away at a local authority and its unwillingness to spend large sums of money fighting cases through inquiries.
In the situations that I have described, I urge my hon. Friend the Minister to make it clear that, for that particular region, he will call in applications so that a strategic overview can be injected by the Government.
12.19 pm
Mr. William O'Brien: I should like to address local issues which could involve your part of Wakefield, Mr. Deputy Speaker, as well as my constituency and those of my hon. Friends the Members for Wakefield (Mr. Hinchliffe) and for Hemsworth (Mr. Enright). We have the same problems in relation to opencast mining. The problems relate not only to mining on derelict sites, which have been mentioned, but to planning applications. For instance, an inquiry is imminent on the Sharlston opencast site.
When we discussed mineral plans and extraction in Committee on the Environment Bill, where the Minister led for the Government, I spoke of problems to which I should like to refer again today to try to impress on the Minister the importance, when considering applications for opencast mining, of the points raised by my hon. Friend the Member for City of Durham (Mr. Steinberg) about the environment, health, noise and dust pollution as well as the nuisance of lights. The Minister must attend to those matters in relation to applications and appeals.
The Sharlston application is from a Mr. Banks and would involve opencast mining in a green belt area. I invite the Minister to view that rural area because it would be a crime to blight it with opencast mining, and the people responsible for the applications should be treated as criminals. It seems that the hon. Member for Newark (Mr. Alexander) would defend such developments. Houses and communities are situated less than 200 m from the proposed site; if that is the kind of development that the hon. Gentleman thinks should go ahead in that environment, I have little sympathy for his constituents.
Mr. Alexander: Will the hon. Gentleman give way?
Mr. O'Brien: I am reluctant to give way to the hon. Gentleman, but as I have mentioned him I will certainly give way.
Mr. Alexander: Perhaps I may help the hon. Gentleman by giving him the positive assurance that that was not what I said. I argued that surface-mined coal should not be rubbish and that in considering planning applications the Minister should be extremely sensitive about the very implications that the hon. Gentleman mentions.
Mr. O'Brien: The hon. Gentleman did not say that in his speech, but I accept his points.

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I impress upon the Minister that it is a question not just of planning applications but of the problems which develop from them. In the Oulton area of my constituency there was opencast mining in the past. Because coal can now be mined at a greater depth, there is an application to carry out new opencast mining on that Oulton site. That is also a crime against the community. The Minister must take opencast mining seriously.
In Committee on the Environment Bill I said that we do not want rape of the countryside in Sharlston. People in that area are totally against the application. They take the view that the closure of the deep pit at Sharlston followed by an application for opencast mining creates problems and is an added insult to the people who lost their jobs in that area. The Minister must consider a number of issues.
I should like to develop other matters, but as a large number of hon. Members want to enter the debate I shall be brief. I ask the Minister to consider the Sharlston application because it could be used as a barometer, as an example of refusing planning applications for coal that is no longer needed. The problems for the environment from such a development can be envisaged. I invite the Minister to come to Sharlston, look at the site and let me have his observations about what he thinks is right or wrong about an application to develop opencast mining there.
12.24 pm
Mr. Peter Atkinson: I also shall be brief. Opencast mining is clearly a controversial activity, but there is no reason, when debating it, for logic and truth to go out of the window. I think that the hon. Member for Stoke-on-Trent, North (Ms Walley), who is no longer in her place, said that deep mining was an environmentally friendly way to extract coal while opencast mining was an environmentally damaging way to do it. That is patently absolute nonsense.
Ms Joan Ruddock: I have a duty to defend my hon. Friend, who is not here at the moment. She did not say what the hon. Gentleman attributes to her. She asked how the total costs of opencast mining could be evaluated, taking into account social and environmental costs. I do not remember her making any comparison with deep-mined coal.
Mr. Atkinson: We have to take the logic of the hon. Lady's remarks to their conclusion. If she takes into account the environmental costs of one form of mining, opencast mining, I assume that she must take into account the costs of deep mining. It is manifest nonsense to say that deep mining is environmentally friendly, as some hon. Members have hinted. Anybody who was brought up in the north-east of England, as I was, and who saw the smouldering pit heaps and the legacy of disease and injury that were caused by deep mining would not say that. We can argue that opencast mining has considerable advantages and that, when the work is finished, the land is generally restored to an extremely high standard. The risk of injuries, accidents and dangers to health of the people in the opencast industry is smaller than it is to those who work in deep mines.
The hon. Member for Sunderland, North (Mr. Etherington) said that opencast coal was not necessary. My hon. Friend the Member for Newark (Mr. Alexander)
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made some good points about that. It is manifest rubbish to say that such coal is not necessary. Opencast coal is needed to add to the coal from deep mines to make the deep mines viable. If the hon. Member for Sunderland, North wants to shut Blenkinsopp colliery in my constituency or Ellington colliery in Northumberland his proposal is the way to do it.
Mr. Etherington: The hon. Gentleman accuses me of talking rubbish. That is fine, because he is an expert on the subject. I do not mind such comments from him because they are obviously authoritative. If land is as well restored after opencasting as he says—he has many more farmers in his constituency than I have in mine—why does the National Farmers Union not agree with him?
Mr. Atkinson: I can say from first-hand experience that the land in my constituency that has been opencast and restored is in some cases better than it was originally.
Mr. Dennis Skinner: Farmers will vote Labour next time.
Mr. Atkinson: Chance would be a fine thing. I do not think so.
Plenmellor, which is being used for opencast mining, was mined in the past. The land was potholed, had shafts and was dangerous. It will be restored to open moorland. We need opencast coal. The hon. Member for Stoke-on-Trent, North spoke about sulphur. I suspect that she is wrong; I think that opencast coal has less sulphur than deep-mined coal. The advantage of opencast coal is that it can be mined completely clean and its calorific value can be determined exactly. Power stations do not blend coal themselves, but buy ready blended coal, so if it was not available here they would buy it from abroad.
It should be borne in mind that, for about every 100 tonnes of material that is mined underground, only 60 tonnes is coal. On average, there is 40 tonnes of spoil, which has to be tipped in the countryside.
I do not see how, if the hon. Member for City of Durham (Mr. Steinberg) took a walk down the Durham beaches, where colliery waste has been thrown for years, he could argue that properly controlled opencast mining is as environmentally damaging as existing deep mines.
Through MPG3, the Government have done a great deal to tidy up and strengthen the planning laws relating to opencast mining. For a start, they have removed the qualification of national interest, which was a great step forward. Before that, opposition to opencast applications could easily be overridden because of so-called national interest and objections to importing coal. The Government are putting in strict controls so that opencast coal mining happens only in areas where it is suitable or where it improves derelict land. That point has not been mentioned either.
The land surrounding opencast workings on the site of the old Orgreave colliery will be restored to a much better standard at no cost to the public purse. If the site had not been opencasted, the work would have cost the taxpayer £10 million or £15 million. There are environmental benefits of properly controlled opencast mining.
I sympathise with my hon. Friend the Member for Elmet (Mr. Batiste) since there is not a mineral development plan in his area. He should have one. Most of the country is covered by such plans. Indeed, most county councils or local planning authorities consider

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whether opencasting is possible and where it can be carried out to benefit the mining industry without causing untold environmental damage that affects nearby residents. I congratulate the Government on their stance and on their new rules and regulations in MPG3.
12.31 pm
Mr. Dennis Skinner: It is very interesting to listen to some Tories complain about opencasting in their areas and about the fact that they are likely to get more opencast applications. With odd exceptions, most of them were there in 1992, shutting the 31 pits with the President of the Board of Trade—who is now, so I am told, Deputy Prime Minister. Most of them went into the Lobby to shut the 31 pits despite the fact that almost every Opposition Member who spoke on the issue said that it would result in more opencast applications in every coalfield in Britain. Now they are crying and whining and whingeing because what has happened is exactly what we forecast.
It is a scandal that the President of the Board of Trade is being promoted when he helped to shut the 31 pits and took part in that—I shall use my words carefully—very smelly deal with R J Budge. There is no doubt that when the President of the Board of Trade knocked that £100 million off R J Budge's contract, he knew that Mr. Budge would make a load of money out of opencasting. Every one of us who work and live in those areas know that an opencast application is a licence to print money. That is the reason for MPG3. This Tory Government wanted to assist their friends, many of whom put money into the Tory party, including Mr. Budge. It is a classic example of the Tory party liaising with others to line their own pockets in return for ensuring the closure of deep-mine pits.
It is an affront that the hon. Member for Hexham (Mr. Atkinson) said that my hon. Friend the Member for Sunderland, North (Mr. Etherington) was on about rubbish. The hon. Gentleman went on to tell us—I think that this is what he implied—that he wanted to opencast Ellington colliery. It is under the sea. I do not know whether they have some new equipment that I have not heard about.
Mr. Atkinson: Will the hon. Gentleman give way?
Mr. Skinner: No. The hon. Gentleman made it clear that he wanted opencast instead of deep mines and he referred to Ellington colliery. I think that I can rest my case.
Mr. Atkinson rose—
Mr. Skinner: The hon. Gentleman has had his chance. Sit down. I know that he voted for Major. Now he has his problems he should not land them on us.
We want to get back to the main question: the blight of the coalfield areas. We know only too well that if any opencast applications were made near Chequers, they would be turned down. The truth is that, with rare exceptions, most opencast applications are made in areas from which spring—in the main—Labour Members of Parliament, including the First Deputy Chairman of Ways and Means. He knows about the subject as much as anybody else.
The Government do not really care. They are not bothered about the outcome. That is why there has been a host of applications recently—to line Mr. Budge's
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pocket so that he can hand over some more money to the Tory party. That is all part of the scene. That is why we have to get back to what can be done.
I am not one of those people who say that, when I worked in a colliery, there were no environmental hazards. Of course there were, but they are now developing deep mines such as those at Selby and Asfordby which are not like the old-fashioned pits in Durham, Derbyshire and Lancashire. Although they are not environmental hazard free, they are very different from those that we knew and worked in.
In the run-up to the general election, knowing that the Tory Government are not going to do anything to help us, we have to impress on our Labour Front-Bench team the kind of policies that we need for the future. First, we have to tackle this opencast business and get back to what we used to have. I remember a policy of no more green-field sites. We also used to have a policy which was in line with the Flowers commission—allowing, as my hon. Friend the Member for Sunderland, North said, opencast mines only to tick over. That meant that they hardly mined anything at all.
In Government, Labour party energy policy should be to take the remaining pits back into public ownership and then control opencasting. Mr. Budge and his friends would no longer exist. That is the only way. We can play around with MPG3 as long as we like, but we have do something more dramatic.
I will finish on this point because many hon. Members want to speak: there has been an aura around Mr. Budge and Arkwright in my constituency. Everybody is saying that this wonderful new authority is shifting a village from one side of the street to the other, that it is all benevolent and that it wants to do it for the good of the community. I have to tell the House that it is the biggest con trick of all time.
R J Budge closed Arkwright colliery and the methane came pothering out into the village and nearly blew it up. The villagers banded together, with my help and that of others, to take British Coal on. They took it to court, issued writs, and were on the verge of making money out of British Coal when what did it do? It said: "We've got a wonderful idea. We'll opencast all of Arkwright, we'll shift your village and you'll all get a house apiece." It saved itself all that wonderful compensation.
The whole thing was a con trick from beginning to end. I thank my hon. Friend the Member for Sunderland, North for giving me an opportunity to put that on the record. Those Arkwright people are really being shifted against their will. They had no option because they were frightened to death of the methane exuding from the old colliery. Now that we have had this debate, it is very important for our Front-Bench team to understand that we need dramatic answers. Pottering about with MPG3 and other such matters is important and I do not disregard it, but we have to take back control to ensure that we can be masters in our own house.
12.38 pm
Mr. Paddy Tipping: I hope that the Minister has listened carefully to the strong opinions of people who represent coalfield communities because there is no doubt that, over recent years, they have had a tough time. Coalfield communities aspire to a better future and that is what this debate is all about.

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In principle, I am not against opencasting, with one big proviso: it has to lift the landscape, enhance the environment and clear up areas of contamination and dereliction. There are some good opencast schemes. I draw the Minister's attention to the Moorgreen site in Nottinghamshire—the site of a derelict colliery which has been opencasted and will be replanted forming part of the new Greenwood forest giving people access to a better future; the recreation of Sherwood forest. Opencasters are not interested in such sites because they are small and difficult. They want the big, new green-field sites.
One can contrast Moorgreen and Robinettes just to the south. Robinettes is a mature landscape—the landscape of Lawrence. It is the area where Lawrence was born, where he roamed and where, I suspect, he did other things as well. The Erewash canal runs through it and the village of Cossall lies within it. It is an important site, yet British Coal tried to destroy it. I am pleased that the local campaign group succeeded and that the county council turned down the plan.
I know that RJB (Mining) will come back with another application. The company will be more sophisticated in that it will change the name in the application. Instead of calling the site Robinettes, the company will call it Shortwood Farm, but it is the same application. The company will do that because it believes that it can make money not out of a small derelict site, but out of a big green-field site.
I point out to the Minister that the average cost of opencasting is 80p per gigajoule—that is what the opencaster is aiming at. I hope that the Minister realises what is happening now in the deep-mining industry. My hon. Friend the Member for Bolsover (Mr. Skinner) talked about the new pits. Coal is being produced at Selby at £1 a gigajoule, and at Asfordby and Welbeck the figure is £1.20. As a result of the restructuring and because many of the overheads have gone, costs are coming down. I tell the Minister straight that, within two to three years, the cost of deep-mined coal will be lower than the cost of opencast.
The real costs of opencast are far greater than the figures suggest. Opencasting destroys landscapes, it destroys the environment and it puts people's health at risk. We need, as we have said before, a more sophisticated way in which to establish the real costs of development. The real cost of opencasting is that it ravages the community. I am no apologist for the deep mining industry. It is bad, tough and rough, but it is getting better.
Mr. Mike O'Brien: The problem is not just what happens when there is opencasting, but the threat of planning applications for opencasting which hang over the community for years.
Mr. Tipping: Opencasting blights the area before and afterwards. We must look for a real energy policy—an energy policy with the deep coal industry as its cornerstone. Unless we have such a policy, I despair about the future. The cost of a new deep coal face is about £30 million. It is clear that, in 1998 and beyond, the new private owners will go for opencasting rather than capital investment. We must get a grip of the situation and give people a new and better future. They have had a tough time and they deserve better.
12.42 pm
Mr. Michael Clapham: I want to deal with the two arguments put by the hon. Members for Hexham (Mr. Atkinson) and for Newark (Mr. Alexander). They argued that opencast mining was advantageous to the country and to the local community provided that high-quality restoration followed. I dispute that argument.
The Flowers report, to which my hon. Friend the Member for Sunderland, North (Mr. Etherington) referred, was produced in 1981. It spoke in terms of opencast being taken to tick-over level; opencast coal was not required in the amount that the hon. Member for Hexham suggested was required for technical reasons. The amount required for technical reasons is extremely small. If the hon. Gentleman had read the 1993 report produced by the Select Committee on Trade and Industry, he would have seen that the evidence given to the Committee by the Coalfield Communities Campaign suggested that the amount required for technical reasons could be cut to less than 10 million tonnes. That suggestion was made when 60 million tonnes of coal was deep mined. The Minister will be aware that the Select Committee recommended that opencast mining production be cut to 10 million tonnes.
In 1994, opencast coal production had reached 16 million tonnes and the total amount of coal produced in the United Kingdom was 48 million tonnes. In other words, the proportion of opencast coal has increased to one third of the total produced in the United Kingdom.
On restoration, I invite the Minister to visit the Redbrook site in my constituency. It was used for opencast at the end of the 1950s and the beginning of the 1960s. It was a long-term project. The site has been restored, but the land is blighted. It is now just pasture land. There is no arable farming, the woods have not been returned and the streams do not meander as they used to do. It takes up to 100 years after an opencast mine has ceased operation for land to return to the state that it was in before opencasting started.
Will the Minister confirm that, in a letter sent from his Department to RJB (Mining) just after privatisation, 110 opencast sites were identified in an area stretching from Derbyshire to the north-east? Will he confirm that figure? Will R J Budge be able to put in planning applications for sites that have been turned down before privatisation? If so, we in the mining communities can expect many more sites to be proposed for opencast mining.
I suggest to the Minister that there is now a need for insurance and bonding because some schemes may leave great holes with which the local authority will have to deal. R J Budge has already created such a problem at the Orgreave site, which was the subject of a debate in the House on 16 May. Several issues should be considered. I ask the Minister to ensure that he reviews opencast mining and to ensure that it is cut to tick-over level, as suggested in the Flowers report.
2.46 pm
Ms Joan Ruddock: I congratulate my hon. Friend the Member for Sunderland, North (Mr. Etherington) on obtaining this debate, which has been extremely interesting and important. No Labour Member underestimates the nation's need for energy or the inevitability of hard decisions, given that no conventional energy source is unpolluting.

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Opencast mining, however, should be a last resort and not a first resort. The industry should be recognised for what it is—noisy, dirty and destructive—and its economic worth, in terms of jobs and national need, should be judged accordingly. It should be an industry that is developed only when it can clearly serve the community's interests and that means the interests of the whole community.
Instead, opencast has been developed as a further expression of the Government's privatisation programme and of their hatred of the National Union of Mineworkers. Of course there are circumstances in which opencast can be tolerated. In some areas, it has a long history and the local community may have found an accommodation. In other areas land with a legacy of dereliction may be appropriately mined as opencast as a prelude to clear-up and restoration. In too many areas, however, as this debate has shown, the effects of opencast on the local community have been appalling.
Much opencast activity could have been avoided. In most cases, the same quantity and type of coal could have been mined from deep mines. When the Tories came to office in 1979, total coal output was 137 million tonnes, of which only 14.5 million tonnes—just 10 per cent.—was from opencast. Today, the proportion from opencast is almost one third, albeit that total coal output is down to 48 million tonnes.
Deep-mined coal production has been massively reduced by direct Government intervention and they have set in train a parallel strategy to promote an increase in coal from opencast mining. They gave guidance to local planning authorities in which they made it clear that
"it would be against the national interest to refuse permission for coal extraction"
by opencast mining. That judgment was reinforced by a series of further measures that, rather than being a response to the changing needs of modern communities, led to opportunities for making private profit by a few of the Tory party's friends.
Opencast mining is one of the most environmentally destructive activities in the United Kingdom today. It has immediate effects on the surrounding neighbourhoods and long-term effects on the landscape. It is Labour's view that, in most circumstances, the damaging effects of opencast far outweigh the economic benefits, and nothing that has been said today will change our mind.
The immediate effects on communities have been graphically outlined by many of my hon. Friends, not least by my hon. Friends the Members for City of Durham (Mr. Steinberg) and for Sherwood (Mr. Tipping). The nuisance of noise, blasting, excavation, vibration, dust and the intrusion of heavy lorries all blight local communities, let alone property values. The long-term effects are more difficult to evaluate. Opencast leads to the permanent loss of mature countryside, and although restoration can grass over an area, it cannot bring back the natural contours.
It would be wholly wrong to believe that such concerns are limited to the ranks of city-dwelling green groups, or even to members of the Council for the Protection of Rural England. I was born and brought up in a south Wales valley. Yes, the miners were hard men, but they loved their countryside and knew every path and contour of the mountains. They loved nothing better than walking on the hillsides or digging their back gardens.
That is why opencast mining such as that found on the Selar Farm site near the village of Cwmgwrach in west Glamorgan is such an abomination. It splits the
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community between those so desperate for work that they are prepared to make the compromise, and those desperate to defend the natural heritage. People should not have to make such choices.
Labour is committed to environmentally sustainable development. While recognising the need for jobs, Labour in government will operate a presumption against opencast mining, and permit it only where it would be to the benefit both of the local community and of the local environment. I hope that, in that aim, we might satisfy my hon. Friend the Member for Bolsover (Mr. Skinner), because I believe that the green-field sites will eventually be excluded. Labour in government will reverse the process, although we shall do so within a comprehensive energy strategy that puts the needs of the nation, of local communities and of the environment into the same equation.
The Minister is the one who must answer questions today. Can he explain how the revised guidance will make any difference? What does he say about the Sharlston application described by my hon. Friend the Member for Normanton (Mr. O'Brien)? Will the provisions in the Environment Bill, inadequate though they are, apply to opencast and the issue of polluting mine water? What is his answer to the question asked by my hon. Friend the Member for East Lothian (Mr. Home Robertson) about Blind Wells?
As my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) asked, will the Minister put on record his response to the idea of bonding? Surely if our holidays can be safeguarded we should be able to safeguard our communities. Surely we cannot allow R J Budge to continue to do what he did in Sheffield, where he put restoration into the hands of a separate company and then allowed that company to go bankrupt.
The Minister must answer those questions today, and we must learn to protect our environment and our communities from the destructive activity of opencast.
12.52 pm
The Parliamentary Under-Secretary of State for the Environment (Sir Paul Beresford): I have had more invitations than a tourist bureau to tour the country, and I would certainly be interested to look at some of the sites. Indeed, I have already agreed to visit some areas.
We had one small interlude with a bit of dramatics—pantomime, perhaps—from the hon. Member for Bolsover (Mr. Skinner), who reminds me of the three ugly sisters in one go. In general, though, there was a balanced debate in some areas with some Members, and there was acceptance on both sides—[Interruption] I must tell the hon. Member for Bolsover that his teeth are still slipping. Positive points were made on both sides and there was recognition, but not by all hon. Members, that there has to be a balance.
I congratulate the hon. Member for Sunderland, North (Mr. Etherington) on initiating the debate and on allowing various Members to put various points. I shall read the report of the debate tomorrow, because I shall not be able to answer all the questions now. Indeed, I shall be able to do no more than touch on some of them.
I understand the environmental concerns that were raised clearly and emphatically by hon. Members on both sides of the House. Letters have come in too. The Government have understood those concerns and taken on board their importance. They have influenced the thinking

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behind the new guidance published last July, which emphasises that development should be allowed only when it can be carried out in an environmentally acceptable way, or where there are overriding benefits, but it is not and should not be the intention to stop all opencast mining. That point has been made by hon. Members on both sides of the House.
I was interested to hear the hon. Member for Sherwood (Mr. Tipping) say that opencast can be done satisfactorily from an environmental point of view. The mess can be cleaned up and we can end up with an acceptable, if not environmentally improved, area afterwards. The aim of the guidance is to ensure that the extraction of coal can take place in accordance with the full and proper protection of the environment and within the principles of sustainable development.
The new guidance was not produced rashly. It was drawn up after extensive consultation with the industry, planners, environmental groups and local communities, and it responds to many of the concerns that were expressed. I recognise that some of what has been said, especially by the hon. Member for City of Durham (Mr. Steinberg), was about areas that were mined before the publication of the new guidelines, and I hope that they will at least help in such cases in future.
The guidelines emphasise a development plan led approach, with tests of environmental acceptability for individual projects. We have taken a tougher approach to the assessment of factors such as noise, dust and visual impact, and there is an annex that addresses each one in turn. We are committed to monitoring the implementation of the guidance through the research programme.
We also recognise the conflicting views on the characteristics of the coal, and intend to undertake research, starting early next year, to examine whether opencast coal has advantageous or disadvantageous characteristics. Some of the arguments have, therefore, already been taken on board.
The development plan led approach ensures that decisions on land availability and use are debated fully and openly at local level. That must offer the greatest certainty for industry about where coal extraction is likely to be allowed. Similarly, communities where coal reserves exist will have a clearer idea about where such activities are likely to take place, and over what period. That in part answers some of the questions that have been asked.
The new approach, which responded to many of the concerns raised, has been generally well received. I understand that the industry is somewhat concerned, and is conscious of the restrictions, but I recognise that there are difficulties on the other side, too. We intend to enforce the restrictions.
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Green belt policy has been mentioned. It is true that there is no bar on making planning applications for development in the green belt. Nor do we intend to introduce a presumption against mineral working in green belts. [HON. MEMBERS: "Why not?"] The simple fact is that minerals can be worked only where they are found, and such workings represent a temporary use of the land. Their extraction need not therefore be incompatible with green belt objectives, but applications for mineral working in green belts should be examined carefully, and development should be allowed only where the highest standards of operation and restoration can be achieved.
Nevertheless, MPG3 does not encourage applications for green-field sites but says that priority should be given to proposals involving the clearance of dereliction. If operators wish to work sensitive green-field sites, they will need to demonstrate that real benefits will accrue from their proposals.
Ms Ruddock rose—
Sir Paul Beresford: I shall not give way because I have only one and a half minutes left, and I want to touch on a few more questions.
There are some good examples, one of which was cited by the hon. Member for Sherwood. Any hon. Member who happens to know the Rother valley country park, near Sheffield, will know that it represents another example of considerable success.
The importance of development plans has been touched on. That is a key element in meeting the Government's objectives and in ensuring that development and growth are sustainable. In emphasising a planning-led approach, the Government were responding to the concerns expressed that the 1988 guidance was too centrally driven. We believe that a plan-led approach to the supply of land for coal and colliery spoil disposal will provide more certainty for the industry and for the communities in areas where coal reserves exist.
The plans should set out criteria against which individual proposals will be assessed. The guidance makes clear that the criteria should include consideration of employment and other economics effects of the proposals, any environmental improvements or other material planning benefits likely to result, the effect on landscape and local amenity, the effect on the local environment of transporting coal off the site, the cumulative effects of the proposals on an area, the avoidance of sterilisation of mineral resources and the avoidance of unplanned piecemeal working of deposits, which was a matter about which my hon. Friend the Member for Elmet (Mr. Batiste) complained. The Secretary of State has visited my hon. Friend's constituency, and I intend to do so as well. I may not have the stature of my right hon. Friend, but I hope that my hon. Friend will welcome me nevertheless.
Madam Deputy Speaker (Dame Janet Fookes): Order.

Military Training (Dartmoor)
1 pm
Mr. Anthony Steen: I am most grateful for an opportunity to discuss Dartmoor national park, a subject close to my heart and close to your constituency, Madam Deputy Speaker.
I raised the subject of Dartmoor in an Adjournment debate in February 1988. I have great a love for Dartmoor. I am a life member of the Dartmoor Preservation Association, and I pay tribute to the association's patron, Lady Sylvia Sayer, who has done more for Dartmoor and the environment than nearly any other person. I also want to recognise the work of my former research assistant Kate Ashbrook. She worked with me on the Dartmoor Commoners Bill, and is now chairman of the Ramblers Association and general secretary of the Open Spaces Society.
My request for a further debate has been prompted by the appalling accident on 18 June this year, when three young children were seriously injured near Great Mis Tor—some 1,700 ft up on the moor and about a mile north of Princetown—when a mortar bomb exploded.
The Worrall family was out enjoying an afternoon in the Dartmoor national park. They are letterbox enthusiasts, as so many of my constituents are. I myself am a letterbox enthusiast. In letterboxing, walkers hide boxes on the moor for fellow wanderers to discover. There are books about letterboxing which show where letterboxes may be placed. In the old days, there were five letterboxes in the most remote parts of the moor.
The idea was that, when one got to a remote letterbox, one left a postcard there. The next person who came to the letterbox would stamp the postcard and take the card back to a proper post box at the edge of the moor. Sometimes, one would not get a card for three to six months, such was the inaccessibility of the letterboxes.
There used to be five small post boxes in inaccessible parts of the moor. Today, there are some 3,000 letterboxes. It has become a huge sport, in which competition is fierce and enthusiasts are determined. Children and adults alike engage in a harmless but amusing pursuit, but it means that people rummage in nooks and crannies and upturn rocks and boulders to find their prize. It is an innocent pastime that occupies a good deal of leisure interest throughout the national park. Many thousands of people are now members of a society for letterboxing enthusiasts.
Unfortunately, in her enthusiasm to try to find a letterbox near Great Mis Tor, Jenny Worrall, aged eight, touched an unexploded mortar bomb and was badly injured. I am pleased to be able to tell the House that Jenny—despite undergoing two operations to remove shrapnel, and having been in intensive care for some time—is now in a general ward in Plymouth, and is making great progress. Her brothers Gary, aged 10, and Ricky, aged 9, have each made a good recovery from their shrapnel wounds.
Apparently, five people have been killed on Dartmoor by mortar shells since 1951, and two civilian injuries have been caused by military activity on the moor as well. The Dartmoor national park was created in 1951 as one of 10 national parks formed principally to provide urban dwellers with open spaces in which to roam, explore and
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escape from it all. The parks were designed to preserve and enhance the natural beauty of the area, and promote its enjoyment by the public.
The parks are some of the most guarded areas in Britain, and are protected from intrusion by development, noise or nuisance. The question must be asked—how can the military's use of such a national park for live firing with ammunition be consistent and compatible with the purposes for which the park was established?
There are three principal ranges in the Dartmoor national park—Okehampton, Merrivale and Willsworthy. I remember visiting the Willsworthy range with you, Madam Deputy Speaker, where we saw what was being done there. It is true that the number of days on which live firing takes place is reducing. The data that I have received for 1994 are particularly interesting. While the permitted number of days for firing at Okehampton was 112, the range was actually used on only 50 days. On Merrivale range, the permitted use was 173 days, but only 73 days were used. On Willsworthy, 232 days were permitted, but only 108 were used.
It is clear that the actual use of the ranges is about 50 per cent. less. than the permitted use. If that is a general picture, and if similar spare capacity exists across the Ministry of Defence's estates, there must be scope for priority release of training areas on Dartmoor. Surely we must review the need for so many training sites and the cost of those sites if each is under-used to that degree.
In 1993, the Public Accounts Committee highlighted the shortcomings in the management of available Army training land. There was widespread dismay in 1991 when the licence periods for Okehampton and Merrivale were renewed by the Duchy of Cornwall for 21 years, as opposed to the usual seven years. It was as if the Duchy felt that it had no interest in the fact that the national park should be protected from a further extension of military use.
Agricultural set-aside could provide alternative opportunities and locations for military live firing. What is the point of laying off more and more agricultural land from agricultural use if that land is not used for something beneficial? Why should we pound Dartmoor with more and more live fire? Why should there be military training in the wildest and most beautiful countryside in the nation? Why are 13,340 hectares-7 per cent. of the total area of the Dartmoor national park—designated for military use and live firing?
As more people explore the moor, the more likely it is that there will be a recurrence of the tragic accident of 18 June. Dartmoor attracts 8 million visitors a year, and we know that 357,338 people visited the eight information centres in the national park between 1993 and 1994.
Some people believe that, as Dartmoor has been used for military training since 1870—some 80 years before the national park was set up—and that live firing also took place before the national park was established, live firing should take precedence. They believe that it is not relevant that the Dartmoor Preservation Association was formed 13 years after military training started in 1870, and has been opposing live firing ever since.
The conflict is not so much about military manoeuvres and dry training—proper uses of a national park—but firing live ammunition. The conflict between military requirements and public access and environmental considerations has been a matter of continuous controversy. It was investigated in the Nugent report, and in the Sharp report, which noted:

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"military training and a national park are discordant, incongruous and inconsistent".
It has also been considered in the Edwards report.
I recognise the need to defend the realm and to train our military. I greatly respect the work done in my constituency by the Britannia royal naval college at Dartmouth, HMS Cambridge at Wembury and the marines in Bickleigh. Their manoeuvres involve dry training, firing blanks and physical endurance tests. They do not involve firing live ammunition.
It is interesting to note that the cessation of the cold war seems to have increased the need for live firing in this country. The British Army used to train extensively in Germany, as well as in the United Kingdom. Now that the troops are back from Germany, they are pounding around our national parks in increasing numbers.
Part of the Luneburg training area in northern Germany is a national park. The public outcry was so immense throughout Germany at a national park being used for live firing that the German Government were forced to find an alternative site for that type of training. Live firing no longer occurs on the Luneburg training area.
The House may be interested to learn that no other European country permits live firing on any area within a national park. When the Minister replies, I hope that he will explain why Britain is the only country in the European Union that allows its national parks to be used for live firing.
While the national park authority pursues its principle towards the ultimate withdrawal of military use and reductions in the restrictions imposed upon public access, another accident is waiting to happen. That is inevitable, and the military know it. Perhaps the Dartmoor national park should be renamed the Dartmoor military park.
It is not good enough to say that there have not been many accidents. There are unexploded mortars on many parts of the moor, and more and more are being discharged every week, so it is inevitable that another accident is waiting to happen, especially when that national park provides open access to the public to enjoy the countryside.
It is not good enough for the Government to say that signs are posted to warn people not to pick up items, or they may be blown up. Dartmoor is a national park for the public's enjoyment, not a place of danger where people should guard against everything they do.
I call on the Government to review the necessity for live firing and military training in our national parks. They should carry out a full investigation into whether, as a result of the alternative land use policy that the Government have rightly pursued, new areas of land that were formerly used for agriculture could now be better used for live firing and military training. That is the only way in which another terrible accident can be avoided.
What is required of the British Government? They should follow the lead set by the German Government and find another site, unless live firing could be confined to a specific area of Dartmoor which would pose no danger to the public. Without that commitment, people will continue to stumble across unexploded ammunition, particularly if they are letterboxing and looking in nooks and crevices for the boxes.
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Safety procedures could be made more rigorous, but I doubt whether they would solve the problem. Dartmoor should be used to the full, but the more it is used for hunting, hang-gliding, orienteering, or other leisure pursuits, the more likely it is that another accident will happen, however careful the military are.
I pay tribute to the meticulous way in which the military decide where and how they fire, but I fear that, when one is dealing with dangerous explosives, people will inevitably stumble across an unexploded bomb. Any accident is one too many.
I am not suggesting that more rules and regulations should be introduced, or that we should have more registers and more bureaucracy. I do not think that that will help. Better signs might be useful, but not more pieces of paper. That would be nothing but an administrative expense. What is required is to use land other than national parks for military firing, and there is other land available.
The tragic accident of 18 June need not have happened. I hope that the Minister will realise that one of the best jobs he could do, as long as he remains in his post, is to find alternative land, so that live firing—not the military—can be confined to certain areas.
I am grateful to you, Madam Deputy Speaker, for the opportunity to raise this matter.
1.15 pm
The Minister of State for the Armed Forces (Mr. Nicholas Soames): I congratulate my hon. Friend the Member for South Hams (Mr. Steen) on raising this important matter. I should like to begin by expressing my deep regret over the unfortunate accident that occurred during the afternoon of Sunday 18 June on the Dartmoor training area. I obviously wish Jenny and Gary Worral a full and speedy recovery, and I am glad to hear that they are making good progress.
As I told my hon. Friend last night, I have trained as a soldier so much on Dartmoor that I am confident that I could find my way from A to B without a map. The unfortunate incident occurred close to Great Mis Tor, part of the moor with which I am sure that you, Madam Deputy Speaker, are familiar.
It appears that, during a visit to the national park, a family from Ashburton had been engaged, as my hon. Friend said, in the pursuit of letterboxing. While the family had paused for a rest, one of the children apparently picked up a metal object, which subsequently exploded, causing serious stomach and spleen injuries to the girl, aged eight, and shrapnel injuries to one of the two boys who was with her. Our early investigations have revealed that the munition involved was a 2 in mortar round, which was manufactured in March 1942.
As my hon. Friend knows, a military board of inquiry has already been established to investigate the matter, and the full circumstances surrounding the case will not be clear until the board has concluded its investigations.
National parks have accommodated many uses since their creation. They are indeed living, working landscapes. My Department employs about 50 people at Dartmoor and contributes considerably to the local community. I am sure that my hon. Friend will want to bear that in mind when weighing his remarks. I believe

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that that should be taken into account when formulating policy for the national parks, and that we should recognise their entirely legitimate uses.
Of course, a balance rightly must be struck between those legitimate uses and the understandable wish of the public to enjoy the peace and tranquillity which those parks offer. Although military training may not conform to the general perception of quiet enjoyment, it is often forgotten that it is that very military presence which has helped to preserve and secure the exceptionally beautiful and varied landscape which attracts so many visitors to the national parks.
On the issue of military training generally, and the use of military parks in particular, my hon. Friend will know that the draw-down of forces from Germany and the introduction of new weapon systems are placing significant demands on our training areas. Some must be used more intensively, and others developed to provide new infrastructure. While use of training land will be maximised, we are of course conscious that this needs to be balanced against the interests of conservation.
It is an often forgotten fact that the Army has had a presence in the national parks since long before they were designated as such. At Otterburn, for example, the military training area was established in 1911, some 45 years before it was designated as a national park. As my hon. Friend rightly said, there has been a military presence on Dartmoor since the early 19th century, again many years before the national park was created.
The military presence in those areas has done a great deal to enhance and conserve the landscape and the natural environment. Salisbury plain is a superb example of an area where the long history of military training has helped to preserve one of the most important archaeological sites in Europe and one of the finest examples of chalk downland in the United Kingdom.
Mr. Steen: Will my hon. Friend give way?
Mr. Soames: If I my hon. Friend will allow me, I must press on.
My hon. Friend mentioned the need for safety in the national parks. It has, of course, long been the policy of my Department to provide the greatest possible degree of safe public access to the defence estate. With that in mind, the Department has reached agreements with the landowners and the Dartmoor national park authority to stop military training on Dartmoor every weekend throughout the year, and to permit unrestricted public access.
Mr. Steen: It is not the miliary use of Dartmoor—everyone understands and accepts that we must have a location in the south-west where military training can go on—but the live firing that concerns me.
Mr. Soames: If my hon. Friend will try to contain himself, I hope to come to that point.
As I have said, the Department has reached extensive agreements to ensure public access. I should like to make it quite plain to the House that we have no intention of altering our policy on public access. We shall continue to encourage it wherever it is consistent with essential operational, security and safety requirements, and with the interests of conservation and of our landlords and tenants.
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On Dartmoor, the arrangements for managing military training and public access are monitored and guided by the Dartmoor steering group. That is a non-departmental public body which was established in 1978, following a recommendation in the report by Lady Sharpe on military use of the Dartmoor national park. The steering group is made up of representatives from my Department, the Dartmoor national park authority, Devon county council, English Nature, English Heritage, the Countryside Commission and the owner, the Duchy of Cornwall.
The group's principal aim is to reconcile the requirements of military training, conservation and public access on Dartmoor. At present, it meets annually under an independent chairman, Sir Anthony Barrowclough QC, who is appointed jointly by the Department of the Environment and the Ministry of Defence. Sir Anthony has been extremely successful in enhancing public access and conservation, while at the same time advising on the balance between the military presence and the interests of the national park, the Duchy and, not least, the general public. We are not complacent. despite of his excellent work. As my hon. Friend said, Dartmoor training area has been used for military training for many hundreds of years, and it was used extensively for live firing by British and American forces in preparation for D-day.
The very regrettable incident which occurred recently highlights the fact that not only is there a danger as far as live firing areas on our ranges are concerned, but also some small risk remains in those parts of our training areas which were used as live firing areas in the past—for example, during the second world war. Buried munitions can and do work their way to the surface, and there is always a slight risk, even after clearance, that ordnance may appear on the surface. As my hon. Friend may know, when a blind is fired these days, the most extensive efforts are made to locate it.
At Dartmoor, my officials and local range staff do all they can to alert members of the public to the dangers, and there are a number of measures currently in place with which my hon. Friend is familiar. The live firing areas are clearly defined and marked, and there are warning boards on all main public access routes into them. Periodic sweeps of the training areas are also carried out in order to clear unexploded devices.
However, despite those efforts, there remains the possibility that some ordnance could rise to the surface and remain undetected, even after a full search has been made. That is the case not only on Dartmoor but also, regrettably, throughout the United Kingdom wherever there are likely to be munitions—some of which could have remained undisturbed, and possibly unstable, for 100 years or more.
I am therefore concerned that we do all that we possibly can to draw the potential risks of unexploded ordnance devices to the attention of as many visitors to our training areas as possible. In that respect, my noble Friend Lord Henley, the Under-Secretary of State for Defence, has recently written to the chairmen of nine of the national parks to seek their help in warning members of the public who visit those areas of the dangers which may exist in those parts of the parks used as military training areas.
On the issue of military use of national parks more generally, I can say absolutely that the military training areas which are found in national parks provide essential facilities for military training which could not be dispensed with and could not be found elsewhere. Military

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use of national parks accounts for only about 3 per cent. of their 3 million acres, and live firing amounts to about 2 per cent. of the total acreage.
We carry out live firing and dry training in six national parks: Dartmoor, Northumberland, the Pembrokeshire coast, the Peak District, Snowdonia and the Yorkshire dales. Like the public, the military use national parks for adventure training, orienteering and hill walking.
My hon. Friend asked me to address the question of live firing. It is important that he realises that we will continue to introduce simulation wherever possible. My hon. Friend may not be aware that a new tactical engagement simulation system has been an amazing success. It is extremely expensive, but a number of full sets of equipment have been ordered. The Chief of the General Staff and I watched it being used on Salisbury plain last week. It is truly remarkable, and I believe that my hon. Friend should be encouraged about its use in the future. However, I must emphasise that nothing can supplement or replace live firing.
Having said that, my hon. Friend will be interested to learn that national park designations—with all the constraints they bring for current and future military use—apply to some 30 per cent. of the Army's training estate, which, as he said, is extremely busy. Taking full note of its responsibilities as far as the use of national parks is concerned, my Department has issued a declaration of commitment to the national parks.
It is my firm intention that we will abide by that declaration and formally consult the various national park authorities and the Countryside Commission over any proposal to extend or significantly intensify military activity within a national park. In addition, my Department has signed similar understandings with English Nature and Scottish Natural Heritage, and we will shortly be doing so with the Countryside Council for Wales. We will also continue with the policy of releasing any land that becomes surplus to defence requirements.
My hon. Friend knows that conservation plays a very important part in our strategy for use and management of the land which we occupy within the national parks. My officials maintain regular close liaison with the national park authorities through the conservation groups that are established on military training areas.
Mr. David Jamieson: Will the Minister give way?
Mr. Soames: No.
I assure my hon. Friend that we fully understand his strong feelings about the matter, but our national parks are not the same as national parks abroad. National parks abroad are designated solely for the purpose of recreation. Our national parks have always been—it is one of their glories—living, working landscapes.
My hon. Friend knows Dartmoor very well, and I know the Yorkshire dales particularly well. The dales simply would not exist in their present form unless they had been farmed. It is a living, working landscape, and the military are very much a part of it. I know that my hon. Friend would want no less.
I take on board my hon. Friend's points, but I am afraid that I do not agree with his argument as to why we should end live firing. I believe that he is right to point out that there is a danger on Dartmoor of people picking up items which they should be very wary of handling. We will continue to do everything we can to draw the public's attention to those matters.
It is my wish that the public should have as much access as possible in order to enjoy the defence estate. While I believe that there is a great deal for them to enjoy, it is also my firm wish that they be safe—I know that that is my hon. Friend's primary concern also. Unfortunately, the only way that my Department can guarantee that absolutely is by prohibiting access, which is a move in the opposite direction to the path that we are determined to follow.
In light of what I have said, I hope that my hon. Friend will agree that the action we are taking to encourage safe public access and to educate the public about military training is the best way forward. While I regret the recent incident very much, I hope that people will continue to come and enjoy all that the defence estate has to offer. I warmly congratulate my hon. Friend on introducing an extremely important debate at—bearing in mind the background against which it was raised—a very apposite moment.
I acknowledge my hon. Friend's concern for the safety of all who use the parks. I also beg the general public to pay the closest attention to the extensive safety markings and signs that exist in all the national parks where live firing takes place to prevent and enhance their own safety. I thank my hon. Friend for raising the matter, and I hope that he will be reassured by what I said.
Madam Deputy Speaker: Order. We now move to the next topic.

Disability Living Allowance
1.30 pm
Mr. Eric Clarke: First, I should make it clear that my hon. Friend the Member for Monklands, West (Mr. Clarke) will be helping me in the debate. The Minister and I have agreed that he should share the time.
I am grateful for this Adjournment debate, which gives me the opportunity to draw to the attention of the Minister and of the House the injustice to the parents and carers of severely handicapped children under five years of age, and perhaps to do something to rectify the anomaly that the mobility component of the disability living allowance is denied to those parents and carers.
I wrote to the Ministry and received a reply from the chief executive of the Benefits Agency, Ian Magee, who kindly pointed out that, regardless of the compassionate case that I had presented to him, section 73 of the Social Security Contributions and Benefits Act 1992 states:
"Subject to the provisions of this Act, a person shall be entitled to the mobility component of a disability living allowance for any period in which he is over the age of 5".
His letter also pointed out that appeals to tribunals and adjudication officers are to no avail as they must adhere to that clause. I ask the Minister to alter section 73 of the legislation.
I should like to quote as an example the case of my constituent, Rebecca Kennedy, of 17 Attlee crescent. Mayfield, Dalkeith. Today is the 50th anniversary of the election of the Attlee Government, so I hope it is a good omen for the case. Rebecca is 19 months old. Her mother has given me a list of what is wrong with her and I shall read it out.
"Rebecca has got brain damage and cerebral palsy—she has both ataxic cerebral palsy and spastic cerebral palsy. She has epilepsy—myoclonic seizures and petit mal seizures. She is microcephalic, which means her head will not grow to the normal size. She has abnormal swallow, which means she cannot eat and requires suction. She is blind. She has only 1 per cent. vision in her right eye and her left eye does not work properly. Rebecca cannot roll, sit, stand, let alone walk. She cannot use any part of her body. All she can do is lie on her back."
I should add that she is a beautiful young child.
Transport is a problem. Her mother writes:
"To get a bus, I have to take a snug seat wheelchair, a tray for the suction machine, the suction machine itself, all her tubes, a bag carrying nappies, food plus her drugs. The seat of the wheelchair is very large and heavy. You cannot fold it down as it is hard backed for her spine. To fold the frame down you have to take the tray off and the frame is extremely heavy. There is no possible way I could use a bus, even with two adults helping."
She then challenges anyone to come along for a demonstration. The most important part is as follows:
"Rebecca requires 24-hour care. You cannot leave her for a second as she could choke to death on her own saliva. She takes lots of muscle spasms due to her cerebral palsy. In the future, she will be getting an operation which will mean a tube shall be coming out of her belly to feed her through."
That is heart rending and no one has challenged those facts or her condition.
The argument that children under five are not mobile and can be carried physically does not apply to Rebecca. There are many other children in similar predicaments.
Mr. Alfred Morris: The compelling case that my hon. Friend is making for a change in the rules can be of help to disabled people generally. It would be enormously helpful, as he says, to
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disabled children, but others too could benefit. My hon. Friend has long shared my concern and that of other right hon. and hon. Members that many people who have Alzheimer's disease are excluded from applying for the allowance because of the very restrictive criteria used. Is he aware that the Alzheimer's Disease Society now estimates that as many as 17,000 people with the disease who are under the age of 65 are being excluded because of those very restrictive criteria?
Mr. Clarke: I have had correspondence with the Alzheimer's Disease Society and there are practical examples in my constituency. As my right hon. Friend knows, we have been trying to form an organisation to look after people in that anomalous position.
I am sure that Rebecca's predicament is repeated throughout the country. Her case should be heard on its merits and should not be written off because she is under five. Rebecca will never be independently mobile and the whole Kennedy family have rallied round to offer her mother and father financial and physical help. The local community of Mayfield has contributed towards the very expensive walker that is needed for a child such as Rebecca. A normal walker that helps children start walking is nowhere near as expensive. Rebecca's grandparents, uncles and the rest of her family have rallied round, as has the local community, and I am proud to represent them. The family have an old car and its upkeep and running costs are a severe burden on the domestic budget.
I understand that lifting the five-year policy will cost the Government money, but if children such as Rebecca were cared for not by their families but by the state, the cost to the country would escalate. I am in no way threatening the Minister. The Kennedys would never contemplate that option as their love and dedication are far too great, but keeping children such as Rebecca in an institution would be more costly than the sums of money that would accumulate if they received an allowance. The figure has been roughly estimated as £30 million. That is not a large amount when one takes into account the budget of the DSS.
I hope that the Minister will override the Treasury. I am aware that the dead hand of the Treasury locks on to every detail of Government spending and that, for some reason, it claws money back, usually not from the fat cats but from the people who most need it.
I ask the Minister to give carer families justice, and to make that justice effective. The Kennedys and others like them need help now. If we wait until Rebecca is five years old—she will not qualify for another three years—her family, who deserve better, will have to carry a heavy burden of increased costs. Of course communities are sympathetic to such cases—no one who knows about the disabilities of this little girl and the burden on her family could be otherwise—but sympathy is not enough. The Kennedys of this world who have dedicated their whole lives to the care of disabled children need help, guidance and financial backing.
My trade union background has taught me to be short, concise and to the point, and I intend to be so. I only wish that many other people in this place were the same. I urge the Minister to drop the five-year qualifying rule in section 73 and to allow those cases to be examined and then to qualify for the mobility component of the disability living allowance. That would give the people caring for such children a morale boost. Even more importantly, it would be a way of showing that the

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community and the country believe that justice should be delivered to the people who dedicate their lives to the children like Rebecca whom they love so dearly.
1.40 pm
Mr. Tom Clarke: I thank my hon. Friend the Member for Midlothian (Mr. Clarke) for initiating this debate. I think that the House was impressed by the lucid and sincere way in which he invited us to discuss this case and other relevant matters.
The case raised by my hon. Friend is, as he knows, not unique. I have a number of similar problems in my constituency, as, I am sure, do other right hon. and hon. Members. Like my hon. Friend, I want to pay tribute to the dedication of parents such as those whom he has described—there are many of them—and to their commitment, which is simply colossal. To care for a child with multiple disabilities is hard enough for any parent. For those—I have met some of them—who are themselves disabled, it is doubly difficult. For those who cannot take employment because of the demands of their parental responsibilities, the willingness of the wider community to provide the necessary support is vital to their day-to-day lives.
I know that solutions do not come easily, but our minds are set on seeking to achieve genuine community care. That is why I was delighted to hear my hon. Friend pay tribute to his community. When a child of three or four cannot walk because of a disability, that causes quite enough stress for his or her parents. When moving the child requires more physical effort than a single adult can muster, the stress is clearly redoubled. Such parents know that mobility problems will be with their children for life—for the whole of their lives. So their inability to obtain mobility support is a further source of stress and strain in an already difficult situation.
The Prime Minister has signalled his recognition of the fact that children under the age of five can and should benefit from nursery education. Of course we welcome that. This is therefore surely a good opportunity to review the cut-off at five years of age for access to mobility support—that was the kernel of my hon. Friend's case.
I should be interested to hear from the Minister what new thinking the Government have done on this matter. I imagine that he will not dispute that it can become clear long before the age of five—as in the case mentioned by my hon. Friend—that a child will never be capable of independent mobility. Hence the needs of the family and others must be taken into account in any forthcoming review. I certainly hope that a review is under way.
I am sure that the Minister will not dispute, either, that the purpose of the mobility element of the disability living allowance is to promote independent mobility for those facing long-term disability, or that there can be clear benefits from providing such support at an early age. We have heard of the constant care required in some of these cases, and of the difficulties experienced when moving children with severe disabilities. The issue is the independence of carers as well as of their children. We should try to alleviate, wherever we can, the burdens carried by those who choose to do the caring.
Many voluntary organisations and professional bodies are involved too—Mencap and the Royal Association for Disability and Rehabilitation to name but two. My right
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hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) will confirm that the organisations dealing with the 19-plus groups also have a stake in this matter. I visited some of them only last week in Rochdale and Oldham, and I expect to visit more of them before the end of this week. I know that I shall witness there more problems similar to those that we have been discussing today.
Not for a second do I want to make a party point, but the Minister knows that Lord Brian Rix of Mencap and many others draw to our attention time after time in the all-party group on disability—my right hon. Friend the Member for Wythenshawe has played a noble role in it, as have Conservative Members and Members from the smaller parties—problems of the sort identified by my hon. Friend the Member for Midlothian. There are no doubts about their views of those problems.
Parents, especially young parents, are greatly shocked to find, sometimes overnight, that the child whom they were expecting to provide the greatest joy of their lives has severe disabilities that mean that a great deal of caring and understanding on the part of everyone concerned will be needed.
We are not charging towards the Government demanding a reply today, but we do seriously invite them to hold a review—and to involve others in it. We can learn a great deal, not just from the national organisations that I have mentioned, but from local groups. I thought it wonderful that my hon. Friend paid tribute to such groups. He was talking about a 19-month-old child; that suggests to me that people quickly rallied round to meet the family's needs.
I hope that the Minister will respond to my hon. Friend's excellent speech in the spirit in which the debate has been held. I hope that he will consider the case sympathetically, because it was a sensibly made and compassionate one. That is only what I would expect from my hon. Friend the Member for Midlothian.
1.48 pm
The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): I begin by congratulating the hon. Member for Midlothian (Mr. Clarke) not only on selecting an important general issue but on directing our attention to a particularly sad and tragic case in his constituency. He promised to be short, concise and to the point, and he most admirably was.
We cannot listen to an account of the predicament of Rebecca Kennedy without being moved by it. Her position is obviously a most difficult one. Her family are coping admirably in very difficult circumstances, and any appeal for more help for them is bound to stir our hearts. The hon. Gentleman is absolutely right to say that discretion cannot be exercised in this case because of the terms of the statute—that is the basic point. He has therefore come to the House to invite the Government to consider altering the law. I entirely accept that that is a proper way of putting the argument.
We are talking about—I shall briefly put the matter in context—the entitlement to the mobility component of disability living allowance. The allowance was introduced in 1992 for people disabled before the age of 65 and, for them, it replaces the help formerly available through attendance allowance and mobility allowance. People who need frequent help in connection with bodily functions, and who would previously have received attendance allowance,

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now receive the care component of DLA at either the middle or higher rate. People who are physically disabled and, as a result, are unable to walk, or virtually unable to walk, who would previously have been entitled to mobility allowance, now receive the mobility component of DLA at the higher rate. New lower rates of both components were introduced to extend help to people who, though disabled, could not previously qualify for the old benefits. Disability living allowance is tax free, non-contributory and non-income related, and is intended to provide help with the extra costs associated with disability.
It is important to understand the principles that at least traditionally have been understood to lie behind these matters. Disability living allowance is not a form of compensation for disability but a personal benefit based on the effect of a disability rather than on the fact that someone has a particular disability or condition. What matters is whether the condition gives rise to care and mobility needs and, if so, how those needs affect the day-to-day life of the disabled person. An award of DLA can trigger eligibility to other benefits—for example, someone who is caring for a disabled person receiving DLA may be entitled to invalid care allowance, as I understand that Mrs. Kennedy is. An award of DLA can also provide access to one of the premiums payable with the income-related benefits such as income support or housing benefit.
As the hon. Member for Midlothian said, the purpose of the mobility component, because it is directed to the effects and dealing with what has to be done to ameliorate those effects, rather than with the condition itself, is to help people to be independently mobile. That point was taken up by the hon. Member for Monklands, West (Mr. Clarke). That, of course, assumes that it would not be right to pay benefit to anyone whose mobility could not be improved. To take an extreme case as an example, someone who is in a coma will never be independently mobile.
Two statutory tests may be relevant. One of them, which we have heard about in detail, is section 73(1) of the Social Security (Contributions and Benefits) Act 1992. That is the age restriction. The second test is section 73(8), which states:
"A person shall not be entitled to the mobility component for a period unless during most of that period his condition will be such as permits him from time to time to benefit from enhanced facilities for locomotion."
The classic example of someone who would not be so entitled is my example of someone whose condition is so severe that he is in a coma. I understand that very few cases are refused on that particular head.
The second matter, and the most important one, is the position of children under five years of age. I have no doubt that the hon. Member for Midlothian appreciates—I saw the right hon. Member for Manchester, Wythenshawe (Mr. Morris) in his place earlier; he has now left the Chamber but he stood in my place in 1975 to advance the argument that I am about to put to the House, but I understand that he has changed his views since—that we are talking about a restriction that goes back all the way to 1975–76.
Children under five were never eligible for mobility allowance which, as I have explained, was the predecessor benefit. That goes back to the introduction of mobility allowance in 1976. It has been argued throughout—that argument has been advanced in the House on several occasions—that the rule should be changed. However, the
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general view of Governments of all descriptions since that period, nearly 20 years ago, has been that it is best to retain the exclusion.
Research conducted in the mid-1980s by the Office of Population Censuses and Surveys into the incidence and prevalence of disability concluded that mobility allowance was well targeted on people who were severely disabled. That is why, when we introduced DLA, we decided to base eligibility on the higher rate mobility component, largely on the old mobility allowance conditions of entitlement. The OPCS findings also informed the creation of a new lower rate of the mobility component to help people who were able to walk but needed supervision to make use of the facility out of doors, extending help with mobility needs for the first time to people with a mental impairment rather than a physical disability.
The principle that underpins DLA is that awards are intended, in general terms, to be based on the effect that disability has on the care and mobility needs of an individual and not on the disability itself. There is a distinction in the case of children. I appreciate that we can argue about how great the distinction is. I appreciate also that we can argue whether it should apply to three, four or five-year-olds. How much is there an amount of additional care and supervision that the disabled child needs beyond what a child of normal health would require?
We recognise that some young babies need substantially more care than able-bodied children. That is why there is no age limit comparable to the one that we are discussing when it comes to the care component of DLA. We do not accept as a general proposition, however, that the position is quite the same for the mobility component. It is the Government's view that it is not so convincing to talk of a three or four-year-old as being independently mobile. I appreciate the problems, of course, when I hear about the difficulties of getting poor Rebecca Kennedy on to a bus and lifting a particularly heavy snug seat, or whatever it is called, which is part of the wheelchair. I understand that there is a real problem. As a general proposition, however, we say that the mobility component is all about making people independently mobile. That is the great success of it for the older person.
We say that the position of children is different. I recognise that there are cases where it may be—
Mr. Eric Clarke: I understand what the Minister is saying. I am a father of three children and I understand that there is involved a normal upbringing, including going shopping with them. They are mobile, or partially mobile. Shopping outings are part of learning, of meeting other people and being in the community. The same can be said of meeting relations and making journeys to visit them. Why should a person who is disabled stay at home? That is really what the Minister is suggesting should happen.
Mr. Evans: The hon. Gentleman is right. There is an element of degree of mobility. We are saying that, classically, the mobility component is directed towards independent mobility. As the hon. Gentleman said, perhaps with remembrance of his own children, young children of three or four years of age learn to walk about, and the amount of supervision that is required diminishes as they become older. As I have said, it is a matter of degree. At the end, the difficulty for the Government is that we have competing priorities. However heart-rending is the case which the hon. Gentleman moved us with, we

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say that when taking the principle of independent mobility, disabled children under five, given the traditional way of looking at these matters, must be at the lower rather than the higher end of the priority list.
I cannot put it any more firmly than that. There will always be difficult decisions in social security matters when it comes to drawing a line. Undoubtedly, the drawing of lines creates hard cases. It is our view, however—this has been a conventional view of Governments, as I have said, for 20 years—that the proper dividing line, if we have to draw one, is the age of five years in this instance for the mobility component of DLA. That is comparable with school age, when normally children become less dependent on their parents. Before the age of five, it is normal for children to be unable to go about without their parents' help.
Much careful consideration was given to this issue. It was the subject of much debate during the passage of the Disability Living Allowance and Disability Working
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Allowance Bill, which went through Parliament not that long ago. We do not believe that extending the mobility component to the under-fives can be the principal or leading-head claim on the list of priorities for benefit expenditure when there is so much pressure on resources and so many competing priorities. The hon. Gentleman is absolutely right to say that that would be expensive. He correctly quoted a figure of £30 million a year, which would indeed be the cost of extending the limit from the age of five to two. Although I appreciate that, as he said, it is perhaps not that big a sum when cast in the wider budget of the Department, it is nevertheless a considerable sum.
I apologise to the hon. Gentleman; he has moved our hearts on the issue, but I am afraid that the Government have to take the view that, on competing priorities for social security expenditure, we are not presently minded to alter the law, and it would require statute to do what the hon. Gentleman wants.
Madam Deputy Speaker (Dame Janet Fookes): Order. We must move to the next topic.

Catherine Laylle
2 pm
Sir Nicholas Scott: I am grateful for the opportunity to draw the attention of the House to the case of Catherine Laylle, who holds dual British and French nationality and whose case has been raised in the press on more than one occasion in recent months. The importance of her case is underlined by the presence today of a number of right hon. and hon. Members on both sides of the House who have taken an interest in her case and who, I understand, may wish to intervene, albeit briefly, in this short debate. I will therefore seek to abbreviate my remarks on what is at once a complicated and a highly emotional case.
At the outset, I would like to express my gratitude to my hon. Friend the Minister and to the Lord Chancellor for seeing me and my constituent on this matter and for dealing courteously with my written representations. Alas, despite many efforts, no way has yet been found of satisfying what I believe to be the legitimate grievances of my constituent.
I shall paint in some background to the case. Catherine was 29 years old when he she met her husband, Peter Volkmann, a German citizen. She had a well-paid job in the City of London and he was studying medicine while doing his military service. They married in 1984 and lived in her Kensington flat while he studied and she worked. Their son Alexander was born in the following year.
After a while, Peter Volkmann abandoned his studies, found a job with a German company in London and then transferred his employment to Germany. Ms Laylle left her career in the City and went with her husband to Germany where a second son, Constatin, was borne. Alas, by 1992 the marriage was in difficulty and the couple agreed to separate. An agreement was then drawn up, and verified by a German notary, which provided that Catherine should return to London to live with the children and that Alexander and Constatin should spend much of their holidays with their father.
The arrangement went well until last summer when, four days before the children were due to be returned to Catherine, she received a letter from her husband saying that the children would not be coming back to London. My constituent was understandably devastated by that appalling breach of faith and the negation of a mutual agreement. Her pleas were dismissed by her husband with, I understand, abusive language and much disdain. She therefore took action to make the children wards of court and obtained a High Court order for their return under the terms of article 3 of the Hague convention. That decision was subsequently endorsed by the German court in Verden.
Alas, Catherine's joy was to be short-lived. During the half-hour that she allowed her husband to say goodbye to the boys, the children were abducted by members, I understand, of Peter Volkmann's family. The court order, I am told, empowered the court bailiff, with police support and physical force if necessary, to ensure the return of children to their mother but no one knew the whereabouts of the children.
The bailiff became unavailable and her husband's lawyer likewise. It transpired that her husband gone to Celle, a town nearby with a higher court where he had lodged an ex parte appeal. That court ruled that he could
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keep the children until the case could be heard. A month later, at a hearing which neither took evidence from Catherine nor interviewed her or her witnesses, the court ruled that the boys should stay in Germany.
It is now a year since my constituent effectively lost her sons. Some would say that she had had her sons stolen from her. She has spent all her savings on legal fees and visits to Germany. She has had much sympathy but little action to redress the situation. Not surprisingly, she is in a state of considerable despair. She feels that a process designed to alienate her children from her has been followed. Her visiting rights have been tightly circumscribed—she gets three hours a month in Germany, under supervision. The current situation is little short of outrageous. Germany and the United Kingdom are senior partners in the European Union. The provincial German court has, in effect, closed its doors to the pleas of my constituent when all she wants is justice.
Since the Celle ruling, Catherine has had access to her sons only under the supervision of German social workers and such access is limited to a few hours each month in her husband's home. On one visit, I understand, her children were removed as she arrived, put into a car and driven away by her husband. That underlines that the situation is nothing short of outrageous.
There are, however, perhaps two openings of which I hope advantage will be taken. First, I understand that the European Commission of Human Rights will be examining her case in its next session, which it will hold very shortly. Catherine is compiling and submitting evidence under three separate articles of the convention. However, as we all know, a considerable period may elapse before any decisions are forthcoming. Meanwhile, she is actively deprived of her undoubted rights of access to her sons.
There is perhaps a second chink of light in this sad case. I understand that at the meeting of European Union Justice Ministers last week, the question of a pattern of law in this area was raised and consideration may be given to the need for fresh legislation. It is my understanding that the French Justice Minister, Jacques Toubon, threw his weight behind the idea. I hope that I can be reassured by my hon. Friend that our Ministers will take the same robust approach.
I would be grateful if my hon. Friend would clarify to me and the House the role of the child abduction unit and say what success it may have had in the case so far. We all know that legislation, especially European legislation, could take a very long time to be put into effect. Catherine is looking for early action by the British and German authorities and I believe that she deserves it.
In conclusion, it is now seven months since Catherine last saw her children. She thought that she would have three hours with them this month but has now been told that their father is taking them on holiday to an undisclosed destination. She will not abandon her sons. She is a fighter and loves her children too much. She believes, rightly in my view, that she is the victim of a gross miscarriage of justice. She has fought long and hard for her rights. The French Government are giving her support. I hope that she can count on the help and support of our Government, too. I trust that the Government will find they have the fullest co-operation of the German authorities as well.
2.7 pm
Mr. Bernard Jenkin: I rise with the permission of my right hon. Friend the Member for Chelsea (Sir N. Scott) to take part in this short debate about a vital matter.
I wish to raise only one point. My involvement is as a result of a personal approach by Ms Laylle. I wish to draw attention to the fact that both Britain and Germany are signatories to the Hague convention, which in article 1(a) states that it exists
"to secure the prompt return of children wrongfully removed to or retained in any Contracting State".
There seems to be no question that, under British law, the children were wrongfully detained. I ask my hon. Friend the Minister whether he can advise about why the German Government and judiciary are not adhering to the Hague convention to allow international law to take its proper course.
2.9 pm
Miss Kate Hoey rose—
Madam Deputy Speaker (Dame Janet Fookes): Order. The hon. Lady may speak on the understanding that she has the permission of the right hon. Member for Chelsea (Sir N. Scott) and the Minister.
Miss Hoey: I shall be brief. I congratulate the right hon. Member for Chelsea (Sir N. Scott) on raising this important issue of human rights. I am speaking as someone who has also had some involvement with the case and as the Secretary of the all-party group on child abduction which has worked very hard with Reunite, the organisation that co-ordinates work to help mothers and fathers in similar positions.
In this case, we are dealing with a European country, one which, like us, is supposedly part of the great new European movement which is meant to bring people together. However, the way in which the German Government, the German courts and, indeed, individuals in the German provincial town in question have behaved makes me despair about any future co-operation within the European Union. What has happened is disgraceful.
The Hague convention has been blatantly broken by the German Government. One can imagine what would have happened if it had been the other way around. If the British Government or British courts had behaved in the same way, there would have been a great uproar and much lobbying by the German Government.
I want to ask the Minister exactly what has been done. What pressure has been brought to bear? How high up the political agenda is this case in the discussions about European unity and a single currency? If we cannot help someone like Catherine Laylle get her children back, the road to European union and co-operation with Germany might as well be abandoned now.
2.11 pm
Mr. William Cash rose—
Madam Deputy Speaker: Order. Again, the hon. Gentleman may speak with the same restrictions.
Mr. Cash: I speak with the permission of my right hon. Friend the Member for Chelsea (Sir N. Scott) and the
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Minister. I have known Catherine Laylle for many months now and I have been deeply disturbed about the case since the beginning. I agree with my right hon. Friend.
Justice is to be found, as they say, in the interstices of procedure. The procedures that have been followed and my knowledge of the way in which the case has been conducted in Germany has filled me with a sense of despair. I cannot believe that someone like Catherine Laylle could be so effectively abandoned by the process of justice in Germany. I have made representations to the German ambassador, to other representatives of the German Government in the United Kingdom and to other members of Chancellor Kohl's private office. I have begged them to consider the case.
In the interests of a coherent and sensible Europe, it cannot be right that such situations should prevail. There is no doubt that the matter can and should be resolved in the interests of the children and of Catherine Laylle. I plead with the Minister to consider every conceivable means that can be employed—be it through the Foreign Office or any other channel—to redress this absolutely unforgivable injustice.
2.12 pm
Sir John Stanley: I, too, am an officer of the all-party group on child abduction. Ms Laylle has been to see me and given me certain papers. I am most grateful to my right hon. Friend the Member for Chelsea (Sir N. Scott) for allowing me to participate briefly in the debate.
I shall make just two points. First, Ms Laylle is partly of British citizenship; her two children are partly of British citizenship and are also wards of court in Britain. Against that nationality and wardship background, it is indefensible that so far it is the German courts which have reserved to themselves sole and exclusive rights of jurisdiction.
Under the terms of the Hague convention, it is the Lord Chancellor's Department that is the designated "Central Authority" through which the British Government discharges their duty under that convention. I draw the House's attention to the duty outlined in article 7(f), which states that it is incumbent on the "Central Authority"—the Lord Chancellor's Department—to
"take all appropriate measures … to initiate or facilitate the institution of judicial or administrative proceedings with a view to obtaining the return of the child and, in a proper case, to make arrangements for organising or securing the effective exercise of rights of access".
I hope that the Minister will explain why the duty clearly placed on his Department under the Hague convention does not yet appear to have been discharged. I hope that he will assure me that it will be discharged in future.
Secondly, in a reply given to me on 26 June the Home Office said:
"Where a child is successfully abducted to a country which is a signatory to the Hague convention, an extradition warrant may be issued."—[Official Report, 26 June 1995; Vol. 262, c. 494.]
It is evident in this case that Ms Laylle's two sons have been successfully abducted to Germany and Germany is a signatory to the Hague convention, so the issue for the Home Office is why extradition warrants have not so far been issued. I hope that the Minister will be able to explain why no extradition procedures have so far been initiated and to tell us whether they will be in future.
2.15 pm
The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor): I should like to thank my right hon. Friend the Member for Chelsea (Sir N. Scott) for raising the issue and for his courtesy in giving me advance notice of his line of argument. I also thank my hon. Friend the Member for Colchester, North (Mr. Jenkin) for his contribution, the hon. Member for Vauxhall (Miss Hoey) likewise, my hon. Friend the Member for Stafford (Mr. Cash) and my right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley).
Towards the end of his comments, my right hon. Friend the Member for Chelsea said that the French Government were giving Ms Laylle support. I must make it clear that, within the proper constitutional limits which define judicial and executive boundaries, the Government have also done and are doing as much as they can.
For the benefit of the House, I shall outline the role which the Lord Chancellor's Department and other Departments play in relation to child custody cases before foreign courts. I shall then deal with the specific case that my right hon. Friend has raised. It might be convenient for the House if I say that the case has thus far been dealt with entirely within the strictures of the Hague convention. However, the House should know that within the Hague convention there is a limited discretion not to return children in certain circumstances. One of those circumstances is when the children themselves have made their views known.
Questions relating to child abduction and custody are governed by the Hague and European conventions of 1980 on this subject. The Child Abduction and Custody Act 1985 enabled the United Kingdom to ratify both conventions. The purpose of the conventions is to prevent international child abduction and to promote the exercise of rights of contact with children.
Mr. Iain Duncan Smith: The Minister said that, under the Hague convention, if the children expressed a particular view, that view had to be taken into consideration. Is he saying that if children are kept with one parent for a period of time that does not have a bearing on their eventual view? Children are ultimately fairly malleable and therefore speed is of the essence. Something should have been done earlier. Does he agree that that fact should have a huge bearing on his comments?
Mr. Taylor: As one who practised as a family lawyer for many years, I have to tell my hon. Friend that hardly any two cases are the same. I have no reason to doubt that the German judicial authorities were able sensitively to seek the views of the boys whose ages—[Interruption.] I hear comments from behind me, but I suspect that the House would like me to continue with my remarks.
I was referring to the purpose of the Hague convention in preventing international child abduction, and the promotion of the exercise of rights of contact with children. The Hague convention does that by requiring a contracting state to return children who have been wrongly removed from another contracting state in breach of rights of custody. The European convention does so by the mutual recognition and enforcement of orders made in contracting states.
In each contracting state there is an administrative body known as the "Central Authority", which is responsible for administering the work of the conventions. In England
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and Wales, the "Central Authority" is the Lord Chancellor's Department, and the work is carried out by its child abduction unit, which is part of the official solicitor's office. The unit does all that it can to help in achieving the objects of the convention, which are, essentially, to safeguard and promote the interests of children on an international basis. In doing that, it sends and receives applications for the return of children, or the recognition and enforcement of custody orders. It communicates with parents, lawyers and other central authorities and instructs solicitors to act on behalf of applicants in other countries wanting to take proceedings in England and Wales.
It is not, however, the unit's role to intervene in private law custody disputes that are being contested in foreign courts. Those are matters to be resolved through the courts concerned.
I should at this point mention the part that is played by the Foreign and Commonwealth Office. In general terms, the consular department is responsible for the protection of British nationals overseas. In the area of child abduction, a variety of types of practical assistance can be offered, including providing details of local lawyers who correspond in English and who can provide background information on the family law system in the relevant country; approaching the local authorities for help in tracing the child, where appropriate; drawing the local authorities' attention to any English court orders that exist, and encouraging the speedy resolution of any legal proceedings; and providing informal help with matters such as the translation of documents and finding cheap accommodation.
I hope that my right hon. Friend will forgive me for going into detail about the Government's responsibilities in such matters, but I consider that a clear understanding of the extent and limits of those responsibilities is vital in looking at the unfortunate situation that his constituent, Ms Laylle, is in.
As my right hon. Friend has explained, his constituent and her husband, who is of German nationality, separated in February 1992. Their sons, aged 8 and 10, have British, French and German nationality. Ms Laylle and her husband entered into a separation agreement with the assistance of a German lawyer, which included the provisions that "parental custody" of their two sons should be entrusted to Ms Laylle, that she and the children should live in London, and that the father should have generous contact with the children. That arrangement was a written agreement between the father and mother and not a judicial order giving custody to Ms Laylle. The children left England on 6 July 1994 to spend the summer holidays with their father.
On 22 August, the father wrote to Ms Laylle to say that both boys had said that they wanted to live and go to school in Germany rather than England, and that he had applied for the right to keep them.
On 26 August, Ms Laylle applied to the child abduction unit for the return of the children under the Hague convention on the basis that they had been wrongfully retained away from their habitual residence in breach of her rights of custody. She also applied to the high court on an ex parte basis for a wardship order, and that was granted on 30 August. The application under the Hague convention and the wardship order were transmitted to the German central authority, and were referred to the family court at Verden, which considered the matter on

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20 September. The court ordered that the children be returned, but the father successfully appealed to the higher regional court. Ms Laylle engaged lawyers in Germany to represent her.
It is important at this point for me to emphasise that proceedings under the Hague convention do not determine custody issues but are intended to restore children to the jurisdiction of their habitual residence so that decisions about their future can be made there. This reflects a generally accepted principle of private international law that decisions about the future care and welfare of children are best made in the country with which they have the closest connection. However, the convention acknowledges that there may be circumstances in which children should not be returned, and therefore gives courts a limited discretion to refuse to make a return order.
One of the reasons for refusing a return order is that the child concerned objects to be returned and has reached an age and degree of maturity at which it is appropriate to take account of his or her views. It was on that ground, after talking to the children, that the higher regional court upheld the father's appeal against the return order made by the family court in Verden. Ms Laylle has complained that she was not allowed to give evidence or speak at that hearing or present her own psychological evidence in respect of the children. It is generally accepted that proceedings under the Hague convention are summary in nature, and oral evidence is discouraged. In this instance, the only grounds of the father's appeal were the wishes of the children, and for that reason the main concern was to discover the children's wishes.
The issue of custody then came before the family court at Verden on 23 February this year. The decision of the court, given on 30 March, was that the children should be placed in the "temporary" custody of their father, and that Ms Laylle should be allowed limited contact with them: specifically, there was to be no contact for a period of three months, following which supervised contact at the father's home was ordered, initially for three hours a month, and from October 1995 for one day a month. Ms Laylle was represented by her two German lawyers at the hearing on 23 February and received assistance from the British consulate in attending the hearing. I understand that the wardship proceedings in this country were discharged on Ms Laylle's application on 4 April.
During the period leading up to the hearing on 23 February, the child abduction unit provided Ms Laylle with as much assistance as it was able within the limitations of its statutory role. Following the court's decision on 30 March, a further meeting took place between the unit's solicitor and Ms Laylle, at which it was explained that there was no basis on which the Government could intervene on the general grounds that German proceedings relating to children are intrinsically unjust or improper.
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The procedure in such cases in Germany is substantially similar to our own. In family proceedings in Germany, both parents can be professionally represented, and the judge, who is independent of the Government, can call on the services of the local youth court to provide a report on the children and see them. In making a decision, he or she has, like a British judge, wide discretion in weighing up all the circumstances of the case. However, the unit's solicitor undertook to write to Ms Laylle's lawyers in this country and in Germany to ask whether in their view the order was unusual or represented the sort of order that a German court might make in a case such a this; whether there were any grounds for appeal on the basis that the judge was plainly wrong or wrongly exercised her discretion; and whether there was any material irregularity in the proceedings, which could form the foundation of a formal complaint or an application to set aside the judgment.
A separate point which had by this stage arisen was that divorce proceedings had been instituted both in this country by Ms Laylle and in Germany by her husband. It appears that the proceedings begun by Ms Laylle were first in time. However, I understand that Ms Laylle's husband has applied for a stay of the English proceedings, and that a jurisdictional dispute exists about the competence of the family court at Verden to entertain the divorce proceedings in Germany. This is a matter that must properly be resolved under German law; it would not be appropriate for the British Government to intervene in the process.
It is understood that there are grounds for appeals against the court's decisions on custody and contact, and that appeals have in fact already been lodged against both decisions. It is also understood that the decisions made about the children to date are of an essentially temporary nature pending the final resolution of the divorce proceedings, and that the appeals against those decisions will be based on evidential matters before the court and not on any fundamental defect of procedure or denial of process.
I also understand that Ms Laylle has a case against Germany pending before the European Commission of Human Rights in respect of her situation. Naturally I am unable to comment on these proceedings, and we must await the outcome.
Thus, while I sympathise with the difficulties in which Ms Laylle finds herself, I do not consider that there is any more substantive assistance that the British Government can provide. It is particularly important to recognise that the children have British, French and German nationality. The matters at issue are the subject of appeal under the German legal system, and the outcome of those appeals must be awaited. As I have said, there is no basis in procedural terms, in what is essentially a private law dispute, on which the British Government could properly intervene.
It being half past Two o'clock, the motion for the Adjournment of the House lapsed, pursuant to Order [19 December]

Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS

    Middle East
    Mr. John Marshall: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the middle east peace process. [30893]
    Mr. Burden: To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the prospects for peace in the middle east. [30899]
    The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd): There are encouraging signs of progress between Israel and Syria, most recently during talks in Washington between their chiefs of staff. We hope that the Israelis and Palestinians will soon agree on arrangements to hold elections in the Palestinian territories and redeploy Israeli forces. I hope that that will happen by the new target date, 25 July, agreed by Mr. Peres and Mr. Arafat. We and our European Union partners are preparing to co-ordinate international observation of the elections and to provide 300 EU observers. Negotiations between Israel and Jordan on a series of agreements to follow up their peace treaty are on track.
    Mr. Marshall: I thank my right hon. Friend for his answer. May I also thank him for the skill, dedication and charm with which he has undertaken his duties for a number of years? It must be a matter of great satisfaction to him that he leaves the world a safer and freer place than it was in 1989.
    In view of the territorial concessions made by Israel, and as several of her neighbours have received an official royal visit, is it not high time that there was an official royal visit to the state of Israel?
    Mr. Hurd: I am grateful to my hon. Friend, but I hope that he will not exaggerate.
    My hon. Friend has raised an important point. There are currently no plans for a state visit to Israel, but there is no bar to such a visit in principle. His Royal Highness Prince Philip was there last year, and we warmly welcomed the President of Israel when he was here on VE day.
    Mr. Burden: I welcome yesterday's announcement that a date has been agreed for confirmation of arrangements for self-rule between Israel and the Palestinians, but does the Foreign Secretary share my concern—which, I believe, is shared by many—about Israel's apparently ambiguous attitude to peace negotiations? It appears constantly to demand more concessions from those whose lands it occupies, while at the same time jeopardising the peace process by its attitude to settlement building and the building of facts on the ground in Jerusalem.
    Does the Foreign Secretary agree that the help that the international community wishes to give the peace negotiations could be aided by our making it clear to Israel that we expect all parties to abide by all United Nations resolutions concerning the middle east?
    Mr. Hurd: No one doubts that the process is difficult, but both Israel and the Palestinians have set their hand to
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    it, and it is important that it should not lose impetus. The next step is to proceed with the redeployment of Israeli forces and the holding of Palestinian elections. It will be followed by a series of further steps that will have to end with a resolution of the question of Jerusalem.
    Sir David Madel: May I ask about the economic policy aspect of the peace process? What kind of projects will the British Government support to help the Palestinians?
    Mr. Hurd: There are a good many projects and our aid totals £83 million for the four years 1994–97. The projects include technical assistance to the police, involving vehicles and communications, training of nurses in Gaza—I have seen for myself how important that is—hydrology training and improving health care in Jericho.
    Mr. Murphy: I am sure that the Secretary of State will welcome, as all hon. Members will, yesterday's resumption of peace talks between the Israelis and the PLO, but does he agree with a recent commentator that unless this country and its allies provide proper and tangible aid to Gaza and the west bank, the lack of jobs and the lack of cash in those regions will provide Hamas with its best recruiting sergeant?
    Mr. Hurd: We are doing that. We were among the first to do so, even when Mr. Arafat and the PLO had no proper accounting procedures in place. We pressed them on that. Eventually, they got procedures in place and we started to pay and to help the police. With our European partners, we have been among the first to give precisely that practical help for the reasons that the hon. Gentleman stated.

    European Monetary Union
    Mr. Duncan Smith: To ask the Secretary of State for Foreign and Commonwealth Affairs what study his Department has made into the economics of EMU; and what assessment he has made of the strength of argument in favour of the formation of a single currency. [30895]
    Mr. Hurd: The economics of economic and monetary union are a matter on which my right hon. and learned Friend the Chancellor of the Exchequer advises the Cabinet. It is not possible to assess fully today the pros and cons of a single currency that might be introduced in 1999. I am encouraged by signs that elsewhere in Europe an increasingly hard-headed debate about the implications of a single currency is under way.
    Mr. Duncan Smith: May I begin by offering my right hon. Friend my sincere best wishes for his future retirement and extend a warm welcome to the Back Benches? I know he will make a huge contribution from here as he has on the Front Bench. Furthermore, as there is such inconsistency about the economic rationale for going into a single currency, does he agree that this country should not endeavour to do so unless a massive, overwhelming economic rationale exists in favour of it?
    Mr. Skinner: Go on, it is your last turn—tell him.
    Mr. Hurd: The hon. Gentleman is trying to excite me.
    I have always found my hon. Friend a most courteous and constructive critic and I am grateful to him for that. I cannot add very much to what the Prime Minister and the Chancellor of the Exchequer have said on this subject. The Prime Minister has shown over and again his wariness—

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    that is the phrase that he rightly uses—[HON. MEMBERS: "Weariness"] No, W-A-R-I. My right hon. Friend has shown not only his wariness on the substance of this question, but his firm belief that Britain should be part of the preparation. That is why, over and again, he has made clear his view that we should retain the freedom that he gained for us at Maastricht. Of course, a single currency would be an important step. It would have important political and constitutional implications and we would have to weigh the economic arguments to which my hon. Friend refers. The whole point of the case from the Conservative Benches is that that weighing of the economic advantages and disadvantages cannot be done at this time.
    Mr. Winnick: Should we not learn from the experience of what some people—certainly myself—would say was the nightmare of having been in the exchange rate mechanism, when conventional wisdom argued that we should go in and we saw what happened? Does the Foreign Secretary accept that there is a distinction to be made between the xenophobia that may be found among his own Back Benchers and those of us who believe, as he has just said, that a genuine constitutional issue is involved: a single currency would undoubtedly take away this country's right to determine interest rates and other issues, which should be in the competence of the Government and the House of Commons? There is bound, therefore, to be concern about the possibility of a single currency.
    Mr. Hurd: The hon. Member can address that point to his Front-Bench team. Of course, this is an important issue and it has political, constitutional and economic aspects. We do not believe that the pros and cons can be fully assessed in 1995.
    Mr. Garel-Jones: Is my right hon. Friend aware that, when historians look back at his period of office in the Foreign and Commonwealth Office, and specifically Britain's position on economic and monetary union, they will see that during that time not only did we begin to tidy up what I suppose one might call the excesses of the Single European Act but the foundations were laid of a European Union of nations, in which Britain will feel comfortable, and at the centre of which it will find its place?
    Mr. Hurd: I am grateful to my right hon. Friend. His personal example has encouraged me to follow him into an active and eager life on the Back Benches. As he has raised this point, may I take the opportunity to thank and congratulate any of the present Foreign Office Ministers of State who may be promoted or moved during the afternoon.
    Sir Russell Johnston: Nevertheless, the tone of the Foreign Secretary's reply suggests that he would agree that opposition to a single currency in a single market derives more from theology about sovereignty than economic common sense. Does he recognise that if the Government continue to pay too much attention to all these crazy Europhobes, sterling could well be left with about as much room for manoeuvre as the Luxembourg franc?
    Mr. Hurd: The hon. Gentleman misunderstands the position. Thanks to the Prime Minister's efforts at Maastricht, we are in a remarkably advantageous position. That is seen clearly—all too clearly perhaps—by our partners on the continent. We are able to take a full part in preparing this project without being committed to joining it. It is not often in life that we can have our cake and eat it, and the hon. Gentleman should rejoice.
    Mr. Dykes: What is wrong with a single currency in a true single market?
    Mr. Hurd: I do not think that anything is wrong with a single currency in a true single market. I believe that a single market can exist without a single currency and it follows that the merits—the pros and cons—of a single currency need to be carefully weighed when and if the choice comes before us.
    Mr. Robin Cook: May I offer my good wishes to the Foreign Secretary for his retirement and the appreciation of the House that he is answering questions today in what appears to be overtime in his post?
    As this will be the right hon. Gentleman's last opportunity at the Dispatch Box, may I tempt him to show the same robustness as he showed last week when he described the views on the single currency of the challenger to the Prime Minister as a "Right wing extremist agenda"? Was he at all surprised that well over a third of Conservative Back-Benchers voted for that right-wing extremist agenda? Did that fact confirm him in his good sense in opting for retirement rather than continuing to pretend that any Conservative can represent Britain in Europe when half his party wants to be rid of Europe and three quarters of Britain wants to be rid of his party?
    Mr. Hurd: I lost the hon. Gentleman in the last bit. I was trying to find a way of paying him a compliment as the third shadow Foreign Secretary with whom I have had the honour to match. They have all had their pluses and minuses, but I have found the hon. Gentleman courteous. Normal courtesies between us have been performed—and perhaps from time to time exceeded.
    The extremist agenda turned out not to be quite so rigorous and extreme as I had expected, and I think that that is good. There was a thoroughly cool-tempered contest for the leadership of my party. I think that we all feel the better for it, particularly those of us who backed the winner.

    Argentina
    Mr. Jacques Arnold: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Britain's relations with Argentina. [30897]
    Mr. Hurd: Our co-operation with Argentina has developed rapidly since we restored relations in 1990. Trade and investment are growing fast. Our exports have risen by 165 per cent. since 1991, and we have made agreements on visa abolition, air services, judicial co-operation against drug trafficking, investment promotion and fisheries.
    We disagree over the Falklands and South Georgia. Argentina continues to assert her claim to sovereignty, and we remain firmly opposed to any discussion on sovereignty. The Falkland islanders want to remain British and we will continue to uphold their right of self-determination.
    Following his recent election victory, President Menem will be inaugurated for a second four-year term next Saturday. We wish him well and look forward to strengthening our relations further on this basis.
    Mr. Arnold: Is not President Menem to be commended for his initial courage in deciding to put the matter of the islands and the dispute between our two countries to one

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    side under, as he said, an umbrella? Have we returned to the level of trade and investment enjoyed with Argentina before that dispute? What specific measures are we taking to strengthen further trade with that country, which is very much based on good will?
    Mr. Hurd: I shall send my hon. Friend the comparative figures. We are certainly building up our trade fast and rebuilding those assets and investments in Argentina which, in fact, we had to sell to win two world wars. The British position in Argentina is being rebuilt fast. That certainly owes something to the policies of President Menem, as my hon. Friend said, and a good deal to the energy of British business men, including those working in the newly privatised utilities. We and Her Majesty's ambassador in Buenos Aires are doing our utmost to encourage that energy.
    Mr. Tony Banks: Would I be correct in assuming that relations between Her Majesty's Government and the Argentines are considerably warmer than relations between Her Majesty's Government and the hon. Member for Gravesham (Mr. Arnold)? I entirely support the rights of the Falkland islanders to remain British, but would it not be appropriate to encourage a limited amount of tourism between Argentina and the Falkland Islands?
    Mr. Hurd: I think that that is something which the islanders have to work out for themselves. I have often told the Argentine Foreign Minister that I am not prepared to start leaning on the islanders about the question of contacts with Argentina. There has been some movement, an example of which is the small but very sensitive matter of Argentine next of kin visiting newly discovered war graves on Pebble island. It has been agreed that they will be able to stay the night there. Such movement may occur, but really it is something that islanders have to work out for themselves.
    Mr. Wilkinson: May I pay my warm, personal tribute to my right hon. Friend's unfailing courtesy and professionalism, which is of the old, classical school, if I may say so?
    Will my right hon. Friend use his influence to ensure that a Cabinet Minister attends the inauguration of President Menem—not least as an expression of good will—to maintain the momentum for the crucial oil and natural gas talks around the Falkland Islands?
    Mr. Hurd: I am grateful to my hon. Friend—another invariably courteous critic. I would have liked, and I think that we would all have liked, a Cabinet Minister to attend President Menem's inauguration. That was in hand, but certain rearrangements have made it difficult to carry through. I am glad that Lady Trumpington will be going. She has proved herself a doughty and highly successful representative of this country on many such occasions.
    Mr. Trimble: Is it realistic to work to strengthen relations with Argentina while it continues to seek to advance its territorial claim? Are we not in danger of repeating the mistake made before 1982 of making the Argentines think that our relations with them are more important than the Falkland Islands and thus encouraging an invasion? Should we not make it clear to Argentina that there cannot be strengthening of relations and developing of trade unless it adopts a more realistic attitude?
    Mr. Hurd: No, we have taken a different course, and with the full approval of the islanders. The islanders need
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    the agreements that we have struck with Argentina about fish and we are now seeking—we have not found it yet—a way of agreeing with Argentina on the exploitation of oil. Both those things are very much in the interests of the islanders if they can be achieved.
    The policy that we have been following—I think that it has been very successful—is to say to the Argentines frequently and very clearly: "We do not agree about sovereignty. We are not prepared to discuss sovereignty, but if you are willing to put that aside, we will be perfectly willing to develop trade, investment and other contacts." The visit of the Duke of York last year and the visit of the president of the Argentine Senate this year are illustrations of the good working of this policy.

    European Policy
    Mr. Dykes: To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he has to present new proposals for European Union developments in the Spanish presidency period which begins on 1 July. [30900]
    The Minister of State, Foreign and Commonwealth Office (Mr. David Davis): May I seek your indulgence, Madam Speaker, to add my comments with respect to the last appearance at the Dispatch Box of my right hon. Friend the Foreign Secretary? I express my personal sadness at that. It has been a great privilege and, indeed, an education to serve under him and I look forward to his continuing to keep me in line from the Back Benches.
    We shall continue to press for developments that will increase the competitiveness of European industries, create jobs and secure a better return from the application of Community resources.
    Mr. Dykes: I thank my hon. Friend for his remarks about our right hon. Friend the Foreign Secretary which, I am sure, will be greeted with acclaim in all parts of the House.
    As we are back at the heart of Europe after yesterday's dramatic events, does my hon. Friend agree that we can now set aside the corrosive British disease of "pas trop de zèle"—excuse me for using the French words, Madam Speaker—which should be translated, in the words of the headmaster of my right hon. Friend the Foreign Secretary's old school, as, "I distrust enthusiasm of any kind"? Does my hon. Friend agree that we can now switch to Ministers appearing to sound enthusiastic about Europe, as they do about other Government policies?
    Mr. Davis: My hon. Friend and I sometimes see the same coin from opposite sides. There is no lack of enthusiasm among Ministers for the Europe that we want to create—a Europe of free markets, a Europe of free movement and a Europe of nation states.
    Mr. Watson: We are now in the Spanish presidency and the Minister will be aware that one of the outstanding issues relating to Spain is the EU-Morocco fisheries agreement. Will he give an undertaking that the Government will include in those discussions firm statements to the Moroccan Government that they must give way on the outstanding referendum on Western Sahara before any accommodation will be given to them in terms of renewal of the fisheries agreement?
    Mr. Davis: These matters are not linked, but we will certainly not do anything to prejudice the question of Western Sahara.

    United Nations Resolutions (Iraq)
    Lady Olga Maitland: To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment has he made of Iraq's compliance with United Nations resolutions.[30901]
    The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hogg): Iraq has consistently failed to comply with its international obligations as set out in the relevant UN resolutions. We particularly look to Iraq to fulfil the requirements relating to weapons of mass destruction, to account for the Kuwaitis detained after the Gulf war and to respect the human rights of all Iraqis.
    Lady Olga Maitland: I thank my right hon. and learned Friend for his reply. Does he agree that it is outrageous that four years after the ending of the Gulf war the Iraqis are still holding 625 missing Kuwaitis and prisoners of war? More than that, does he agree that the Iraqis are still prevaricating, weaving and dodging whenever there is an opportunity to try to get them to discuss this important issue? Is my right hon. and learned Friend aware that the Iraqis failed to turn up to a key meeting on the Kuwait border on 18 June? Will he ensure that the Government make strong representations on the matter when the coalition Governments supporting the Gulf states meet the Iraqis in Geneva on this issue?
    Mr. Hogg: My hon. Friend makes an important point which troubles us greatly. There are 609 files on missing Kuwaitis; 168 have been the subject of discussion and in 70 cases Iraq has prevented an intermediate result. I very much regret that the most recent planned meeting did not take place. The International Committee of the Red Cross has invited the parties to a tripartite commission meeting in Geneva. I very much hope that all the parties attend.
    Mr. Dalyell: Is it not within the knowledge of the Foreign Office that Russian, French, German and Italian, not to mention Greek, business men are busy in Baghdad putting together contract after contract? Is it not a pity that as most of the Iraqi decision makers were educated at British universities, we are not rethinking this whole area of policy?
    Mr. Hogg: I know that the hon. Gentleman, understandably, is deeply concerned about the plight of the Iraqis. But he will forgive me if I point out that under United Nations Security Council resolution 986, Saddam Hussein was given the opportunity to export oil to the value of $2 billion every 120 days, so long as he used the proceeds for humanitarian purposes—although the operation would have been subject to various constraints. He chose not to do so, and that is the primary reason why we see the privation in Iraq now.

    Nuclear Test Ban Treaty
    Mr. Cohen: To ask the Secretary of State for Foreign and Commonwealth Affairs what progress is being made towards the achievement of a comprehensive nuclear test ban treaty. [30902]
    Mr. David Davis: Good progress is being made in the negotiations for a comprehensive test ban treaty, especially in areas such as scope and verification. Much remains to be done, but we remain committed to work for the conclusion of a treaty before the end of 1996.
    Mr. Cohen: Should not the Government have an opinion on the French nuclear tests—one of opposition?
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    Are the above-ground non-nuclear experiments, lasers and computer simulations proper safeguards, as the Minister of State for Defence Procurement said yesterday, that will enable Britain to give a commitment not to resume tests? If so why, in another place on 20 June, did Lord Henley, on behalf of the Government, refuse to rule out the use of the Nevada test site for further British tests? Do the Government suspect France and other nuclear states of trying to kill at birth the comprehensive nuclear test ban treaty?
    Mr. Davis: The hon. Gentleman is showing his Labour-CND roots, I am afraid. We recognise and understand the concern that the French decision has caused in some countries, but the decision is one for the French. It is not for us to comment on French requirements and how they decide to meet them. Our principal objective is the early conclusion of an indefinite comprehensive test ban treaty, and the French commitment to that has been reaffirmed by President Chirac. Our policy on testing remains unchanged. We are actively working for a comprehensive test ban treaty, and we have said that we shall not seek to test while the United States moratorium remains in force.
    Mr. Colvin: Does my hon. Friend agree that, following the collapse of the Soviet Union and the growing risk of proliferation of weapons of mass destruction and their delivery systems, the nuclear deterrent is more important today than ever? Does he further agree that for a nuclear deterrent to work, and to be seen to work, it has to be tested? What scope is there for the United States, the United Kingdom and the French to join forces to develop credible simulation tests, therefore avoiding the need for explosions? Will my hon. Friend confirm that following the introduction of Trident, and bearing in mind the foreseen abandonment and scrapping of the free-fall bomb, we shall have fewer nuclear warheads in our armoury than before?
    Mr. Davis: I start by confirming the latter point. My hon. Friend is right; since 1970 there has been about a 59 per cent. reduction in explosive power, and reductions in warheads too. As for the need for a deterrent, my hon. Friend is right to say that the world is still a dangerous place, and the first concern of any British Government must be to maintain the security of the British nation. Everything that we do concerning a comprehensive test ban treaty, and our attitude to testing in general, takes that into account and works with it as our primary objective.
    Mr. Tony Lloyd: Does the Minister accept that the condemnation that the French Government have rightly received from nations friendly to us such as Australia and New Zealand is mirrored by criticism from the French socialist party and from most people in France? Does he also accept that a comprehensive test ban treaty is the price that the nuclear powers must pay for an extension of the non-proliferation treaty? That was the bargain that we undertook. Does the Minister seriously believe that the world, especially the non-nuclear powers, will accept that there is a basis for trust when France has announced plans to test, China has tested and even the United States now talks about resuming a testing programme?
    Mr. Davis: I am afraid the hon. Member for Leyton (Mr. Cohen) is not the only one showing his Labour-CND origins. I repeat that our principal objective is the early conclusion of an indefinite comprehensive test ban treaty

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    and, as I have also said, the French commitment to that has been reaffirmed by President Chirac. That is the most important point, and that is what we put at the top of our agenda.

    Angola
    Mr. Lester: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the current position in Angola. [30903]
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tony Baldry): During a recent visit to Angola, my right hon and noble Friend Baroness Chalker was assured by both parties of their commitment to a successful outcome to the peace process.
    Mr. Lester: May I preface my question by giving my personal thanks to my right hon. Friend the Foreign Secretary on behalf of the Select Committee on Foreign Affairs, of which I am the longest-serving Conservative member? I am very grateful for the relationship that we have had in terms of the work that the Committee has sought to do for the House.
    Does not the case of Angola need to be carefully analysed? The UN operation during the original election was relatively underfunded and underworked and the consequences of that included a breakdown of the proposals, the loss of many hundreds of lives and a greater cost of trying to put together a destroyed and war-ravaged country.
    Mr. Baldry: My hon. Friend is right that there are many lessons to be learnt from what has happened in Angola. I am glad to say that the May meeting between President Dos Santos and Dr. Savimbi has given fresh impetus to the peace process. There is still much to be done, but the prospects for peace are brighter now than at any time since the elections in 1992. The House should remember that the United Kingdom is doing much to support the peace process. In particular, since May we have provided some 645 troops from a UK logistics battalion, who are doing excellent work in helping UN forces to deploy in Angola.
    Mr. Grocott: Does the Minister agree that if the peace process is to succeed after many years of the most devastating war there is an urgent need for an international programme of reconstruction? Has the UN set a date for its conference on reconstruction? If not, what steps are the Government taking to bring about that conference?
    Mr. Baldry: We have provided about £30 million in emergency aid since June 1993, and we are encouraging longer-term development work through the Angola development fund which is dealing with long-term reconstruction. We are trying simultaneously to help the UN troops and, through the Angola development fund, to help in the longer-term reconstruction.

    Thailand
    Mr. Heald: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on UK relations with Thailand, including trade and investment. [30904]
    Mr. Baldry: Relations are excellent. Trade and investment are thriving. Our visible exports to Thailand last year were up 14 per cent. at £746 million. We are the leading European investor and the fifth largest overall. Contacts between our countries are extensive. My right hon. Friend the Member for Eddisbury (Mr. Goodlad) visited Thailand at the end of May to underline the progress in bilateral relations and to mark the reopening of a British consulate in Chiang Mai.
    Mr. Heald: Given the huge potential for trade and investment in all quadrangle countries, but particularly Thailand, will my hon. Friend give more details on the purposes of reopening the trade consulate at Chiang Mai and the objectives of that consulate? Does he feel that there is now adequate trade representation in that region?
    Mr. Baldry: Helping British companies to win business overseas is the Foreign Office's single largest activity overseas. The Chiang Mai consulate will reopen as a trade-focused mission, and forms part of a worldwide strengthening of our commercial effort. The decision to reopen that post is a reflection of our growing commercial interests in Thailand, which have more than quadrupled in the past decade. Visible exports are now worth nearly £750 million a year, and it is for that reason that we have opened the new trade office which, it is hoped, will expand business into northern Thailand, a region of great economic potential.

    War Victims (Compensation)
    Mr. Campbell-Savours: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with his Japanese counterpart on the compensation of war victims. [30905]
    Mr. Hurd: I discussed the position of the former British prisoners of war and civilian internees with my Japanese counterpart when we met in Halifax on 16 June.
    My right hon. Friend the Prime Minister met a group of former prisoners of war and internees on 21 June. He emphasised the Government's deep respect and sympathy for those who suffered as prisoners of the Japanese. We will continue contacts with the Japanese Government to try to resolve this long-standing problem.
    Mr. Campbell-Savours: Is it not perverse and unacceptable for one of the richest countries in the world—a country with an immense tradition and cultural heritage—to equivocate on an apology to those people who were so gravely abused during the second world war and to duck and weave on the question of compensation for war victims? Why do not the British Government really lay themselves on the line in discussions with their counterparts in the Japanese Government?
    Mr. Hurd: On the legal point, the hon. Gentleman knows the position. In 1951, both the Labour and Conservative Governments settled that question, so far as the law is concerned, in the San Francisco treaty of that year. So far as Governments are concerned, we are not talking about a legal case, although there is a case brought by former prisoners of war in the Japanese courts.
    When my right hon. Friend the Prime Minister visited Japan in 1993, the Japanese Prime Minister expressed deep remorse as well as apologies for the fact that J panese past actions had inflicted deep wounds on many people, including the former prisoners.

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    We have made it clear often to the Japanese Government that this issue is not disappearing and that the feelings aroused here are strong and go beyond those who suffered. We have discussed with them various ways of tackling that and we shall continue to do so. I made it clear to the Japanese Foreign Minister that the measures so far taken by Japan, and the efforts that the Japanese have made, are not sufficient to allay the anxieties and resentments here.
    Mr. Nicholas Winterton: I join in all the tributes that have rightly been paid to my right hon. Friend on his outstanding service not only to the Government but to the Foreign Office over the years in which he has held the high and important office of Secretary of State.
    My right hon. Friend's response to the question has been full and sympathetic, but am I right in suggesting that if the Japanese would go so far as to apologise, as the German people and the German Government have done, that would go a long way to meet the concerns expressed? Like many others who have met representatives of the Far East Prisoners of War Association and the Burma Star Association, I believe most fervently that the agreement made in 1951 was inadequate and that there is an excellent case for compensation for those people who were so badly abused.
    Mr. Hurd: I am grateful for what my hon. Friend said at the beginning of his question, although there is an element of exaggeration in what has been said about my five and a half years at the Foreign Office. I am particularly glad that such remarks should come from those who have been among my sternest critics at moments during that period.
    I sympathise with what my hon. Friend has said. We both know individuals who suffered at the hands of the Japanese. I have a friend in Witney who is one of the leaders of that group of former prisoners and internees. The matter is on that is discussed over and over again in Japan, where it is a matter of high controversy in a way that it is not in Germany. The recent Diet resolution, which was very controversial, was a general statement repeating the expression of deep remorse.

    Inter-Parliamentary Union
    Mr. David Marshall: To ask the Secretary of State for Foreign and Commonwealth Affairs what is the Government's policy in respect of the special Inter-Parliamentary Union meeting to celebrate the 50th anniversary of the United Nations; and if he will make a statement. [30906]
    Mr. Hurd: We support the special meeting of the IPU planned in New York to mark the 50th anniversary of the United Nations.
    Mr. Marshall: I thank the Secretary of State for that response. Will he ensure that the topic of co-operation between the IPU and the UN is put on the agenda of the General Assembly of the UN? Will the Government support such an initiative? Will the right hon. Gentleman do his utmost to see that the matter is discussed at the General Assembly as soon as possible?
    Mr. Hurd: I think that it will be. We support close co-operation between the UN and the IPU. A resolution
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    has been submitted by Senegal for the next session and we are looking to see whether it is sensible from our point of view.
    Mr. Rathbone: First, I add my own compliments to my right hon. Friend the Foreign Secretary, particularly on his honesty; I say that as the only Member of the House, I believe, to have bought a second-hand car from him. What is Her Majesty's Government's policy on the future membership of the UN Security Council, and will that be pursued through IPU circles?
    Mr. Hurd: The answer to the latter part of my hon. Friend's question is yes.
    I remember the car to which my hon. Friend referred: I believe that it was an open-roof Sunbeam Rapier. It had to be taken to Long Island for repairs rather too often in its life, but I am glad that it served my hon. Friend well.

    Departmental Commercial Services
    Mrs. Angela Knight: To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of whether his Department's commercial services could be geared more towards small and medium-sized enterprises. [30907]
    Mr. Baldry: The chargeable services provided by our overseas posts are specifically targeted at small and medium-sized companies. They are designed to help those companies export successfully.
    Mrs. Knight: As small companies require special assistance when exporting, can my hon. Friend tell the House what steps his Department is taking to advertise its services through the relevant trade associations and business links in Britain?
    Mr. Baldry: We provide small businesses with information and advice that it would be difficult for them to obtain elsewhere. At least 60 per cent. of companies which take part in outward missions are small and medium-sized enterprises. The business links network will have 70 export development counsellors to offer advice, smaller companies will receive export vouchers which they can exchange for export services and the network of 200 business links will help to raise awareness still further, so much has been done to help small and medium-sized businesses export.
    Mr. Pike: Can the Minister assure the House that in dealing with the newly emerging democracies in eastern Europe we take into account not only the advantages for Britain, but also what we can do to help to stabilise those countries' economies and democracies, which is crucial if they are not to move backwards?
    Mr. Baldry: I think that British business appreciates that it is important to establish long-term partnerships in every emerging market. It is in the interests of British business as well as of the countries concerned to ensure that there is maximum stability in order to make those long-term partnerships successful and profitable.
    Mr. Thomason: Does my hon. Friend agree that the use of the know-how fund in appropriate countries may assist small and medium-sized companies in their export operations and that it is important to use the know-how

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    fund not only for design and development but also for the full implementation of schemes if we are to see them develop properly?
    Mr. Baldry: The know-how fund has been, and continues to be, extremely successful. I know of no scheme under the know-how fund that has been criticised. The fund has managed to achieve a range of projects and schemes throughout eastern Europe and it is now being copied by many other countries who wish that they had thought of it before we did.

    Council of Europe
    Mr. Jim Marshall: To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had regarding the future composition of the Council of Europe. [30908]
    Mr. David Davis: My right hon. Friend the Foreign Secretary most recently discussed the future composition of the Council of Europe on 15 February 1995 in London with Mr. Tarschys, the Secretary-General.
    Mr. Marshall: I thank the Minister for that answer, but I take a slightly different approach to the question. Is the Minister aware that the British parliamentary delegation to the Assembly of the Council of Europe is the same delegation as attends the Assembly of the Western European Union? In view of the heavy workload of the Council of Europe and the increasing workload and importance of the Assembly of the Western European Union, will the Government give some attention to either splitting the British parliamentary delegation or having two separate and distinct delegations to those parliamentary assemblies?
    Mr. Davis: I know that the hon. Gentleman has put a great deal of work into both those organisations, as well as into the Legal Affairs and Human Rights Committee of the Council of Europe and the Technical Aerospace Committee of the WEU. I have not considered the matter and I do not hold out any great hopes to the hon. Gentleman at this point, but I will examine his proposals.
    Mr. David Atkinson: Now that the Council of Europe has accepted that the three Caucasian states are European, is my hon. Friend disturbed by today's reports that the elections currently taking place in Armenia may not prove to be free and fair? Is the Minister observing those elections and will he continue to urge restraint on both Armenia and Azerbaijan not to go to war again on Nagorny Karabakh if they are really serious about wanting to join the Council of Europe?
    Mr. Davis: There are international observers attending the elections. However, the countries' admission to the Council of Europe will fall under article 3 of the Council, which means that they must meet the various freedom and democracy requirements.

    UN Conflict Prevention Activities
    Mr. Home Robertson: To ask the Secretary of State for Foreign and Commonwealth Affairs what consideration he has given to improving Britain's contribution to United Nations conflict prevention activities, with particular reference to the rapid reaction force in Bosnia. [30909]
    Mr. Hurd: We have taken the lead in trying to strengthen the United Nations in preventive diplomacy and conflict prevention. Last September, I made some specific proposals for the UN to give more effective help to regional preventive diplomacy in Africa, and in 1993, with the French, outlined proposals to help enhance UN capability in that respect. We strongly support UN work to prevent conflict in Macedonia and Burundi.
    Where preventive diplomacy has failed, we are also working to improve UN response to conflict. Britons are serving in six UN peacekeeping operations. We have made proposals for improving the planning and management of those operations and have seconded British experts to New York to help implement them.
    In Bosnia, as the hon. Gentleman knows, we have played a leading role in deploying additional troops to form the rapid reaction force to which he refers. The force will increase the effectiveness of UNPROFOR in its peacekeeping activities. It is not there to impose a solution. The priority remains to bring the parties to a negotiated settlement.
    Mr. Home Robertson: I welcome the deployment of a stronger United Nations force to Bosnia, and particularly the participation of rapid reaction units from Britain. As the situation in Sarajevo is worse than ever, with the three-year siege continuing, the return to indiscriminate shelling and sniping and the closure of the air bridge and all road access, will the Foreign Secretary confirm that the Government and other members of the United Nations intend that the new rapid reaction force should be able to protect humanitarian aid convoys to the city of Sarajevo and other isolated communities in Bosnia?
    Mr. Hurd: The hon. Gentleman does not exaggerate the seriousness of the conflict. I received a sombre report this morning from Mr. Carl Bildt, the new European negotiator, who is working very hard on the military agenda, to make it possible for UNPROFOR to function effectively on the ground with the minimum of consent from all concerned, including the Bosnian Serbs, and on the contact group agenda towards a negotiated settlement.
    The arrival of new units and the reinforcement of units in the UN force will make it somewhat easier for UN commanders to take the action to which the hon. Gentleman refers. However, the hon. Gentleman recognises that they do not transform the strategic position; they increase the choices in a tactical situation for the UN command.
    Sir Patrick Cormack: May I thank my right hon. Friend for all he personally has done to try and bring peace to that troubled part of the world? Does he agree, however, that it is important that President Milosevic should use his best endeavours to persuade the Bosnian Serbs to lift the siege of Sarajevo; Is he confident that President Milosevic is doing all that he can?
    Mr. Hurd: Yes. I believe that President Milosevic realised some time ago that the only future for his country, Serbia, lies in a negotiated peace and that he must use what influences are at his disposal to bring the Bosnian Serbs to the same conclusion. Neither he nor we nor anyone else has yet succeeded in that, but it is in his interests and intentions to continue.
    Mr. Robin Cook: The Foreign Secretary will be aware that we welcome the reassurances that no undertakings

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    were given to the Bosnian Serbs in return for the release of the hostages? Does he therefore share our concern at the repeated failure of the UN to respond to the escalating breaches of the UN mandate by the Bosnian Serbs? Can he confirm that only one sixth of the aid required is getting through to Sarajevo and that cases of starvation are now being reported from Bihac? Does he agree that, having shown the necessary resolve to secure the release of the hostages, the UN must show same resolve to protect and feed civilians in towns that the UN itself has declared safe areas?
    Mr. Hurd: Small amounts of aid are getting through to Sarajevo and the enclaves, but they are too small. The hon. Gentleman is perfectly right that the humanitarian position has deteriorated. The choices before the UN commanders are not enviable. They now have a greater range of troops and equipment, which will increase quite substantially during the coming month, but it does not transform the basic position: they have to judge—and we cannot do so on their behalf—what is possible without making the position worse. I hope and believe that they will able to make further progress, partly as a result of Mr. Bildt's efforts, which were extremely vigorous, and partly through the reinforcements that they have received.
    Mr. Jenkin: I join the tributes already paid to my right hon. Friend, particularly for his unfailing courtesy towards those who have not always sought to make life easier for him.
    Is there not a lesson to be drawn from the involvement in Bosnia—that whatever contribution we make to the UN, these operations would be easier if they were premised on the unequivocal support of all the major NATO powers before we embarked on them?
    Mr. Hurd: I believe that it is right that NATO should be involved to the extent that it is involved in the enforcement of sanctions and in providing the possibility of air strikes. I have always been anxious—I think that the House has appreciated this—that we should not, in Bosnia or Yugoslavia, build up a situation in which the NATO powers are on one side and the Russians on the other. That would be a bad outlook. We have avoided it with the contact group, which includes Russia.
    If, however, my hon. Friend is saying that there needs to be absolu olidarity between the main western allies, all the members of the European Union and all the members of NATO, he is entirely right. At the moment, the policy that the international community—to use the shorthand phrase—is pursuing in Bosnia has that solid support.

    Intergovernmental Conference
    Mr. Berry: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about Her Majesty's Government's priorities for the 1996 intergovernmental conference of the European Union. [30910]
    Mr. Hurd: My right hon. Friend the Prime Minister set out our priorities for the IGC at Leiden last September and in this House on 1 March. As the Minister of State said earlier, we want a European Union which is open, flexible, free trading, efficient and responsive to popular concerns.
    Mr. Berry: I note that the Secretary of State did not say that it is a Government priority to secure measures to tackle
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    unemployment in Europe. With 20 million people unemployed in Europe, does he not feel that now is the time for more serious action to deal with that rather than simply abolishing the Department of Employment? What measures will the right hon. Gentleman seek to put forward at the IGC to tackle unemployment, and what effect will they have?
    Mr. Hurd: There was a good discussion on jobs at the summit in Cannes a week ago. President Chirac put them at the top of the list for the summit. What clearly emerged from the discussion was the fact that jobs are created through free trade—one of the objectives that I have just mentioned—through deregulation, and through flexible labour markets. My right hon. Friend the Prime Minister was in a strong position because we are in the lead on all those matters.
    Sir Peter Hordern: In the forthcoming discussions about the IGC, will my right hon. Friend ensure that the agenda for it comprises the extension of the European Union to take in the Visegrad countries and the necessary reform of the common agricultural policy? Beyond that, will he do his best, from whatever position he occupies, to see that the IGC is a low-key affair? We do not want another Maastricht treaty, however skilfully and well my right hon. Friend managed to defeat the arguments of the Euro-sceptics on both sides of the House.
    Mr. Hurd: I entirely share my right hon. Friend's last wish and I think that we can avoid that. What is taking shape in the reflections group, which my hon. Friend the Member for Boothferry (Mr. Davis) attends, is not a huge further radicalisation of the European Union or a huge new concept that will pull up everything by the roots and start something entirely afresh. It is, however, a little more than a 3,000-mile service—for the reason that my right hon. Friend the Member for Horsham (Sir P. Hordern) gives.
    We have to look ahead to the expansion eastwards, and to some extent southwards—to Cyprus and Malta—of the European Union. One aspect that we have to consider to that end is the changes that will be needed in the common agricultural policy and in the structural funds. No one in their right mind would suppose that we could expand eastwards, which is certainly necessary, while conserving the CAP in its present form as the whole thing would go bust.
    Mr. Ieuan Wyn Jones: On behalf of my party I, too, pay tribute to the Foreign Secretary for the work that he has carried out during his period of office and wish him a happy retirement.
    In the context of the IGC and the future of the European institutions, will the Government be pushing for a review or appraisal of the work of the Committee of the Regions, which was set up under Maastricht, to look at the effectiveness of that committee as it is currently constituted, and to see whether the United Kingdom Government can make the work of the representatives on it much more effective by giving them better support?
    Mr. Hurd: That illustrates the difficulties of the exercise. The committee has only just started its work. It is far too soon in practice to review how it is going. High hopes are placed on it in Wales, Catalonia and other places, but it is too soon to make an assessment. That is one of the reasons why 1996, as in the treaty, for the review conference is too soon. However, we have to make

    379
    the best of the treaty. No doubt the Committee of the Regions will be reviewed, but I am sure that it is too soon to reach a conclusion.
    Sir Giles Shaw: Does my right hon. Friend agree that he is right to concentrate on the thematic approach to the conference and not to get into too much detail about the precise agenda and the exact stance that we might wish to take? Does he further agree, as a diplomat who has rendered so much distinguished service to this country, that we should bear in mind that although it was once said that a week was a long time in politics, a day is a pretty long time too?
    Mr. Hurd: I am grateful to my hon. Friend. I am sure that in the coming months the House will seize many opportunities to talk about these issues and to prise out of the Government our approach, and we shall be forthcoming in response.
    It is worth repeating the timetable. The reflections group, on which my hon. Friend the Member for Boothferry sits, has just begun its work. The intergovernmental conference will not start, I believe, until the spring—I do not think that the Italians will be in a rush to start it—and it is likely to last a considerable time, so there will be plenty of time for reflection and debate.
    Ms Quin: The Government are being urged by some of their friends to bring about a substantial return of powers from the European Union to national Governments during the process that the Foreign Secretary has outlined. Given the right hon. Gentleman's extensive contacts with his European counterparts over the years, does he think that such a substantial repatriation of powers is either possible or desirable?
    Mr. Hurd: We are still looking at this. There is quite an appetite for greater clarity and a worry about what in the jargon is called creeping competence—that gradually without changes in the treaty the borderline will slide. That is a worry which goes beyond this country. However, we are still examining exactly what proposals might be sensible.

    Middle East
    Mr. Cyril D. Townsend: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the middle east peace process. [30912]
    Mr. Douglas Hogg: This is probably the last Foreign Office question that I shall have the privilege of answering in the presence of my right hon. Friend the present Foreign Secretary, with whom I have had the privilege of working for seven years at both the Home Office and the Foreign Office. It has been a great privilege and I much regret that my right hon. Friend will no longer be representing Britain's interests abroad. I know that that
    380
    is the view of my ministerial colleagues, too, and I believe it to be the view also of the service that my right hon. Friend has led with such distinction for so long.
    In answer to the main question, I refer my hon. Friend to the answer that my right hon. Friend the Foreign Secretary gave to my hon. Friend the Member for Hendon, South (Mr. Marshall).
    Mr. Townsend: First, I acknowledge the rapid rapport that my right hon. and learned Friend the Minister of State and my right hon. Friend the Foreign Secretary have been able to strike up with Arab leaders during their time at the Foreign Office. Does my right hon. and learned Friend recall, however, that the basis of the middle east peace process was supposed to be land for peace? Does he agree that dividing the west bank into zones A, B and C is hardly likely to help the peace process? Is it not time that he told the Israeli Government, in his last few moments, perhaps, that this is a good moment to withdraw altogether from the occupied territory?
    Mr. Hogg: I think that on these occasions one should not be more royalist than the King. I also believe that we need strongly to support the negotiations that are afoot. I hope that it will be possible for the Israelis and Palestinians to meet their newest deadline of 25 July for a conclusion to the present negotiations.
    Mr. Janner: May I take the same opportunity to thank the Foreign Secretary for many courtesies over many years? He has been a friend and sparring partner for nearly a lifetime. If we have to have a Tory Foreign Secretary, I am sorry that the right hon. Gentleman is leaving his post.
    At the same time, I thank the Minister of State for his reply. I am sure that he will have the support of almost all Opposition Members for the Government's efforts to make constructive approaches to both sides to help the peace process forward rather than trying to find ways to destroy good will.
    Mr. Hogg: I am grateful to the hon. and learned Gentleman. I am glad that this Question Time has ended on such a harmonious note.
    Mr. Tredinnick: I, too, wish my right hon. Friend the Foreign Secretary well and I thank him for his support of the British Atlantic Group of Young Politicians and the Future of Europe Trust over the past five years.
    Can my right hon. and learned Friend the Minister confirm that the Israelis are now dealing with Mr. Arafat, which is a remarkable achievement? It must be made clear to the Israelis that they will never have peace unless they give up a good many of their settlements in the area known as Palestine.
    Mr. Hogg: It is clearly a good thing that the Israeli Government are dealing directly with Mr. Arafat and have been doing so for many months. That is a tribute to Mr. Arafat for his courage and to Prime Minister Rabin for his.

Points of Order
3.30 pm
Mr. Greville Janner: On a point of order, Madam Speaker. I understand that, at a time when unemployment by the Government's figures is just under 2.5 million and, in reality, probably a million more, the Government are proposing to scrap the Department of Employment. Is it in order for any Government to take such a step without first consulting the House or at least having the courtesy to make a statement to the House? Have you received any request for such a statement?
Secondly, I have honour to be the Chairman of the Select Committee on Employment. [HON. MEMBERS: "Ah."] Hon. Members may say," Ah", but we all recognise why they propose to dispose of the Department; they do not like it. Does there not have to be a change in Standing Orders to achieve that? If so, Madam Speaker, have you had any notification of such a request? Is it not clear that the betrayal of unemployed people by removing the only Department of State that is concerned with jobs will not he forgiven by anyone who is unemployed or likely to become unemployed under this regime?
Madam Speaker: The matter that concerns me is the hon. and learned Gentleman's point about whether there needs to be a change in Standing Orders. If what the hon. Gentleman suspects is correct, there must be a change in Standing Orders.
To answer his other points, I have not been informed that a Minister is seeking to make a statement on that matter. As the hon. and learned Gentleman and the House know, changes in departmental and ministerial affairs are not a matter for me. He might care to seek to catch my eye at a time when either the Prime Minister or the Leader of the House is at the Dispatch Box.
Mr. Michael Fabricant (Mid-Staffordshire): On a point of order, Madam Speaker. As a new boy, may I ask whether you could explain whether there is any hope, if a Ministry is abolished, that the Select Committee covering it will be abolished, too?
Madam Speaker: I refer the hon. Gentleman to the reply that I gave a moment ago.
Mr. Dennis Skinner: There is a matter that concerns you, Madam Speaker, in that the existence of Departments results in questions being put to the responsible Ministers. As you know, Members of Parliament are required to table a fortnight beforehand oral questions to the Department of Employment, the Department of Trade and Industry or other Ministries that may be affected by the reshuffle. In view of that, I ask you to make further inquiries, so that the House and Back-Bench Members of Parliament who table questions know whether it is in order to table Employment questions.
Finally, it is pretty clear that the new Deputy Prime Minister has shut the pits, shut most of the shipyards and is now shutting down the Government.
Madam Speaker: That is hardly a point of order for me.
Mr. Jacques Arnold: On a point of order, Madam Speaker. For the past seven years, we have enjoyed a one-and-a-half hour Consolidated Fund debate in July on Britain's relations with Latin America. Under
382
the new arrangements, a number of hon. Members of all parties applied for such a debate this July. We could do so only by applying for one of the Wednesday morning debates, for which, we have been advised by your office, we were unsuccessful. What steps can we take to ensure that, in July, the House debates this important part of the world as usual, because such debates are for the interest of the people of Latin America?
Madam Speaker: As I am sure the hon. Gentleman is aware, that is a matter for the Leader of the House at business questions tomorrow, if the hon. Gentleman is fortunate enough to catch my eye.
Mr. Nigel Spearing: Further to the reallocation of the responsibilities of Ministers of the Crown and the action that needs to be taken by the House in the form of a motion or resolution, is it not a fact that such a formal reallocation, which involves the responsibility for answering questions and presenting estimates, expenditure, votes and related matters, cannot take place unless and until a relevant resolution is carried in the House? Is it not also the case that, until that time, the Secretary of State named is responsible until the House decides otherwise?
Madam Speaker: Ministers and Government Departments make their own arrangements, but I am as concerned as the hon. Gentleman about this matter. I shall certainly make all inquiries to satisfy myself.
Mr. David Shaw: On a point of order, Madam Speaker. Have you had any request from the Leader of the Opposition to move a vote of confidence or a vote of no confidence in the Government? Is the Leader of the Opposition capable of making a decision, or is he indecisive on this matter?
Madam Speaker: That would not be the procedure. Such a request would be made through the usual channels.
Ms Angela Eagle: I note that we are scheduled to have Employment Questions next Tuesday. Indeed, a list has already been drawn up. Can you give any guidance, Madam Speaker, as to what will happen? The Department of Energy has already been subsumed into the Department of Trade and Industry, and if the Department of Employment is to be so subsumed, how are we to ask reasonable questions about the plight of many millions of people in this country?
Madam Speaker: As I attempted to explain in response to the original point of order on that matter, I am not responsible for departmental and ministerial changes. However, I understand the House's concern, and I shall attempt to find out what the position is as soon as I am able to do so.
Mr. Andrew Faulds: On a point of order, Madam Speaker. Having been for many years one of the elder statesmen, and not normally needing such a prop as this stick, I had hoped to catch your eye a little earlier. For many, many, many years now, your predecessors have always made a point of asking me to ask some small question during Foreign Affairs questions.
I was very eager this afternoon just to say—I was not going to be difficult—that those of us who have the greatest expectations of British Foreign Secretaries of whatever party have not too much to be dissatisfied with

383
in the right hon. Gentleman, who has just disappeared for the last time from the Chamber as Foreign Secretary. We wish him well; we respect his manner of going, which is the honourable sort of thing that we would have expected him to do; and we much regret his departure.
Madam Speaker: I am delighted to hear the hon. Gentleman's comments, but, as Speaker, I have never prompted any hon. Member to ask questions on a particular day. Far be it from me to do so—I have sufficient competition at Question Time without prompting hon Members.

Peace and Freedom Day
3.39 pm
Mr. David Atkinson: I beg to move,
That leave be given to bring in a Bill to provide for the discontinuation of the May day bank holiday and to establish a Peace and Freedom day bank holiday on the Monday nearest to Victory in Europe day, 8 May.
Eight weeks ago, the entire nation commemorated the final collapse of the Third Reich and celebrated the 50th anniversary of victory in Europe. The events that took place over that splendid weekend in May were astonishingly successful in bringing back the excitement and relief that was originally felt following six of the longest and toughest years in our country's history.
To those of us who were born too late to have played a part in the war, VE day gave us an opportunity to give thanks to those who offered their lives in defence of freedom. Younger generations, perhaps for the first time, became aware of the magnificent achievement of this country as Europe's last bastion against Nazidom, wholly alone for nearly two years after the fall of France, until Germany invaded Russia, and America joined us after Pearl harbour.
Throughout all the events during the VE day celebrations, the portrayal of our royal family was for ever present, and rightly so, because of its tremendous inspiration to all our people throughout the entire war. Equally dominating was the portrayal of Winston Churchill as the one man above all others who symbolised as well as led our country's resistance, from our darkest days to our finest hours.
It was inevitable that, after the celebrations were over, it was said that VE day would never again be commemorated and remembered in such a way; that, as those who took part in the war depart, so will all memories of their achievements dim, and for future generations will be merely the stuff of history books.
The purpose of my Bill therefore is to ensure that the significance and achievements of VE day will never be forgotten. The establishment of a clearly designated bank holiday in our calendar to commemorate the triumph of peace and freedom over tyranny, and its importance to Europe and the world, will remind this country annually and permanently of the crucial part that Britain played.
Many hon. Members, including you yourself, Madam Speaker, will recall a previous attempt to introduce such a bank holiday eight years ago, on 24 March 1987, by our former colleague, Stefan Terlezki. He called it the Winston Churchill National day. The House voted for it by 160 to 80, and there was every reason to believe that it could have been passed into law but for the general election three months later.
To reintroduce Stefan's Bill was precisely what I had in mind today, inspired by the events of two months ago, when so many of us in the House came together in Westminster Hall with our families to participate in the historic, unique and, above all, British ceremony as both Houses presented their humble addresses to Her Majesty.
But on further thought, I do not think that Winston Churchill would have wanted such a day solely to commemorate his name. As he himself so nobly and modestly said:

385
"It fell to me in those days to express the sentiments and resolves of the British nation in that supreme crisis of its life. That was to me an honour far beyond any dreams or ambitions I had ever nursed, and it is one that cannot be taken away."
Churchill's personal reputation and his "walk with destiny", as he put it, first as the prophet and then as the leader against Hitler, will always be bound up with the general reputation of that war as the crusade against evil that it was, in which patriotism was not enough. Such a day to commemorate peace and freedom in Europe would always be associated with Winston Churchill, just as his portrayal and presence dominated the 50th anniversary events just two months ago.
My proposal for the actual date of the bank holiday to be the Monday closest to VE day, 8 May, is also symbolic in other appropriate ways: it is close to the day when Winston Churchill became Prime Minister, 10 May 1940, when the nation faced a very bleak future indeed; and it is close to the same day a year later when this very Chamber, the greatest symbol of freedom and democracy, was destroyed by German bombs.
It is also the day before Europe day, 9 May, which is celebrated throughout the European Union to mark the day in 1950 when Robert Schuman called on the people of Europe to rally together for a common cause, in which cultural diversity is respected and solidarity proclaimed.
Having, I hope, persuaded the House to support the establishment of such a bank holiday permanently to commemorate VE day, I should now explain why I propose that it should replace the May day bank holiday the previous week. I should stress to Opposition Members that I have no great prejudice against a bank holiday to commemorate Labour day. Indeed, as a Roman Catholic I am encouraged to celebrate it myself as St Joseph the Worker's day—the day of St Joseph the carpenter, the stepfather of Jesus. I consider it rather unfortunate, however, that in recent years May day has become too associated with the massive demonstration of the communist war machine in Red square, overlooked by Soviet leaders on the Kremlin wall.
Certainly the origin of May day is no part of British history—or European history, for that matter. As our former colleague Dave Nellist reminded the House when speaking against Stefan Terlezki's Bill, the original May day was 1 May 1886, when 350,000 workers downed tools in more than 11,000 establishments in America in a demand for an eight-hour day, which led to the first general strike in American history. Workers and police died in the violence that followed. Since then, 1 May has evolved into an international expression of workers' solidarity, and a bank holiday to commemorate it was introduced in 1978 by the Labour Government.
I suggest that a peace and freedom day bank holiday to replace the May day bank holiday would epitomise all the rights and freedoms, including the freedom of trade unions, that the liberation of Europe and the re-establishment of democracy and the rule of law in western Europe has guaranteed and protected—thanks largely to British leadership and British courage. Indeed, only recently the Council of Europe's social charter—which, along with the European convention on human rights and the European Court of Human Rights, was a consequence of victory in Europe—has been extended to include new categories of rights for workers.
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Finally, there are good practical arguments in favour of a bank holiday a week later than May day. It would be welcomed by industry, especially the tourist industry, as being that much further away from the Easter bank holiday weekend. It would apply equally in Scotland: we know from early-day motion 871 of the problems that this year's VE day holiday—which was not a bank holiday in Scotland—imposed on that country.
For all those good reasons, I ask the leave of the House to bring in my Bill, as a permanent reminder to the people of this country—and generations to come—of the successful outcome of the finest chapter in our British history, and the part played by our royal family, Winston Churchill as leader of a coalition Government, all the people of Britain, our allies and the Commonwealth in the restoration of peace and freedom to Europe and the world 50 years ago.
3.42 pm
Mr. Mike Watson: I oppose the motion—which I have only just spotted on the Order Paper—not simply because May day happens to be the day on which I was born, but for much more serious reasons.
Despite the jingoism that we have heard from the hon. Member for Bournemouth, East (Mr. Atkinson), this is a vengeful and petty proposal, designed as a further attack on organised labour by Conservative Members. I am sure that no Opposition Member would oppose the establishment of a special holiday to commemorate VE day, and I am sure that a holiday to commemorate VJ day would be equally justified; but that is not the point of the proposal.
Over the past 15 or 16 years, Conservative Members have lost no opportunity to attack organised labour in any form. My hon. and learned Friend the Member for Leicester, West (Mr. Janner) recently pointed out that, for some bizarre reasons that may eventually become clear, the Department of Employment is to be abolished.
The May day holiday, however, is a fine tradition. I accept that, as the hon. Member for Bournemouth, East said, it resulted from an industrial dispute in, I believe, San Francisco in 1888, but it goes back far further than that. I understand that it goes back far further in English traditions, with which, for obvious reasons, I am not particularly familiar. Perhaps the hon. Gentleman should have washed his face more carefully in the morning dew on May day before thinking up this ill-considered proposal.
Not only Opposition Members oppose the idea. The hon. Gentleman failed to mention that, when the right hon. Member for Norfolk, South-West (Mrs. Shephard), as Secretary of State for Employment, suggested abolishing May day, the CBI was against the proposal, because it saw no need for change. Apparently, employers' organisations believe that there is no need for any change. We know that some of this country's worst employers sit on the Conservative Benches. That may partly explain why such proposals continually come forward.
The May day tradition goes back hundreds of years. In this country, it goes back about 100 years as a proud labour movement tradition in many regions. I and many other hon. Members participate in May day rallies and parades, which are family and fun days. They recall the labour movement's history but, equally, they look forward as well. They are enjoyed by thousands of people. To suggest that that should be taken away is, at best, mean-minded and, at worst, insulting to the people who enjoy it.

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May day is a day of working-class tradition in many communities, even those where heavy industries that had developed in the past 100 years have virtually ceased to exist. On that day, people still proudly parade their banners and remember their forefathers and foremothers.
It is important to make the point that the Bill is not just about May day. Its proposal that we should have a specific peace and freedom day in place of May day is equally insulting to the millions of people who took part in world wars in this century. Who fought hardest of all to achieve peace and freedom in the 1914–18 and 1939–45 wars? For obvious reasons, many people who fought in those wars have proud traditions in the labour movement and were happy to commemorate VE and VJ days as much as they commemorate May day.
If the hon. Member for Bournemouth, East really wishes us to have a VE day holiday, let us consider the possibility of creating an additional holiday. Before he falls off his seat by suggesting that that would cost industry millions of pounds and would be unworkable, let us compare the holidays in the UK with those in other European Union member countries. Let us start by comparing the holidays of the UK. The hon. Gentleman's constituents in Bournemouth have nine public holidays a year, My constituents in Scotland have 10, and the constituents of Northern Ireland Members have 11. Already, therefore, the public holidays position needs to be addressed.
Throughout the European Union, nine member countries have more public holidays than we do, and only two have fewer public holidays: the Netherlands and Denmark. Those are the only two European countries that do not have May day as a public holiday. Plenty of scope exists, therefore, for the hon. Gentleman and his hon. Friends to introduce a VE day, and, as I said, a VJ day, holiday and still to remain in a position that is not out line with the majority of European Union member countries by retaining the May day holiday.
The Bill is a thinly veiled attack on this country's organised labour, and its proud traditions going back many years. Opposition Members will not tolerate it, and I suggest that, when the Bill goes to the vote, the House will not tolerate it either.
Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—
The House divided: Ayes 79, Noes 155.

Division No. 198]

[3.52 pm

AYES

Alexander, Richard

Colvin, Michael

Alison, Rt Hon Michael (Selby)

Congdon, David

Alton, David

Cope, Rt Hon Sir John

Arnold, Jacques (Gravesham)

Cormack, Sir Patrick

Atkinson, David (Bour'mouth E)

Day, Stephen

Booth, Hartley

Duncan-Smith, Iain

Bottomley, Peter (Eltham)

Evennett, David

Bowden, Sir Andrew

Foster, Don (Bath)

Boyson, Rt Hon Sir Rhodes

Gorman, Mrs Teresa

Bruce, Ian (Dorset)

Gorst, Sir John

Bruce, Malcolm (Gordon)

Grant, Sir A (SW Cambs)

Budgen, Nicholas

Greenway, Harry (Ealing N)

Butterfill, John

Griffiths, Peter (Portsmouth, N)

Carrington, Matthew

Hamilton, Neil (Tatton)

Cash, William

Harris, David

Clifton-Brown, Geoffrey

Harvey, Nick

388

Hawkins, Nick

Sims, Roger

Hawksley, Warren

Spring, Richard

Hunter, Andrew

Stanley, Rt Hon Sir John

Jackson, Robert (Wantage)

Steen, Anthony

Jenkin, Bernard

Stern, Michael

Jessel, Toby

Sweeney, Walter

Johnson Smith, Sir Geoffrey

Taylor, Matthew (Truro)

Kellett-Bowman, Dame Elaine

Thomason, Roy

Kirkwood, Archy

Thompson, Patrick (Norwich N)

Lawrence, Sir Ivan

Thornton, Sir Malcolm

Lynne, Ms Liz

Thurham, Peter

McLoughlin, Patrick

Townsend, Cyril D (Bexl'yh'th)

Marshall, John (Hendon S)

Tracey, Richard

Mitchell, Sir David (NW Hants)

Tredinnick, David

Moate, Sir Roger

Tyler, Paul

Viggers, Peter

Montgomery, Sir Fergus

Walker, Bill (N Tayside)

Neubert, Sir Michael

Wallace, James

Pattie, Rt Hon Sir Geoffrey

Waterson, Nigel

Pawsey, James

Wilkinson, John

Porter, David (Waveney)

Winterton, Mrs Ann (Congleton)

Rathbone, Tim

Winterton, Nicholas (Macc'f'ld)

Riddick, Graham

Robathan, Andrew

Tellers for the Ayes:

Roberts, Rt Hon Sir Wyn

Lady Olga Maitland and

Shaw, David (Dover)

Mr. Michael Fabricant.

NOES

Ainger, Nick

Gerrard, Neil

Ainsworth, Robert (Cov'try NE)

Godman, Dr Norman A

Ashton, Joe

Godsiff, Roger

Barnes, Harry

Golding, Mrs Llin

Bayley, Hugh

Graham, Thomas

Beggs, Roy

Grant, Bernie (Tottenham)

Benn, Rt Hon Tony

Grocott, Bruce

Bermingham, Gerald

Gunnell, John

Berry, Roger

Hall, Mike

Betts, Clive

Harman, Ms Harriet

Blunkett, David

Hill, Keith (Streatham)

Bradley, Keith

Hinchliffe, David

Burden, Richard

Home Robertson, John

Byers, Stephen

Hood, Jimmy

Campbell-Savours, D N

Hoon, Geoffrey

Canavan, Dennis

Howarth, George Knowsley North)

Chisholm, Malcolm

Hoyle, Doug

Clapham, Michael

Hughes, Kevin (Doncaster N)

Clark, Dr David (South Shields)

Hughes, Robert (Aberdeen N)

Clarke, Eric (Midlothian)

Hughes, Roy (Newport E)

Clarke, Tom (Monklands W)

Hutton, John

Clwyd, Mrs Ann

Ingram, Adam

Coffey, Ann

Jackson, Helen (Shef'ld, H)

Cohen, Harry

Janner, Greville

Connarty, Michael

Jones, Ieuan Wyn (Ynys Môn)

Corbett, Robin

Jones, Jon Owen (Cardiff C)

Corbyn, Jeremy

Kaufman, Rt Hon Gerald

Corston, Jean

Keen, Alan

Cummings, John

Kennedy, Jane (L'pool Br'dg'n)

Cunliffe, Lawrence

Khabra, Piara S

Cunningham, Jim (Covy SE)

Kilfoyle, Peter

Dalyell, Tam

Lestor, Joan (Eccles)

Davies, Bryan (Oldham C'tral)

Lewis, Terry

Davies, Ron (Caerphilly)

Liddell, Mrs Helen

Denham, John

Litherland, Robert

Dewar, Donald

Livingstone, Ken

Dixon, Don

Lloyd, Tony (Stretford)

Donohoe, Brian H

Llwyd, Elfyn

Dunnachie, Jimmy

Loyden, Eddie

Eagle, Ms Angela

McAllion, John

Eastham, Ken

McAvoy, Thomas

Etherington, Bill

McCartney, Robert

Fisher, Mark

McFall, John

Flynn, Paul

McKelvey, William

Forsythe, Clifford (S Antrim)

Mackinlay, Andrew

Foster, Rt Hon Derek

McMaster, Gordon

Gapes, Mike

MacShane, Denis

Garrett, John

Marek, Dr John

389

Marshall, David (Shettleston)

Ross, Ernie (Dundee W)

Marshall, Jim (Leicester, S)

Rowlands, Ted

Martin, Michael J (Springburn)

Salmond, Alex

Maxton, John

Sedgemore, Brian

Meale, Alan

Sheldon, Rt Hon Robert

Michie, Bill (Sheffield Heeley)

Simpson, Alan

Milburn, Alan

Skinner, Dennis

Morgan, Rhodri

Smith, Llew (Blaenau Gwent)

Morley, Elliot

Spearing, Nigel

Morris, Rt Hon Alfred (Wy'nshawe)

Spellar, John

Morris, Estelle (B'ham Yardley)

Squire, Rachel (Dunfermline W)

Morris, Rt Hon John (Aberavon)

Steinberg, Gerry

Mowlam, Marjorie

Straw, Jack

Mudie, George

Sutcliffe, Gerry

Mullin, Chris

Taylor, Mrs Ann (Dewsbury)

Murphy, Paul

Timms, Stephen

Oakes, Rt Hon Gordon

Tipping, Paddy

O'Brien, Mike (N W'kshire)

Touhig, Don

O'Brien, William (Normanton)

Trimble, David

Olner, Bill

Turner, Dennis

Orme, Rt Hon Stanley

Vaz, Keith

Parry, Robert

Watson, Mike

Pickthall, Colin

Wicks, Malcolm

Pike, Peter L

Williams, Rt Hon Alan (Sw'n W)

Prentice, Gordon (Pendle)

Wilson, Brian

Purchase, Ken

Wise, Audrey

Randall, Stuart

Wright, Dr Tony

Reid, Dr John

Young, David (Bolton SE)

Robinson, Peter (Belfast E)

Tellers for the Noes:

Roche, Mrs Barbara

Mr. Tony Banks and

Rooker, Jeff

Mr. David Winnick.

Question Accordingly negatived.

Orders of the Day
  Pensions Bill [Lords]
  As amended (in the Standing Committee), further considered.
New clause 6

  PROTECTIVE COSTS ORDERS
  'Where an application is made to a Court and —

  (1) the Court is satisfied that there has been, in relation to the scheme, a prima facie breach of trust by trustees, and

  (2) the application has been supported by scheme members under prescribed conditions,

  the court may grant an order requiring the scheme trustees to pay the reasonable costs of scheme members in obtaining legal advice in order to pursue claims on behalf of the scheme.'.—[Mr. Ingram.]
  Brought up, and read the First time.
  4.5 pm
  Mr. Adam Ingram: I beg to move, That the clause be read a Second time.
  Before I begin my comments on new clause 6, may I say that, although the Minister for Social Security and Disabled People is in his place, which is good to see, I understand that congratulations are due on his recent elevation to the post of Secretary of State for Wales? I only hope that the decision was not taken on the back of battles with the Celtic fringes while debating this Bill over the past few weeks.
  I give the right hon. Gentleman a word of advice: understanding the Scottish accent will not stand him in good stead when he goes to Wales. The Welsh accent is entirely different. Gaelic may be somewhat similar to Welsh, but the right hon. Gentleman will have a hard task speaking to the Welsh in that language. I wish him every success in his new appointment, although he will hold his post for a very short time.
  The new clause is straightforward in its intention. It seeks to give maximum protection to scheme members in circumstances where they are required to initiate a court action against trustees of their pension scheme when they consider that there has been a prima facie breach of trust by the trustees. The purpose of the new clause is to lay down a level playing field between trustees and scheme members in matters that require determination by a court.
  The new clause is based on experience of recent judgments, which, although they have clarified the law substantially, still leave areas of uncertainty. There can be no dispute that the cost of legal actions against trustees for breach of trust can be extremely high, because of the length of such cases and the need for different sub-categories of beneficiaries to be separately represented.
  Where scheme members, either individually or collectively, possibly and unusually with the support of their trade union, decide to take a case against their trustees or their employers, or jointly against them, for breach of trust, they face the prospect of open-ended and indeterminate costs. That is a major deterrent, especially if all costs are to be met by them if the case is found against the plaintiffs.

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  Trustees against whom the case is being brought do not face the same hazard, for the simple reason that their costs will be met by the trust fund. Trustees, therefore, have the added facility and encouragement to drag out cases, making them extremely expensive and creating a greater disincentive to scheme members to take action in the first place.
  The most recent example of court action, on which the current law rests in relation to such matters, is the Melton Medes case. The case involved action being taken by beneficiaries against their employers, their pension fund trustees and others, in which they made serious allegations concerning the administration of the scheme.
  The beneficiaries originally had the financial support of their trade union, the GPMU—the Graphical, Paper and Media Union—which paid out £250,000 in legal costs at the commencement of the case and as it developed. Understandably, however, the union decided that it could pay no more, because the case was open-ended. That left the beneficiaries unable to fund the case to its conclusion.
  An application was therefore made to the court for a pre-emptive costs order. In the court's consideration, Justice Vinelott found in the plaintiffs' favour. As a result of the unprecedented nature of that judgment, the matter was then transferred to the Court of Appeal for further consideration.
  Last August, the Court of Appeal upheld Justice Vinelott's judgment by declaring:
  "What distinguishes the shareholder and pension fund member on the one hand from the ordinary trust beneficiary on the other is that the former have both given consideration for their interests. They are not just recipients of the settlor's bounty which he, for better or worse, has entrusted to the control of trustees of his choice. The relationship between the parties is a commercial one and the pension fund members are entitled to be satisfied that the fund is being properly administered. Even in a non-contributory scheme, the employer's payments are not bounty. They are part of the consideration for the services of the employee."
  At the Court of Appeal, Lord Justice Hoffman, in his judgment, laid down some criteria to be used in future cases. They include the provision that the discretion can be considered in pension scheme cases only where the plaintiff members are suing on behalf of the trust estate. Another provision stated that the fact that the employer's residuary interest on a winding-up of the fund might be reduced by the cost of reasonable and bona fide proceedings coming out of the fund could not be conclusive against the making of an order, and that this was to be a factor in the exercise of a court's discretion. A further provision was that, if the plaintiffs were impecunious, unless the litigation was funded, serious claims would never be investigated.
  Clearly that decision set an important precedent. It established the right of scheme members and beneficiaries with a legitimate grievance to obtain a protective costs order out of a pension fund to enable them to litigate at the expense of the fund, irrespective of the eventual outcome of the case.
  However, the principles on which Lord Justice Hoffman made his judgment were narrow. It is important that the judgment had not been confirmed by the Law Lords, because the case was settled before the House of Lords had the opportunity to give further consideration to that new departure in law.
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  Others who have considered the judgment have confirmed that the principles set out by Lord Justice Hoffman were indeed narrow. In the "Occupational Pensions Law Reports", pensions lawyer and expert John Mesher stated:
  "there is little guidance on which to predict how the discretion will or will not be exercised in the future, since the factors identified in it will be common to most cases where pension scheme members bring claims against the trustees or the employers."
  New clause 6 sets out to replace the broad statutory right available to beneficiaries, which is subject to interpretation by the judiciary, who may not always find in favour of the beneficiaries, with a properly defined right in law.
  The Government may argue—indeed, they have argued when the matter has been considered elsewhere—that the appropriate mechanism for dealing with matters of dispute is the newly established pensions ombudsman, who has been in place for about four or five years. It is accepted that the ombudsman may be able to resolve certain disputes, but he will not be successful in all cases, and recourse to the law will therefore still be required.
  When the matter was considered earlier in the Bill's progress, Opposition amendments sought to place the financial responsibility on the new regulatory authority, saying that that body had a duty to fund such cases in the interests of natural justice. The Government did not accept that approach.
  The Government's first argument was that there was a pensions ombudsman in place to take on such matters, and that it was therefore unlikely that there would be such disputes requiring clarification. It was clear that the Government accepted that cases could still end up in court, but they were not prepared to find a mechanism to assist the beneficiaries to fund any case that they might be forced to take.
  Under the regulatory authority provisions, that chance is denied them, and I am not aware of any other mechanism available to them. Clearly, if access to justice is not to be denied, the only way forward is through the mechanisms laid down in new clause 6, allowing trust funds to be used in pursuance of such matters.
  I accept the arguments advanced during our earlier considerations that litigation should be avoided if possible, but I hope that the Minister will accept that that will not always be possible. The likelihood is that recourse to the law will be required in some cases to clear up matters of doubt and to ensure that the scheme beneficiaries are properly protected against possible wrongdoing or maladministration of their scheme.
  I accept that such cases may be rare, but they may easily end up in a court of law, so it is important that beneficiaries should not be disadvantaged relative to the powers that rest with trustees, who can draw upon trust funds to protect their interests. On that basis, I commend the new clause to the House.
  The Parliamentary Under-Secretary of State for Social Security (Mr. James Arbuthnot): Clearly it is right that the interests of scheme members should be protected. If members have reason to challenge the actions of the trustees because they believe that there has been a breach of trust, effective and straightforward methods of redress should be available. New clause 6 proposes one way of meeting that concern, by indemnifying members against their legal costs.

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  I make no bones about it—I shall be asking the House to reject the new clause, for two reasons. The first reason is that it gives the courts a power that they already have. That is a fundamental objection. The second reason is that there are other ways which are more effective than legal action by which scheme members may pursue their concerns. I suggest to the House that new clause 6 is unnecessary.
  I shall first go through the other and more effective ways, which the House will consider important. The first avenue open to members who have concerns about their pension scheme will be the dispute procedures which trustees will be required to implement under the provisions in clause 49. Any member who has a grievance will be able to pursue it first with the scheme administrator and—if he remains dissatisfied—with the trustees or managers. It is right that scheme members should be able to ask the trustees to account for the decisions they make, and it is in the interests of both the schemes and the members that, if possible, disputes should be resolved by the schemes themselves.
  If the member remains concerned after using the new dispute procedures, he will as now be able to take the matter to the occupational pensions advisory service and the pensions ombudsman. The member can be told how to get in touch with those bodies in the scheme documentation, and I have a couple of scheme documentations here—these are visual aids and props—to show precisely how the important bodies are drawn to the attention of members of pension schemes.
  The Pension Law Review Committee recognised that any redress system should be effective and should have the full confidence of those using it. It should also be easily accessible and cost-effective. All those attributes are provided by the occupational pensions advisory service and by the pensions ombudsman. The occupational pensions advisory service offers free and independent advice to any scheme member who has a problem with his pension scheme.
  The Pension Law Review Committee has recognised the worthwhile work carried out by the occupational pensions advisory service, and the Government remain committed to providing financial support for that valuable service. There may have been some confusion about what has been said about the powers of the ombudsman and the occupational pensions regulatory authority to seek the direction of the courts, as those directions would be funded by the levy and the funding of litigation costs.
  I should now cover the services of the pensions ombudsman which are also available to scheme members free of charge. This was the subject of some considerable discussion in Committee, particularly in relation to my role as a Chancery barrister. The pensions ombudsman was set up in 1991 to provide scheme members with an easily accessible and cost-effective way of resolving disputes with pension schemes. He has wide-ranging and flexible powers, which allow him to deal with the sometimes complicated disputes that arise in pensions cases.
  The ombudsman may consider complaints about injustice caused by maladministration and disputes of fact or law. I make it clear that that includes complaints and disputes involving trust law as well as breaches of statute. The ombudsman has the same power as the courts in requiring information and the examination of witnesses,
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  and I should emphasise that his determinations—unlike those of other ombudsmen—are final and binding on the parties to a dispute, subject only to an appeal to the High Court on a point of law. Effectively, his determinations have the same force as court rulings.
  The Pension Law Review Committee recognised the expertise and experience of the ombudsman in pursuing a variety of complex cases. Indeed, it recommended that his jurisdiction should be extended and should be available for the resolution of a wider range of pension disputes.
  It would be productive at this stage to refer to the report of the Pension Law Review Committee. Paragraph 4.13.42 states:
  "We have also considered whether to recommend that a tribunal be set up in place of the Pensions Ombudsman but we have not been persuaded by arguments in favour of a change of this sort. Whilst a tribunal is less formal than a court, creating a tribunal for pension disputes would still involve some of the elements that lay people find daunting: oral evidence, and an adversarial procedure, in which the protagonists confront each other and ask questions whilst the tribunal listens to the evidence, as opposed to the inquisitorial approach used by the Ombudsman, who investigates the facts and then decides on the basis of them. The Ombudsman's office has only been in place for a short time, during which it has established a good working relationship with OPAS and has investigated a number of cases in considerable detail and with great persistence. We therefore prefer to see changes implemented not by replacing the Ombudsman with a Pensions Tribunal but by introducing a series of rather smaller changes in the operation of existing institutions."
  Although the new clause does not suggest that the ombudsman should be replaced by a pensions tribunal, it is instructive to listen to what the Goode committee considers to be the successes of the ombudsman.
  Mr. Ingram: I accept that conclusion of the Goode committee, but it is worth while putting on record why it reached it. It received representations from the Council on Tribunals, which advised the committee that nothing less than an expert, properly constituted independent tribunal with a legal chairman would be apt for the purpose.
  I hope that the Minister is not trying to suggest that the Goode committee recommendation represents the only judgment on the matter, and that therefore any other suggestions were unimportant, especially when a responsible body such as the Council on Tribunals has made such a strong recommendation that contradicts the conclusion reached by that committee.
  Mr. Arbuthnot: I would not for a moment suggest that there are no arguments in favour of a tribunal. The Goode committee heard those arguments, and considered them carefully. It then published a report that is not small, and came to the conclusion that I have just read out.
  At the moment, the ombudsman's jurisdiction is restricted to cases referred to him by individual members of pension schemes, but, as the Pension Law Review Committee recommended, in future he will also be able to handle complaints and disputes between employers and trustees and between the trustees of different schemes. Again, that will include cases involving breaches of trust law.
  The Council on Tribunals has been fully consulted on the provisions relating to the ombudsman's jurisdiction. Although it might, understandably, want a tribunal to be created, I understand that it does not currently raise any objections to the ombudsman's jurisdiction and the extension of it under the Bill.

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  We recognise that it may not be appropriate for the ombudsman to investigate all pension scheme disputes. Certain matters will be specifically excluded from his jurisdiction, because the Occupation Pensions Regulatory Authority will have enforcement powers that are more likely to be effective in securing compliance with the legislation in certain matters.
  My noble Friend Lord Mackay of Ardbrecknish explained in another place that we intend to make regulations which will exclude from the ombudsman's jurisdiction cases involving payment from surplus to an employer; failure to meet the minimum funding requirement; failure to comply with audit requirements; and the procedures for the appointment of member-nominated trustees and the scheme actuary. Concerns that scheme members may have about such matters will fall exclusively to the regulatory authority, which will have a wide range of powers to ensure compliance with statutory obligations.
  I recognise that court action is expensive. It is also time-consuming, and it may be daunting for members of pension schemes. Through the occupational pensions advisory service, the pensions ombudsman and the introduction of the Occupational Pensions Regulatory Authority, we have provided the means for scheme members to seek effective redress for their grievances without the need for lengthy and costly litigation. Effective means of redress, other than court action, is therefore available to scheme members.
  However, we certainly do not want to deny members access to the courts if that is what they want, and assistance is available for those members who decide to go to the courts. New clause 6 would allow members to apply to have the costs of legal advice met by the scheme trustees where the members are pursuing a case involving a breach of trust.
  As I said, the courts already have that power. In the Melton Medes case, to which the hon. Member for East Kilbride (Mr. Ingram) referred, a number of scheme members brought an action against the trustees of their pension scheme. The members applied successfully for a protective cost order allowing their costs to be met from the scheme, regardless of the outcome of the case.
  The hon. Member for East Kilbride read out parts of that judgment. However, I suspect that he may have read out those parts of the judgment that were modified by the conclusions reached by Lord Justice Hoffman. I suspect that the hon. Gentleman may have read out the historical position rather than the current position. If I am wrong about that, I hope that the hon. Gentleman will correct me immediately.
  Perhaps it would be best if I were to read the summary in the "All England Law Reports", which states:
  "An action by a member of a pension fund to compel the trustees or others to account to the fund was analogous to a derivative action by a minority shareholder on behalf of a company in that pension funds were a special form of trust and the analogy between them and the company/shareholder relationship was much stronger than ordinary trusts and, in both cases, a person who had given consideration for a limited interest in a fund (whether a pension fund or the company's assets) was alleging injury to the fund as a whole and seeking restitution on behalf of the fund. Since a minority shareholder was entitled to a pre-emptive costs order indemnifying him out of the assets against his costs and any costs he might be ordered to pay to the other party, the court could also make a similar order in favour of a pension fund member pursuant to s 51 of the Supreme Court Act 1981."
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  I do not believe that that finding is as restrictive as the hon. Gentleman suggested. The Court of Appeal made that ruling, and I understand that it will not be appealed further. Therefore, I suggest that new clause 6 is unnecessary.
  Mr. Ingram: Does the Minister agree that the matter is not being pursued further in a higher court because a settlement was reached in the case, and therefore the reference to the Law Lords was withdrawn? If the case had gone to a higher court, a different decision might have been reached. I said that there was some doubt and uncertainty arising from the judgment and I based my argument on that point.
  I have visual aids as well, and I could read out the whole judgment if that is what the Minister wants. However, I think that we should make some progress on the matter. I stand by my earlier remarks about the uncertainties that can prevail. We are still in a grey area, because the judgment was not considered in a higher court of law.
  Mr. Arbuthnot: I am not entirely sure that the hon. Gentleman could read out the whole judgment, because I think I am the only person who has it. I have not spoken to the parties in the case, and I do not know what motivated them to come to a settlement after the finding of the Court of Appeal. However, until that judgment is overturned in the House of Lords—whether in this case or in another case—it remains the law of the land.
  I believe that new clause 6 is unnecessary, because it provides a power that the courts already have and that they have exercised. It extends to scheme members the principle known as the Beddoes principle, under which trustees can apply to the court for an order indemnifying them from the trust fund against the costs of legal action taken on behalf of a scheme.
  I have described a wide range of measures that provide scheme members with various means of challenging the actions of the scheme trustees. Schemes will have to provide dispute resolution procedures and they have access to an excellent means of redress through the free services of the occupational pensions advisory scheme, the ombudsman and the Occupational Pensions Regulatory Authority.
  Following the Melton Medes case, it is clear that they can apply to the courts for protective costs orders if they prefer to take their case to the courts. I am therefore unable to accept that the new clause would serve any useful purpose. I hope that the hon. Gentleman will not press it to a division, because it would not improve the Bill.
  Question put and negatived.

New clause 4

  INVESTMENT POWERS: DUTIES OF TRUSTEES
  '(1) Trustees or managers of a scheme shall, in relation to investments held by the scheme —

  (a) make available to scheme members a statement of policy on the exercise of shareholder voting,

  (b) maintain records of shareholder voting,

  (c) permit the inspection by a scheme member of the voting records described in subsection (b), within 21 days of the date of a written request to trustees, and

  (d) provide to a scheme member within 21 days of the date of a written request a copy of all or part of the shareholder voting record.'.—[Mr. Dewar.]

  Brought up, and read the First time.
  4.30 pm
  Mr. Donald Dewar: I beg to move, That the clause be read a Second time.
  Mr. Deputy Speaker (Mr. Michael Morris): With this, it will be convenient to discuss also the following: Government amendments Nos. 36 and 38 to 50.
  Amendment No. 13, in clause 47, page 30, line 21, leave out 'may' and insert 'must'.
  Mr. Dewar: This is a debate on quite an important issue by any standards; in fact, I am not clear why I used the word "quite"—perhaps it is innate moderation. It is an extremely important issue which generated a great deal of anger as certain events in industry and commerce were deeply resented by a wide cross-section of the public, and indeed, of informed and technical opinion.
  The new clause addresses the issue of corporate governance. A great deal has been said about that in recent times, but it should be brought before the House during our consideration of the Pensions Bill. As anyone who has examined the facts and figures will recognise, pension funds hold a special place because of their growing financial muscle, which has built up spectacularly in recent years.
  Much of the present discontent has been highlighted by one or two spectacular cases. British Gas attracted an enormous amount of publicity and Mr. Cedric Brown became famous. In my view, no reasonable man would want such fame, although there may be private consolations when he inspects his bank balance. Those cases have done a great deal to damage public confidence.
  During the passage of the Pensions Bill, we spoke learnedly about the impact of the Maxwell case and what it has done to shake confidence in the management and solidity of pension funds. I do not want to exaggerate, but some recent instances, particularly those concerning private utilities, and the way in which managers have used their muscle and their privileged position to award themselves startling increases in salary and perks have made a profound impression on the public. If I lived in the City, worked in the City and lived on the City, I would be concerned about some of the public responses and the evident worry.
  It is not just poor Mr. Brown and British Gas. In some ways, it is more alarming when people who are given the opportunity to enrich themselves do it with vim and vigour, although the chance arose simply through privatisation and not because of some great entrepreneurial skill that has driven out a new platform of economic activity and the opportunity to contribute to national growth.
  The national grid might be a example of that. The existing operation ran on under new colours, but those colours provided the opportunity to move very fast in the direction of self-aggrandisement. I do not intend to make a lengthy speech about that aspect. I draw it to the attention of the House because it is a matter of particular sensitivity, but I have no doubt that the arguments can be rehearsed on other occasions.
  The foregoing is symptomatic of a much wider problem of which the Secretary of State will be well aware. These days I read the Financial Times regularly. It reports pensions news and related issues in a detail that other papers cannot match. Reading it every day, I have been
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  struck by the number of times I have come across details, now routinely reported, of the emoluments of chief executives and directors of public companies. It is clear that there are now people who are able, out of earned income, to build up significant capital fortunes in a way that some of us would have though inconceivable only 10 or 12 years ago.
  Sometimes there are other perquisites, such as pension contributions which outrage common sense, and share options which yield profits comparable to a decent-sized win in the national lottery. I do not want to give the impression—I realise it is likely that the Secretary of State will charge me with this—that I am opposed to reward for initiative. If people work hard, if they have special talents or if they produce special results, that will and ought to be reflected in their earnings and their rewards. That is an inevitable part of the system; I do not protest against it. I am trying to put the case in comparatively low-key terms because I do not want to end up in a slanging match with Conservative Members over what they would describe as the politics of envy. That would not take the argument much further.
  I am sure that Ministers will accept, however, that certain cases have raised eyebrows and that there is a worry which is widely reflected right across the sweep of industry and of those who comment on industrial and commercial matters. I wish here to use the words "offensive" in a justified but not excitable fashion. I find it offensive to see rolling contracts extending over a number of years. They mean that if someone has to go because he has not been a success or has not delivered as expected, he is paid sums which seem extraordinary to me—I was going to say "to you", Mr. Deputy Speaker, but that would be an impertinence on my part; I do not know how broad your vision of these matters may be—given that he is paid them simply because he has not succeeded in his job.
  I am happy to recognise that worth must be rewarded, but the argument that firms are only paying the market rate has set in motion a ratchet phenomenon, whereby each supports the other and the ante goes up endlessly. There is genuine scope for abuse here. But I also recognise that this is not all about pay and executive perks. That would be a rather narrow basis on which to conduct the argument.
  As I have said, we come across extraordinary examples in the papers. I, for instance, have been watching the activities of Mr. Sorrell of Wire Packaging and Plastic with considerable interest. At one time—admittedly, tied to performance targets—he was looking at a rake-in of about £35 million over the next few years. It is interesting to note also that the sum has been moderated and the man has been reined in as a result of shareholder pressure and a revolt by a cross-section of the institutions with an interest in WPP—which, despite its rather prosaic name, turns out to be an advertising agency holding company more familiarly known as JWT, or Ogilvie and Mather, and one or two other names of that sort. This is a startling example of the extreme end of the argument.
  It is not just a question of pay. We also believe, in the context of investments in a public company held by a pension fund or any other institutional investor, that those investors ought to take a practical interest in how the company in question is run, in the interests of the beneficiaries of a pension fund or of the shareholders of an institutional investor. That would also lead to the better

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  government of the company under examination. I think of such matters as investment policy, environmental considerations, which often raise sensitive issues, and the difficult balance between profit and environmental considerations. There are other ethical and management issues that should be on the agenda and given active consideration by shareholders, especially institutional shareholders.
  Short-termism in investment policy is often debated. It may be said, "This is a general problem. Why do you seek to impose a particular burden upon pension institutions and pension funds?" By the end of 1992—the percentage has probably increased since then—pension funds were reckoned to hold about 34 per cent. of the equity market, getting on for £300 billion. In 1963, it was not 34 per cent. but 8 per cent. There is a real question mark over how that substantial influence will be exercised and the level of responsibility that is expected of the funds.
  There is not necessarily a great deal of dispute about many of the basic considerations of what should be expected. But there will be a dispute, I think, about whether we want to do anything about those who fall short of expected standards. That is perhaps the real purpose of the new clause. It is designed to provoke or invite some debate on that issue. We do not want—when it comes to short-termism, this is an important distinction—institutional investors or pension funds to be owners in a superficial sense. We do not want them merely to be dealers in the shares of the companies in which they have an interest. We do not want them watching and waiting to take a percentage profit when a share price reaches a pre-determined level and has a certain added value over the purchase price.
  It is compatible and much in the interests of those for whom pension funds are in existence that matters such as research and development, investment and management standards come well to the fore. To encourage that positive interest we want to encourage positive ownership of the sort that I have tried to outline.
  I remember talking to a managing director of a firm with a proud record of research and development and investment in it. My constituency does not throw up many such examples. The company was in a highly technical industry in which it did not produce spectacular results at the time. It was investing heavily for the future. A rather aggressive conglomerate came shopping for it with a hostile takeover bid. The managing director—in fact, he was the managing director of one of the subsidiary companies—was asked to see some institutional investors to discuss the issues with them and to try to persuade them that there was genuine interest in the company remaining in independent ownership and continuing its proud traditions of investment and innovation. There was also a national interest.
  The managing director told me that what ensued was the most depressing experience of his industrial life. He visited largely Edinburgh investment offices. The House will be aware that Edinburgh is a large centre of investment funds. He said, rather bitterly, that he found people half his age in smart suits. It sounded as though it was rather like looking at the occupants of the Conservative Benches.
  Mr. Ingram: They are not very smart.
  Mr. Dewar: I think that there is a sartorial distinction between the two sides of the House. No one has ever
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  accused me of being a dandy, but if the Secretary of State wishes to do so, I shall await his speech with interest.
  The managing director went around the boardrooms, but the young men would not listen to his arguments. He described them—at least, I am interpreting what he said, so I shall describe them—as having brains like calculating machines and having about as much vision. They made it clear that if the price—the percentage mark-up on what they had originally paid—was right, the door would be slammed shut and the sale could go ahead.
  There is a wider worry about institutional investors. That case was symptomatic of a general problem. The Secretary of State would not deny that investment in the United Kingdom, as a percentage of gross domestic product, has not been as good as it should have been. Between 1979 and 1993, our level of investment was lower than that of any of the other G7 countries. The deficit in investment in fixed capital relative to, say, France and Germany, is something like £1,000 per employee.
  4.45 pm
  It is not easy to put that right and I am not suggesting that a modest new clause in the Pensions Bill will resolve the problem. We have to start trying to resurrect an interest in a definition of ownership and stewardship for shareholders, and especially for institutional investors, that is wider than has been accepted in the past. It was on the basis of a wish to encourage healthy corporate governance that the new clause was tabled.
  The new clause is something of a reprise. We have debated it in the House of Lords and in Committee. My noble Friend Lord Haskel raised the issue and argued the case forcefully. Lord Mackay of Clashfern, sounding a little like a boy scout, expressed good intentions but promised no action. We thought it right to return to it in Committee but we got very little help, I am afraid, from the Under-Secretary of State, the hon. Member for Wanstead and Woodford (Mr. Arbuthnot), who took that debate. It was an interesting debate in the sense that he conceded a great deal of the ground that I have outlined in this debate.
  The relevant passages come from the Standing Committee's proceedings of 18 May. We had tabled an amendment designed to make sure that when investment principles were being considered and put into written form, the trustees of a pension fund would take into account their ability to exercise their voting rights. It was a comparatively modest peg for a discussion about the way forward.
  I shall quote a few broken phrases to give the spirit of the Under-Secretary's argument rather than wearying the House with its detail. He said:
  "I am sure that we all agree that the intention behind the amendment—the improvement of good corporate governance—is admirable.
  Shareholders have a crucial role in influencing and ensuring good governance and the competitiveness of British industry … The Government are concerned that shareholders should take their corporate governance responsibilities more seriously. It is extremely important that they should subject the performance of their companies to critical scrutiny … The role of shareholders is crucial to the country's economic prosperity."
  At that point, I was in the audience and not an active participant. I felt 10 ft tall and thought that I was going to get a gold star for good conduct. Clearly, the

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  Under-Secretary thought that we were fighting the good fight. Rather oddly, he went off the tracks after that, because he started to consider what we should do, from that platform of agreement, about the nature of the problem. I do not disagree, but he said that
  "good practice in corporate governance does not necessarily translate easily into legislation … The Goode committee considered the matter carefully. On ethical and socially responsibly investment, page 350 of the report says:
  'We believe the present law to be satisfactory and do not recommend any change'."—[Official Report, Standing Committee D, 18 May 1995; c. 223–24.]
  I have no doubt that the report did say that about the narrow issue of the rights of trustees to take into account certain ethical and environmental considerations, but that was not what we were discussing.
  The Under-Secretary went on, even more strangely, to accuse us—at least by implication—by charging that the choice that we were offering was between forcing trustees to invest in a particular way and allowing them to make their own decisions on how best to serve the interests of their beneficiaries. I cannot imagine how the notion that we were forcing trustees to follow a certain investment course could be inferred from the nature of that amendment.
  The point of rehearsing these arguments is to underline the fact that the Government accept that there is a problem and that a great deal needs to be done but that there is very little sign of their being prepared to consider any likely solution or even a modest first step forward.
  We know that in total—I am referring to equity holdings—the assets of pension funds are getting on for about £500 billion. We know that they have a crucial role, especially in the equity market, and that good governance must involve them. If we cannot get them moving, it will be difficult to make any impact on the problem.
  The House will know that, although there is a feeling that some progress has been made, there is clearly a long way to go. The National Association of Pension Funds, for example, has been charting the progress and examining in particular the way in which pension funds have been exercising their franchise at the shareholder meetings of the companies in which they have invested. There is no doubt that a good deal of progress has been made but, as the vice-chairman of the National Association of Pension Funds made clear at the association's most recent conference, there is still a long way to go. He accepted that the job was by no means satisfactorily completed.
  The Cadbury report had a fair bit to say about corporate governance in general. I do not want to mislead the House, but it is a little odd to find that the Cadbury report referred to the fact that the Goode committee—the Pension Law Review Committee—was sitting and said that, in the light of that, it would be inappropriate for it
  "to deal specifically with pension fund governance issues".
  However, its comments about institutional shareholders and good governance, which I shall not quote at length, are relevant. It states that institutional investors should make positive use of their voting rights unless they have good reason for doing otherwise and that they should register their votes wherever possible on a regular basis. The committee recommended that institutional investments should disclose their policies on the use of
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  voting rights. Although that report left the matter to Goode, I cannot see that it is any way likely that its general conclusion about corporate governance would not transplant—if that is not too agricultural a simile—to the world of pension funds.
  Unfortunately, as the House will know, the Goode committee did not consider the matter. It considered everything else that man could think of, several things that man probably had not thought of and certainly many that man did not want to think about at all, although perhaps he should have wanted to do so. It is indeed a comprehensive report but, strangely—despite what the Cadbury report said—the Goode committee did not say very much about this particular matter on this occasion.
  That is the general background. I hope that it will have convinced the Minister that we are not suggesting a sinister approach to an imaginary problem. The new clause is a genuine attempt to deal with a problem that is very real and a worry, whether to the NAPF or Cadbury or in Government circles. There is a recognition in every circle that the situation is unsatisfactory. Our share-owning democracy—a phrase that is occasionally used in Government circles—is not as developed in this country as we would like, partly because of the enormous importance of institutional shareholdings and, of course, pension funds, as I have being trying to outline. The new clause is a modest proposed step on the road to putting that right.
  To summarise, the new clause tries to lay certain duties—I say "tries" because we do not know whether it will find favour—on trustees or managers of pension schemes to make available to scheme members a statement of policy on the use of their votes in the affairs of the companies in which they have invested, to maintain a record of what they have done, to permit inspection of that record and to provide copies of that record on written request within 21 days.
  I must confess that I am sometimes astonished by the moderation of Labour Members. There is nothing in the new clause that anyone could say was extreme or objectionable. We are not trying to direct. We are not even going as far as saying that it should be mandatory to use the vote. We have tried to make the new clause compatible with the duties and responsibilities outlined in the current legislation.
  We have tried to make the new clause a harmonious proposition that fits in the Bill well and have tried to ensure that it is not something that would panic or frighten the horses. That is, perhaps, an unfair way to refer to Ministers, but I am sure that the House will understand the reference. When I am trying to persuade people, I always try to use language that they understand. I do not think that the Secretary of State is a horsey type, so I fear that he does not conform—but I cannot really be responsible for his individuality, in a Conservative sense. I did not use the word "peculiarity" as I thought that it might put him off.
  I now return to the argument, from which I was temporarily diverted. The new clause is modest but not unimportant, and it deserves serious consideration. Although it is modest, it is sensible and very much fits in with the provisions contained in clause 35. Hon. Members who served on the Committee will remember that clause 35 deals with investment principles. It reads:

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  "The trustees of a trust scheme must secure that there is prepared, maintained and from time to time revised a written statement of the principles governing decisions about investments for the purposes of the scheme."
  It goes on to say that the statement must cover matters, which include the kind of investments to be held, the balance between different kinds of investments, risk, the expected return on investments, the realisation of investments, and such other matters as may be prescribed.
  Given that there is to be a written statement, it seems to me that a positive attempt must therefore be made to formulate a coherent investment plan, that it is not unreasonable to say that, as part of that process—if one likes, not as an addendum but perhaps as a parallel to that process—those same trustees should consider how they will cast their votes in corporate governance and produce guidance as to the general position they will adopt in these matters. That seems to be absolutely reasonable. It will draw attention to the matter and encourage a positive approach. It will also give information, and these days we are all interested, rightly, in transparency and in allowing people who have an interest as potential or actual beneficiaries in a pension scheme to know how their funds are managed. It will give them an opportunity to assess how their affairs are run.
  One of the reasons why we are picking out pension funds in this way, as opposed to other institutional investors, is that pension funds hold the money in trust for others. Trustees act on behalf of others, and a pension fund is a very important trust because it is a nest egg that, one hopes, will bring security in retirement. Surely, given those circumstances, it is not unreasonable to ask trustees to state their approach and to make that statement available to those who have a genuine interest.
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  We could have gone much further. As the Secretary of State will know, in America it is mandatory, and has been since 1988, for the managers of pension funds to cast their votes. It is possible to escape the commitment only if the costs outweigh the benefits from the point of view of the beneficiaries of the pension trust. When I asked someone who was more familiar with such matters than I for an example of costs outweighing benefits, I was told that it might not be wise for a person with a holding in a Swiss company to exercise his mandatory duty to vote, as under Swiss law he would have to appear in person. Although that might prove popular with the executive sent on such a dangerous mission, it might not make much sense in other respects.
  I have made the point light-heartedly, but we are discussing the heartland of capitalism, often cited by the Secretary of State as an exemplar to us all—especially in terms of the job creation record and the policies that he mistakenly imagines to have been responsible for that record. As I have explained, in the United States it is not enough to provide a coherent statement of policy to serve as guidance, which is what we are suggesting; votes must be cast.
  I mentioned Switzerland because I understand that in August the rule was extended to overseas holdings. There have been some spectacular examples in that context, involving, for instance, the affairs of Saatchi and Saatchi, over which I shall draw a decent veil. We can all think of many other companies with substantial American holdings, however.
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  There has been an interesting shift in the statistics. American pension funds that used to invest a much smaller percentage of their total portfolio abroad than British funds are now increasing that investment markedly: there has been a large rise in the amount of buying of overseas holdings. Under American law, more and more will have to "punch their weight"—that is the cliché of the moment—and exercise their rights as shareholders at companies' annual general meetings. Many of the drug companies are involved, including Hanson—a company from over here that is doing very well over there. Its American shareholders will take a close interest in its affairs as a matter of legal duty. We have not gone as far as that in the amendment, because we realise that the Minister might bolt at the prospect.
  Ours is a reasonable and sensible proposition. It concentrates the mind; it increases the pressure; it recognises the difficulties that still exist, as defined by the National Association of Pension Funds; and it fits easily into a slot in the Bill, as a natural continuation of clause 35.
  The Minister is an individualist and may not advance the arguments that I expect him to advance, but certainly all his junior colleagues, such as Lord Mackay of Ardbrecknish and the Under-Secretaries of State, have taken shelter behind the Greenbury report—and his ex-junior colleagues. I hope that it was not listening to many hours of speeches in Committee that drove the hon. Member for Richmond, Yorks (Mr. Hague) to seek shelter in the Cabinet; I suspect that he may regret the choice, but there we are. We may have to wait for a final decision on Greenbury, although there are rumours that the committee will not recommend legislation.
  In any event, our measure does not attempt to anticipate what Greenbury may or may not say. We are certainly not going into the more controversial issues such as mandatory voting, or the view—with which I have some sympathy—that if incentive payments are to be made they should not take the form of share options and the like but should constitute a bonus in the company's stock, to confer a sense of identification with the organisation and a vested interest in its future success. I understand that that is currently a strong trend in America.
  We have not tried to infringe, preclude, anticipate, pre-empt or do any of the things that we might have tried to do by tabling a new clause that was simply propaganda and would have us shouting abuse from the roof tops. Our new clause is a genuine attempt to encourage a positive approach rather than leaving matters to a system that has not been performing as it should, and hoping that it is a case of "Physician, cure thyself."
  The idea may not appeal to the Secretary of State, but I believe that the Government have a duty not to dictate or inhibit unnecessarily but to regulate sensibly and to set a framework within which people can realise the potential of their companies, and their own potential, to the best of their ability. I consider the new clause helpful, and I hope that the Secretary of State will view it in a friendly spirit.
  Sir Andrew Bowden: I hope that the hon. Member for Glasgow, Garscadden (Mr. Dewar) will feel that I am suitably dressed, in view of his comments about Conservative Members' clothes.
  When I first studied the new clause, it struck me as fairly reasonable, but having listened to the hon. Member for Garscadden, I have become somewhat disillusioned. It is possible that I completely failed to understand what

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  new clause 4 was all about. If that is so, it is entirely my responsibility; but I put my name to the new clause because I assumed that it was essentially about supplying information to pension scheme members.
  Many pension scheme members feel that they are boxed into an arrangement that prevents them from receiving much information about what is going on. Beneficiaries in particular feel isolated from the operation of the scheme in which they are involved. I should have thought that, in principle, they were entitled to have as much information as possible, so that they know how their scheme is doing and can express to the appropriate people any views that they wish to express. I shall listen with interest to what my right hon. Friend the Secretary of State has to say.
  Let me explain why I originally put my name to the new clause. I am sorry that the hon. Member for Garscadden has left the Chamber, but I did not think that most of his speech was very relevant to the new clause—especially the first part, which was a thinly veiled attack on various executives in individual businesses. I look forward to an explanation from my right hon. Friend, not having received much of an explanation from the Opposition. If the new clause is about supplying information to pension scheme members so that they can understand better how their money is being used, where it is being invested, what the impact is and whether they have a role to play or a view to express, I consider it a reasonable proposal —
  Mr. Geoffrey Hoon: Will the hon. Gentleman give way?
  Sir Andrew Bowden: I should like to give way to the hon. Gentleman, but I understand that time is short and I gave a pledge that I would make a short speech.
  If I have got the new clause right, I look forward to my right hon. Friend telling me about it, and I shall then judge what action I should take in the Division Lobby.
  Mr. Hoon: May I make it clear to the hon. Member for Brighton, Kemptown (Sir A. Bowden) that new clause 4 makes it plain that it is concerned simply with the provision of information? As I hope to explain, such provision has implications for pension funds and the companies in which they invest, but the new clause is primarily an exercise in transparency for the benefit of people who contribute to their pension funds and therefore indirectly purchase shares in companies, specifically British companies.
  We are concerned with corporate governance. We are trying to promote greater corporate responsibility on the part of trustees or managers of pension schemes in respect of shares held by a pension fund and of the use of associated voting rights.
  The starting point for the debate must be the fact that United Kingdom pension funds hold assets totalling about £500 billion. It has been estimated that they hold about 35 per cent. of the total shares available on the UK equity market. Pension funds, along with many other institutional investors, are frequently the most significant institutional grouping among shareholders in any company. In practice, they may hold a controlling interest in a company.
  It is important that, as pension funds are such significant shareholders in UK companies, they should exercise the responsibilities that go with voting rights and the holding of shares in a proper way. That should be in
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  the national interest, as they receive significant tax concessions. They may have been able to accumulate shares in companies as a result of those tax concessions, which are, in effect, paid for by the UK taxpayer. The taxpayer must therefore have an interest in how those shares are held and in the manner in which funds are used and voting rights exercised.
  The new clause therefore deals specifically with the accountability of pension funds for their actions, both on behalf of people who have paid into a fund and their consequential position as indirect shareholders in major companies. With the new clause, we are seeking to establish the responsibilities that pension funds have to people who have, in effect, paid for shares by their pension fund contributions.
  The basic principle should be that scheme members who contribute to funds that are then invested in UK companies should have the right to know how the trustees or managers of the fund intend to use their voting rights to influence the policy and strategy of the company in question. Scheme members pay into the company, be it indirectly through their pension contributions, so surely it is not unreasonable to expect some information about how associated voting rights are then deployed. In essence, that is the purpose of the new clause.
  We know that the Cadbury committee has made recommendations on good corporate governance. It concluded that the trustees or managers of pension funds have a responsibility to vote their shares. As has already been mentioned by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), to a great extent, that practice has been adopted in the United States of America. In 1974, legislation was introduced to encourage the process. Since 1988, it has been recognised that a shareholder's vote is an asset of a fund. That means that, in United States law, a pension fund has become under a duty to vote shares, unless there has been a positive decision not to do so.
  Moreover, as I understand the position in the United States, it flows from that that the pension fund is required to inform itself of the role that its shareholding has in a given company and therefore of the role that its shareholding plays in influencing the direction of corporate activities.
  5.15 pm
  It appears that the Government do not especially object to that practice. Lord Mackay of Ardbrecknish said in another place:
  "We are in no doubt that institutional investors, as owners of shares, have a responsibility to the companies in which they invest. As part of that responsibility, it is extremely important that shareholders should subject the performance of their companies to critical scrutiny. If shareholders see that their companies are not competitive … they must demand changes in the management and impose them if they must. It is not an exaggeration to say … that that function is crucial to our economic prosperity."—[Official Report, House of Lords, 13 February 1995; Vol. 561, c. 536.]
  In Committee, the Under-Secretary of State for Social Security made similar observations, but, notwithstanding the acceptance of the general principle, it appears that the Government are not prepared to recommend legislation to bring about the very objective that they appear to support. Their argument appears to be that it is best to leave it to the market to decide, that the market will bring about appropriate changes in the way in which companies operate, and that, therefore, it is not necessary to legislate.

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  It is significant, however, to contrast the Government's view on shareholdings with the way in which they have repeatedly sought to regulate trade unions, which are, after all, voluntary unincorporated societies. Since 1979, they have faced a welter of legislation from Conservative Governments who have interfered in the internal working and democracy of what, after all, are voluntary organisations. Why should the internal activities of such organisations be regulated by legislation? The answer, as I am sure Conservative Members would tell us, is that trade unions play a vital role in our society, and that their functions are so important that they must be subject to legislation.
  I do not disagree with that conclusion. Clearly, it is necessary that trade unions should be regulated. If they should be regulated in the interests of society, however, that must surely apply as much to pension funds, and in particular, the use of pension fund shareholdings in our major companies. If pension funds are able to determine the investment strategy of UK companies because of the size of their shareholding, surely that is as significant as the need to regulate trade unions.
  Unfortunately, too often in practice pension fund shareholders have, in effect, opted out of their responsibilities. Too often, they have handed over proxy votes to the chairman of the company concerned and allowed him to use the proxy vote to preserve the status quo. Even when there was significant opposition to the position set out by the British Gas chairman from the floor of its annual general meeting, it was clear that institutional voters had lined up behind the existing management to preserve the status quo and to stifle the opposition. That is a perfectly proper use of their votes, if that is how they see their best advantage, but it is not unreasonable—this is all that the new clause would do—to suggest that pension funds in particular should be able to justify their decisions to people who have contributed to the pension fund. This modest clause does no more than that.
  It is clear that pension funds' attitude towards the exercise of their voting rights has changed. Surveys have suggested that, between 1990 and 1993, only 20 per cent. of pension funds voted their shares at all times. By 1993, that figure appeared to have improved, with about 26 per cent. using their voting rights at all times. From other surveys, it appears that that improvement is proceeding steadily and that many more pension funds are prepared to recognise their corporate responsibility in this respect.
  Where pension funds do vote, however, there is a concern, particularly in respect of contentious takeovers, that they employ their votes in an especially short-term and negative way, and that the culture in the UK has often been to establish, as a result of disputed takeovers, management teams that will guarantee simply the highest rate of return in the form of dividends. That encourages companies to concentrate on maximising dividends, perhaps sometimes at the expense of productive investment. We are concerned that a significant institutional shareholding in major companies encourages the attitude that develops dividends and profits at the expense of returning profits to, perhaps, research and development or new productive capacity.
  The community has a clear interest in the sense that if pension fund shareholdings have been built up as a result of significant tax concessions, those concessions should be used for the benefit of British industry rather than simply for maximising profits. In the short term, that may
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  not necessarily appear to be in the interests of the pension fund whose managers want to maximise the return year by year. However, it will be in the longer-term interests of contributors to the pension fund.
  It is significant that the United States practice has developed in a way that ensures that investment is in the wider national and corporate interest. A United States institutional investor in a UK company could look at the wider interests of the company's performance, whereas a British pension fund manager, who might have narrower, short-term perceptions, would simply be concerned about dividends from one year to the next. There has been considerable academic criticisms of the United Kingdom practice of concentrating on short-term returns instead of looking at the longer-term benefits to United Kingdom industry.
  Describing the new clause as a modest measure might encourage the idea that contributors to pension funds have a right to know how their contributions are being used, and whether the pension fund managers are exercising their voting rights, and if so, in what respect, so as to encourage, we hope, productive investment in British industry and in our ability to compete in the world.
  Mr. Archy Kirkwood: The 30-minute speech by the hon. Member for Glasgow, Garscadden (Mr. Dewar) caused me some concern because I think that he was in danger of being too reasonable for his own good. Perhaps he is getting soft in his old age. He tiptoed on eggshells all over the issue, and that was quite unnecessary. I am sure that the hon. Gentleman had his reasons for doing that: there are tactical reasons for deciding whether to go in hard or gently. I am sure he knows what he is doing because he always does. I take a more robust view.
  I thought that the hon. Member for Garscadden had just entered the Chamber, but I see that it is the hon. Member for East Lothian (Mr. Home Robertson) who is one of my constituents, from Paxton Mains.
  Mr. John Home Robertson: I hope that the hon. Gentleman is looking after my interests.
  Mr. Kirkwood: I am, and I always do.
  I take a different view from that of the hon. Member for Garscadden. The new clause is clearly in the interests of fund members, and that is one of the overriding interests that the House should consider, certainly in relation to clause 35, which goes a long way towards giving pension scheme members a series of new bits of information. That is right, but the new clause is quite unexceptional. However, it is important in terms of giving powers in addition to those set out in clause 35.
  I can see no argument of any kind against the new clause. It would have been better in gremio of clause 35 because a new, free-standing clause does not make it any easier for a practitioner who is trying to use the legislation to find his way round the Bill's provisions. I found my argument in support of the new clause on the fact that it clearly establishes new rights and entitlement to information that pension fund members must have. For that reason alone, the clause deserves support.
  I take a keen interest in freedom of information and I assume that the powers in the Bill are new. I have no idea of the arrangements for pension fund members who want to ask for information under the existing rules. I assume that no pension fund manager in his right mind would

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  deny normal, legitimate requests for information from bona fide members. As the hon. Member for Garscadden said, the new clause would enhance transparency. In the context of freedom of information and enhanced rights, it should be supported and encouraged, and I hope that the Government will do that.
  The new clause has an important bearing on the way that joint stock companies organise and operate their decision-making process in the United Kingdom. I entirely agree that there are substantial worries that companies which are limited by shares are beginning to use their enormous financial power in a way that has caused concern in the past. The Government would be well advised to look more widely at the issue. It is not relevant, and technically not in order in debating the Bill, but the Department of Trade and Industry under its new Secretary of State, the right hon. Member for Galloway and Upper Nithsdale (Mr. Lang) should look at the whole question of how joint stock companies that are limited by shares are running well ahead of the game in terms of board decisions and the impact of pension funds on their decisions. That should be one of the Secretary of State's first jobs when he arrives at his new desk tomorrow morning.
  That brings me to the fears that were expressed by the hon. Member for Brighton, Kemptown (Sir. A. Bowden). He was right to draw attention to the fact that the hon. Member for Garscadden entered into some potentially controversial issues about what would happen after people got the information and whether it would encourage them to take political decisions in the context of what was being done by those in charge of the pension funds and how they voted. But, with respect, that is a matter for them. The hon. Gentleman's interpretation of the clause was accurate, but the measure is more neutral than that. It does not seek to knock people into political positions one way or the other: they are entitled to make their own decisions and reach conclusions on the information that is available to them.
  Like the hon. Member for Kemptown, I think that we cannot possibly take exception to the basic provision of information because that must be good in its own right. The hon. Gentleman's support is valuable. His signature on the clause adds an enormous amount of weight and will certainly concentrate Ministers' minds much more than would support by me or by the hon. Member for Garscadden. I expected the hon. Gentleman to say that he intended to withdraw his support because of his fears about the clause, but I assure him that his original interpretation of the clause was right. However, if people make up their minds to disagree with him politically, that is a matter for them.
  I do not think that it is possible for the Government to remain agnostic on this question, and it is completely disingenuous to say that they will wait until Greenbury reports, because we shall all be on the beaches by then. I look forward to reading my copy of the Greenbury committee report on the beaches, as I am sure does the Secretary of State. It is no answer for the Government to say, as they have in the past—the hon. Member for Garscadden rightly pointed this out—that we should wait and see. It is a good Asquithian response, I am sure, but it does not measure up to the Government's responsibility.
  The Secretary of State has a duty to say whether the Government are in favour of, or against, the proposal. It is a perfectly clear proposal. If the Government say that
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  new clause 4 is technically inadequate, or that they will implement its proposal through guidance, or that they will use any of the other multifarious devices available, it would certainly be enough for me. But they must come off the fence to say one way or the other whether the proposal is a good idea or not. This is the last chance for Ministers on the Treasury Bench to express a view on that important question.
  I certainly support the spirit of the new clause and will be looking to the Government to say something a little more positive in the debate than they have been able to say so far.
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  Mrs. Helen Liddell: A number of points have been made about the moderation of the new clause. Indeed, the moderating influence of my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) is always with us. It is very tempting to explore more general issues about standards in public life because a great deal of the background to the tabling of this new clause relates to such issues, but that is not the first point of interest.
  The new clause is about transparency and allowing pension fund members to know how the fund, to which they have contributed and on which they are dependent, is being managed. It is a common sense measure. Like the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), I cannot understand why the Government are taking a negative line. Implementation of the proposal would be of considerable value in the operation of pension funds and it would also make people more aware of the possible impact of pension funds on the overall running of our corporate and industrial life in Britain.
  In the British system, which is heavily reliant on self-regulation, it is important to use the mechanisms available to ensure the highest possible standards in the operation of companies. Pension fund members have the opportunity, through fund managers, to exercise an influence which would be for the general good of the companies and would play a role in transforming the landscape of our corporate and industrial life.
  I have one specific criticism of the operation of fund management in relation to the boardrooms of Britain. It is, bluntly: the boardrooms of Britain are populated by a self-perpetuating clique. It is very rare that I find cause to pay tribute to the Prime Minister but, in one area, he drew attention to the fact that our boardrooms are a self-perpetuating clique whenever he referred to the absence of women in them. Indeed, he began Campaign 2000 as a means of trying to break some of those glass ceilings. The fact that he has manifestly failed in his endeavour is neither here nor there. At least it has been recognised that such cliques need to be broken.
  I say that with a degree of passion because it was my misfortune to be involved in investor relations. Indeed, I was involved with investor relations with Mirror Group Newspapers immediately after the crisis was discovered following the misappropriation of company and pension funds. I was involved in a number of presentations made to the fund managers and I never want to see a prawn vol-au-vent or a canapé again. Much work is done behind closed doors by people who all work within walking distance of one another, who share the same clubs and, increasingly, share the same schools. Frankly, that is not sensible for the good governance of pension funds.

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  The other side of the coin of that exercise was having cause to make presentations to fund managers in the United States. I can assure the House that I would rather appear before a Labour party selection meeting than go again before fund managers in the United States because it was a brutal experience. They wanted answers, and they were entitled to them. That very determination to get answers has led to legislation in the United States.
  Reference has been made to the Cadbury report. Some people assume that just because there has been such a report, all is well in the boardrooms of Britain. That is arrant nonsense. In more cases than not, the Cadbury report is honoured in the breach rather than in the observance. Any influence that can be brought to bear to increase standards is to be welcomed.
  My hon. Friend the Member for Garscadden referred to the fact that institutional shareholders hold about 62 per cent. of UK equity in pension funds: roughly 35 per cent. of the equity market. If we want good stewardship of public companies, the institutional shareholder must use that power. It can be a boost to corporate power.
  One example, although not directly related to pensions, shows the impact that action by companies can have, not only in the way that they do their business, but in the way that Governments can be influenced. Would Nelson Mandela be President of South Africa had it not been for the actions, not only of trade unionists and men and women throughout the world, but of companies? Indeed, a number of pension funds decided that they would take an ethical line on their investments regarding South Africa.
  Increasingly, too, companies are taking a line on the environment. It is an important aspect of the life of those who can determine the future of companies that they act with the broader community in mind. Furthermore there is a responsibility to the pensioners to ensure that corporate decisions are soundly taken.
  As I said, a self-perpetuating clique can allow boardroom inaction and certain aspects of boardroom behaviour can have a detrimental effect on the company. We hear about pay-offs. I shall not go down the road of condemning pay deals in the privatised utilities because that has been debated often enough in this House, but, from the point of view of pensioners, I am concerned that the impact on company performance and dividends available to pension funds of rolling contracts and big pay-offs must be taken into account.
  Someone who is perhaps closer to the Secretary of State than anybody on the Opposition Benches, Mr. Alastair Ross Goobey, has very much made the case on behalf of POSTEL, now Hermes, on the whole issue of rolling contracts. The new clause will not affect the situation directly but it will mean that pension fund members will be able to see the voting records of their fund managers.
  The case of British Gas has been mentioned. There was swingeing criticism of the activity of institutional shareholders at its recent annual meeting. Dr. Ann Robinson, formerly of the Institute of Directors and now of the National Association of Pension Funds, drew attention to the fact that it is extremely rare for institutional shareholders even to turn up at annual meetings. Dr. Robinson—not me—claims that institutional shareholders prefer quiet dialogue behind closed doors. That is not in anyone's interest.
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  It is also extremely important that there is no suggestion that pension fund managers for institutional shareholders in any way may be swayed by a conflict of interest. In ensuring that there is no conflict of interest, new clause 4 is very important. There must be transparency at all levels.
  In the LEX column in the Financial Times on 31 December 1994, clear allegations were made that because executive directors who are trustees of pension funds award the mandates which give these very fund managers their lifeblood, it is not in their best interest to offend the hand that feeds them. That is a powerful argument for this new clause. In an article in The Times, Professor Tom Clarke of Leeds business school referred clearly to the environment of self-regulation. In such a climate, the penalties for non-compliance are hardly severe. They work in an environment which is like a gentlemen's club.
  I refer to the situation in the United States where there has been a dramatic turn, as my hon. Friends the Members for Garscadden and for Ashfield (Mr. Hoon) have pointed out. Since 1988, it has been enshrined in statute in the United States that pension funds in the private sector have a duty to vote under the Employment Retirement Income Security Act. Since 1994, that duty has been extended to shares outside the United States. United States institutional investors now vote in 71 per cent. of all foreign companies in which they own a stake, according to the investor responsibility research centre, Washington. That figure was only 24 per cent. in 1991.
  A classic example, which has been referred to before, is that it was a United States institutional investor who set in train the process that led to the ousting of Maurice Saatchi from Saatchi and Saatchi. Activities by US pension fund managers are expected to increase dramatically in the near future, which raises an issue for us here. There are a number of companies in which 25 per cent. of shares are held by US institutional investors and those investors will dictate standards within our companies. Does not logic suggest that British institutional shareholders should do the same?
  One powerful argument was summed up by Mary Ellen Anderson, the director of investment and corporate relations at the State of Connecticut retirement and trust fund, who said of US companies:
  "They want our money. We have made it clear we are interested in investing but we are also interested in voting. We don't really want to do one without the other."
  The new clause would secure that aim.
  In March this year, the Teachers Insurance and Annuity Association College Retirement Equity Fund, the world's largest pension fund—and the one with the longest name—engineered the board room coup that brought down Peter Grace, the 81-year-old chairman of W. R. Grace. All of that led to a warning by Bill Crist, who is the board president of the California public employees retirement scheme. He said:
  "There will be an increase in the application of standards we attempt to maintain in the US to other parts of the world."
  That is a lesson to us here in Britain. If the institutional funds of other countries are concerned about the operation of companies here, it is a damning indictment of all of us that we are not setting up the mechanisms whereby we can secure those high standards through British institutional funds.

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  The new clause would not represent a dramatic move. It is in the interests of transparency and it flags up the fact that we wish to see the highest possible standards in this country.
  Mr. Clifford Forsythe: I have reservations about the new clause; I am torn in different directions and I shall explain why. I support all that the new clause says on the surface about transparency and I support the idea that members of pension funds should know what is going on in terms of investment and so forth. That is an excellent thing. However, there is another aspect to the matter which I ask those who have tabled the new clause to consider.
  It was the mention of the United States that alerted me to a problem. Some of the pension funds in the United States are being used by certain elements to try to impose the MacBride principles on certain United States firms in Northern Ireland. That is being done despite the fact that the United States Government are against the MacBride principles and despite the fact that all the legislation for Northern Ireland passed by this House is designed to look after the interests of all citizens in Northern Ireland and to ensure that there is fairness, regardless of political, religious or any other views.
  There are those who bring pressure to bear on the shareholders and trustees of funds and who say that the funds should be used in a political manner—in an anti-British manner in terms of Northern Ireland. I wonder whether those who have tabled the new clause considered that point. People who are against smoking, for example, might not want investments in companies that deal in tobacco. Others might be against any number of things and might insist that although the trade concerned was genuine, the fund should not invest in it. We could open up the door to all sorts of things.
  5.45 pm
  Legislation for Northern Ireland is passed by Members of this House. Even with all the parties in Northern Ireland opposing the MacBride principles, the pension funds and those who bring pressure to bear on them insist that some of the US firms in Northern Ireland should do certain things. That has an adverse effect on Northern Ireland; it does not help relationships in Northern Ireland. In that situation, the new clause and the ideas behind it could be counter-productive.
  I would be happy for the system to be transparent and I would be happy for people to know about it, but I have the reservations that I have described. When the hon. Member for East Kilbride (Mr. Ingram) winds up, perhaps he would consider that point and make some comments which would be helpful to me.
  Mr. Jim Cunningham: The interpretation of the new clause by the hon. Member for Antrim, South (Mr. Forsythe) is not mine. I believe that the new clause is all about transparency, as some of my hon. Friends have suggested. I cannot understand why the Government cannot accept the new clause, given that about £500 billion is held in pension funds, in some cases not very stringently accounted for in terms of how the money is spent and how it is invested. Anyone who has experience of pension funds knows that. It should be a basic principle that anyone contributing to or investing in
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  a pension fund should know what the fund's policy is. Unless one knows what the pension fund's policy is, one can encounter all sorts of problems. It is because certain pension funds made information available that great pressure was brought to bear on the South African Government to make changes, which led to the election of Nelson Mandela. I hope that the Government will take that aspect on board. Equally, if representatives cast their votes in pension funds, we should know what issues the representatives have voted on and how they have represented the pension fund members.
  Another area which is of tremendous concern to people outside the Chamber after the events of the Maxwell fiasco, which I shall not repeat today, is the power of trustees and the accountability, or lack of it, of trustees. I should have thought that the Minister would give an early indication that he accepted the new clause. From time to time, Ministers—some of my hon. Friends have mentioned this—have referred to the reasons why they had to introduce legislation against the trade unions. That was all about what they claimed to be transparency and accountability. For the life of me I cannot understand why the Government cannot adopt the same principle here—after all, it is their principle—and accept the new clause.
  Hon. Members must remember that pension funds derive many tax concessions from the taxpayer. Taxpayers contribute their taxes and rebates are given back in their name, but they do not seem to have much influence on what is done with the money.
  Then there is British Gas, for example, or the water companies. Money has been invested in them but there is not much transparency or accountability. Some of my hon. Friends have said that not many people know, for example, the policy of the water authorities—I shall not mention British Gas—on executive perks. People, especially the people who contribute to the pension funds, should have some influence on such matters.
  A further aspect worries me, and it has not yet been touched on in the present debate. Employers often use pension funds to invest in their companies when there is a question of whether they can survive. Yet they do not refer to the employees to see what they think about it. That issue is not highlighted often, but there certainly have been instances of employees finding that their money has been used to prop up a company that has eventually gone bankrupt, and they have lost their pensions.
  Equally, employees often find that some of the conditions that they thought that they would have after retirement are not available. As many as 6 million people could be in that position, because during the 1980s when there was not much transparency about pension funds many people were encouraged to move out of the state earnings-related pension scheme into private pension schemes. Many hon. Members will know that such people now turn up at our surgeries and ask us to try to sort out their pension problems. That is another reason why the Government should accept our reasonable amendment.
  Ms Judith Church: It is clear that comprehensive information is a vital prerequisite of any correctly functioning market. Full information for scheme members is all the more important in the pension fund market, given the concentrated nature of the power in the hands of a few trustees and fund managers.

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  Efficiency depends on each level of authority being accountable to those whom it represents, yet at present scheme members do not even have a right to see the voting records of their trustees. Clearly that information would have a significant bearing on whether members are satisfied with the conduct of those trustees.
  The logical solution—it certainly seems logical to Opposition Members, and we have heard many excellent arguments about why the measure is sensible—is to have a legal commitment to proper disclosure. That move is obviously necessary following the pensions industry's pallid response to the Cadbury report.
  The recent actions of fund trustees in backing enormous pay rises for utility bosses serve only to emphasise the problem, which has been in existence for some time. Conservative Members are just beginning to realise how people throughout the country have been sickened by the way in which decisions taken in secret to award huge bonuses and enhanced pension rights to executives have feathered the nests of people whose nests they consider to be over-feathered already.
  All that is done in secret, so it is detected only by quite difficult forensic investigations. As the Barber judgment defined pensions as deferred pay, it seems only fair that employees should have better information about how their trustees are using their future income.
  This is not a trivial matter—far from it—and I hope that the Government realise that. The failure of those affected by the various operations of different enterprises to find out what is going on within those enterprises litters history, especially recent history. That covers the prominent failures to disclose information on vital health and safety issues that has led to the loss of life in incidents such as the Piper Alpha disaster, the Herald of Free of Enterprise sinking, the Clapham rail disaster, the King's Cross fire and others too numerous to mention now.
  Conservative Members may think those disasters remote from the operations of the pensions market, but there is a striking common factor—the culture of secrecy and the failure to provide information to people who are not only entitled to it but whose lives may be seriously adversely affected if it is withheld.
  Contrast that with the charters that the Government have promoted, which are stuffed with information, much of it unintelligible and only remotely relevant to people's everyday lives, but which are heralded by the Government as their contribution to open government. Why are the Government permitting the secrecy that will seriously imperil the security of pension funds and the recipients of pensions? We can think only that their stated central objective of setting a framework for an efficient market is to be undermined by their refusal to accept our proposals.
  If we are to have a properly functioning efficient market, the core of the structure has to rest on assuring proper information flows. Without the new clause the Government will create an environment in which full information is not a right but a privilege. How can there be confidence in such a market when scheme members are denied basic information on the voting records of their trustees? If the Bill is not changed it will create a market characterised by secrecy, inequity and inefficiency. Is that really what the Government want to achieve? Millions of pension scheme members think otherwise, and they look to the Government to back their words with action, but I fear that they will be disappointed.
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  The measures that we propose would give a further boost to trust and confidence in the operation of the pensions market, which badly needs such a boost. Do the Government not realise that the public have lost confidence in those operations—rightly, I believe, in view of all the scandals and mismanagement? Why do they not take the opportunity to tackle that serious problem and to put right what so desperately needs correcting?
  From the perspective of the public, the only conclusion to be drawn if the Government fail to support our proposals is that the Labour party will champion the interests of the typical fund member, improve the operations of the fund market and bring transparency and security to the pension fund arrangements of thousands of our retired citizens.
  Mr. John Denham: The hon. Member for Antrim, South (Mr. Forsythe) posed an important and challenging question. Fortunately I do not have the responsibility of speaking from the Front Bench, so any views that I express spring from my own interpretation. I would love to give the hon. Gentleman a totally reassuring answer, but in all honesty I cannot. He asked whether we were prepared to live with the consequences of allowing members of pension funds to exercise greater rights over their money as held in investments in those funds.
  I am a deferred member of an occupational pension scheme managed by one of the leading ethical investment houses in this country. When I was self-employed and took out a personal pension I also, as an individual, chose to invest in an ethical scheme. If I buy a personal pension I can make an ethical choice about how I want the money to be invested, and if I am a member of a collective scheme I should, with other members of the scheme, be able to exercise the same rights. Clearly, the new clause does not take us to that situation, as it is more limited in its scope and deals mainly with transparency.
  The hon. Member for Antrim, South rightly said that if we go further down that road, as I hope that we shall, all sorts of safeguards and procedures will need to be brought into place to ensure that some of the problems to which he referred, including the policies of a democratic Government being subverted by such measures, can be properly dealt with. I see the new clause as part of what I hope will be a series of changes that will influence corporate governance in this country and help us to tackle the fundamental contradictions of British economic and pensions policy.
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  The growth of pension funds in this country in the past 50 or 60 years is a remarkable phenomenon which has not occurred in most other European countries to the same extent. It is a voluntaristic—one might say socialistic—approach to employers and employees contributing towards pension fund savings, and it has produced a huge mass of funds. At the same time as that growth in savings by employees and employers has occurred, British industry has been starved of investment. This country has an appalling investment record, and it has been particularly appalling in the past 15 years. I do not think that anybody could suggest that there has been a "golden age" in the past 15 years when the level of investment—particularly in manufacturing industry—has been at a satisfactory level.

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  I hope that the new clause will help to start a process of attacking the contradiction in which people in this country are putting aside huge sums in savings while there is a total failure by financial institutions and businesses to invest that money where it is needed. It is clear that there is a problem at the interface between the management of funds and the small and medium-sized enterprises which are currently being starved of investment. Something in the interface between the savings that people put aside and the needs of the economy is breaking down badly.
  There are two reasons why that interface has broken down. The new clause begins to address the first of those reasons, which is that members of pension funds have become totally detached from the use and investment of their money. They have no say in and no knowledge of how their money is used. It is taken away from them and put in the hands of a professional elite who are, of course, supposed to be bound to act on behalf of the members' interests, but whose decisions, values and judgments cannot be challenged or questioned by the members. It is dangerous to see so much money and power slipping out from the grasp of members.
  The second problem, which the new clause also addresses in part, is that the criteria by which pension funds are managed contributes to the problem of short-termism and the lack of funds for investment in the economy. There is a lack of information coming through to members. It is a remarkable feature of our lengthy discussions on the Pensions Bill that while we have discussed minimum funding requirements and a number of other investment criteria, we have not had a debate about where the money held by pension funds is invested. It has been assumed throughout that the narrowest definition of a return on pension funds is the most appropriate one, and that if the fund manager aims to produce the highest short-term investment result the wonders of the market will ensure that the money is invested in a most efficient and effective way within the economy. Yet that is clearly not the case. Short-term gains being pursued by pension funds will create a society in which people will not wish to enjoy their retirement because unemployment is too high—
  Mr. Deputy Speaker: Order. The hon. Gentleman's speech is getting rather broad. His remarks are very interesting, but they are not directly relevant to the new clause. I would be grateful if he would get back to the new clause.
  Mr. Denham: The problem is that members of pension funds have no information about how their funds and savings are invested on their behalf. They are unable to scrutinise the policies adopted by the fund managers, or the criteria used by them. If those criteria are too narrow, it creates a situation in which the funds are invested in a way that is not in the long-term interests of members. That is the issue that I am seeking to address.
  Mr. Deputy Speaker: Order. I have been listening attentively to the hon. Gentleman and I am well aware of his point, but there is nothing in the new clause about what the rules and regulations of fund managers should be. I accept that there is a debate to be had on that matter, but not during discussions on the new clause.
  Mr. Denham: One of the issues that fund managers must address is the question whether they follow market trends and shift investments from one company to another or whether they stick with individual companies for a long period. When more information is made available to the members of funds about the voting record of their fund managers, it will become more apparent to the members whether the company is backing major British companies over a long period of time and exercising its voting rights responsibly in seeking to influence the development of the company—as advocated by the Cadbury report—or whether the fund managers are switching the funds on a regular basis from one company to another because they anticipate a short-term increase in profits.
  Once the information becomes available to members of pension schemes, as sought by the new clause, they will be able to interpret the strategy being pursued on their behalf by fund managers. Making information available to fund members will raise awareness in a healthy way of the power of the money that they have invested in a pension fund and the need to see that that power is exercised responsibly.
  It is true that the public debate on the issue over the past few months has centred on the important, but rather narrow, issue of payments to the bosses of privatised industries. It may well be that, in the short term, the immediate effect of publishing voting records will be to focus attention on questions of executive pay, over-pay and perks. That would be reason enough for making voting records available to members of schemes, but the real prize in the long term for members of a scheme is to know whether their funds are being applied in their interests and in the long-term interests of the British economy.
  As the debate on the application of pension funds is generated, we shall begin to bring about the change in culture that is needed if we are to produce a better economic performance in this country and to make the maximum use of the funds of pension fund members which, as hon. Members have said in the debate, have now reached a very large sum of money in total.
  By increasing the transparency and operation of funds and seeking the publication of voting records, the new clause may provide a middle way between the "do nothing" approach of the Government—who do not want make to make any changes to the culture of investment and operation in the City or to the investment policies of funds—and the other argument, which is more or less in favour of the sequestration of pension funds. The latter argument is that instead of fund members knowing how their funds are to be dealt with, the funds are sequestered by a Government agency and invested on their behalf. That is neither politically nor economically desirable.
  If we wish to raise the awareness of the members of pension funds about where their savings are going and how they will be applied, we must give them information about how their votes and influence will be used by the pension fund managers. That would, over time, send some shock waves through the culture of the City of London. There are many people who vote those funds or who do not vote those funds who assume that, by virtue of their professional position as fund managers, they have an absolute right to use those funds as they think best. They also assume that their criteria and their judgment are best. It will be good to open the culture of the fund managers in

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  the City to the scrutiny of pension fund members. Those managers will then be asked to justify the decisions that they take on behalf of millions of people.
  The Secretary of State for Social Security (Mr. Peter Lilley): I enter, or re-enter, the debate on the Bill with humility, conscious as I am of the depth of expertise that has been built up by those hon. Members who served long hours and days in Committee. I recognise the quality of the debate that has taken place on many of the issues not just in Committee but on Report.
  I pay tribute to the calibre of the Members involved from both sides. My opposite number has played a full part, often a constructive one, in the discussions. I also pay tribute to my hon. Friends the Minister for Social Security and Disabled People and the Under-Secretary of State, to whom I shall refer again on Third Reading, when I hope that they will be present, despite renewed responsibilities for both of them in, I regret to say, other areas than my own. One of the consequences of working for me is that one gets promoted.
  Mr. Dewar: Perhaps the Secretary of State will agree that there is a lot to be said for a policy of short sentences.
  Mr. Lilley: Yes. That is something of which I have a little experience, having been one of the longest-serving Secretaries of State at the Department of Trade and Industry—once I passed the 11-month mark. I have been in office at the Department of Social Security for three years.
  I have chosen to participate in the debate on new clause 4 not just because of the chance of timing, and certainly not because it is the most important issue, nor because I am totally opposed to the spirit at least of what some hon. Members believe lies behind the new clause. After all, I would welcome, if I believed that it was wholehearted, the Opposition's conversion to belief in shareholders' power. I agree that institutional investors should be encouraged to exercise their shareholders' power and to develop long-term relationships with companies. That has long been the Government's objective. We endorse the Cadbury recommendation that institutional investors should
  "use their voting rights positively".
  We facilitated the Myners group working party into co-operation between corporate management and institutional investors. I strongly approve of the initiative led by Postel to adopt best standards and, notably, to limit the length of rolling contracts.
  I recognise the concerns that some shareholders have about executive pay. If I were a shareholder in one or two companies I would want to be convinced that the managers were paid neither more nor less than their market worth, because if they were paid more than their market worth I would know that that money was coming out of shareholders' funds.
  What distinguishes our approach from that of the Opposition is that we recognise that there is already an obligation on trustees, and through them on those whom they appoint to manage their funds, to act in the interests of the beneficiaries of that fund. That includes acting in their interests when deciding whether and how to exercise the voting rights on their shares. The question is whether we should decide how they should fulfil that obligation and spell it out in law.
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  I have distinct reservations about the Opposition's approach because it exemplifies, albeit in miniature, three characteristics of the Labour party's approach to investment in industry which give rise to concern.
  First, the new clause would impose unnecessary specific burdens on the management and trustees of investment funds through extending unnecessarily the bureaucratisation of best practice. If anything is good, the Opposition tend to think it should be imposed by statute. I fear that if that practice were carried a little further we would see a Labour Britain in which anything that was not forbidden would be made compulsory.
  It is true that it is a good thing that trustees should take their responsibilities seriously, and that may involve thinking through systematically their approach to how they use their voting rights, but that does not automatically mean that we then have to impose on each and every trust and fund a requirement that they work out and specify a statement of such policy. The practical effect of that would be to impose a time-consuming burden on the trustees. They would have to sit down and try to think out an abstract statement of policy. That may be quite easy to pursue in practice, but rather difficult to express in abstract form. It would inevitably lead to vague platitudes, meaningless generalisations or to the rigid codification of whatever is current fashion. All too often those trustees would simply be unable to foresee the actual problems on which they would have to vote, and they therefore would be unable to spell that out. They would have to go back to their beneficiaries subsequently to explain a change in policy in the light of unforeseen circumstances.
  6.15 pm
  The second reason why I have reservations about the Opposition's approach is that it would lead inevitably to the politicisation of business and investment. For all I know, that may be the consequence of what remains an instinctive Opposition approach to business and investment—and, indeed, to life in general. They see life as a political process. It is significant that all the examples cited by Opposition Members of how institutional shareholders should use their votes related to political matters—sex equalisation and job equalisation. The hon. Member for Antrim, South (Mr. Forsythe) pointed out how businesses in America are compelled by pressure groups to use their votes for political purposes, involving them in the politics of Ireland and backing Irish republicanism.
  Opposition Members have also referred to pay and inequalities in pay, but we have heard absolutely nothing from them about how voting power could be used to improve the performance of business in the normal economic process.
  Mr. Hoon: With respect, the only example I gave of how the new clause might encourage the use of investment was investment in the productivity capacity of British industry. Does the Secretary of State object to that?
  Mr. Lilley: I will certainly read what the hon. Gentleman said, although I thought that he distinguished between some national interests in investment and the interests of the businesses concerned. I may be mistaken about that. I will certainly discuss the issue of long-termism versus short-termism.
  Mr. Denham: For the record, I hope that the Secretary of State will concede that I also said that one of the

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  reasons for publishing the voting record is that it would enable members of a pension scheme to see whether their fund managers were making a long-term commitment to the company.
  Mr. Lilley: That is splendid. I should have made reference to that. All the specific points raised were political, however, and the hon. Gentleman did not tell us specifically—unless my attention slipped—how trustees should spell out in their policy statements, as the new clause requires, any policies towards business which would make it more efficient.
  The danger of politicising the decision making of companies is that it distracts business leaders from the business of business, which is business, to political considerations. We, and even the Labour party, lost faith in nationalisation because it diverted attention from business to political considerations. Conservatives still reject Government intervention in industry because it means the inevitable politicisation of industry. It is a great paradox that the clause is known as new clause 4, which seems to suggest that it will socialise industry. In fact, one Labour Member spoke about a socialisation process and referred to the instruments of collective government. That is a legitimate view, but it is not one that we endorse.
  Of course businesses and investors should be ethical, honest and honourable in all their business activities. I agree with Samuel Johnson, who said:
  "There are few ways in which a man can be more innocently employed than in getting money".
  That does not mean that we should try to pretend that a prime concern of business is addressing the political and social problems of the day rather than running the businesses concerned in an honest, honourable and efficient fashion to the long-term benefit of their shareholders—the members of the pension trusts.
  I have a third reservation about the new clause and the direction in which it is heading. It could lead to a transfer of power from trustees to political activists and to a conflict of responsibilities for the trustees. At present, trustees have a clear legal responsibility to act in the interests of the beneficiaries of the trust. New clause 4 implies that trustees should represent the views of current members and, in practice, the views of the most articulate and politically motivated members.
  Labour Members may argue that new clause 4 imposes no such obligation. If it stopped short at subsection (a), that would be fair enough. However, subsections (b), (c) and (d) would have the inevitable effect of subjecting trustees to pressure from scheme members—especially those who are motivated and organised by pressure groups. That would have an insidious and undesirable coercive effect on trustees which, to the extent that they succumbed to it, would be improper. Their responsibility is to the long-term interests of beneficiaries and not to the short-term pressures or views of any group of members. We would be very unwise to create any such conflict of interest. I hope that that is not the intention of the Opposition amendment, although it may be a consequence of it.
  Opposition Members suggested that the normal time horizon of investors is a short-term one. I hope that the time horizon of any managers of pension funds in which I am involved will be long-term. I would like to think that they were investing for a retirement that was due to begin
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  only at a considerable distance into the future and which would continue for some decades after that. At least my own retirement has not begun today.
  I believe that it is logical, legal and natural to oblige people running a pension fund to take a long-term view. They should not be terribly concerned about the precise movement of profits from quarter to quarter if they do not reflect the underlying trends and prospects of the company.
  Mr. Denham: The Minister said that it would be logical to take a long-term view and not to move with prices from quarter to quarter, but does he really believe that that is what pension fund managers are doing? I believe that many pension fund managers are driven by pressures to operate according to quarterly results, which diverts them from a long-term commitment and involvement in major and growing companies.
  Mr. Lilley: We could spend a long time debating the subject—I am not sure how much time the Front Bench spokesman wishes to spend responding to the points that I and other hon. Members have raised. My point is that it is not just a logical obligation: fund managers are obliged legally to act in the interests of the fund beneficiaries. There are long-term interests to match the liabilities which are imposed on the schemes.
  One must distinguish between taking that legal obligation seriously and responding to the long-term interest, and simply sitting indefinitely on a company, unmoved and inactive. It may be best to sell a company if one thinks that its value is out of line with its price in the marketplace. That would have a beneficial effect in the long term through the operation of market forces on the allocation of capital and, conceivably, on the management of the company. We should not equate taking a long-term interest with not trading in shares. A case can be made for trading in shares and thereby fulfilling the obligation to the beneficiaries of the scheme.
  If trustees were subject to political pressures through the sort of approach indicated in new clause 4, we would impose a much shorter time horizon upon them. The time horizon of those who were likely to manipulate the processes under the new clause would be that of the political process, which is usually much shorter than the time horizon of pension funds. It involves current fashion and current issues or those matters associated with the electoral cycle. It would be regrettable if those pressures were brought to bear on companies in the way that new clause 4 implies.
  I am not suggesting that the new clause would mean an end to capitalism and a return to the contents of the old clause IV, from which the Labour party has so recently escaped. However, I think that it has some of the symptoms that concern us about the Labour approach to business and industry, such as the belief that ever-increasing burdens may be imposed upon industry without a thought about the costs involved in diverting attention from the main function of management investment. There is also a cost in terms of politicising the process and in terms of creating a conflict of interest between the real responsibilities of trustees to the long-term beneficiaries and the short-term pressures of the views of the more articulate members of the schemes.
  I am afraid that I am unable to recommend that my colleagues endorse the measure—moved though I was by the plea from the hon. Member for Glasgow,

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  Garscadden (Mr. Dewar) that I should approach it in a friendly fashion, and charmed though I was by his suggestion that we were in any way sartorially superior to Labour Members—I see no good evidence of that, although no doubt he has a better view from his side of the House.
  Mr. Dewar: There are great hazards in parliamentary life, one of which is that one starts to get quite fond of one's opposite number. The Secretary of State must be the last man in Britain who believes that the arrival of a Labour Government will mean that everything that is not forbidden will be made compulsory. That is a very quaint view. He always gives me the impression that he has been dragged screaming and struggling into the 19th century. If we wait a few months or years, he may even get there.
  The Secretary of State's speech was an embodiment of the conspiracy theory. I am slightly embarrassed that this poor new clause—which seemed to me to be almost harmless—is now being seen as part of the great conspiracy to politicise pension funds. I think that that is quaint and curious. So far as I can see, the politicisation charge boils down to the fact that the clause would ensure that members of funds receive information which would allow them to take an interest in the management of the funds. I suppose that that may be a form of politicisation, but I understood that it was a form of politicisation that everyone approved and wanted to encourage.
  If the Minister is worried about the proposal and gives it such sinister connotations, he had better read the rest of the Bill before it is too late. That wicked left-wing group the Goode committee, the Pension Law Reform Committee, has been making all sorts of nasty suggestions about giving more information and giving scheme members a greater say in the running of schemes. I fear that it may encourage people to take a political approach to such matters. This is a obviously very dangerous Bill and the Minister had better do something about it before it gets an unopposed Third Reading later tonight. The fact that the Labour party is not voting against the Bill is proof positive of just how dangerous it is.
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  It is a great pity that the Secretary of State was not on the Committee because he would have discovered that the whole point about conspiracies is that they are secret. The Minister for Social Security and Disabled People, who is about to be his Cabinet colleague, is clearly part of the conspiracy because he has not warned the Secretary of State that clause 35 is full of nasty regulations on which creeping socialism can be based. To mix metaphors, it is a big Trojan horse full of people like me who will spring out and destroy capitalism as we know it. I have decided that that is my historic role. The Secretary of State should realise that that is all nonsense.
  New clause 4 is a good clause which attempts simply to bring into legislative form best practice and to ensure that what most good pension funds are doing is done by all. I commend it to the House and we shall certainly divide the House on it.
  Question put, That the clause be read a Second time:—
  The House divided: Ayes 249, Noes 275

  Division No. 199]

  [6.31 pm

  AYES

  Abbott, Ms Diane

  Faulds, Andrew

  Adams, Mrs Irene

  Field, Frank (Birkenhead)

  Ainger, Nick

  Fisher, Mark

  Ainsworth, Robert (Cov'try NE)

  Flynn, Paul

  Alton, David

  Forsythe, Clifford (S Antrim)

  Armstrong, Hilary

  Foster, Rt Hon Derek

  Ashton, Joe

  Foster, Don (Bath)

  Banks, Tony (Newham NW)

  Foulkes, George

  Barnes, Harry

  Fraser, John

  Barron, Kevin

  Galloway, George

  Bayley, Hugh

  Gapes, Mike

  Beckett, Rt Hon Margaret

  Garrett, John

  Beggs, Roy

  Gerrard, Neil

  Bell, Stuart

  Godman, Dr Norman A

  Bennett, Andrew F

  Godsiff, Roger

  Bermingham, Gerald

  Golding, Mrs Llin

  Berry, Roger

  Gordon, Mildred

  Betts, Clive

  Graham, Thomas

  Blunkett, David

  Grant, Bernie (Tottenham)

  Boateng, Paul

  Griffiths, Nigel (Edinburgh S)

  Bradley, Keith

  Grocott, Bruce

  Bray, Dr Jeremy

  Gunnell, John

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

  Hall, Mike

  Bruce, Malcolm (Gordon)

  Harman, Ms Harriet

  Burden, Richard

  Harvey, Nick

  Byers, Stephen

  Hattersley, Rt Hon Roy

  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

  Hogg, Norman (Cumbernauld)

  Canavan, Dennis

  Home Robertson, John

  Cann, Jamie

  Hood, Jimmy

  Carlile, Alexander (Montgomery)

  Hoon, Geoffrey

  Chidgey, David

  Howarth, George (Knowsley North)

  Chisholm, Malcolm

  Howells, Dr. Kim (Pontypridd)

  Church, Judith

  Hoyle, Doug

  Clapham, Michael

  Hughes, Kevin (Doncaster N)

  Clark, Dr David (South Shields)

  Hughes, Robert (Aberdeen N)

  Clarke, Eric (Midlothian)

  Hughes, Roy (Newport E)

  Clarke, Tom (Monklands W)

  Hughes, Simon (Southwark)

  Clwyd, Mrs Ann

  Hutton, John

  Coffey, Ann

  Illsley, Eric

  Cohen, Harry

  Ingram, Adam

  Connarty, Michael

  Jackson, Glenda (H'stead)

  Cook, Robin (Livingston)

  Jackson, Helen (Shef'ld, H)

  Corbett, Robin

  Jamieson, David

  Corbyn, Jeremy

  Janner, Greville

  Corston, Jean

  Jones, Barry (Alyn and D'side)

  Cousins, Jim

  Jones, Ieuan Wyn (Ynys Môn)

  Cunliffe, Lawrence

  Jones, Lynne (B'ham S O)

  Cunningham, Jim (Covy SE)

  Jones, Martyn (Clwyd, SW)

  Cunningham, Roseanna

  Jones, Nigel (Cheltenham)

  Dalyell, Tam

  Kaufman, Rt Hon Gerald

  Darling, Alistair

  Keen, Alan

  Davidson, Ian

  Kennedy, Jane (L'pool Br'dg'n)

  Davies, Bryan (Oldham C'tral)

  Khabra, Piara S

  Davies, Rt Hon Denzil (Llanelli)

  Kilfoyle, Peter

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

  Kirkwood, Archy

  Denham, John

  Lestor, Joan (Eccles)

  Dewar, Donald

  Lewis, Terry

  Dixon, Don

  Liddell, Mrs Helen

  Dobson, Frank

  Litherland, Robert

  Donohoe, Brian H

  Livingstone, Ken

  Dowd, Jim

  Lloyd, Tony (Stretford)

  Dunnachie, Jimmy

  Llwyd, Elfyn

  Dunwoody, Mrs Gwyneth

  Lynne, Ms Liz

  Eagle, Ms Angela

  McAllion, John

  Eastham, Ken

  McAvoy, Thomas

  Etherington, Bill

  McCartney, Robert

  Evans, John (St Helens N)

  McCrea, The Reverend William

  Ewing, Mrs Margaret

  Macdonald, Calum

  Fatchett, Derek

  McFall, John

  425

  McKelvey, William

  Reid, Dr John

  Mackinlay, Andrew

  Robertson, George (Hamilton)

  McLeish, Henry

  Robinson, Geoffrey (Co'try NW)

  Maclennan, Robert

  Robinson, Peter (Belfast E)

  McMaster, Gordon

  Roche, Mrs Barbara

  McNamara, Kevin

  Rogers, Allan

  MacShane, Denis

  Rooker, Jeff

  McWilliam, John

  Ross, Ernie (Dundee W)

  Madden, Max

  Ross, William (E Londonderry)

  Marek, Dr John

  Rowlands, Ted

  Marshall, David (Shettleston)

  Ruddock, Joan

  Marshall, Jim (Leicester, S)

  Salmond, Alex

  Martin, Michael J (Springburn)

  Sedgemore, Brian

  Martlew, Eric

  Sheldon, Rt Hon Robert

  Maxton, John

  Shore, Rt Hon Peter

  Meacher, Michael

  Short, Clare

  Meale, Alan

  Simpson, Alan

  Michael, Alun

  Skinner, Dennis

  Michie, Bill (Sheffield Heeley)

  Smith, Andrew (Oxford E)

  Michie, Mrs Ray (Argyll & Bute)

  Smith, Llew (Blaenau Gwent)

  Milburn, Alan

  Smyth, The Reverend Martin

  Miller, Andrew

  Spearing, Nigel

  Molyneaux, Rt Hon James

  Squire, Rachel (Dunfermline W)

  Morgan, Rhodri

  Steinberg, Gerry

  Morley, Elliot

  Stevenson, George

  Straw, Jack

  Morris, Rt Hon Alfred (Wy'nshawe)

  Sutcliffe, Gerry

  Morris Estelle (B'ham Yardley)

  Taylor, Mrs Ann (Dewsbury)

  Morris, Rt Hon John (Aberavon)

  Taylor, Rt Hon John D (Strgfd)

  Mowlam, Marjorie

  Taylor, Matthew (Truro)

  Mudie, George

  Timms, Stephen

  Mullin, Chris

  Tipping, Paddy

  Murphy, Paul

  Touhig, Don

  Oakes, Rt Hon Gordon

  Trimble, David

  O'Brien, Mike (N W'kshire)

  Turner, Dennis

  O'Brien, William (Normanton)

  Tyler, Paul

  Olner, Bill

  Walker, Rt Hon Sir Harold

  O'Neill, Martin

  Wallace, James

  Orme, Rt Hon Stanley

  Walley, Joan

  Paisley, The Reverend Ian

  Wardell, Gareth (Gower)

  Parry, Robert

  Watson, Mike

  Pearson, Ian

  Wicks, Malcolm

  Pickthall, Colin

  Williams, Rt Hon Alan (Sw'n W)

  Pike, Peter L

  Williams, Alan W (Carmarthen)

  Pope, Greg

  Wilson, Brian

  Powell, Ray (Ogmore)

  Winnick, David

  Prentice, Gordon (Pendle)

  Wise, Audrey

  Prescott, Rt Hon John

  Worthington, Tony

  Primarolo, Dawn

  Wright, Dr Tony

  Purchase, Ken

  Young, David (Bolton SE)

  Quin, Ms Joyce

  Radice, Giles

  Tellers for the Ayes:

  Randall, Stuart

  Mr. John Cummings and

  Raynsford, Nick

  Mr. Jon Owen Jones.

  NOES

  Ainsworth, Peter (East Surrey)

  Beresford, Sir Paul

  Alexander, Richard

  Biffen, Rt Hon John

  Alison, Rt Hon Michael (Selby)

  Bonsor, Sir Nicholas

  Allason, Rupert (Torbay)

  Booth, Hartley

  Amess, David

  Boswell, Tim

  Ancram, Michael

  Bottomley, Rt Hon Virginia

  Arbuthnot, James

  Bowls, John

  Arnold, Jacques (Gravesham)

  Boyson, RI Hon Sir Rhodes

  Arnold, Sir Thomas (Hazel Grv)

  Brandreth, Gyles

  Ashby, David

  Brazier, Julian

  Atkins, Rt Hon Robert

  Bright, Sir Graham

  Atkinson, David (Bour'mouth E)

  Brooke, Rt Hon Peter

  Atkinson, Peter (Hexham)

  Brown, M (Brigg & Cl'thorpes)

  Baker, Rt Hon Kenneth (Mole V)

  Browning, Mrs Angela

  Baker, Nicholas (North Dorset)

  Bruce, Ian (Dorset)

  Baldry, Tony

  Burns, Simon

  Banks, Matthew (Southport)

  Burt, Alistair

  Batiste, Spencer

  Butler, Peter

  Bellingham, Henry

  Butterfill, John

  Bendell, Vivian

  Carlisle, John (Luton North)

  426

  Carlisle, Sir Kenneth (Lincoln)

  Heald, Oliver

  Carrington, Matthew

  Heathcoat-Amory, David

  Carttiss, Michael

  Hendry, Charles

  Cash, William

  Hicks, Robert

  Channon, Rt Hon Paul

  Higgins, Rt Hon Sir Terence

  Chapman, Sydney

  Horam, John

  Churchill, Mr

  Hordern, Rt Hon Sir Peter

  Clappison, James

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

  Clark, Dr Michael (Rochford)

  Howell, Rt Hon David (G'dford)

  Clifton-Brown, Geoffrey

  Howell, Sir Ralph (N Norfolk)

  Coe, Sebastian

  Hughes, Robert G (Harrow W)

  Colvin, Michael

  Hunt, Rt Hon David (Wirral W)

  Congdon, David

  Hunt, Sir John (Ravensbourne)

  Conway, Derek

  Hunter, Andrew

  Coombs, Anthony (Wyre For'st)

  Jack, Michael

  Coombs, Simon (Swindon)

  Jackson, Robert (Wantage)

  Cope, Rt Hon Sir John

  Jenkin, Bernard

  Cormack, Sir Patrick

  Jessel, Toby

  Couchman, James

  Johnson Smith, Sir Geoffrey

  Cran, James

  Jones, Gwilym (Cardiff N)

  Curry, David (Skipton & Ripon)

  Jones, Robert B (W Hertfdshr)

  Davies, Quentin (Stamford)

  Kellett-Bowman, Dame Elaine

  Davis, David (Booth ferry)

  Key, Robert

  Day, Stephen

  King, Rt Hon Tom

  Deva, Nirj Joseph

  Kirkhope, Timothy

  Devlin, Tim

  Knapman, Roger

  Dicks, Terry

  Knight, Mrs Angela (Erewash)

  Dorrell, Rt Hon Stephen

  Knight, Grge(Derby N)

  Douglas-Hamilton, Lord James

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

  Dover, Den

  Knox, Sir David

  Duncan, Alan

  Kynoch, George (Kincardine)

  Duncan-Smith, Iain

  Lait, Mrs Jacqui

  Dunn, Bob

  Lawrence, Sir Ivan

  Durant, Sir Anthony

  Legg, Barry

  Elletson, Harold

  Leigh, Edward

  Evans, David (Welwyn Hatfield)

  Lennox-Boyd, Sir Mark

  Evans, Jonathan (Brecon)

  Lester, Jim (Broxtowe)

  Evans, Nigel (Ribble Valley)

  Lidington, David

  Evans, Roger (Monmouth)

  Lightbown, David

  Evennett, David

  Lilley, Rt Hon Peter

  Faber, David

  Lloyd, Rt Hon Sir Peter (Fareham)

  Fabricant, Michael

  Lord, Michael

  Fenner, Dame Peggy

  Luff, Peter

  Field, Barry (Isle of Wight)

  MacGregor, Rt Hon John

  Fishburn, Dudley

  MacKay, Andrew

  Forman, Nigel

  Maclean, Rt Hon David

  Forth, Eric

  McLoughlin, Patrick

  Fowler, Rt Hon Sir Norman

  McNair-Wilson, Sir Patrick

  Fox, Dr Liam (Woodspring)

  Madel, Sir David

  Fox, Sir Marcus (Shipley)

  Maitland, Lady Olga

  Freeman, Rt Hon Roger

  Malone, Gerald

  French, Douglas

  Mans, Keith

  Gale, Roger

  Marland, Paul

  Gallie, Phil

  Marlow, Tony

  Gardiner, Sir George

  Martin, David (Portsmouth South)

  Garnier, Edward

  Mates, Michael

  Gill, Christopher

  Mayhew, Rt Hon Sir Patrick

  Gillen, Cheryl

  Merchant, Piers

  Goodson-Wickes, Dr Charles

  Mitchell, Andrew (Gedling)

  Gorman, Mrs Teresa

  Mitchell, Sir David (NW Hants)

  Gorst, Sir John

  Moate, Sir Roger

  Grant, Sir A (SW Cambs)

  Montgomery, Sir Fergus

  Greenway, Harry (Ealing N)

  Needham, Rt Hon Richard

  Greenway, John (Ryedale)

  Nelson, Anthony

  Griffiths, Peter (Portsmouth, N)

  Neubert, Sir Michael

  Hague, William

  Newton, Rt Hon Tony

  Hamilton, Rt Hon Sir Archibald

  Nicholls, Patrick

  Hamilton, Neil (Tatton)

  Nicholson, David (Taunton)

  Hampson, Dr Keith

  Nicholson, Emma (Devon West)

  Hanley, Rt Hon Jeremy

  Norris, Steve

  Hargreaves, Andrew

  Onslow, Rt Hon Sir Cranley

  Harris, David

  Oppenheim, Phillip

  Haselhurst, Sir Alan

  Ottaway, Richard

  Hawkins, Nick

  Paice, James

  Hawksley, Warren

  Patnick, Sir Irvine

  Hayes, Jerry

  Pattie, Rt Hon Sir Geoffrey

  427

  Pawsey, James

  Sumberg, David

  Peacock, Mrs Elizabeth

  Sweeney, Walter

  Pickles, Eric

  Sykes, John

  Porter, Barry (Wirral S)

  Tapsell, Sir Peter

  Porter, David (Waveney)

  Taylor, Ian (Esher)

  Portillo, Rt Hon Michael

  Taylor, Sir Teddy (Southend, E)

  Powell, William (Corby)

  Temple-Morris, Peter

  Rathbone, Tim

  Thomason, Roy

  Redwood, Rt Hon John

  Thompson, Sir Donald (C'er V)

  Renton, Rt Hon Tim

  Thompson, Patrick (Norwich N)

  Richards, Rod

  Thornton, Sir Malcolm

  Riddick, Graham

  Thurnham, Peter

  Rifkind, Rt Hon Malcolm

  Townend, John (Bridlington)

  Robalhan, Andrew

  Townsend, Cyril D (Bexl'yh'th)

  Roberts, Rt Hon Sir Wyn

  Tracey, Richard

  Robertson, Raymond (Ab'd'n S)

  Tredinnick, David

  Robinson, Mark (Somerton)

  Trend, Michael

  Roe, Mrs Marion (Broxbourne)

  Trotter, Neville

  Rowe, Andrew (Mid Kent)

  Twinn, Dr Ian

  Rumbold, Rt Hon Dame Angela

  Vaughan, Sir Gerard

  Sackville, Tom

  Viggers, Peter

  Sainsbury, Rt Hon Sir Timothy

  Waldegrave, Rt Hon William

  Scott Rt Hon Sir Nicholas

  Walden, George

  Shaw, David (Dover)

  Walker, Bill (N Tayside)

  Shaw, Sir Giles (Pudsey)

  Waller, Gary

  Wardle, Charles (Bexhill)

  Shephard, Rt Hon Gillian

  Waterson, Nigel

  Shepherd, Colin (Hereford)

  Watts, John

  Shersby, Sir Michael

  Wells, Bowen

  Sims, Roger

  Whitney, Ray

  Smith, Tim (Beaconsfield)

  Whitlingdale, John

  Soames, Nicholas

  Widdecombe, Ann

  Spencer, Sir Derek

  Wiggin, Sir Jerry

  Spicer, Sir James (W Dorset)

  Willetts, David

  Spicer, Michael (S Worcs)

  Wilshire, David

  Spink, Dr Robert

  Winterton, Mrs Ann (Congleton)

  Spring, Richard

  Winterton, Nicholas (Macc'f'ld)

  Sproat, Iain

  Wolfson, Mark

  Stanley, Rt Hon sir John

  Yeo, Tim

  Steen, Anthony

  Young, Rt Hon Sir George

  Stephen, Michael

  Stern, Michael

  Tellers for the Noes:

  Stewart, Allan

  Mr. Timothy Wood and

  Streeter, Gary

  Mr. Michael Bates.

  Question accordingly negatived.

New clause 5

  EMPLOYMENT PROTECTION FOR TRUSTEES
  'In relation to a trustee who is also a member of the scheme, the Trade Union and Labour Relations (Consolidation) Act 1992, and the Employment Protection (Consolidation) Act 1978 shall each have effect as if

  (a) the reasons specified in section 157(1) of the 1992 Act include reasons concerned with, or connected with, his duties as a trustee;

  (b) the purposes specified in section 146(1) of the 1992 Act included preventing or deterring him from carrying out any duties concerned with, or connected with his appointment as a trustee, or penalising him for carrying out such duties.'.—[Mr. Ingram.]

  Brought up, and read the First time.
  6.45 pm
  Mr. Ingram: I beg to move, That the clause be read a Second time.
  Madam Speaker: With this, it will be convenient to discuss also the following: New clause 24—Right not to suffer detriment in employment or be unfairly dismissed—
  428
  '.—(1) Subject to subsection (2), an employee has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by his employer done on the ground that, being a trustee of a trust scheme which relates to his employment, the employee performed (or proposed to perform) any functions as such a trustee.
  (2) Subsection (1) does not apply where the detriment in question amounts to dismissal, except where an employee is dismissed in circumstances in which, by virtue of section 142 of the Employment Protection (Consolidation) Act 1978 ("the 1978 Act"), section 54 of that Act does not apply to the dismissal.
  (3) Sections 22B and 22C of the 1978 Act (which relate to proceedings brought by an employee on the grounds that he has been subjected to a detriment in contravention of section 22A of that Act) shall have effect as if the reference in section 22B(1) to section 22A included a reference to subsection (1).
  (4) In the following provisions of the 1978 Act—

  (a) section 129 (remedy for infringement of certain rights),

  (b) section 141(2) (employee ordinarily working outside Great Britain), and

  (c) section 150 and Schedule 12 (death of employee or employer),

  any reference to Part II of that Act includes a reference to subsection (1).
  (5) The dismissal of an employee by an employer shall be regarded for the purposes of Part V of the 1978 Act as unfair if the reason (or, if more than one, the principal reason) for it is that, being a trustee of a trust scheme which relates to his employment, the employee performed (or proposed to perform) any functions as such a trustee.
  (6) Where the reason or the principal reason for which an employee was selected for dismissal was that he was redundant, but it is shown —

  (a) that the circumstances constituting the redundancy applied equally to one or more other employees in the same undertaking who held positions similar to that held by him and who have not been dismissed by the employer, and

  (b) that the reason (or, if more than one, the principal reason) for which he was selected for dismissal was that specified in subsection (5),

  then, for the purposes of Part V of the 1978 Act, the dismissal shall be regarded as unfair.
  (7) Section 54 of the 1978 Act (right of employee not to be unfairly dismissed) applies to a dismissal regarded as unfair by virtue of subsection (5) or (6) regardless of the period for which the employee has been employed and of his age; and accordingly section 64(1) of that Act (which provides a qualifying period and an upper age limit) does not apply to such a dismissal.
  (8) Any provision in an agreement (whether a contract of employment or not) shall be void in so far as it purports—

  (a) to exclude or limit the operation of any provision of this section, or

  (b) to preclude any person from presenting a complaint to an industrial tribunal by virtue of any provision of this section.

  (9) Subsection (8) does not apply to an agreement to refrain from presenting or continuing with a complaint where—

  (a) a conciliation officer has taken action under section 133(2) or (3) of the 1978 Act (general provisions as to conciliation) or under section 134(1), (2) or (3) (conciliation in case of unfair dismissal) of that Act, or

  (b) the conditions regulating compromise agreements under the 1978 Act (as set out in section 140(3) of that Act) are satisfied in relation to the agreement.

  (10) In this section, "dismissal" has the same meaning as in Part V of the 1978 Act.
  (11) Section 153 of the 1978 Act (general interpretation) has effect for the purposes of this section as it has effect for the purposes of that Act.'.
  Amendment No. 109, in clause 120, page 81, line 4, at end insert—
  '( ) This section does not apply to sections 42 to 45 and (Right not to suffer detriment in employment or be unfairly dismissed).'.
  Amendment No. 110, in schedule 3, page 137, line 17, leave out 'and 43' and insert
  '43 and (Right not to suffer detriment in employment or be unfairly dismissed)'.
  Amendment No. 111, in page 137, line 18, at end insert—
  '. In section 71(2B) (compensation award for failure to comply with section 69 not to be made), at the end there is added "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995."
  . In section 72(3) (special award), at the end there is added "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995."
  . In section 73(6B) (calculation of basic award), at the end there is added "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995."
  . In section 77(1) (interim relief), after "57A (1)(a) and (b)" there is inserted "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995".
  . In section 77A(1) (procedure on application for interim relief), after "57A (1)(a) and (b)" there is inserted "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995".'
  Amendment No. 112, in page 137, line 22, leave out 'or 43' and insert
  ' 43 or (Right not to suffer detriment in employment or be unfairly dismissed)'.
  Amendment No. 113, in page 137, line 25, at end insert—
  '. In section 138 (Application of Act to Crown employment), in subsection (1), after "and section 53" there is inserted "of this Act and sections 42 to 45 and (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995.".'.
  Mr. Ingram: The purpose of the new clause is to protect trustees from unfair dismissal for exercising any of their rights or obligations in respect of the pension funds of which they are members. This matter was extensively dealt with in another place and in our Committee deliberations, and it is right that so much attention and time have been given over to the issue, as it is clearly important.
  As the law stands, employees have the right to claim compensation or reinstatement for wrongful dismissal. However, the burden of proof falls on the employee—and anyone so dismissed needs two years of qualifying service before he can take a case against the employer who dismissed him. The new clause makes dismissal automatically unfair in the case of trustees, and requires no qualifying service. In essence, it strengthens the protection afforded under the Employment Protection (Consolidation) Act 1978.
  It is worth taking a look at why the new clause is required. One of the key features of the Bill is the enhanced role and responsibility given to trustees, especially to member trustees. As experience has shown, trustees are likely to be the first people to know if there is wrongdoing on the part of an employer in the administration of a pension fund.
  Sir Andrew Bowden: As the hon. Gentleman knows, I have added my name to his new clause, because I think it important that the House debate it. He said earlier that the new clause will mean that a company employee who becomes a trustee will be protected from dismissal as a result of his actions as a trustee, even though he has not
  430
  been with the company for two years. In practice, does the hon. Gentleman agree that it would be extremely rare for someone to join a company and become a trustee in less than two years?
  Mr. Ingram: I was going to come to that later. I am grateful for the fact that the hon. Gentleman has added his name to our new clause, and I shall deal with his point in due course.
  Trustees can find themselves forcefully arguing against their employers' wishes in relation to a pension scheme, and that may be detrimental to scheme members. It may not be a case of wrongdoing in a pension scheme; it may simply be that the employers or employer trustees are seeking to do something that other trustees believe not to be in the interests of the scheme members. Employee trustees could find themselves arguing against such an action, thereby causing friction in their relationship with their employer.
  In that sense, they put themselves in an exposed and vulnerable position. But if they are to do their job properly as trustees, they must be allowed to act in a free and unfettered way and not be under any pressure.
  That concept was accepted by the Government. Indeed, the Under-Secretary of State said:
  "It is important that member-nominated trustees should be able to feel free to be able to act in the best interests of the members of the scheme."—[Official Report, Standing Committee d, 16 May 1995; c. 181.]
  That is a position that all of us would endorse. But the Minister needs to do more than utter sweet words of encouragement to member-nominated trustees. If they are to be free from pressure, they must be given the full protection of the law in all the circumstances in which they find themselves.
  Member-nominated trustees need not platitudes but protection. The Bill rightly imposes considerable responsibilities on these trustees, and in so doing exposes them to greater potential pressure from unscrupulous, crooked employers such as Robert Maxwell. They are expected to blow the whistle, but they are under no statutory obligation to do so, unlike scheme actuaries and auditors. They cannot plead such an obligation before an industrial tribunal if they are dismissed.
  The Government's view is clear. They do not believe that trustees require a special protection in law. Indeed, that view was set out by Lord Mackay in another place when he said:
  "employees are already protected against significant victimisation or bullying by employers for whatever reason … we do not believe that acting as a pension scheme trustee will put individuals in any more vulnerable a position with regard to victimisation by an employer. After all, employers set up pension schemes voluntarily; so any real employer-trustee conflict should be something of a rarity."—[Official Report, House of Lords, 13 March 1995; Vol. 562, c. 625.]
  That passage exposes a complete misunderstanding of what can and does take place in the real world of industry and commerce. The Maxwell case highlighted many shortfalls in pension legislation. That is why the Bill was introduced in the first place.
  Bullying and the victimisation of employees was referred to during our deliberations yesterday. My hon. Friend the Member for Birkenhead (Mr. Field) gave the example of a member-nominated trustee of the Maxwell pension scheme. There was a member trustee who was arguing against what Maxwell was seeking to do. He

  431
  wanted to expose what was happening. Maxwell found it difficult to remove that person as a trustee, so he sacked him. He removed the problem in that way. That may or may not be a rare happening, but it is important that the law did not adequately protect the individual, as the Select Committee on Social Security so graphically highlighted.
  By its existence, the Bill accepts that there will be occasional conflict between bad or dishonest employers and employees, and assigns a special role to the member trustees in preventing abuse. Trustees are expected to be the second line of defence for scheme members. The Secretary of State made that clear on Second Reading. However, when trustees act on behalf of scheme members they will be in an extremely vulnerable position without additional employee protection.
  The Government argue that few member trustees will have less than the two years of service needed to bring them under the ordinary employment rules. That is the point that the hon. Member for Brighton, Kemptown (Sir. A. Bowden) raised. I accept that that is the position, because most trustees are long-standing employees who are respected by the rest of the work force. That tends to be the position that prevails when it comes to selecting and appointing member trustees.
  But in a new company, where a new scheme is being set up, where there has been an upheaval within a company that has led to a complete turnover in posts, or in a small company, there may well be trustees with less than two years of service. Those trustees will need protection. There will be occasions—they may be rare—when the trustees have less than two years of service and so will not be protected by the law if they are victimised or bullied by their employer and subsequently dismissed.
  The new clause is designed to protect employer-nominated trustees as well as member nominees. In many instances, senior managers could be appointed as employer-based trustees. Those trustees, as employees of the company, could find themselves in a difficult situation with, for example, the finance director. Acting in their proper function of trustees, they could put themselves in difficulties. It is important that the clause deals not only with employee-nominated trustees but with employer-nominated trustees as well.
  I agree that the situations to which I have drawn attention would undoubtedly be rare. It cannot be argued, therefore, that industrial tribunals will be clogged by the cases that stem from them. Many crimes are rare, but that does not make them any the less reprehensible and any less illegal.
  I would welcome the support of the hon. Member for Kemptown, who has added his name to the clause. I know that he added his name to new clause 4 and then expressed some reservations. I hope that I have not scared him off on new clause 5, as we possibly did when dealing with new clause 4, and that he will decide that he can support the arguments that I have advanced.
  I welcome the anticipated support of the hon. Member for Bristol, North-West (Mr. Stern), who, in tabling comprehensive amendments, is, I guess, seeking the same objectives. I hope that the Minister—perhaps I should refer to him as the Secretary of State. As I understand it, this will be his swan song in his present capacity. I have already commented on his new appointment. Other hon. Members may wish to make their comments during the debate, or perhaps on Third Reading.
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  I hope that the new Secretary of State for Wales, but the Minister in the context of this debate, will take on board the arguments that will be advanced in favour of the new clause, which I commend to the House.
  Mr. Michael Stern: First, I join the hon. Member for East Kilbride (Mr. Ingram) in congratulating my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) on his appointment to the Cabinet. We shall miss him greatly during our debates on these matters, on which he has shown considerable expertise.
  I do not intend to detain the House for long. As the hon. Gentleman anticipated, many of the arguments that I would advance in moving new clause 24 and the related amendments would be identical to the arguments that he has rehearsed.
  There is a clear need for further legislation. It would be pointless for the House to create a framework of law and regulations to bolster the independence of trustees of pension schemes if there were to remain among those seeking or accepting appointment as trustees the fear that they might be subject to any form of victimisation in carrying on the proper duties of their office.
  Both new clauses 24 and 25 are about providing protection to ensure that the fear of victimisation is removed. They are not tabled on the basis that they will be needed to cope with victimisation. In the majority of pension schemes, the relationship between the employer and the trustees will be, as it has always been, a fair and proper one.
  The new clauses are designed to do deal with that tiny minority of cases, not where undue pressure is put on, but where the nominated trustee fears that if he acts properly, he may come under such pressure. The House has previously given similar rights to nominated health and safety officers in companies, and I believe that it is entirely proper that we should do the same for nominated trustees.
  If my right hon. Friend is moved to accept the proposals in the new clauses—I have some feeling from the Committee debates that he may well be inclined to—it is merely a question of whether he has moved more towards new clause 5 or new clause 24. Clearly, the differences between the new clauses and the related amendments are much more a matter for argument between lawyers than argument across the Floor. I can say only that I hope that my right hon. Friend will decide that my lawyers are bigger and better than his lawyers and recommend the adoption of new clause 24.
  7 pm
  Mr. Andrew Miller: I join in the congratulations to the new Secretary of State for Wales. I hope that he quickly learns the words of "Land of my Fathers" better than his predecessor. At last I have told a joke that the Minister has laughed at. In Committee, I missed the punch line of one of the better jokes of my hon. Friend the Member for East Kilbride (Mr. Ingram).
  In yesterday's debate, some important points were made about the role of pensioner trustees. One of the most powerful arguments used by several hon. Members was derived from page 261 of Professor Goode's report, where, in respect of pensioner trustees, he states:

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  "In addition, they are thought to be less susceptible to some of the pressures that face active members."
  That argument was rejected last night, but the evidence from the Goode inquiry and the arguments of several hon. Members during last night's debate are important in the context of the new clause.
  If, as Professor Goode and hon. Members on both sides of the House believe, it is true that pensioner trustees are less susceptible to pressure, clearly the reverse must also be the case: active members are in a position where employers could lean upon them. Indeed, the Confederation of Occupational Pensioner Associations has set that out in a leaflet that it circulated to hon. Members.
  It must be a straightforward and clear principle that, when an employee becomes a trustee, he or she has direct responsibility for that trust. That responsibility must at all times be free of any pressure from the employer, for whatever reason. The only way that we can achieve that is to build it formally into statute.
  I will not delve into the detail of the lengthy new clause 24, tabled by the hon. Member for Bristol, North-West (Mr. Stern), but say only that the principle that he is seeking to pursue is precisely the same as that sought by my hon. Friend the Member for East Kilbride. I hope that the Government recognise the simple philosophy, which was explored in Committee in slightly different form and reappeared last night in a slightly tangential debate, to which we have returned in black and white terms this evening. The employee must be protected at all times. I urge hon. Members to accept the spirit of the new clause to bring that about.
  Mrs. Jane Kennedy: I add my congratulations to the now right hon. Gentleman, the new Secretary of State for Wales. I wish him success in his new position, and I am sure that his unfailing courtesy will stand him in good stead in the short time that his party will remain in government.
  I shall deal with new clause 24, which was tabled by the hon. Member for Bristol, North-West (Mr. Stern) and which is entitled "Right not to suffer detriment in employment or be unfairly dismissed". Clause 16 allows for nomination and selection of trustees by members of the scheme. In Committee, we established that the term "member" could mean active members—in other words, employees—pensioner members or, indeed, deferred members.
  The new clause would offer protection to member trustees who are selected from the work force. The trustees selected may come from any level of the work force. It is quite possible that trustees may also be trade union or health and safety representatives. Their work as trustees will without doubt take them away from their workplace. They will need to attend meetings of the board of trustees. Most importantly, they will need to attend training sessions if they are to perform their function properly.
  Paragraph 9(ii) of the fourth report of the Social Security Committee states:
  "We believe that particular emphasis should be placed upon instructing trustees they are there to act as independent guardians of the trust and not as representatives of the employers, employees or
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  pensioners … For their part, employers will have to accept that trustees will require adequate assistance to attend training courses as well as meetings."
  While the principle of the important role that trustees have to play has been accepted by the Government, the consequences of the decision to invest new powers and responsibilities in the trustees has still not, in my view, been sufficiently well thought through. That is why I welcome the new clause. It gives us an opportunity to press the Government one more time to take our arguments on board.
  Employers will be required to allow for selection of member trustees, some of whom will be their own employees. Many occupational schemes already have such employee trustees, and their experience has been that such trustees perform diligently. Companies that have resisted that, and which are now having it forced upon them, might find ways of placing obstacles in the path of employee trustees performing their proper duties.
  A member trustee drawn from the workplace will be called upon to leave the workplace from time to time, and in so doing, interrupt the functioning of the workplace. They may well need to be replaced by another employee to ensure that their function carries on and that work is progressed.
  If employees are on performance-related pay, they stand to lose bonus pay unless they are fully compensated. The same applies to shift workers who receive premium rates of pay for unsocial hours of work. Further, the team of workers left behind may be disadvantaged, and may require the employer to take steps to ensure that they do not lose because of the activity of the trustee. Failure to act to address that range of problems would lead to dissatisfaction, which might lead to pressure being brought to bear on the trustee by his or her workmates, let alone an employer minded to undermine the work of the trustee.
  Good employers, who have the best interests of pension schemes at heart, will take steps to remedy the problems that I have outlined, but at no little cost to them. Employers who take less care, or who are facing financial difficulties for whatever reason, may not take the steps necessary to address those problems.
  The trustees may then find themselves out of pocket or faced with choices over whether, for example, to forgo opportunities for promotion. They may even, on occasion, have to choose between leaving the workplace at an inopportune moment to attend to business relating to the pension scheme and staying in work, thereby failing to fulfil their role as trustees.
  If a trustee also has the role as shop steward or health and safety representative, he is protected by statute from discrimination and has the right not to suffer detriment. New clause 5 and the new clause and amendments tabled by the hon. Member for Bristol, North-West correct that failing, and bring trustees under the same statutory protection as other employee representatives.
  I look forward to hearing the Government's response but, in view of experience on the Bill, I am not sure that they will have the wisdom and foresight to adopt either of the new clauses or any of the amendments.
  Sir Andrew Bowden: I, too, warmly congratulate my right hon. Friend the Minister on his appointment. I believe that the people of Wales will soon realise that they have a very able and dedicated Secretary of State.

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  New clause 5 is important, because it protects people from a minority of employers who inevitably try to exploit their power. Pressure can be applied to an employee trustee in various ways. It can be done subtly and relate to an employee's promotion prospects or salary increases. The word can be carefully spread, so that, if a trustee does something that displeases key people, there could be repercussions. Those of us who have worked in industry—I admit that it is a long time since I did—will be aware of the problem.
  After I completed my national service in the late 1940s, I went to a large company—it is not fair to name it, because I am sure that it is wholly different today—which was running a management trainee scheme. The scheme was due to last for some six or seven years, and was quite an innovation at the time. Even as far back as the 1950s, I was active in politics in my spare time. I wanted to stand as a candidate for the old London county council in the constituency of Deptford and fight the very distinguished man who represented that seat. He was the leader of the council, Sir Joseph Hayward.
  As a matter of courtesy, I informed my employers of my intention. I said that I had no prospect of being elected, but that I wanted to gain the experience of contesting a parliamentary-sized seat in the LCC. I explained that it would involve a considerable amount of time in the evenings and at the weekend, but that it would not affect my duties and responsibilities as an employee.
  It quickly came home to me, in various relatively subtle ways—and some perhaps not so subtle ways—that, if I wanted to progress in the company, I should not meddle in politics, because business and politics did not mix. I understood that I had to dedicate myself seven days a week, flat out, to the company if I wanted to join the senior ranks. I do not think that that would happen today in a political context, because more companies recognise that it is useful to have among their employees people of all political persuasions who are active outside work.
  Pressure can, however, be applied in subtle ways which are extremely difficult to counter. There is therefore a strong case for enshrining in law the maximum protection for employee trustees. Subject to what my right hon. Friend may have to say, I am minded to support the new clause.
  Madam Speaker: Who is next? The Minister?
  7.15 pm
  The Minister for Social Security and Disabled People (Mr. William Hague): I was momentarily surprised by the absence of other hon. Members wishing to speak.
  I thank the hon. Member for East Kilbride (Mr. Ingram) and all the other hon. Members and my hon. Friends for their good wishes. If I can enjoy my new appointment—I certainly intend to—as much as I have enjoyed this portfolio and as much as I have enjoyed debating this particular Bill, it will be very rewarding indeed. I have immensely enjoyed the company of all the hon. Members and my hon. Friends with whom I have debated the Bill.
  The new clause tabled by the Opposition, and the new clause and the amendments tabled by my hon. Friend the Member for Bristol, North-West (Mr. Stern), all have the same objective, as became clear in the debate. They would protect employee pension scheme trustees against
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  victimisation by their employers. They aim to do that by giving those employees a right to complain to an industrial tribunal if they are dismissed or subjected to any other adverse treatment in connection with their duties as trustees. No qualifying length of service, hours of work or age thresholds would apply.
  As the House may be aware—those hon. Members present certainly are, because we have discussed these matters before, and they have been discussed in another place—the Government have resisted the introduction of such protection. Our concern has been to avoid adding unnecessarily to the legislative burdens on business.
  We have taken the view that virtually all employee trustees would have the two years' continuous service necessary to entitle them to make an ordinary unfair dismissal complaint. That was the point about which my hon. Friend the Member for Brighton, Kemptown (Sir A. Bowden) asked the hon. Member for East Kilbride earlier in our proceedings.
  The two-year qualifying period is a key element of our policy of sensible deregulation of employment protection, and we remain firmly committed to ensuring that a proper balance is struck between employees' rights and employers' costs.
  The Government have always accepted that there are specific types of dismissal which are so unacceptable and contrary to public policy that the employees involved should be entitled to make an industrial tribunal complaint without first having to satisfy the usual length of service and other qualifying criteria. That category must be drawn narrowly, or the benefits of protection will be outweighed by the loss of job opportunities that the legislative burden would cause.
  Mr. Miller: Does the Minister agree that action short of dismissal should be included in the category of actions that he regards as unacceptable?
  Mr. Hague: I must address my remarks to the specific new clause. The hon. Gentleman may take some pleasure in what I am about to say. I have listened to the views expressed in this debate as well as those put forward in another place. In the light of the various arguments, the Government have been persuaded that it is indeed a sphere in which special protection should apply.
  Employment legislation already provides special protection for trade union and health and safety representatives. The new clauses and the amendments that we are considering must be seen in the light of that existing legislation. I therefore accept that dismissal on the grounds of carrying out or proposing to carry out functions as an employee trustee should fall into that special narrow category.
  Protection against detrimental action short of dismissal goes hand in hand with the special protection against dismissal enjoyed by trade union and health and safety representatives. It is therefore only right that it should do so in this case, too. I believe that that deals adequately with the point raised by the hon. Member for Ellesmere Port and Neston (Mr. Miller). I may be accused of agreeing to this in the spirit of demob abandon, but I am pleased that, as we come to the end of our proceedings, we may be able to achieve some cross-party agreement.

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  Of the suggested proposals, I prefer those tabled by my hon. Friend the Member for Bristol, North-West.
  Mr. Ingram: I am not surprised.
  Mr. Hague: They are drafted in terms that are similar to those of the provisions of the Trade Union Reform and Employment Rights Act 1993, through which the Government introduced the analogous protection for health and safety representatives. They also provide for remedies identical to those that are available to such representatives, which include the possibility of special awards of compensation, and interim relief in dismissal cases.
  New clause 5 would not deal with a number of important consequential matters, including remedies, and is, I believe, flawed in its drafting, in that it refers to clause 157(1) of the 1992 Act whereas it should refer to clause 152, just to take up a pedantic point.
  Although I support the intention of both new clauses, I intend to support new clause 24, which was tabled by my hon. Friend the Member for Bristol, North-West, and hope that Opposition Members will feel able to withdraw their new clause.
  The hon. Member for Liverpool, Broadgreen (Mrs. Kennedy) doubted whether I would have the wisdom and foresight to accept these new clauses and amendments. I hope that she will readily agree that wisdom and foresight are on display in great quantity this evening.
  We have consistently made clear our belief that victimisation of employee pension scheme trustees for carrying out their functions as trustees would be totally reprehensible. We are confident that very few employers would ever be tempted to act in such an irresponsible manner, but the amendments will nevertheless ensure that employee trustees can carry out their important duties confident in the knowledge that they have the protection, afforded in these provisions, to deter unwarranted retaliation by their employer.
  I am happy to recommend new clause 24 and the associated amendments to the House.
  Mr. Ingram: That is most welcome. There has clearly been substantial movement on the part of the Government, obviously because of the weight of arguments that have been advanced by Opposition Members in the House and in Committee, and because of the valuable contribution that was made by the hon. Member for Bristol, North-West (Mr. Stern). I think that I heard him correctly when he said that his lawyers were bigger and better than ours.
  Clearly, those people are capable of writing bigger clauses and amendments, and obviously the Minister thinks that they are better, but just let me tell him, however, that one of the lawyers who was involved in drafting new clause 5 was my hon. Friend the Member for Garscadden, and lawyers do not come any bigger or better than him.
  I still feel that new clause 5 could be argued as being marginally better, but I have listened carefully to what the Minister has said and take on board some of the points that he made, notwithstanding the typographical error in new clause 5. I am grateful that he has accepted the weight of the argument that has been advanced. I am sure
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  that employee pension scheme trustees, and trustees generally, will warmly welcome the protection that is afforded them. On that basis, I beg to ask leave to withdraw the motion.
  Motion and clause, by leave, withdrawn.

New clause 24

  RIGHT NOT TO SUFFER DETRIMENT IN EMPLOYMENT OR BE UNFAIRLY DISMISSED
  '.—(1) Subject to subsection (2), an employee has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by his employer done on the ground that, being a trustee of a trust scheme which relates to his employment, the employee performed (or proposed to perform) any functions as such a trustee.
  (2) Subsection (1) does not apply where the detriment in question amounts to dismissal, except where an employee is dismissed in circumstances in which, by virtue of section 142 of the Employment Protection (Consolidation) Act 1978 ("the 1978 Act"), section 54 of that Act does not apply to the dismissal.
  (3) Sections 22B and 22C of the 1978 Act (which relate to proceedings brought by an employee on the grounds that he has been subjected to a detriment in contravention of section 22A of that Act) shall have effect as if the reference in section 22B(1) to section 22A included a reference to subsection (1).
  (4) In the following provisions of the 1978 Act —

  (a) section 129 (remedy for infringement of certain rights),

  (b) section 141(2) (employee ordinarily working outside Great Britain), and

  (c) section 150 and Schedule 12 (death of employee or employer),

  any reference to Part II of that Act includes a reference to subsection (1).
  (5) The dismissal of an employee by an employer shall be regarded for the purposes of Part V of the 1978 Act as unfair if the reason (or, if more than one, the principal reason) for it is that, being a trustee of a trust scheme which relates to his employment, the employee performed (or proposed to perform) any functions as such a trustee.
  (6) Where the reason or the principal reason for which an employee was selected for dismissal was that he was redundant, but it is shown—

  (a) that the circumstances constituting the redundancy applied equally to one or more other employees in the same undertaking who held positions similar to that held by him and who have not been dismissed by the employer, and

  (b) that the reason (or, if more than one, the principal reason) for which he was selected for dismissal was that specified in subsection (5),

  then, for the purposes of Part V of the 1978 Act, the dismissal shall be regarded as unfair.
  (7) Section 54 of the 1978 Act (right of employee not to be unfairly dismissed) applies to a dismissal regarded as unfair by virtue of subsection (5) or (6) regardless of the period for which the employee has been employed and of his age; and accordingly section 64(1) of that Act (which provides a qualifying period and an upper age limit) does not apply to such a dismissal.
  (8) Any provision in an agreement (whether a contract of employment or not) shall be void in so far as it purports—

  (a) to exclude or limit the operation of any provision of this section, or

  (b) to preclude any person from presenting a complaint to an industrial tribunal by virtue of any provision of this section.

  (9) Subsection (8) does not apply to an agreement to refrain from presenting or continuing with a complaint where —

  (a) a conciliation officer has taken action under section 133(2) or (3) of the 1978 Act (general provisions as to conciliation) or under section 134(1), (2) or (3) (conciliation in case of unfair dismissal) of that Act, or

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  (b) the conditions regulating compromise agreements under the 1978 Act (as set out in section 140(3) of that Act) are satisfied in relation to the agreement.

  (10) In this section, "dismissal" has the same meaning as in Part V of the 1978 Act.
  (11) Section 153 of the 1978 Act (general interpretation) has effect for the purposes of this section as it has effect for the purposes of that Act.'.—[Mr. Stern.]
  Brought up, read the First and Second time, and added to the Bill.

New clause 16

  IMPROVED STATE PENSION RIGHTS WHEN SPOUSE ENTERS RESIDENTIAL CARE
  'There shall be inserted after section 48 of the Social Security Contributions and Benefits Act 1992—
  "48A.—(1) Where a woman who is married and has attained pension age but is residing apart from his spouse because the spouse is resident in residential accommodation (other than a temporary resident) and in respect of the tax year before he reached pensionable age and any previous tax year, does not, with his own contributions, satisfy the contribution conditions for a Category A retirement pension then, for the purpose of enabling him to satisfy those conditions (but only in respect of any claim for a Category A retirement pension), the contributions of his spouse may be to the prescribed extent be treated as if they were his own contributions.
  (2) A person who receives a category A pension under these provisions will no longer be entitled to a category B pension under section 49 of the Social Security and Benefits Act 1992.
  (3) In this section 'residential accommodation' means either

  (a) accommodation provided under Part III of the National Assistance Act 1948 or

  (b) accommodation in a nursing home or residential care home as defined in Regulation 19 of the Income Support (General) Regulations 1987 if such accommodation is not provided under Part III above.

  'resident' means a person provided with residential accommodation.
  'temporary resident' means a resident whose stay is—

  (a) unlikely to exceed 52 weeks, or

  (b) in exceptional circumstances, unlikely to substantially exceed this period".'.—[Sir Andrew Bowden.]

  Brought up, and read the First time.
  Sir Andrew Bowden: I beg to move, That the clause be read a Second time.
  The object of the new clause is to give the same state pension rights to a woman whose husband enters long-term care as to a woman whose husband has died, or from whom she has divorced. It will give women who have separated from their husbands who then go into permanent—I stress permanent—residential care parallel rights to women who are divorced and widowed.
  People who are divorced or widowed can use their former spouse's contribution record up and until the end of the marriage to gain a basic state pension or to increase a partial pension. The new clause would particularly benefit older married women receiving the married women's category B pension of £35.25 per week. When the partner goes into care, a category A state pension of up to a maximum of £58.85 a week will be the substitute for the married women's pension.
  The new clause introduces parallel changes to state pensions. It will give a spouse who is separated from his or her partner entering long-term care similar rights to those of people who are divorced or widowed. I shall read to the House a specific case that has been brought to my
  440
  attention. It is not from one of my constituents, and, of course, I do not intend to give the name, but I can assure colleagues that it is a perfectly genuine case.
  In the letter, the lady writes:
  "I am 69 years of age. I worked to make ends meet as my husband has not been well. I worked till I was 65 and then had my husband to look after. We manage on our pension, as I have never asked for help in my life and never owed a penny anywhere. The last two years were just awful and the last 12 months my husband has Alzheimer's disease, which is bad enough to watch happening. I had a slight heart attack on 5th March, was taken to hospital and my husband was put into a home. The doctor advised me he must stay there as he won't get any better. I was told to send my pension book in so I could get more money. My pension is £35.60p, but I had the book back saying that that is all I can get. How can I live on that? Now the little I have saved will have to go to keep myself. I don't want any help, but my pension surely should have been £57 old-age pension, but they told me I am classed as single and my husband is still alive. To go in and see him and come out as I do is so upsetting and now the worry of the pension. Life just not seems worth living. Please can you help?"
  That represents a very sad situation indeed. I am aware that this matter was discussed in Committee, and, of course, I know the arguments that were used by my hon. Friend the Under-Secretary of State, who said:
  "the spouse at home would benefit only if the pension they received was sufficiently substantial to lift them entirely above the level of income-related benefit they received."—[Official Report, Standing Committee D, 27 June 1995; c. 890.]
  I do not think that that gives the full picture. As I understand it, the full state pension is £58.85. The applicable amount for income support for a single pensioner aged between 60 and 74 is £65.10, so a woman benefiting from my new clause and with no other income would still get income support of £6.25 in addition to her enhanced pension. The applicable amount for a pensioner aged between 75 and 79 is £67.20, and for a pensioner aged 80 or over it is £71.65.
  I shall at this point remind the House and emphasise to my hon. Friends on the Government Front Bench that pensioners do not like taking income support; they will avoid it whenever they can. The new clause would help considerably in that regard.
  I shall not detain the House any longer. I hope that my hon. Friend will look at the new clause again.
  7.30 pm
  Mr. Arbuthnot: The new clause attempts to extend the existing substitution rules in a way that I believe would distort the intention behind those rules. The substitution provisions are aimed at cases in which a marriage has ended. The rules recognise that in such cases a woman needs to be compensated for a particular change of circumstances—the unforeseen ending of a marriage in which she had previously relied on her husband's record for an income in retirement.
  In such circumstances, substitution gives women a record on which they can build with their own contributions following a divorce. The married woman's 60 per cent. pension could almost be described as a good buy, because it is achieved without the payment of any extra contributions. Ours is the only country in the European Union to provide such a pension. The new clause would give women in that position a 100 per cent. pension, again without any contribution.

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  An amendment similar to the new clause was discussed in another place, and we had a full discussion on the whole residential care issue in Committee. As both my noble Friend Lord Mackay of Ardbrecknish and I said in our separate debates, the Government sympathise with the concerns felt in both Houses about people in such circumstances, and—as I have said many times in Committee—we are a listening Government. Both my right hon. Friend the Secretary of State for Social Security and my right hon. Friend the Secretary of State for Health have taken action: the local authority charging regulations will be amended so that spouses can keep their partners' occupational pension when those partners enter residential accommodation. That will extend to income support preserved rights cases. The change will benefit many people, and I am sure that my hon. Friend the Member for Brighton, Kemptown (Sir A. Bowden) will welcome it as far as it goes.
  My hon. Friend, however, has pressed us to go further, and to amend the legislation relating to the basic state pension. I cannot agree that that is necessary. It would not benefit everyone concerned, especially in cases in which the remaining spouse receives an income-related benefit—usually, income support. All income-related benefits must take pensions fully into account, and in such cases spouses at home would benefit only if the amount of pension that they received was large enough to take them entirely above the level of income-related benefit that they received. In the majority of cases it would simply be a bureaucratic accounting exercise, recycling state spending from one benefit to another. An adequate safety net already exists: that is the point that I wish to make in regard to the example given by my hon. Friend.
  My hon. Friend suggested—rightly, in my view—that older people preferred to receive contributory benefits rather than means-tested benefits. I understand that preference, but I do not consider it sufficient reason to extend contributory benefit provision to this or any other group. That would impose an automatic and unwarranted extra charge on public expenditure. After all, spouses at home may have considerable resources of their own. I do not believe that automatically granting extra state pension to people in such circumstances would be an appropriate use of public funds.
  I hope that, having listened to my argument, my hon. Friend will not feel it necessary to press his new clause.
  Question put and negatived.

Clause 1

  THE NEW AUTHORITY
  Sir Andrew Bowden: I beg to move amendment No. 7, in page 1, line 10, at end insert—
  '(1A) It shall be the duty of the Authority, when it is satisfied that there are reasonable grounds for doing so, to cause an investigation to take place into any breach of trust law or any other misconduct alleged to have occurred in relation to an occupational pension scheme.'.
  Mr. Deputy Speaker (Sir Geoffrey Lofthouse): With this, it will be convenient to discuss also No. 14, in schedule 1, page 131, line 3, after 'expenses', insert
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  'provided that, taking one year with another, not less than one quarter of those expenses shall be paid by the Secretary of State.'.
  Sir Andrew Bowden: Amendment No. 7 is intended to strengthen the powers of the Occupational Pensions Regulatory Authority. At present, OPRA is seen essentially as a fire fighter; I believe that it needs to become more proactive, and to have powers of fire prevention.
  OPRA will replace, and expand on the powers of, the Occupational Pensions Board. It will be an independent statutory body. It currently lacks clear powers, however. The Goode report recommended that the new legal framework should depend for its effectiveness on proper supervisory and enforcement machinery. I therefore suggest that the pensions regulator should have wide-ranging functions and powers. I do not think that the Bill deals adequately with OPRA's powers: there are not enough clear definitions relating to monitoring, registration, investigation and codes of good practice—in short, the role of the regulator himself.
  The aim of amendment No. 14 is to make OPRA 25 per cent. state funded. The current intention is to finance the authority through a levy on pension funds, but that may lead to its being far from independent of those whom it is meant to regulate. The House should not forget that more than 10 million employees are active members of occupational schemes. If we take account of beneficiaries and other family members, we see that the majority of the population benefits from such schemes. I believe that an element of state funding, via taxation, is justifiable. Furthermore, OPRA replaces the Occupational Pensions Board, which, as the House knows, was state funded. The amendment strikes a compromise between those who want state funding and those who favour an industrial levy.
  Mr. Arbuthnot: The amendments address different subjects. I shall deal with the issues raised by each in turn.
  First, on amendment No. 7, the powers of the regulator to conduct investigations and take action are directly linked to a wide range of obligations relating to scheme security, which are clearly specified in the Bill and the Pension Schemes Act 1993. In that way, we have sought to ensure that all responsible for running pension schemes are left in no doubt about the obligations placed on them, and the consequences of failing to comply with those obligations.
  If we gave the authority the powers set out in the amendment, we would undermine the very clarity that we seek to achieve. There is a danger that the authority could be drawn into investigating matters that were the responsibility of the other regulatory bodies.
  In Committee and in the other place, there has been extensive debate about whether the authority should police trust law. Our reasons for resisting that were set out fully in those debates. We do not believe that it would be right to extend the authority's remit to cover the vast and complex body of trust law or that we should attempt to re-create trust law in the Bill. Disputes relating to the particular characteristics of a scheme, as set out in its trust deed or rules, can be settled by the pensions ombudsman or, if necessary, the courts.
  The Bill enshrines the principles underlying the most important duty of trust that apply to all schemes. The security of members' rights will be considerably strengthened by it, and the authority's powers of

  443
  investigation and enforcement will provide a robust and effective regulatory regime. I understand, however, that my hon. Friend is concerned about general misconduct on the part of trustees. We have naturally considered those concerns very carefully, and will continue to do so. To some extent, however, those concerns are already covered by the extensive provisions in the Bill; I am referring in particular to sanctions available to the regulatory authority under clauses 3, 4, 10 and 29.
  Amendment No. 14 seeks to alter financial arrangements that we have made for the authority. Paragraph 8(1) of schedule 1 gives the Secretary of State power to decide how much to pay the authority in respect of its expenses. Instead of its running costs being recovered in full from the levy on pension schemes, the amendment would require him to raise from taxation a minimum of one quarter of the amount that he determines is appropriate to meet those costs.
  The fundamental issue here has been well rehearsed and debated, not only in this House but in another place. Although, this time, a smaller amount is at stake, the principle of who should pay for regulation remains the same. Recovering the costs of the authority through the levy is merely an extension of the principle on which the pensions ombudsman, the pensions registry and the grant to the occupational pensions advisory service are already funded. It is right that the costs of the regulator should be borne by those regulated. Given that we expect the costs to be in the order of £12 million and the assets of pension funds amount to many hundreds of billions of pounds, that does not seem unreasonable. I hope that my hon. Friend will not pursue the amendments.
  Amendment negatived.

Clause 5

  REMOVAL OF TRUSTEES: NOTICES
  Amendments made: No. 27, in page 4, line 13, leave out 'in the United Kingdom'.
  No. 28, in page 4, line 22, leave out 'in the United Kingdom'.
  No. 29, in page 4, line 30, leave out 'in the United Kingdom'.
  No. 30, in page 4, line 31, leave out from first 'given' to end of line 33 and insert
  'to any person under this section may be given by delivering it to him or by leaving it at his proper address or by sending it to him by post; and, for the purposes of this subsection and section 7 of the Interpretation Act 1978 in its application to this subsection, the proper address of any person is his latest address known to the Authority.'.—[Mr. Hague.]

Clause 10
  CIVIL PENALTIES
  Amendment made: No. 31, in page 6, line 19, leave out 'require' and insert 'provide for'.—[Mr. Hague.]
Clause 11

  POWERS TO WIND UP SCHEMES
  Amendments made: No. 32, in page 7, line 9, leave out 'subsection (6)' and insert—
  'the following provisions of this section'.
  No. 33, in page 7, line 16, at end insert —
  444
  '(1A) The Authority may not make an order under this section on either of the grounds referred to in subsection (1)(a) or (b) unless they are satisfied that the winding up of the scheme —

  (a) cannot be achieved otherwise than by means of such an order, or

  (b) can only be achieved in accordance with a procedure which —

  (i) is liable to be unduly complex or protracted, or

  (ii) involves the obtaining of consents which cannot be obtained, or can only be obtained with undue delay or difficulty,

  and that it is reasonable in all the circumstances to make the order'.
  No. 34, in page 7, line 34, at beginning insert
  'except for the purpose of the Authority determining whether or not they are satisfied as mentioned in subsection (1A)'.—[Mr. Hague.]

Clause 12

  POWERS TO WIND UP PUBLIC SERVICE SCHEMES
  Amendment made: No. 35, in page 8, line 3, at end insert—
  '( ) Subsection (1A) of section 11 applies for the purposes of this section as it applies for the purposes of that, but as if references to the Authority were to the appropriate authority'.—[Mr. Hague.]

Clause 33

  INVESTMENT POWERS: DUTY OF CARE
  Amendments made: No. 36, in page 20, line 41, leave out from 'the' to 'under' in line 42 and insert 'function has been delegated'.
  No. 37, in page 20, leave out line 44.—[Mr. Hague.]

Clause 34

  POWER OF INVESTMENT AND DELEGATION
  Amendments made: No. 38, in page 21, line 13, leave out from beginning to 'except' in line 17 and insert—
  '(2) Any discretion of the trustees of a trust scheme to make any decision about investments—

  (a) may be delegated by or on behalf of the trustees to a fund manager to whom subsection (3) applies to be exercised in accordance with section 36, but

  (b) may not otherwise be delegated'.

  No. 39, in page 21, line 28, at end insert—
  'or the person who made the delegation on their behalf has taken all such steps as are reasonable to satisfy himself.
  No. 40, in page 21, line 29, leave out 'he' and insert 'the fund manager'.
  No. 41, in page 21, line 33, leave out subsection (5) and insert —
  '(5) Subject to any restriction imposed by a trust scheme —

  (a) the trustees may authorise two or more of their number to exercise on their behalf any discretion to make any decision about investments, and

  (b) any such discretion may, where giving effect to the decision would not constitute carrying on investment business in the United Kingdom (within the meaning of the Financial Services Act 1986), be delegated by or on behalf of the trustees to a fund manager to whom subsection (3) does not apply to be exercised in accordance with section 36;

  but in either case the trustees are liable for any acts or defaults in the exercise of the discretion if they would be so liable if they were the acts or defaults of the trustees as a whole.

  445
  ( ) Section 33 does not prevent the exclusion or restriction of any liability of the trustees of a trust scheme for the acts or defaults of a fund manager in the exercise of a discretion delegated to him under subsection (5)(b) where the trustees have taken all such steps as are reasonable to satisfy themselves, or the person who made the delegation on their behalf has taken all such steps as are reasonable to satisfy himself—

  (a) that the fund manager has the appropriate knowledge and experience for managing the investments of the scheme, and

  (b) hat he is carrying out his work competently and complying with section 36;

  and subsection (2) of section 33 applies for the purposes of this subsection as it applies for the purposes of that section'.—[Mr. Hague.]

Clause 35

  INVESTMENT PRINCIPLES
  Amendment made: No. 42, in page 22, line 19, at end insert—
  '( ) Neither the trust scheme nor the statement may impose restrictions (however expressed) on any power to make investments by reference to the consent of the employer'.—[Mr. Hague.]

Clause 36

  CHOOSING INVESTMENTS
  Amendments made: No. 43, in page 22, line 39, leave out
  'they have delegated any discretion'
  and insert
  'any discretion has been delegated'.
  No. 44, in page 23, line 15, leave out 'fund manager' and insert
  'the fund manager to whom any discretion has been delegated under section 34'.
  No. 45, in page 23, line 19, leave out paragraph (a) and insert —
  '(a) where giving the advice constitutes carrying on investment business in the United Kingdom (within the meaning of the Financial Services Act 1986), advice—

  (i) given by a person authorised under Chapter III of Part
  I of that Act,

  (ii) given by a person exempted under Chapter IV of that Part who, in giving the advice, is acting in the course of the business in respect of which he is exempt,

  (iii) given by a person where, by virtue of paragraph 27 of Schedule 1 to that Act, paragraph 15 of that Schedule does not apply to giving the advice, or

  (iv) given by a person who, by virtue of regulation 5 of the Banking Coordination (Second Council Directive) Regulations 1992, may give the advice though not authorised as mentioned in sub-paragraph (i) above'.—[Mr. Hague.]

Clause 46

  PROFESSIONAL ADVISERS
  Amendments made: No. 46, in page 28, line 40, after 'by', insert 'or on behalf of'.
  No. 47, in page 28, line 42, leave out from 'person' to end of line 2 on page 29 and insert—
  '(a) is appointed otherwise than by the trustees or managers as legal adviser or to exercise any prescribed functions in relation to the scheme, or
  (b) is appointed otherwise than by or on behalf of the trustees or managers as a fund manager'.
  No. 48, in page 29, line 7, leave out from 'actuary' to 'referred' in line 10 and insert
  'and legal adviser appointed by the trustees or managers,
  446
  ( ) any fund manager appointed by or on behalf of the trustees or managers, and
  ( ) any person appointed by the trustees or managers to exercise any of the functions referred to in subsection (3)(a),
  are'.
  No. 49, in page 29, line 18, leave out from 'which' to end of line 19 and insert
  'professional advisers may be appointed and removed'.
  No. 50, in page 29, line 20, leave out from 'which' to '(including' in line 21 and insert
  'professional advisers may be appointed'.—[Mr. Hague.]

Clause 50

  ANNUAL INCREASE IN RATE OF PENSION
  Amendments made: No. 51, in page 32, line 37, at beginning insert 'Subject to subsection (3A)'.
  No. 52, in page 32, line 45, leave out from 'scheme' to 'and' in line 46.
  No. 53, in page 33, line 13, at end insert—
  '(2A) Subsection (2) does not apply to a pension under an occupational pension scheme if the rules of the scheme require—

  (a) the annual rate of the pension, or

  (b) if only part of the pension is attributable to pensionable service or, as the case may be, to payments in respect of employment carried on on or after the appointed day, so much of the annual rate as is attributable to that part,

  to be increased at intervals of not more than twelve months by at least the relevant percentage and the scheme complies with any prescribed requirements.
  (2B) For the purposes of subsection (2A) the relevant percentage is—

  (a) the percentage increase in the retail prices index for the reference period, being a period determined, in relation to each periodic increase, under the rules, or

  (b) the percentage for that period which corresponds to 5 per cent per annum,

  whichever is the lesser'.
  No. 54, in page 33, line 14, leave out 'subsection (2)' and insert 'subsections (2) and (2A)'.
  No. 55, in page 33, line 21, at end insert—
  '(3A) This section does not apply to any pension or part of a pension which, in the opinion of the trustees or managers, is derived from the payment by any member of the scheme of voluntary contributions'.—[Mr. Hague.]

Clause 53
  SECTIONS 50 TO 52:SUPPLEMENTARY
  Amendment made: No. 56, in page 34, line 47, leave out from beginning to end of line 4 on page 35.—[Mr. Hague.]
Clause 58
  DETERMINATION OF CONTRIBUTIONS: SUPPLEMENTARY
  Amendment made: No. 57, in page 38, line 12, at beginning insert 'Except in prescribed circumstances'.—[Mr. Hague.]
Clause 59
  SERIOUS UNDERPROVISION
  Amendment made: No. 58, in page 39, line 5, at beginning insert 'Except in prescribed circumstances'.—[Mr. Hague.]
Clause 63

  EQUAL TREATMENT RULE: EXCEPTIONS
  Mr. Kirkwood: I beg to move amendment No. 19, in page 41, leave out lines 38 to 47.
  Mr. Deputy Speaker: With this, it will be convenient to discuss also amendment No. 20, in page 42, line 2, leave out 'or (3)'.
  Mr. Kirkwood: I do not want to detain the House any longer than I can help, but it is worth spending time, even at this late stage in the progress of the Bill through the House, to consider sexual discrimination on actuarial grounds in private and occupational pension schemes.
  I am prepared to accept the criticism that this issue relates more to sex discrimination than directly to pensions, but the amendments—which are probing—would make it unlawful for defined benefit occupational pension schemes, defined contribution schemes, occupational pension schemes and personal pension schemes to differentiate actuarially on the ground of sex for the purposes of calculations of both contributions and benefits.
  At present, the application of sex-specific actuarial factors is permitted under the current regulations when calculating pensions contributions and benefits. Allowance for that provision is reinforced in the Bill. It is right to raise questions about that because it is possible to argue that we should oppose any sort of discrimination on the ground of sex; that includes discrimination based on an expectation that, on average, women will live longer than men.
  Of course, as the House will know, actuarial calculations are based on a range of life style factors, such as smoking, diet, amount of exercise, occupation and social class, in addition to a genetic predisposition that determines that women will, on average, live longer than men. Average life expectancy, however, does not tell one when one will die; all of us know women who have died in their 60s and men who have died in their 90s. I understand that the state pension system does not discriminate on the ground of sex. Other life style factors such as smoking, diet, occupation and income level create much greater actuarial differences than that of gender alone.
  7.45 pm
  An independent report was drawn up on behalf of the Equal Opportunities Commission in 1989 by the actuarial consultants Tillinghurst. It was called "Unisex Pricing in Long-Term Insurance". Its conclusion was that there would be no great disruption to the life insurance market if unisex pricing were introduced for the determination of payments and benefit.
  I want to draw the House's attention to the experience in the United States of America. In 1978 and 1983, the Supreme Court ruled that the use of sex-specific actuarial factors in the calculation of pensions was unlawful under the Civil Rights Act 1964. It is now the case there that pensions contributions are assessed on unisex mortality tables and that sex distinctions have been eliminated from all calculations.
  In addition, the European Court of Justice has considered the issue extensively and ruled that the use of sex-specific actuarial factors in defined benefit schemes
  448
  is outside the scope of article 119 on equal pay. Of course, the Minister will probably be aware that it has yet to make a judgment on differential rates of benefit and contribution for defined contribution schemes, but by removing this clause of the Bill, as the amendments propose, and by amending section 45 of the Sex Discrimination Act 1975, the United Kingdom would be following a similar path to the United States Supreme Court and would be leading the way for the European Union.
  As the Minister may know, the Equal Opportunities Commission has been calling for a repeal of the actuarial defence in section 45 of the Sex Discrimination Act, for direct discrimination in insurance and annuities according to sex or gender. It would be simpler, although technically incompetent in terms of the scope of that Act, to repeal the whole of section 45. To remove from women any avoidable structural disadvantage in the provision of annuities is of great importance for social policy precisely because of the combination of women's life expectancy and many other life and career factors that already tend to depress their chances, relative to men's, of accumulating an adequate retirement income. In the amendments that I moved last night, I was seeking to focus the Government's attention on the difficulties that women face in retirement, particularly because of their tendency to work part time and in having their career patterns interrupted.
  The Government's decisions in the past few years to encourage people to take financial responsibility for their retirement, by creating readily obtainable personal pensions and allowing for contracted-out money purchase occupational schemes will not benefit women to the same extent as men if they find that they have to pay more into a scheme and receive less back. The actuarial justification that women receive less back in benefits because they live longer can easily be countered with the argument that the needs of women in their old age are greater because they live longer; thus, there is a need for greater assistance and care.
  There are also the problems associated with reduced mobility and the possible need for special diets. All those matters give rise to additional expense and must be paid for somehow. I shall conclude my case by quoting two sentences from the European Court of Justice report in the Neath v. Steeper judgment. It states:
  "The Commission claims … any difference in treatment based on sex would be permissible only if it were objectively justified. Statistical data based on the life expectancy of the two sexes do not, in its view, constitute an objective justification because they reflect averages calculated on the basis of the entire male and female population whereas the right to equal treatment in the matter of pay"—"
  that was the issue in front of the court—
  "is a right given to employees individually and not because they belong to a particular class."
  The Government have a duty to balance discrimination between the sexes for benefits and contributions. This may not be the appropriate legislation or the right time or place, but it is certainly the right issue and something should be done about it quite soon.
  Mr. Arbuthnot: I was not expecting a debate on this amendment. This is the second time today that that has happened. The hon. Gentleman relies quite heavily on the European Court of Justice words on the matter in the case of Neath v. Steeper. The words that the hon. Gentleman

  449
  quoted are set out in paragraph 27 of the judgment. However, if he reads the judgment he may find that the court set out that argument in paragraph 27 in order to reject it comprehensively in paragraphs 28 to 34. The hon. Gentleman should not place too much reliance on it.
  The amendment would remove a permitted exception to the equal treatment rule that was granted by the ruling of the European Court of Justice in the case of Neath v. Steeper. The amendment proposes the removal of a subsection in the Bill that would permit schemes to use sex-based actuarial factors when deciding the necessary funding of the scheme, and also in the application of such factors when calculating certain benefits arising from the scheme.
  The use of sex-based actuarial factors in relation to the funding of the scheme simply reflects the fact of life that, on average, women live longer than men, as the hon. Gentleman so rightly said. That matter concerned the Committee, but we felt that we could do little about it. As a result, schemes generally have to pay pensions to women on average for a longer time than for men. That is an inescapable fact of life and it must be accounted for if schemes are to be adequately funded to meet their liabilities.
  Clause 63(3)(a) reflects the fact that employers may need to make higher contributions to schemes in respect of female members than for male members. Consequently, where a pension benefit is commuted to a lump sum, the amount paid to a woman is normally greater than that paid to a man because it reflects the greater amount of money in the fund to take account of her longer average life expectancy.
  By the same token, the lump sum will, on average, need to last a woman longer than it would a man. Similarly, transfer payments where an individual transfers from one scheme to another are normally higher for women than for men. That again reflects the higher investment made for a woman in the transferring scheme and the fact that the receiving scheme will require a higher transfer payment than for a man if it is to provide for benefits of equivalent value to those that she had in the transferring scheme, as well as providing a periodic pension of equal value to men in the receiving scheme.
  I should add that the clause is permissive. There is nothing in European law or in the Bill that requires the use of sex-based actuarial factors; therefore, the clause does not prevent schemes from using unisex actuarial factors based on the average life expectancy of the whole population if they so desire.
  Funding a scheme on a national, unisex basis could put a strain on a fund if a scheme had more female members than male members, because there would be a greater call on the fund by the longer-living women. The likely result would be that schemes would err on the side of caution and would fund more closely towards the more expensive female rates. Costs would increase, and pensioners would therefore receive less value from their schemes. Male members of the scheme would be likely to opt out shortly before pension age and purchase an annuity or personal pension on the open market which would not be restricted to unisex rates and might offer them a better pension for their money. Meanwhile, the occupational scheme would be left with a higher proportion of female members, and a higher overall increase in costs which would have to be
  450
  met by employers and remaining members of the scheme. Actuaries would have to take such matters into account when assessing the proper contributions to such a scheme. Such selection against occupational schemes by their male members could seriously damage the viability of those schemes. For those reasons, I do not support the amendment although I fully understand the hon. Gentleman's reasons for moving it and the concerns that lie behind it.
  Mr. Kirkwood: I am content because of the Minister's last sentence. I carefully avoiding saying that the Neath v. Steeper judgment was conclusive. I carefully avoided doing that because I have been in courts. The judgment is not the point in any case, because it relates more to pay than to pensions, contributions and benefits. The Minister's technical objections have to be weighed in the balance, but in the fullness of time we shall be pulled in that direction, I suspect through European Court judgments although perhaps not Neath v. Steeper. It would be better to consider these matters properly in advance so that the technical matters to which the Minister rightly referred can be redressed before changes are made. They must be properly attended to in good time. I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.

Clause 72

  PREFERENTIAL LIABILITIES ON WINDING UP
  Amendments made: No. 59, in page 47, line 24, at end insert
  '(but excluding increases to pensions)'.
  No. 60, in page 47, line 27, after 'scheme', insert
  '(but excluding increases to pensions)'.—[Mr. Hague.]

Clause 87
  SCHEDULES OF PAYMENTS TO MONEY PURCHASE SCHEMES: SUPPLEMENTARY
  Amendment made: No. 61, in page 57, line 3, at beginning insert 'Except in prescribed circumstances'.—[Mr. Hague.]
Clause 93

  SECTIONS 90 TO 9: SUPPLEMENTARY
  Amendment made: No. 102, in page 61, line 4, at end insert—
  '( ) references to a charge are to be read as references to a right in security or a diligence and "charged" is to be interpreted accordingly,'.—[Mr. Hague.]

Clause 105

  DISCLOSURE FOR FACILITATING DISCHARGE OF FUNCTIONS BY THE AUTHORITY
  Amendment made: No. 103, in page 73, line 20, at end insert —

  'The Lord Advocate.

  Functions under Part I of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990. '.

  —[Mr.Hague]

Clause 107

  OTHER PERMITTED DISCLOSURES
  Mr. Dewar: I beg to move amendment No. 26, in page 75, line 21, at end insert
  'or any proceedings for breach of trust in relation to an occupational pension scheme'.
  The amendment is of some significance and worth. I am fairly confident about that, but then I normally am when I move an amendment. However, in a sense it is second best and related to the arguments by the hon. Member for Brighton, Kemptown (Sir A. Bowden) who said that the remit of the regulatory body should be extended and that it should be able to deal with breaches of trust law. We canvassed that matter in Committee with the kind of success that the hon. Gentleman had a few minutes ago. As that door is closed, it seems reasonable to make efforts to ensure the speeding up of disputes about trust law.
  The clause simply lists and defines the properly limited power of the regulatory authority to make disclosure of information, and that should be extended a little by allowing the release of information that may be relevant to an allegation and proceedings pursuant to it of a breach of trust law. That is the intended effect of the amendment. It does not widen the powers of OPRA but ensures that that regulatory authority is able to help either the pension ombudsman, who has a remit, presumably if the parties believe that the dispute can be decided by a third party, an honest broker, or the courts if, sadly, because that is always an expensive and time-consuming business, the matter has to go to the courts for proof. In either category, it should be possible for the regulatory authority to make the information available, although normally that disclosure would not be possible if it were not specifically endorsed as a proper course of action by the Bill.
  I take the view—although I know that the Minister does not—that it would be desirable to give the Occupational Pensions Regulatory Authority such wider powers. I know that he wishes to confine OPRA to a very narrow enforcement role. Having said that and having lost the battle to—I could hardly say the massed ranks of the Conservative party—the small group of hon. Members who made up the Minister's majority in Committee, it seems sensible to bring in this element of flexibility in at least allowing disclosure in the circumstances that I have described. I hope that that is a fair summary of the amendment.
  8 pm
  Mr. Arbuthnot: My hon. Friend the Member for Brighton, Kemptown (Sir A. Bowden) spoke earlier about his concerns over OPRA having powers to regulate breaches of trust law. The hon. Member for Glasgow, Garscadden (Mr. Dewar) is always persuasive, but on this amendment he has been more persuasive than usual.
  In view of the concerns which have been raised and also because of the need to ensure that restricted information in connection with any proceedings for breach of trust could bolster the regulatory regime, we agree that the amendment would add some value to the Bill. Therefore, unusually—I hope not uniquely—I would be delighted to accept the amendment.
  Amendment agreed to

Clause 117

  POWERS TO MODIFY THIS PART
  Amendment made: No. 62, in page 80, line 6, leave out from 'modify' to 'in' in line 7 and insert
  'any provisions of this Part'. —[Mr. Hague.]

Clause 120

  CROWN APPLICATION
  Amendment made: No. 109, in page 81, line 4, at end insert —
  '( ) This section does not apply to sections 42 to 45 and (Right not to suffer detriment in employment or be unfairly dismissed).'.—[Mr. Hague.]

Clause 123

  INTERPRETATION OF PART I
  Amendment made: No. 63, in page 82, line 7, at end insert —
  ' "member-nominated director" has the meaning given by section 18(2)'.—[Mr. Hague.]

Clause 135

  NEW REQUIREMENTS FOR CONTRACTED-OUT SCHEMES, OTHER THAN MONEY PURCHASE SCHEMES
  Amendments made: No. 64, in page 92, line 12, after 'which', insert—
  '(i)''.
  No. 65, in page 92, line 13, after 'scheme' insert 'and
  (ii) may include a requirement that, if the only members of the scheme were those falling within any prescribed class or description, the scheme would comply with section 12A'.
  No. 66, in page 92, line 20, at end insert—
  '( ) In subsection (3) of that section (requirement for protected rights, etc.) after "case" in paragraph (a) there is inserted—
  "(aa) the Secretary of State is satisfied that the scheme does not fall within a prescribed class or description" '.
  No. 67, in page 92, line 28, at beginning insert
  'Subject to regulations made by virtue of section 9(2B)(c)(ii)'.—[Mr. Hague.]

Clause 139

  REDUCTION IN BENEFITS FOR MEMBERS OF CERTIFIED SCHEMES
  Amendment made: No. 68, in page 100, line 43, at end insert
  'and section 45A of that Act did not apply (where it would, apart from this subsection, apply)'. —[Mr. Hague.]

Clause 171

  PARLIAMENTARY CONTROL OF ORDERS AND REGULATIONS
  Amendments made: No. 82, in page 128, line 32, leave out 'or'.
  No. 83, in page 128, line 33, at end insert —
  '( ) section (hybrid occupational pension schemes)'.—[Mr. Hague.]

Clause 174
  EXTENT
  Amendment made: No. 84, in page 129, line 5, after '148' insert '165'. —[Mr. Hague.]
Clause 176
  COMMENCEMENT
  Amendment made: No. 85, in page 129, line 23, leave out paragraph (a).—[Mr. Hague.]
Schedule 1

  OCCUPATIONAL PENSIONS REGULATORY AUTHORITY
  Amendments made: No. 104, in page 133, line 35, at beginning insert '(1)'.
  No. 105, in page 133, line 37, at end insert—
  '(2) Sub-paragraph (1) above does not apply in relation to any document which is or is to be signed in accordance with the law of Scotland.'.—[Mr. Hague.]

Schedule 2

  THE PENSIONS COMPENSATION BOARD
  Amendments made: No. 106, in page 137, line 4, at beginning insert '(1)'.
  No. 107, in page 137, line 6, at end insert—
  '(2) Sub-paragraph (1) above does not apply in relation to any document which is or is to be signed in accordance with the law of Scotland.'. —[Mr. Hague.]

Schedule 3

  AMENDMENTS CONSEQUENTIAL ON PART I
  Amendments made: No. 110, in page 137, line 17, leave out 'and 43' and insert
  '43 and (Right not to suffer detriment in employment or be unfairly dismissed)'.
  No. 111, in page 137, line 18, at end insert—
  '. In section 71(2B) (compensation award for failure to comply with section 69 not to be made), at the end there is added "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995."
  . In section 72(3) (special award), at the end there is added "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995."
  . In section 73(6B) (calculation of basic award), at the end there is added "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995."
  . In section 77(1) (interim relief), after "57A (1)(a) and (b)" there is inserted "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995".
  . In section 77A(1) (procedure on application for interim relief), after "57A (1)(a) and (b)" there is inserted "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995".'
  No. 112, in page 137, line 22, leave out 'or 43' and insert
  '43 or (Right not to suffer detriment in employment or be unfairly dismissed)'.
  No. 113, in page 137, line 25, at end insert—
  '. In section 138 (Application of Act to Crown employment), in subsection (1), after "and section 53" there is inserted "of this Act and sections 42 to 45 and (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995.".'.
  No. 108, in page 138, line 13, at end insert—

  'The Bankruptcy (Scotland) Act 1985 (c. 66)
  . In section 31(1) of the Bankruptcy (Scotland) Act 1985 (vesting in permanent trustee of debtor's estate on sequestration), after "Act" there is inserted "and section 90(3) of the Pensions Act 1995".
  . In section 32 of that Act (vesting of estate, and dealings of debtor, after sequestration), after subsection (2) there shall be inserted—
  "(2A) The amount allowed for the purposes specified in paragraphs (a) and (b) of subsection (2) above shall not be less than the total amount of any income received by the debtor—

  (a) by way of guaranteed minimum pension; and

  (b) in respect of his protected rights as a member of a pension scheme,

  "guaranteed minimum pension" and "protected rights" having the same meanings as in the Pension Schemes Act 1993.".'.—[Mr. Hague.]

Schedule 5
  AMENDMENTS RELATING TO PART III
  Amendments made: No. 86, in page 154, line 32, at end insert—
  'The Administration of Justice Act 1970 (c. 31)
  . In Schedule 4 to the Administration of Justice Act 1970 (taxes, social insurance contributions, etc subject to special enforcement provisions), in paragraph 3, for "State scheme premiums" there is substituted "Contributions equivalent premiums".

  The Attachment of Earnings Act 1971 (c. 31)
  . In Schedule 2 to the Attachment of Earnings Act 1971 (taxes, social security contributions etc relevant for purposes of section 3(6)), in paragraph 3, for "State scheme premiums" there is substituted "Contributions equivalent premiums".'.
  No. 87, in page 155, line 3, at end insert—
  '( ) In section 64(3) of that Act (expenses and receipts), for "state scheme premium" there is substituted "contributions equivalent premium".'.
  No. 88, in page 155, line 7, at end insert—

  'The Justices of the Peace Act 1979 (c. 55)
  . In section 55(6)(b)(ii) of the Justices of the Peace Act 1979 (duties of local authorities), for "state scheme premiums" there is substituted "contributions equivalent premiums".'.
  No. 89, in page 155, line 16, at end insert—

  'The Companies Act 1985 (c. 6)
  . In Schedule 2 to the Companies Act 1985 (interpretation of references to "beneficial interest"), in paragraphs 3(2)(b) and 7(2)(b), for "state scheme premium" there is substituted "contributions equivalent premium".'.
  No. 90, in page 155, line 31, at end insert —

  'The Social Security Contributions and Benefits Act 1992 (c.4)
  . In Schedule 1 to the Social Security Contributions and Benefits Act 1992 (supplementary provisions), in paragraph 8(1)(g), for "state scheme premium" there is substituted "contributions equivalent premium".'.
  No. 91, in page 155, line 33, after '10.' insert—
  ' —( ) The Social Security Administration Act 1992 is amended as follows.
  ( ) In section 110 (appointment and powers of inspectors) —

  (a) in subsections (2)(c)(ii) and (6)(a)(ii), for "state scheme premium" there is substituted "contributions equivalent premium", and

  455

  (b) in subsection (7)(e)(i), for "state scheme premiums" there is substituted "contributions equivalent premiums".

  ( ) In section 120 (proof of previous offences), in subsections (3) and (4), for "state scheme premiums" there is substituted "contributions equivalent premiums".
  ( )'.
  No. 92, in page 155, line 33, leave out
  'the Social Security Administration Act 1992' and insert 'that Act'.
  No. 93, in page 164, line 24, at end insert —
  '. In section 171 (questions arising in proceedings), in subsection (1)(b), for "state scheme premium" there is substituted "contributions equivalent premium".'.
  No. 94, in page 164, line 40, leave out
  'the definition of "the Board" is omitted'
  and insert '—

  (i) the definitions of "accrued rights premium", "the Board", "contracted-out protected rights premium", "limited revaluation premium", "pensioner's rights premium", "personal pension protected rights premium", "state scheme premium" and "transfer premium" are omitted, and

  (ii) in the definition of "contributions equivalent premium", for "section 55(6)(e)" there is substituted "section 55(2),'.—[Mr. Hague.]

Schedule 7

  REPEALS
  Amendments made: No. 95, in page 170, leave out line 50.
  No. 96, in page 171, leave out lines 10 to 14.
  No. 97, in page 173, leave out lines 4 to 6.
  No. 98, in page 174, line 32, column 3, leave out 'definition of "the Board"'and insert
  'definitions of "accrued rights premium", "the Board", "contracted-out protected rights premium", "limited revaluation premium", "pensioner's rights premium", "personal pension protected rights premium", "state scheme premium" and "transfer premium"'.
  No. 99, in page 174, line 54, column 3, after 'Board"' insert 'and'.
  No. 100, in page 174, line 56, column 3, leave out 'and' and insert 'in sub-paragraph (2)'.
  No. 101, in page 175, line 42, leave out from '1971' to end of line 43 and insert
  'shall come into force on the day this Act is passed'.—[Mr. Hague.]
  Order for Third Reading read.-[Queen's Consent, on behalf of the Crown, signified]
  8.4 pm
  Mr. Lilley: I beg to move, That the Bill be now read the Third time.
  This huge Bill, with 177 clauses, is the biggest of half a dozen Bills which collectively constitute the largest overhaul of social security legislation in 50 years.
  The Bill imposed an enormous task on the Committee and I am very grateful to the members of the Committee for the constructive way in which they approached it. I extend that gratitude to the Opposition, as I do to all the organisations which have contributed to the thought behind, and amendment of, the Bill as it has gone through the House. We are grateful to the joint working group on occupational pensions, the Institute and Faculty of
  456
  Actuaries, the Confederation of British Industry, the Trades Union Congress, the Pensions Management Institute and a great many other organisations and individuals for their advice and representations.
  Above all, I should like to express my gratitude to my ministerial team, whose members have so efficiently and effectively, good-humouredly and with such intellectual distinction, carried the Bill in Committee and on Report to Third Reading. This speech gives me an opportunity to offer my congratulations, which I think will be shared by all hon. Members, to my hon. Friend the Member for Richmond, Yorks (Mr. Hague), who is moving from the dales to the valleys.
  I got into slight trouble when Neil Kinnock was claiming that he was going to displace my former right hon. Friend the Member for Finchley, now my noble Friend Lady Thatcher, from No. 10. I said that I was pretty sure that the people of Britain would not send a boyo to do a woman's work and I was criticised by someone in Wales who wrote to me saying that I should not use the word "boyo". So, I shall just say how I am certain that the people of Wales will be delightful-sorry, delighted to know—
  Mr. Hague: They will be delightful.
  Mr. Lilley: Oh, they will be delightful. The people of Wales will be delighted to know that a boy has been sent to do a Vulcan's job.
  I should not refer to the age of my hon. Friend the Member for Richmond, Yorks. To me, he is reaching middle age. I was brought up in the village where William Pitt was born and every week I saw the statue commemorating the fact that he was Prime Minister at the age of 24, so I rather think that the new Secretary of State for Wales is a bit past it. He is, of course, admirably placed to launch a leadership bid at a future stage.
  I also convey my congratulations to my hon. Friend the Member for Wanstead and Woodford (Mr. Arbuthnot) who—I think that I am allowed to reveal it—has been made the Minister of State for Defence Procurement. He goes there with two enormous advantages: first, he has had experience of spending large sums of money in the DSS, which will come in handy in his new task and, secondly, as a former parliamentary private secretary of mine, he knows that his new post is but a stepping stone to the Cabinet, where all of my PPSs are destined to end up, as the Secretary of State for Education and Employment, with her enhanced authority, can confirm.
  This is a big Bill and it is about big money. Pensions are the largest single element of social security spending. Indeed, the basic state pension alone is the biggest item of expenditure in Government. In the private sector, too, they account for an enormous amount of money: £500 billion is invested in occupational schemes and personal pension funds in this country, which, as we know, is more than that invested in all similar private pension schemes in the rest of the European Community put together.
  We as Conservatives believe that it gives us a tremendous advantage to have so much private provision complementing state provision, especially as we move into a world in which there are an increasing number of retired people supported by a decreasing number of people of working age. We are therefore determined to build on

  457
  our success in encouraging people to build up occupational and personal pension schemes; that is one of the key things that the Bill is about.
  The confidence that lies behind the growth of occupational and personal pensions was dented by the events affecting the Maxwell pension schemes and by the mis-selling of private pensions. The Bill is designed to restore confidence in the security of occupational pension schemes by giving greater rights to members, greater powers to trustees, greater duties to professionals such as actuaries and auditors and authority to a new strong regulator. It sets a minimum funding requirement and backs it up by a compensation scheme should all other measures fail to prevent a deficiency in the funds.
  Secondly, we believe that the Bill will encourage choice in personal pensions by giving people greater choice in how they use the funds that they have built up in their personal pension schemes, when they convert them into annuities and draw funds from them before they do so, and by making it possible for people to remain opted out of the state pension scheme throughout their working life by introducing age-related rebates.
  The third aspect of the Bill is its emphasis on equality. That is partly in response to the Barber ruling by the European Court of Justice and partly as a result of an autonomous decision, which we still have the power to take in the House, to equalise the state pension age between men and women. We have chosen to do that in a way that, we believe, is responsible and reflects the growing propensity of women to work, especially once their children have left home, and, therefore, to build up their own pension rights. We decided, therefore, to equalise at the age of 65, beginning the change in the second decade of the next century.
  That decision is probably the most important spending decision taken this century—if we had decided to equalise at 60 rather than 65, the cost to the taxpayer would have been £12 billion a year once the change had come through—but we have not had a clear-cut response from the Opposition to it. The hon. Member for Glasgow, Garscadden (Mr. Dewar) has talked about introducing a flexible decade with a pivotal age of 63. I am not sure whether that is a firm commitment or one of those ideas that the hon. Gentleman is wont to float in his engaging way.
  I point out to the hon. Member for Garscadden merely that the key thing about a flexible decade is the pension that one is entitled to draw at the beginning of the decade. The overwhelming experience everywhere is that people draw their pension at the first opportunity. If both men and women were allowed to draw their pension at the age of 60, we can assume that, just as they do now, the bulk of people would draw their pension at the age of 60 even if it were 20 per cent. lower than the present basic pension. That would be the result of having a pivotal age—that is, the age at which a person would reach the present value uprated for inflation, which is some three years into the flexible decade.
  We will allow a much longer period of potential flexibility—an indefinite period of flexibility—from a starting age of 65. At the starting age, people will be able to draw the full basic pension, uprated for inflation. Should they defer for a year, they will get an extra 10 per cent. They will get an extra 20 per cent. for two years, an
  458
  extra 30 per cent. for three years, and so on. The Opposition's proposal combines the worst of all possible worlds—high up-front costs, which would be higher than equalisation at 63, and the result of many people being much more dependent on income support because they have chosen to draw a low pension at an earlier age.
  Other issues, to which I shall now refer, have arisen during the passage of the Bill. One important one is pension on divorce. I am grateful for the amendment introduced by my noble Friend Baroness Young in the other place, which provided the basis of the changes that we introduced. I know that there is a case, strongly argued in some quarters, for going further in the direction of full pension splitting. I believe that it would not have been appropriate to move in that direction in the Bill. The Government will, however, look at that issue in the context of the research that we are undertaking.
  The issue of war widows came up and we made an important concession, which was right in this 50th anniversary year of the second world war, but we resisted other changes and I am grateful for the brave and lucid speech given by the hon. Member for Garscadden in that context.
  The issue of residential care was raised and we have resolved an important difficulty and a sense of grievance, which were aired as a result of the Bill, by saying that we shall require, as a result of regulation changes, local authorities to ensure that when one spouse is in residential care—usually the husband—and the other remains outside, he or she will be able to retain at least half of the joint occupational pension. Local authorities will no longer be allowed discretion to leave less than half the pension for the spouse who remains outside residential care; that discretion was being used, in a minority of cases, in a way that was simply not acceptable.
  I have paid a genuine tribute to the contributions from hon. Members on both sides. It would not be right, however, to let pass the fact that we are dealing here with an absolutely fundamental aspect of modern government and with a central aspect of social security provision—pension provision and provision for retirement. It is the most costly single item in the Government's Budget. It is important that any Government who are serious about controlling public expenditure and about ensuring that public expenditure does not outstrip the nation's ability to. pay spell out clearly what they intend to do about it. We as a Government have done so previously and we have done so in the Bill. We still wait to hear any clear response from the Opposition to the challenge so lucidly laid down by my hon. Friend the Member for Richmond, Yorks, now Secretary of State for Wales, in which he asked them to make clear
  Mr. Miller: Right hon. Friend.
  Mr. Lilley: No. My hon. Friend has yet to take the oath.
  My hon. Friend laid a clear challenge to the Opposition, to which we have heard no response. He asked whether they reaffirmed the pledge to uprate pensions in line with earnings—a pledge on which they have fought the past three general elections—whether they were still pledged to reverse the changes to the state earnings-related pension scheme, which they have criticised in this Bill, whether they were still pledged to reverse the other changes to which they objected and whether they were firmly committed to a process of equalising the state

  459
  pension age that would involve a cost several billion pounds higher than the cost in the Bill. In their ability or inability to answer that question lies one of the great tests of whether they are a serious Opposition and a potential Government or whether they are wedded to being in opposition and determined to remain there.
  I commend to the House the Bill, with the changes that have been introduced in its passage through both Houses. They enhance it and mean that it will be a major contribution to the provision of pensions into the next decade.
  8.19 pm
  Mr. Miller: As was said last night, the genesis of the Bill came in the wake of the Maxwell affair. That was followed soon afterwards by Professor Goode's inquiry, which raised many important issues that I am sure that the House will revisit many times.
  As the Secretary of State said, the Bill is large, and I congratulate my hon. Friends the Members for Glasgow, Garscadden (Mr. Dewar) and for East Kilbride (Mr. Ingram) on the amazing efforts that they have put in. I acknowledge that the Minister for Social Security and Disabled People—the future right hon. Secretary of State for Wales—was clearly in command of his whole team, but his team was enormous. I have never met so many civil servants as I did during the passage of the Bill. My hon. Friends had little or no such expert support, so their efforts should be commended—along with the efforts of my hon. Friend the Member for Leeds, East (Mr. Mudie), who occasionally let me out of the Committee to do other things.
  It is clear from the energy and effort that went into the Opposition's activities that there are certainly people who will soon form a new Government. I take issue with the Secretary of State's closing comments, because it is obvious that the Opposition have taken the Bill extremely seriously, in a most responsible manner.
  Many issues arise from the Bill. First there are the functions of the new regulatory authority, which we shall have to re-examine. The composition of that body, especially the absence of a pensioner representative, is a fundamental error. As we heard in our debates last night, the whole House and indeed the whole country are taking pensions matters increasingly seriously, and it would be improper to leave the gap unfilled in the longer term.
  Trustees, too, have been debated in the past two days. Both the rights of pensioners as potential trustees and the numbers of member trustees will need revising. I feel strongly that a good pension scheme has nothing to fear from having at least as many member trustees as management appointed trustees. We considered those ideas in Committee and examined several potential permutations, all of which were rejected by the Government. For the sake of basic democracy in pension schemes, we shall have to revisit those issues in the near future.
  The Secretary of State mentioned residential care, and we have heard some carefully thought-out contributions to that debate. I am worried about some of the anomalies that still exist. For example, I think of people in the same category as a constituent of mine who, having paid for 40 years into an occupational pension scheme, finds that at the age of 88 she gets no direct benefit from it. The woman in the next room has not paid into an occupational
  460
  pension scheme—she has probably not had the opportunity—but under the clawback arrangements both women end up with the same personal allowance. That is an anomaly that needs thinking through more carefully.
  Because of another personal constituency case, I was pleased that the effect of second marriages on war pensions was dealt with. That removed another anomaly that has deprived one of my constituents of a pension. She was one of the women who escaped during the fall of Singapore, and her pension was taken away in 1957. It will be welcome if her pension is restored after all those years.
  The Secretary of State mentioned the importance of occupational pensions. Whatever changes we introduce in this place, occupational pensions will continue to be an important part of personal savings—probably the most important part. In my previous occupation, it took me a long time to persuade many of the people whom I represented that their investment in their occupational pensions was equal to, and in many cases greater than, their investment in their houses. When that argument was won, it woke people up to the idea but they should have some control over the funds invested on their behalf. That is why issues concerning democracy in occupational pension funds are dear to me, and I hope that a future Government will revisit them.
  My great regret is that I do not believe that the Bill will stop another potential Maxwell. It puts obstacles in the way of such a person, but I do not believe that it would stop someone determined to bypass fairness and equity and to manipulate people's pension funds improperly.
  The Secretary of State mentioned the age of retirement. Many women resent the way in which the Government have dealt with that issue. There is no point in hiding the fact that the problems are complicated, but the Labour party's alternative approach provided a solution that would have been far more beneficial to a significant proportion of the population. I am especially disappointed that the Government failed to pick up those ideas.
  Finally, I shall return to an issue at which I have nagged away in other debates, including those in Committee. I was disappointed that the Government did not pick up the spirit of the Occupational Pensions Bill that I presented in 1992.
  Mr. Arbuthnot: I have not received it.
  Mr. Miller: That is extraordinary. Here we have a Under-Secretary who is so keen on computing and information technology that we hear that he is now to be responsible for procuring weapons for our service personnel, yet he cannot find in his Department a piece of paper that I presume he will have to acknowledge must have been eaten by his predecessor. If the hon. Lady reads some of the Minister's remarks about her in Committee, she will perhaps eat him as well.
  It is a great pity that the concept of my Bill—to deal more specifically with what happens to pension funds at the point of takeover of a company—was not addressed within the Bill. I acknowledge that the Government have dealt with some of the points that I raised in other debates, but I find it sad that they have continued to avoid the basic right of occupational pension fund members at the point of takeover. The Government have argued time and again that the assets of pension funds belong to everyone involved, including the employer, and that therefore the

  461
  employer should have some of the benefits in certain circumstances. I have strongly argued that where an incoming employer has taken no risk whatsoever at the point of takeover, he should have none of the benefits accruing from assets in a fund.
  We have gone through a lengthy Committee stage, and lengthy remaining stages, of the Bill, and we have sought to address many problems and other issues that I have described. I hope that the Government's confidence is well-founded, but the Bill is deficient in a number of ways. I hope that if, in their short remaining period in office, the Government recognise that we were right and they were wrong—as the Minister graciously did on the question of the rights of trustees during his swansong this evening—they will come back and make amendments to correct any deficiencies.
  8.32 pm
  Sir Andrew Bowden: I congratulate my right hon. Friend the Secretary of State and his colleagues on the gigantic task that they have now completed. This is an important Bill which has a great deal to commend it, but I fear that time will reveal some weaknesses—for example, in relation to the powers and effectiveness of OPRA. In the sector of trustee representation, I regret that an opportunity to define in law the purpose of pension funds and to establish the principle that pension fund money represents deferred earnings has been missed. I appreciate that the Bill is complex and technical, and that it has placed an enormous burden on Ministers in the Department who have undertaken an incredible amount of detailed work, but I suspect that, in the not too distant future, the House may well have to consider another amending pensions Bill.
  8.33 pm
  Mr. Clifford Forsythe: I know that Northern Ireland business is coming directly after Third Reading, but I would like to take a little time to say a word about the Bill. First, I congratulate the hon. Member for Richmond, Yorks (Mr. Hague) on his elevation, and also the hon. Member for Wanstead and Woodford (Mr. Arbuthnot) on his promotion. Both promotions are well deserved. It was a pleasure to work in the Committee considering the Bill. It was hard work and exhausting, but it was also pleasant.
  I also congratulate the hon. Members for Glasgow, Garscadden (Mr. Dewar) and for East Kilbride (Mr. Ingram) on their tremendous work during the debates on the Bill. It is not often that we mention Whips, but I should like to refer to the hon. Members for Leeds, East (Mr. Mudie) and for Gedling (Mr. Mitchell). I have been fortunate to have two Whips on this Committee, and I feel greatly honoured. I would like to thank both of them, but particularly the hon. Member for Leeds, East for the great help that he has given me.
  The House should know that, as a member of the Ulster Unionist party and therefore not subject to the Whips who know what is going on, I had to listen carefully to the points put forward both by Government and by those leading for the Opposition. It has been fascinating, and it is quite obvious that those who took part are well versed in the subject.
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  I feel this evening that I have come to the end of a very long journey. My experience of this subject began when I heard the news that a certain gentleman had gone overboard and drowned. That prompted my first experience of looking into occupational pensions. Since then, we have come a long way. When I spoke on Second Reading, I made out a list of items that I felt we should try to change. I have to tell the House that, up until a very short time ago, every item on that list had not been changed. I was almost dancing with joy this evening when two amendments that I very much support were accepted by the Government.
  I am delighted that the Bill is reaching the end of its passage through the House. I know that most of us are, but for the best reasons. The difficulties for the Committee in looking at the subject were enormous, and I congratulate everyone concerned with the Bill and all of my Committee colleagues on the hard work that they did.
  I should like to mention one other item. I am sorry that the Secretary of State for Northern Ireland left the Chamber just before I began my speech. I mentioned earlier that I am very concerned because the Bill does not extend to Northern Ireland. I was shown great courtesy by Ministers and by civil servants—for whom I have the highest regard—when I raised the matter. I must also congratulate the civil servants on their hard work. When such matters are being looked at, the fact that they should extend to Northern Ireland should be taken into account at the beginning. Perhaps if they had, we would not need 167 amendments applying to Northern Ireland. I fully support the Bill and I am delighted that it has managed to complete its passage through the House.
  8.38 pm
  Mr. Denham: I will not detain the House for long, because I have already tested the credulity and patience of my Front-Bench team by saying that I found the Bill interesting and the Committee enjoyable. I also know that the Minister of State will want to go off to look for a house in the Principality or in a nearby commuter suburb, such as Wokingham. The Under-Secretary will soon find a number of letters on his desk regarding major procurement contracts, so I would not like to alienate him at this stage in our proceedings.
  We have been on a long journey, and we have all aged a lot. Cabinet Ministers seem a lot younger to me now than they did when we started our consideration of the Bill. Just like one feels when one gets to the top of a hill while fell walking, when one wants to enjoy the view before one goes down, it is worth taking a quick overview of the Bill. I must say that I am disappointed by it. It was born out of a desire to provide more security for people's pensions and people's retirement.
  It is a remarkable achievement of the Bill that the great majority of people will now receive a lower pension as a result than they would have done before its introduction. Every single woman will now have less entitlement to pension rights than she did before the Bill was introduced. Every single member of the state earnings-related pension scheme will now have a lower SERPS entitlement than he or she did when the Bill was introduced.
  People with appropriate personal pensions, APPs, which are, as we have said, linked to SERPS, will, through the rebate, be liable to a lower entitlement and will receive lower pensions should the Government

  463
  Actuary gets his calculations right. The links between SERPS and occupational pension schemes have been broken. Perhaps the jury is still out on the requisite benefits test, but I suspect that people's pension rights will be worth less than they were before the Bill was introduced.
  It would be churlish not to accept that one or two measures such as limited price indexation will provide better pensions for those who do not enjoy that protection in their current occupational schemes. It is a remarkable and rather cynical achievement on the part of the Government to introduce a measure on the back of widespread concern about pension security that diminishes people's pension rights.
  The Secretary of State chided the Opposition for failing to provide all the details of their pension strategy. The Government's Bill does not constitute a pension strategy. It is a mistake to believe that simply redrawing the boundaries between what the state scheme does and what non-state schemes do constitutes a new pensions strategy. It may constitute a public expenditure strategy for the future and a strategy for reducing the future tax burden, but it does not constitute a pension strategy.
  One question is still unanswered. Will there be sufficient funds available in 2010, 2020, or 2030, whether through a state scheme or through funded non-state schemes, to provide people with the level of pensions that they would expect to accrue during their working lives? There is nothing in the Bill to ensure that those funds are available to pay people's pensions in the future. The past six months have changed nothing.
  I believe, perhaps for slightly different reasons from the hon. Member for Brighton, Kemptown (Sir. A Bowden), that, in a short time, under a Labour government, the House will have to reconsider the pensions strategy. That must happen if we are to ensure that people in the 21st century have a pension to retire on that is not only secure—a central aim of the Bill—but of an adequate level to provide them with a decent retirement income.
  8.42 pm
  Mr. Dewar: Many things happened in the course of the Committee, some of which I sadly missed. One that I particularly regret missing was the sight of the hon. Member for Antrim, South (Mr. Forsythe) dancing with joy. That would have been a rare spectacle. As I said at the end of the Committee, I thought that the staying power of the hon. Member for Antrim, South was admirable. He took punishment with uncomplaining zeal, and lasted the pace. He was an extremely useful colleague in Committee.
  My feelings are mixed. The Bill is in many ways a disappointing end product, but I cannot pretend that I am not sorry to see the end of it. I am, to put it bluntly, very pleased to see the end of it. The Secretary of State said that the Bill has 177 clauses. It started out with 162 clauses, so I suppose that that represents productivity in a way. I doubt whether we will get a bonus for our efforts—certainly not from the Secretary of State.
  The Bill has been a difficult one to consider because of its complexity, but the business has been conducted with great courtesy, I hope on both sides. I certainly pay tribute to the Ministers who were in charge of the Bill. I wonder whether the Minister of State is aware that there is a rather unfortunate rumour that he was born aged 54½ I am
  464
  prepared now to put it around that at least the evidence is worth re-examining. I will not put it more enthusiastically than that, but he was genuinely extremely helpful within the limits of propriety. I do not know what that means, but it sounds very pleasant.
  The new Minister of State for Defence Procurement must have got some sort of remission, because he was among us at the Department of Social Security for a short time. He passed wraith-like among us and is now disappearing. I must bring him the bad news, as did my hon. Friend the Member for Southampton, Itchen (Mr. Denham): that I, too, have a defence procurement constituency. I look forward to the next round of type 23 orders—
  Mr. Denham: I do, too.
  Mr. Dewar: Oh dear. Damn. I would be straying just marginally out of order if I prayed the case of Yarrow Shipbuilders, although I feel strongly about it in the context of frigate orders.
  Everyone has tried hard on the Bill at least to make sense of it. I agree with other hon. Members that we have been on a long road—at times a stony one. I do not pretend that there were not moments when I began to wonder where we were going. I suppose that that is inevitable.
  I am grateful to my colleagues who have stuck to the task remarkably well. The Whips are, of course, a race apart, we all know that. My hon. Friend the Member for Leeds, East (Mr. Mudie) has been a constant aid, and the co-operation from his opposite number would have warmed the heart of those who enthuse over the Jopling Committee report—a small and select band in the House. I believe that such co-operation is important in making the business of the House manageable.
  I will not advise my hon. Friends to vote against the Bill—it would be extraordinary if I did so—because it has some good things in it, particularly in the earlier sections, which built upon the Goode committee report. There has been widespread concern about security and the adequacy of the regulatory framework for occupational pensions. Although there are some disappointments, I believe that much of the Bill, taken from the Goode committee and translated into legislation, is helpful and right.
  I am sorry that the shift in control represented by the arrival of a legal minimum for a number of active member-selected trustees stuck at one third. As the Minister knows, we tried hard to persuade him that many British companies operate successfully on at least a 50:50 basis. That, too, fell upon stony ground.
  The Opposition also had doubts about the regulatory authority, not in terms of the need for such a body, but whether it has all the powers it needs to carry out its enforcement and monitoring jobs, which are essential to it. We also argued hard and lost on pensioner trustees.
  The compensation scheme, time off for trustees, training for trustees, indexation, limited price indexing and so on will stand the test of time. I hope that those parts of the Bill will have provided an enduring framework for occupational pension schemes. Whatever may happen in the future, at least that shape will remain. It will be of importance in reassuring the public, and perhaps encouraging an even broader coverage of occupational pension schemes in the future.

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  I also approve of other parts of the Bill. Perhaps it is inevitable, but I thought that the Government were a little over-proud of the important concession to war widows and to that band who unfortunately have seen a second marriage end. I take some satisfaction from the fact that the Labour party in another place voted for that concession, but the Government did not. I will leave that point at that.
  It was important that we got the concession on the protection of the rights to a portion of occupational pensions when the holder of that pension has, unfortunately, gone into residential care. That was again the result of fairly sustained pressure in another place. We were preparing to return to that point when, to their credit, the Government capitulated.
  There is much unfinished business. I cannot agree that the argument about the future treatment of pension assets upon divorce and the break-up of a marriage has concluded. To be fair, the Minister said that the Government would examine the matter again in the context of further research. However, I feel very strongly about it, as do my hon. Friends and the majority of people in the wider community.
  It is not some sort of Opposition delusion on this occasion; I think that it is the unanimous view of those who are involved in the technicalities of the matter that there should at least be an option of dividing funds at the time of divorce and providing security for an ex-spouse. That cannot occur with the form of deferred maintenance that the Minister appears to prefer.
  I think that we have said all that we need to say, but I must conclude with one important area of dissent. I refer to part II of the Bill, which deals with the state pension system. We were disappointed that the Government insisted on what we believe is the rather unrealistic concept of a retirement age of 65 when people are expected to shuffle off into retirement. I recognise that the term "flexible decade of retirement" is anathema to the Secretary of State.
  It is not such a silly idea when we remember that it was—and still would be if the door had not been slammed—the preferred option of the National Association of Pension Funds and of the Confederation of British Industry. I do not suggest for a moment that that means that it is, by definition, the right solution. However, it is perhaps an antidote to the idea that it is some sort of eccentricity on the part of the Labour party to believe that flexibility should be part of the scheme.
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  I look forward to seeing the costings and the definition of the Prime Minister's pledge—I referred to it in Committee—which appeared in the Evening Standard as one of his trump cards in the leadership election. He promised that there would be a new flexible pension scheme which would allow people to receive their state pension before the normal retirement age in circumstances such as illness or unemployment. I do not know quite what that means, but Prime Ministers do not give those pledges lightly, and we look forward to seeing exactly how it will work and how it will be costed. Perhaps it will give a rather different definition to the whole argument.
  Our major concern is that part II of the Bill represents an attack on the state earnings-related pension scheme, which is fundamental in its impact and very serious in social terms. It is a very complex matter, and we spent hours talking about the annualisation of SERPS, for example—an interest that will not be widely shared. However, people may be interested in the end product.
  As we all know, the way in which we treat the proportion of earnings below the lower earnings level of the national insurance contributions band and the alterations to how it is treated that have been introduced are "technical"—that is the word used by Ministers—but, to be fair, important in financial terms.
  Many people will not have woken up to the fact that the changes will save the Treasury £400 million in 2010 and £2.3 billion by 2050. If one puts that into more practical terms, it means that those people drawing SERPS in 2000 will find that their weekly pension is worth about £2.70 per week less, on average, in current terms. By 2020, it will be £4.90 per week less.
  When we examine the basis of entitlement to SERPS and the loading of the contracting-out calculations, it is fair to say that SERPS has again been mugged by the Government. That argument is encapsulated by the Government's calculation that, as a result of the changes, in 2050 the cost of SERPS to the national insurance fund—which would have been £19.3 billion—will be £9.9 billion. That has been done by stealth, and it is a mugging in the small print of the Bill.
  I think that it is a serious matter, and one about which we protested in vain. It means that that section of the legislation will have a very uneasy and, I suspect, rather short life. I look forward to returning to the matter, and I recommend that the Secretary of State keep the Committee stage reports by him, as they will prove a useful reference work when he is on this side of the House.
  Question put and agreed to.
  Bill read the Third time, and passed, with amendments.

  Merchant Shipping Bill [Lords]
  Order for Second Reading read.
  8.54 pm
  The Solicitor-General (Sir Derek Spencer): I beg to move, That the Bill be now read a Second time.
  The Merchant Shipping Bill, the Shipping and Trading Interests (Protection) Bill and the Goods Vehicles (Licensing of Operators) Bill are consolidation Bills which resulted from the work of the Law Commission and the Scottish Law Commission. The Merchant Shipping Bill is closely linked to the Bill that follows it, and perhaps the House will permit me to speak to them together.
  The Merchant Shipping Bill is a major consolidation measure, encompassing some 30 Acts or sections of Acts dating back to the Merchant Shipping Act 1894. The Shipping and Trading Interests (Protection) Bill covers a discrete topic derived from parts of two of them. Both Bills were referred in the usual way to the Joint Committee on Consolidation Bills during their passage through the other place. The Joint Committee reported its approval of the Bills, subject to minor amendments and corrections, and its opinion that the Bills are pure consolidation and represent the existing law.
  8.55 pm
  Mr. Donald Anderson: As the Solicitor-General has explained, the three Bills continue the important consolidation work and we have nothing further to add. Much of the undergrowth in the statute book is being taken away by this and by other means, and we can only rise to applaud the work that is being done.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Motion made, and Question put forthwith, pursuant to Order [19 December], That the Bill be not committed.—[The Solicitor-General.]
  Question agreed to.
  Question, That the Bill be read the Third time, put forthwith and agreed to.
  Bill accordingly read the Third time, and passed, without amendment.

  Shipping and Trading Interests (Protection) [Lords]
  Read a Second time.
  Motion made, and Question put forthwith, pursuant to Order [19 December], That the Bill be not committed.—[The Solicitor-General.]
  Question agreed to.
  Question, That the Bill be read the Third time, put forthwith and agreed to.
  Bill accordingly read the Third time, and passed, without amendment.

  Goods Vehicles (Licensing of Operators) Bill [Lords]
  Read a Second time.
  Motion made, and Question put forthwith, pursuant to Order [19 December], That the Bill be not committed.—[The Solicitor-General.]
  Question agreed to.
  Question, That the Bill be read the Third time, put forthwith and agreed to.
  Bill accordingly read the Third time, and passed, without amendment.

  Statute Law Repeals Bill [Lords]
  Order for Second Reading read.
  Ordered,
  That the Bill be read a Second time tomorrow.
  Mr. Andrew Mackinlay: On a point of order, Mr. Deputy Speaker. I am pleased that the Bill is not being proceeded with tonight, but I wonder whether it is possible to have a very brief explanation why?
  Mr. Deputy Speaker (Sir Geoffrey Lofthouse): No. The Bill has not been moved.

  Northern Ireland Act 1974
  8.58 pm
  The Secretary of State for Northern Ireland (Sir Patrick Mayhew): I beg to move,
  That the draft Northern Ireland Act 1974 (Interim Period Extension) Order 1995, which was laid before this House on 12th June, be approved.
  If schedule 1 of the Northern Ireland Act 1974 were not renewed, direct rule would come to an end, resuscitation being possible only by means of a further Westminster statute. What has to be acknowledged, with regret, in this debate as in its precursor on each of the occasions when I have had responsibility, is that the temporary provisions of the Northern Ireland Act 1974 again need to be renewed. Direct rule from Westminster is still needed and the principal reason is that an insufficiently broad basis of agreement as yet exists for any system of larger local accountability.
  It is not for want of encouragement or for want of trying. It is worth taking a little of the House's time to look at what we see as an encouragement and at the efforts that have been made. The obvious starting point is this time last year. In that debate I said:
  "I have faith in a better future for Northern Ireland."—[Official Report, 30 June 1994; Vol. 245, c. 963.]
  I pointed to the Downing street declaration, then some six months old, and said that it represented a new context for political progress. It had contributed to rational grounds for hope that, through consent and democracy, a settlement would be reached.
  Looking back to the period from 31 August 1993 to the end of June 1994—that is to say, before the IRA ceasefire—87 people lost their lives in Northern Ireland because of the security situation. In the same period ending a few days ago, the total is only three—one of whom, Constable Seymour, died from head injuries caused by the IRA as long ago as 1973. Every such death is a tragedy, with on-going miseries whenever it occurred, in whatever circumstances. That is in every way true of the deaths of young Karen Reilly and Martin Peak in September 1990, who are in our minds this week.
  That ceasefire and the loyalist one which followed it were as welcome as they were overdue. For my part I give great credit to all—and I mean all—who influenced the declaration of the ceasefires. I acknowledge the contribution of all who have been prepared to take risks to bring violence to an end. Most particularly, I identify and pay tribute especially to the security forces, whose staunch courage and professionalism has attracted such admiration. In that context, I should like to congratulate the Royal Ulster Constabulary on the professional manner in which they have responded to the disgraceful disturbances and violence of the past few days in Belfast, Londonderry and elsewhere. These have been orchestrated by those keen to confront and discredit the police and they have been deeply unjust to the people.
  The ceasefires and the absence of terrorist attacks have enabled the Government and the security forces to respond to an improved security situation. Much has been done and much more can be done, given the right circumstances. More than 1,000 soldiers have been withdrawn from the Province. Nearly 100 border road
  470
  have been opened. Army patrols in support of the police are now the exception. Exclusion orders and broadcasting restrictions have been lifted.
  We are also, with the RUC and the Police Authority, looking ahead to the future of policing in Northern Ireland. The RUC is making the transition from a force primarily concerned with countering terrorism to one dealing mainly with the everyday concerns of the ordinary community. Much work is in progress, with the public being consulted as never before.
  The Government place an even greater emphasis on community relations work to help heal the divisions between the main sections of the community and to create a more stable and united society for the future. The evidence is that positive changes are taking place in the relationships between the main traditions in Northern Ireland, but real and lasting change takes time.
  I can also report briefly and happily on the economy. I shall be brief because many right hon. and hon. Members wish to speak. A strong economy with plenty of jobs is, of course, a great support for stability. There is much good news. Employment in the year to March 1995 rose by 2.1 per cent.—four times the Great Britain rate. At 565,000, it is the highest March figure on record. In the year to May 1995 unemployment fell by more than 10 per cent. It is now 11.7 per cent., which is still much too high, but it is the lowest since September 1981, almost 14 years ago. Particularly welcome is the fall over the last year of almost 5,000 in the number of long-term unemployed. We shall be working hard to bring the figures down still further.
  Manufacturing output is growing strongly, with an increase in 1994 of 6.8 per cent. Some of this growth occurred in the period before the ceasefires. In the current year, however, with the prospects of a sustained peace continuing to improve, we hope that we shall do better still. The consensus among local economic commentators is that this year Northern Ireland will be able to build further on recent successes. Local surveys of business opinion suggest continuing high levels of business confidence and strong positive investment intentions.
  There has also been good news in the Fair Employment Commission's latest annual monitoring report, summarising the religious composition of the Province's work force, which shows a significant increase of 2.3 percentage points in the Catholic share of the monitored work force between 1990 and 1994.
  The Prime Minister's conference in Belfast last December greatly enhanced Northern Ireland's profile as an attractive investment location for companies from the United States, Great Britain, Europe and the far east.
  Then in Washington in May there was the US President's White House conference for trade and investment, which was also a resounding success. The conference focused on trade and investment in Northern Ireland and the six border counties of the Republic of Ireland, and attracted an attendance of approximately 1,300 people. Of these, 600 were business people—350 US-based and 250 from Europe, predominantly Northern Ireland and the Republic of Ireland. We are enormously grateful to the President for this initiative, and for the follow-up which his Administration is pursuing.
  Turning to political policy, this time last year I reported that we were in discussion with the Irish Government. We had the aim of achieving a shared understanding between

  471
  us of the elements of a political settlement which in our view was most likely to command widespread support across the community in Northern Ireland. We did that because we were asked to do so.
  After considerable hard work on all sides, and lengthy negotiation, on 22 February my right hon. Friend the Prime Minister launched in Belfast the document, "A Framework for Accountable Government in Northern Ireland" and, together with the Taoiseach, "A New Framework for Agreement". Taken together, the two documents outline what a political settlement in Northern Ireland might look like.
  Many things have been said about those documents, but I should like to emphasise once again what they are not. First, the documents are not a blueprint; the ideas are not set in concrete and the proposals will not be imposed without the consent both of the Northern Ireland parties and of the Northern Ireland people. They do not affect Northern Ireland's constitutional guarantee; they do not contain any proposals for joint authority and there is no slippery slope to a united Ireland. They are ideas for discussion and negotiation. They represent the best ideas of the two Governments.
  The House is familiar enough by now with the documents' character and contents. Both Governments believe that they have fulfilled a useful purpose, but as Mr. Bruton said at their launch in Belfast,
  "If people have better ideas—and we hope you have—let us hear them".
  Meanwhile we both stand by them and we believe that they have already encouraged much fresh thinking by the parties about the issues central to a settlement. Progress towards a settlement will come only by talking.
  Shortly before Easter I invited the leaders of the Ulster Unionist party, the Social Democratic and Labour party, the Ulster Democratic Unionist party and the Alliance party to a series of separate bilateral meetings to discuss the issues on which agreement must be reached if there is to be a widely acceptable settlement. To date, I have had very useful and productive discussions with the UUP and the Alliance party, and we hope and plan to hold more. I very much hope that the other two Northern Ireland parties which I have invited will take part in the discussions.
  The context for negotiation has been transformed by the two terrorist ceasefires, and I know from talking to people in Northern Ireland that everyone wants peace. They see that the way forward can be found only through talking, by discussion and by negotiation.
  With Sinn Fein, the Popular Unionist party and the Ulster Democratic party, the Government have sought to consolidate the situation created by the two ceasefires of 31 August and 13 October 1994 by entering into exploratory dialogue with them. The dialogues began on 9 and 15 December respectively. The objective was and remains to exchange views on how those parties would be able, over a period, to play the same part as the main constitutional parties in the public life of Northern Ireland, and to examine the practical consequences of the ending of violence.
  There have now been 12 meetings of exploratory dialogue with the loyalist parties, covering a range of subjects including prisons, political development, decommissioning of arms, policing-criminal justice issues and the economic-social problems of disadvantaged areas.
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  Given the progress made in the earlier exchanges with officials, it was decided that my hon. Friend the Minister of State, the hon. Member for Devizes (Mr. Ancram), would join the dialogue at the eighth meeting on 22 March. As for exploratory dialogue with Sinn Fein, there have now been seven meetings, two of which have been attended by my hon. Friend. Discussions have taken place on a broad agenda, including the decommissioning of illegal arms.
  Progress on the decommissioning of illegally held arms is needed to help to demonstrate the parties' commitment to exclusively peaceful methods. Serious and constructive discussion of this issue has taken place with the PUP and the UDP. The Government have made clear their belief that substantial progress on decommissioning will be necessary before any party that is closely associated with paramilitaries can expect to participate in inclusive talks.
  More than nine months have now elapsed since the IRA ceasefire and eight months since its loyalist counterpart.
  Mr. David Trimble: The Secretary of State has been talking about the exploratory talks between a Minister, officials and paramilitaries and the possibility of moving to what he calls inclusive talks. Given the disturbances that have occurred in Northern Ireland over the past 48 hours and given the clear involvement in fermenting those disturbances of Sinn Fein, can that party still be regarded as having any commitment to peaceful methods? Is it still appropriate for officials or Ministers to continue talking to Sinn Fein when Sinn Fein is clearly involved in violence?
  Sir Patrick Mayhew: As I have already said, the disturbances to which the hon. Gentleman refers were clearly orchestrated. That has been made clear by the assistant chief constable, Mr. Stewart, in a public statement a day or so ago. In that statement he said that local members of Sinn Fein were present and prominent, I think, on a number of occasions. We want to see a good deal more of what has happened and why it happened. I am reluctant to break off conversations with any party for the reasons that I have given this evening. Any participation by the central direction of a political party in such events certainly precludes that party from claiming that it is wholly committed to a peaceful means of dealing with political disputes. There can be no question about that.
  Yet the guns and explosives have not yet been decommissioned even though more than nine months have elapsed since the IRA ceasefire and eight months since its loyalist counterpart. The latent threat of violence accordingly remains. Decommissioning is not an arbitrary new hurdle created by the Government to block progress with Sinn Fein and the loyalists. Nor is it tantamount to surrender by the paramilitaries. Nor do we have pre-conceived notions about how decommissioning takes place, provided that it happens and is verifiable.
  We are in no doubt that decommissioning is a difficult issue. Equally we are in no doubt that it needs to be resolved if we are to move forward. The phrase which I think expresses best the new opportunities which decommissioning could bring about is "parallel progress". I shall explain what I mean by that. The ending of paramilitary violence has created an environment allowing commanders on the ground to make operational

  473
  decisions about the level of military deployment. In all these matters I have been guided by the professional advice of the chief constable, Sir Hugh Annesley.
  Equally, however, nothing by way of troop reductions, for example, has occurred which cannot be taken further. Parallel progress in that direction and in other areas can and will be occasioned by events which establish that risk to the public has been further reduced. If I may distort Newton's third law of motion, every action has an equal and parallel reaction.
  We have within view talks in which all sides can take part, provided they are wholly committed to democratic methods. My right hon. Friend the Prime Minister remains fully committed to the peace process and is determined that it shall properly be seen through to a successful conclusion. But peace can only be built on trust, and trust can never sit alongside the loaded gun pointed at its head.
  Dr. Norman A. Godman rose—
  Sir Patrick Mayhew: I will finish now, if I may.
  I conclude by saying to the House that the Government will continue to do all in their power to build on the advances of the past two years. Meanwhile, the Government will also continue, through direct rule, to work for a just, peaceful and prosperous society in which both sides of the community can by consent come to exercise greater control over their affairs. I commend the order to the House.
  9.16 pm
  Ms Marjorie Mowlam: I apologise to the Secretary of State for missing his opening couple of sentences. I welcome him and his team in its entirety, back after the events of the past 48 hours. I hope that now that we have some political stability at Westminster, we can move things forward.
  In the past six months I have met a number of local councillors, business leaders, trade unionists and community and voluntary groups across Northern Ireland to discuss how economic policy can be made more responsive to local need. The ideas and enthusiasm generated in the present window of opportunity, with US and European assistance, are very impressive.
  However, the common concern of all parties is their lack of ability to influence decision making. For example, was anybody listening to the people of Limavady, Strabane and Derry who wanted urgent improvements to the A5, especially to the bottlenecks at Toome and Dungiven; or to the thousands of people who raised money for a scanner for South Tyrone hospital. who want to use that scanner in their own hospital; or to folk in Moyle who want to have the planning powers to accommodate both the wishes of local farmers and the environmental needs of an area of outstanding natural beauty?
  Everyone would be happier if such decisions were taken closer to the people whose lives are affected through devolved government. Short of improving the transparency and accountability of the 96 quangos in Northern Ireland, meaningful change can come about only
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  in the context of an agreed and balanced constitutional settlement and new political structures such as those outlined—
  Mr. Clifford Forsythe: Surely there are more than 96 quangos in Northern Ireland?
  Ms Mowlam: Yes, there are certainly more than 96 quangos. I was dealing with those directly related to local authority matters such as health and education and which, if local democracy were working, would be affected by local accountability.
  Whether we are dealing with those 96 or others, there can be meaningful change and genuine accountability only if there is a change towards a balanced constitutional settlement and new political structures are put in place, such as those suggested in the framework documents, whether within Northern Ireland, between the North and the South, or between Westminster and Dublin.
  We regret that we are having this debate again this year. We hope that the momentum in the peace process will be maintained and that significant progress can be made so that it will not be necessary—or there will be new legislation—next year.
  The Secretary of State outlined a number of the changes that have occurred in the past 10 months and the considerable progress made towards peace and reconciliation since the ceasefires last autumn. He is right. It is sad and instructive to mark the changes that have been achieved by comparing this July with the same month in previous years.
  This July will, we hope, be a quiet one. Last July, seven people were killed; in 1993, one person—Kevin Pullin—was killed by a sniper; in 1992, five people were killed; in 1991, three were killed; and, as many hon. Members will remember, nine people died in July 1990, including Ian Gow, a former Member of the House. Our horror at this history of violence and killing must not prevent any of us from exercising imagination and thinking clearly about the future.
  This debate concerns the Secretary of State's stewardship in Northern Ireland. It is difficult to evaluate as the debate is always held at the end of the year and there are few yardsticks to go by. As the next year is crucial, I think that it would help the debate if we put down some markers that are important for us to consider in the progress that we hope will be made in the year ahead.
  As the Secretary of State said, the momentum of political progress must be maintained. The issue of decommissioning has to be tackled in such a manner that it is not a surrender but a clear statement that progress is made in the process of decommissioning paramilitary arms. Consideration should be given by the new—or newish—joint committee to the suggestion made by the hon. Member for Fermanagh and South Tyrone (Mr. Maginnis) that a third party should oversee and verify the decommissioning process.
  In the coming year, we want to see progress made on anti-terrorist legislation. This year, the Prevention of Terrorism Act and the Northern Ireland (Emergency Provisions) Act were again renewed in full without an independent review for which we and many others called. We hope that Ministers will respond with careful planning and preparation for new UK-wide legislation, which is

  475
  essential if we are to be properly equipped to respond to the changing circumstances in Northern Ireland and to combat the changing nature of terrorism world wide.
  There are other difficult and delicate matters that must he on the political agenda for discussion, including the question of prisoners and parity of esteem. We want prison policy—including, as we have said, the transfer of prisoners closer to their families—to be considered. Each case must be dealt with on its own merits within the rule of law. There can be no bargaining or equating the cases of different prisoners. The law must be fair to all people and implemented equally. At the very least, those cases which should be considered now are those subject to persistent dispute.
  I deal again with more mundane political matters. We should like a halt to the accelerating process of compulsory competitive tendering and privatisation of public services in Northern Ireland so that, when the new settlement is agreed and, we hope, a new Assembly established, there are at least some services left for people to manage.
  The disaster of water privatisation should not be inflicted on the people of Northern Ireland. In a recent survey, 90 per cent. of respondents said that they were opposed to it. The Government should rule it out completely in the next year.
  Sir Patrick Mayhew: We have.
  Ms Mowlam: The Government have already done so in respect of legislation for the first term, if I can earwig on the Secretary of State's whisper, but that commitment has not been given for the duration of this Parliament. We should welcome such a commitment this evening.
  We want a change of direction and a new economic strategy that includes measures more specific than those presently on offer to help small businesses; we want a unified framework for skills and training, incentives for businesses to take on the long-term unemployed—I know that there is a pilot project at the moment but projects need to be directed more specifically at the one in five people who are still long-term unemployed—and other more innovative approaches such as the improvement of nursery care.
  We want significant progress in reducing the appalling level of unemployment, which is still officially around 12 per cent. I acknowledge the progress that the Secretary of State outlined, but a fifth of the unemployed in Northern Ireland have been unemployed for five years or more. Action has to be taken to bring them back into training and employment because the effects of such high unemployment are economically disastrous and socially damaging.
  We should also like action to target social need and to tackle the relative deprivation of specific areas and pockets within parts of Northern Ireland. Measures to deal with unemployment must be accompanied by enforced employment legislation.
  The people of Northern Ireland cannot be dictated to and will reject any attempts to impose a settlement, and rightly so. Agreement is the only basis on which the people of both communities can proceed towards a new settlement for Northern Ireland.
  Like the Downing street declaration, the joint framework document maintains that it is for the people of Ireland alone, by agreement between the two parts
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  respectively, to exercise their right to self-determination on the basis of consent, freely and concurrently given, north and south.
  I have tried to be brief and shall not make a closing speech tonight, as I know that many hon. Members representing Northern Ireland want to speak. I pay tribute to the security forces, the police and the many public servants who during the past year are adapting well to the changing circumstances. I thank them. I would also ask them to continue to show that commitment and determination to change in the year ahead—a time when flexibility and lateral thinking will be crucial for everybody involved.
  The months ahead present many difficult and delicate decisions. We have seen an example of that over the past couple of days in the case of Private Clegg—a decision that I welcome because he should not stay in prison a day longer than is necessary. It is also important, however, that decisions taken clearly show the impartiality and the rule of law and that they are based on the rule of law on a case-by-case basis.
  What is needed now is a policy of restraint by all parties, not only to keep the peace process moving forward but to help economic progress too, and to build on the two ceasefires from last autumn.
  I hope that, as the peace process evolves, more progress can be made in improving the day-to-day quality of people's lives by continuing to remove some of the security apparatus, to which the Secretary of State referred tonight, such as the watchtower on the Rosemount estate in Derry. There must be an attempt to draw a line over the past and to move forward to achieve stability and to make sensible and rational decisions.
  Mr. William Ross: Does the hon. Lady agree that the watchtowers have improved the quality of life for many people, because by keeping a watch on terrorists they have kept people alive? Therefore, why should they be removed?
  Ms Mowlam: I agree that when there was violence on the streets the quality of people's lives was improved considerably by the watchtowers, because, as the hon. Gentleman pointed out, people remained alive. We have had ceasefires since the autumn of last year. I did not put a time scale on it, but asked whether in the year ahead the Secretary of State could bear them in mind for the simple reason that, if the peace holds and there is no violence on the streets, the watchtowers make a difference to the quality of life. Both the hon. Gentleman and I do not live within 20 yds of one, and we do not have to live with them watching us in our kitchens day-by-day. Our quality of life may be okay, but for the people who live close to them it is not.
  I am not asking for a blanket removal of the watchtowers or for a time scale to be attached. All I am saying is that the quality of those people's lives should be taken into account, because they are being affected. We would be negating the impact on their lives if we denied that this evening.
  Rev. Ian Paisley: Further to that point, is the hon. Lady aware of what is happening in Northern Ireland at the present time? Is she aware that almost £6 million-worth of damage has been done in the city of Belfast and elsewhere? Is she aware that last night a property worth almost £1 million was gutted by fire, by

  477
  IRA attackers? Is she in reality when she talks about the peace that is going on? The peace is not going on. How can she say that there is a perceived peace when violent people are on the streets? I am sure that she listened on Tuesday to what the Prime Minister said when he underscored the fact that the IRA and Sinn Fein were at the heart of this. The Prime Minister himself said that in the House.
  Ms Mowlam: I listened, not only to what the Prime Minister said, but to the comments that the Secretary of State made about the present situation and the assumptions that he is working on. I am well aware of what is happening on the ground; I have spent the past two days in Belfast and Newry, so I have direct day-to-day experience of what is happening. I know only too well of the impact on the communities and the effect of the economic policies, which all of us have been trying to encourage to get a quality of life and jobs for people that would make a difference to their lives. The bread van that was burnt out in west Belfast was new and belonged to an expanding small business. That business had just begun to turn the corner from the difficulty, which small businesses have, of growing from two to three people. The effort was being made. We are only too well aware of the disastrous impact that the events of the past couple of days have had on many people, but the situation has calmed down, and perhaps, if we can keep things moving, progress can be made. As I said to the hon. Member for Londonderry, East (Mr. Ross), we are not asking for that progress immediately; I am merely saying that I want certain issues to be on the agenda, so that when we are having the same debate here in a year's time we can look back to the markers that I have put down tonight.
  Mr. Seamus Mallon: We can all talk about watchtowers, releases from prison and all sorts of issues. As the hon. Lady is putting down markers for the coming year and, as it were, wrapping up the previous year, will she tell us—in political terms—the one thing that she would have done differently from the Government in that year?
  Ms Mowlam: I cannot thank the hon. Gentleman for his intervention, for the simple reason that I have made it clear on numerous occasions that I will not draw a clear distinction between us and the Government in relation to the peace process and the negotiations that he, and we, are conducting with all parties. On other occasions, I have made clear distinctions between the parties in regard to policies relating to, for instance, the economy.
  I am avoiding the question because if I said, "If I had acted differently from the Secretary of State, this would have been the outcome", it might please the hon. Gentleman who asked the question but it would not please others. I would merely be opening the door for others to say, "So you think that the Opposition would do better. Let us wait for instability in the Government to start again in four months' time. Let us wait for a general election; then we will do better."
  In view of the disturbances of the past 48 hours, the worst thing that could happen to the peace process now would be prevarication and procrastination by any hon. Members present, or any of the parties not represented here tonight, because they believed that delay would
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  secure them a better deal. I will not answer the question for that reason, and I have no difficulty in saying so to the hon. Member for Newry and Armagh (Mr. Mallon).
  As I have said, my hon. Friends the Members for Clydebank and Milngavie (Mr. Worthington) and for Warley, West (Mr. Spellar) and I will continue to approach the current peace process in a bipartisan manner. We shall continue to play our part; but we, and every other hon. Member, can do so only with the support and encouragement of people in Northern Ireland.
  9.32 pm
  Mr. James Molyneaux: As you have been kind enough to call me early in the debate, Madam Deputy Speaker, let me take the opportunity to congratulate and welcome the hon. Member for North Down (Mr. McCartney). My hon. Friends and I look forward to his contribution if he catches your eye, as I trust that he will.
  On 30 June last year, in another debate on the extension of the Northern Ireland Act 1974, the Secretary of State told us:
  "we are currently working … on a framework document."
  He added:
  "let me address fears about what is spoken of as 'joint authority'".
  It was feared, he said, that the two Governments
  "would jointly run the affairs of Northern Ireland over the heads of the people."
  He concluded:
  "There is no truth in that at all."—[Official Report, 30 June 1994; Vol. 245, c. 960.]
  I did not and do not wish to imply that the Secretary of State was less than honest, but after 25 years in this place I do not underestimate the duplicity of those in certain Departments whose mission in life is to find a form of words. That blessed phrase "find a form of words" has plagued us at every meeting that we have had to discuss the way forward in Northern Ireland. I sometimes wonder whether those people are descended from ancestors in "Alice in Wonderland".
  It was with such unworthy suspicions in my mind that, several minutes later in that debate—not several months later—I delivered the Ulster Unionist answer to those words of the Secretary of State. I said:
  "We would add merely that that joint authority, however it is disguised, amounts to a change in the constitutional status of Northern Ireland."—[Official Report, 30 June 1994; Vol. 245, c. 972.]
  That remains the position of my party. We have not changed and we shall not change.
  It was for that reason, therefore, that, in the succeeding months of last year, we warned the Government that the required support, to use their words, of the Unionist community for a framework document would not be forthcoming. Now the Government must think again. Now that all the high wire acts of two decades have failed, they could, with great advantage, go back to basics, to coin a phrase.
  In December 1976, in the week-long debate on the constitution of the United Kingdom and on what was known roughly as the Kilbrandon report, I suggested, as a first step, the decentralisation of powers away from the gentlemen in Whitehall who are reputed "to always know best". I think that I am on all fours with the hon. Member for Redcar (Ms Mowlam), who was good in the first part

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  of her reference on restoring accountable democracy to Northern Ireland. She rather spoilt it by getting into the "nothing agreed until everything is agreed" package, but I forgive her that. I think that we will convert her eventually.
  That plea of mine way back in 1976 led to the formulation of section 22 of the 1979 manifesto, on which the Thatcher Government were elected. I shall quote from that manifesto—I am a student of these things. It says:
  "We will seek to establish one or more elected regional councils with a wide range of powers over local services."
  As I played some little part in tendering advice from time to time during the drafting proceedings before the manifesto was put to the shadow Cabinet in 1978, I know exactly what was in the mind of the then Leader of the Opposition, soon to become Prime Minister. For elected regional councils, one would read an elected assembly—that is what it was all about—and the wide range of powers over local services did not mean just powers to local government; it meant clearly—and I know this for a fact and one of the draftswomen is still fortunately alive and can confirm this—administrative powers to administer the law as made by this sovereign Parliament of the UK. It meant delivering a service, the sort of service that all of us in this Chamber deliver. When we open that untidy bundle of mail every morning, we discover that 95 per cent. of our constituents' problems can be redressed by administrative and not legislative action, so it was prudent at that time, and still is prudent, to start at that level, and then to see what can be built on and what is necessary thereafter.
  That pledge was ditched by the new Government within six months. As the then Prime Minister explained, and I am not looking at my memoirs here, when I asked why they did not proceed with a proposal on which they were elected, "Jim, because it was not enough", but I never knew for whom it was not enough. I can assume only that it was Dublin and Washington, with a bit of the European Community—sorry, I am not politically correct; it should be the European Union, I suppose—thrown in.
  The partners in the reversal of that election pledge were utterly blind to the simple fact that, in aiming too high too soon, they were dividing and not drawing together the Northern Ireland parties, then at variance at the turn of that decade—1980. Fifteen years on, a different mood prevails. There has developed a willingness to sink differences and to work together in practical ways on issues of real benefit. In local government, there is a tendency to put the interest of local communities before party advantage and, yes, sometimes even before the consideration of mayoral chains. What a sacrifice that entails.
  Belfast city council has elected a Unionist lord mayor and a Nationalist deputy lord mayor. Those developments are possible because of the growing self-confidence within the ranks of what I have termed "the greater number." I have to be generous and readily forgive the infringement of my copyright to that title. I welcome all those recruits after all the lonely years when I sat alone on that little rock proclaiming that message and began to assert that we in the Ulster Unionist party have a responsibility to represent and protect the interests of that greater number consisting of Protestants, Roman Catholics and those of no religion at all who, admittedly with varying degrees of enthusiasm, simply want to remain within the United Kingdom.
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  You and I, Madam Deputy Speaker, and all our colleagues in the House have a still wider responsibility which springs from the fact that on the day that we were elected we took upon ourselves a duty to improve the lot of even those who do not share our attachment to the United Kingdom. We are responsible for looking after, representing and protecting the interests of those who vote for us, those who vote against us and those who do not bother to vote at all.
  I am optimistic about the future. By the time we come to this debate next year, or perhaps before that, we shall have recovered from the unease caused by what I would call the remaining capacity of terrorists to resume their campaign at the flick of a switch. Unease has been increased by what I can only call the devilish wording of the framework document. I hope that both of those will be erased in a year's time and that that war of nerves will be over. I hope that at that time our people will recognise the extent of the efforts of those who set out to destroy their morale and will step into the future with self confidence restored.
  The Secretary of State touched on the possibility of Sinn Fein eventually emerging at the end of all these rather tortuous talks as a bona fide democratic party. He will remember his right hon. Friend the Father of the House, the Member for Old Bexley and Sidcup (Sir. E. Heath) addressing to him the proposition and painting the picture that would confront us all when that day came. I have rather facetiously rehearsed them to the amusement of certain audiences. Let us suppose that the day will come when the Secretary of State is able to say, "Yes Gerry, you have decommissioned all your weapons, you have surrendered all your Semtex, and you have refrained from all the other sordid acts of violence." As we sit here, the IRA and other terrorist movements are engaging in such acts.
  The Secretary of State will say, "You are now one of us, you are now clear. Sinn Fein can now become a democratic party and you stand for election." What is Mr. Adams's response? "Big deal. Secretary of State, I, Gerry Adams, was elected to the Parliament of the United Kingdom. I did not represent, but I was there nominally as a Member for five years. I have councillors in practically every one of the district councils in Northern Ireland. Is that all that we are to get?"
  That was the question posed by the Father of the House, and it has been put to me in recent days by hon. Members in all parts of the House. I am putting it as a challenge, not only to the Secretary of State because it is a challenge to us all. That will be the testing time, the crunch issue. What could a Conservative or Labour Government give in addition to that which is given to the rest of us who represent democratic parties?
  There has been a recons tructed Government, and the Secretary of State was today confirmed in office, on which he is to be congratulated. As I seldom watch the news I am not certain about the status of his colleagues, but I take that for granted. They must set about, or at least make a start, on the restoration of accountable democracy, probably at a modest level to begin with.
  I am not ruling out more powers at a later stage. They must begin at a practical level at which there will be a role for all who are democratically elected and who are bona fide democrats. I do not rule out new methods of employing the talents and involving Northern Ireland Members of both Houses of Parliament.

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  As we debate here this evening, we cannot and dare not ignore the deep unease and frustration which grips the entire Northern Ireland community. It is slowly diminishing, but we have to work very hard to remove it in its entirety. The Government were elected to provide reassurance, confidence and sound administration for the whole of the United Kingdom and, with their authority restored yesterday—if we are to believe the news industry, which up to 5 o'clock yesterday was determined to destroy this Administration—they now have a bounden duty to remove all that uncertainty, and remove it now.
  9.45 pm
  Mr. Andrew Hunter: I hope that the right hon. Member for Lagan Valley (Mr. Molyneaux) will forgive me if I do not take up the points that he has just made. I think brevity is commendable, and I am sure that my right hon. and learned Friend the Secretary of State will comment as appropriate on the right hon. Gentleman's points. I shall make three points as I know, Madam Deputy Speaker, that other hon. Members wish to catch your eye.
  The first point is with regard to the substantive business. Quite obviously, the order must be approved by the House. It would be utterly irresponsible not to do so and there is no sane alternative course of action. The Government of the Province would be plunged into chaos were the House to do anything other.
  Mr. Trimble: Will the hon. Gentleman give way on that point?
  Mr. Hunter: I shall not give way because I believe, Madam Deputy Speaker, that many other hon. Members wish to catch your eye. I shall proceed with great alacrity.
  I make the point again that I believe that it would be quite ridiculous to do anything other than approve the order. I appreciate the fact that hon. Members, perhaps especially those from Northern Ireland, will wish to take this opportunity to make wider and different points. I also acknowledge the fact that very many of us look forward to the time when the order can be consigned to history. We are not at that point yet and obviously the order must be approved.
  My second point arises from the opening comments of my right hon. and learned Friend the Secretary of State. I hope that he appreciates the depth and strength of support throughout the country for the position that he and the Government have adopted and for his handling of his responsibilities. I see two primary reasons for that and the first takes me back to the debate of last year. I quote from Hansard, following the precedent set by the right hon. Member for Lagan Valley, and refer to my right hon. and learned Friend's speech of 30 June, in which he said:
  "the future of Northern Ireland lies in the hands of its own people. There will be no change in its constitutional status as an integral part of the United Kingdom save in accordance with the democratic wishes of its people, and no political settlement without the participation of the main parties in arriving at it and the widespread acceptance of the people of Northern Ireland to the outcome."
  With regard to the north-south body, a little later in his speech, my right hon. and learned Friend said:
  "To impose … a structure against the will of the people of Northern Ireland would be incompatible with the principle of consent."—[Official Report, 30 June 1994; Vol. 245, c. 960.]
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  It-remains-the firm-opinion of many right-hon. and-hon. Members that that is the basis of our approach to this question and that is the reason for the support.
  A second reason for the continuing great support of my right hon. and learned Friend is the developments of the past year. No one who follows the situation can have any illusions whatever about the fragility of the ceasefires. The events of the past 48 hours or so have underlined and demonstrated that point. We have come a long way during the past 12 months, but there are still problems. The greatest is demonstrated by the orchestration of the unrest on the streets of the past few days. We know that the paramilitaries retain their structures, and that they continue to recruit, train and target. Nevertheless, the facts that exploratory dialogue has started, and that the Government seek to move rapidly to substantive talks, are great achievements, which deservedly win support.
  During the past 48 hours or so, the prisoners issue has been very much on the agenda. My right hon. and learned Friend the Secretary of State may add to his earlier comments on the subject. It remains the understanding of many of us that, although in due course this vital issue can feature on the agenda of talks, we are not yet at that stage. We must first clear the initial hurdle of the decommissioning of illegally held arms and weapons. When that has been cleared, when the paramilitaries, both loyalist and republican, have clearly committed themselves to the principle of decommissioning, when there has been agreement over the modalities of decommissioning and when there has been an acceptable start to that progress, the agenda can widen.
  It is, however, quite wrong for many well-intentioned people to argue that people who, quite unlike Private Clegg, set about their business with the direct purpose of murdering and maiming should be regarded in some way as "victims" of the troubles. They are not victims of the troubles; they were the orchestrators of them. It is to prostitute both reasoning and morality to say that people who took part voluntarily in terrorist activities are in some way victims of terrorism. That is not true, and we must reassert that point.
  The order must be approved. We have come a long way in 12 months, but let us have no illusions about the difficulties that face us. However, the broad strategy that the Government have followed, with exploratory dialogue continuing, one hopes, eventually to substantive dialogue, should command support.
  9.51 pm
  Mr. Robert McCartney: On the occasion of my maiden speech, I pay tribute to my predecessor, the late Sir James Kilfedder, a man of kindness who was without peer as a constituency Member. It was entirely in character that his maiden speech should call for the accelerated payment of pension increases for the elderly. The aged and the disadvantaged are among the many who mourn his passing.
  I am honoured to be the Member of Parliament for North Down. It is perhaps the most truly representative constituency of pro-Union sentiment in Northern Ireland. Its electors span the entire social spectrum and its main town, Bangor, has been the scene of a number of major terrorist bombings. The people of North Down share an almost universal desire for peace, but in electing me, they

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  have elected someone who is an open opponent of both the joint declaration and the framework documents as workable mechanisms for achieving peace.
  I am proud, however, that the people of North Down endorse an inclusive, pluralist Union, free from the failed ascendency badges of the past. I am aware that a maiden speech is not supposed to be controversial. If it provokes a degree of intellectual or other energy, it may be allowed.
  Mr. Mallon: Humility
  Mr. McCartney: Well, some of us are more humble than others. This evening, the Government propose to extend—[Interruption.] I believe that I am not being offered the usual courtesies of the House.
  This evening, the Government propose to extend for another year a measure that was introduced more than 20 years ago as a temporary expedient. For 21 years, Northern Ireland has been governed, in the words of the distinguished Irish historian J. C. Beckett, like a half-alien dependency in a manner that would have been objectionable in a 19th century colony.
  Arbitrary unaccountable government has turned part of the United Kingdom into what can be described only as a bureaucratic paradise. In its original and temporary form, such provision was barely defensible as emergency legislation in trying circumstances, but at least then this Parliament was solely responsible for Northern Ireland's affairs. Today, that despotic unrepresentative government is shared with a foreign power, in circumstances without precedent. There is no like situation throughout Europe.
  The presence of a minority seeking union with another state is by no means unique, even within the European Community, and the present arrangement is in breach of international conventions and arrangements for dealing with similar problems. In Northern Ireland, 1.6 million British citizens are being jointly administered in secret, like a mandated territory, and not one of the Ministers from either the United Kingdom or the Republic of Ireland enjoys the benefit of having received a single vote from any person in Northern Ireland.
  It does not help to assert that the final executive decisions are taken by the British Government by right of their claim to nominal sovereignty, or that the status of Northern Ireland within the United Kingdom will not change without majority consent. The truth is that the rights of each citizen in Northern Ireland are being systematically diminished by secret Executive action.
  The claim that Northern Ireland is different and must be governed differently is both morally and politically repugnant, and implies the form of political apartheid once condoned in the United States and the Republic of South Africa as "equal but separate". The British citizens of Northern Ireland know that their interests will always be made subservient to those of their fellows in Great Britain who have the means to turn a Government out of office.
  In Northern Ireland, the peace process is seen primarily as a mechanism for protecting Great Britain's economic interests rather than as one designed essentially to secure a democratic and permanent peace in Northern Ireland. The on-going discussions between scarcely rehabilitated—some might say dry cleaned—terrorists without any significant electoral support demonstrate the Government's true priority. Those same people are orchestrating the violence of the past few days.
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  The peace process is viewed as a disguise for marketing a political settlement acceptable to the two sovereign powers, regardless of how unpalatable it may be to the pro-Union majority. Indeed, the people of Northern Ireland believe that they, like the Czechs in 1938, are being asked to pay the price for England's peace.
  The pro-Union people from both communities desperately seek and desire peace and a permanent cessation of violence, but they could have had that 25 years and 3,000 deaths ago at the price currently on offer. Peace is not to be found in the byzantine complexities of the framework document, which is designed to effect a policy, not to achieve a peace. Its clearly recognisable bias in favour of the single solution of Irish unity makes it patently unworkable.
  Peace, I believe, can be found in the policy that I have entered this House to advocate. It is to be found in a cross-community, pro-Union majority which eschews sectarian triumphalism and embraces the principle of pluralism and socio-economic politics. It has a voice that is pro-Union, rather than Unionist, and advocates a cause that deserves to be heard. It spans both communities, and commands an expanding centre which can isolate the extremes of both terror and violent rhetoric. It redefines the Union in a way that includes everyone and excludes no one. It offers subscription to a political identity without the sacrifice of ethnic pride and cultural heritage.
  The bipartisan agreement between the Government and the Opposition has, paradoxically, not helped the cause of peace. It has been said that when this House is in tumult and filled with dissent, the real business of the people is receiving its attention, but that when this House is in pious and self-congratulatory agreement, the cause of liberty is often not well served. Those oppressed by the Government rightly rely on the Opposition to protect their rights and redress their grievances. When such help is not to be found, both freedom and justice suffer. Did I not, however, believe in the essential fairness of the British people as reflected in their representatives in this House, I should not have come here in the first place.
  The declared policy of the Government is to preserve the Union, but in reality they offer—in the opinion of many—a policy of covert institutional coercion into a united Ireland. The policy is designed to buy off terrorists who retain the means of damaging the British economy. It has been said that the discussions should continue between the Government and the representatives of Sinn Fein, who everyone knows are nothing more than the political front or aspect of a violent Provisional IRA.
  In this, as in many other matters, the British Government would perform the role of honest broker—some might say judge. But how can a judge deal with a situation impartially when he himself has an interest? The interests of the British Government are not, and never have been, entirely congruent with the interests of the British citizens of Northern Ireland. The policy is pursued against the will of a peaceful majority and of an entire community disgusted by the elevation of terrorist supporters to the role of statesmen.
  If there is one allegation or complaint made by the ordinary and decent people of Northern Ireland, it is an expression of disgust at seeing men and women, their hands still stained with the blood of innocents, being given an honoured place in discussions with representatives of Her Majesty's Government. There

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  seems to be no position that the Government say that they will defend to the end that the same Government do not retreat from within a matter of weeks.
  One of the more novel aspects of political life in Northern Ireland is the remarkable semantic athleticism displayed by members of the Government team. Parallel progress is one term which I heard this evening for the first time. I add it to parity of esteem and a working assumption of permanence. All those terms are difficult to understand.
  Parallel progress presumably means that there will be some equal movement in tandem by both sides to the argument. We have heard of troop withdrawals, roads being opened and observation posts being dismantled. Where is the parallel progress and balance being displayed by those terrorist organisations with whom the Government would seek to negotiate? They continue to train, to observe and monitor the whereabouts, the goings, the to-ings and fro-ings, of members of the security forces. They continue to test even more wicked and awful weapons of destruction.
  I am so recently elevated from the ranks of the governed—not to the ranks of those who govern, but to the ranks of those who observe that process a little more closely—as to be able to make some comment of, I believe, an objective kind upon what ordinary people think. The ordinary people of Northern Ireland do not, I venture to say, see matters relating to the peace process with quite the optimism of Her Majesty's Secretary of State for Northern Ireland.
  I should like to say something finally about the declared policy of new Labour, which is said to be unity by consent. I pose the Opposition this question: would they be equally dedicated to union by widespread consensus if that can be patently demonstrated? For my part, I believe that new Labour could be so persuaded, because I believe it to be a party of principle rather than expedience. [Interruption.] Yes, it is a party of principle because experience teaches those who live in Northern Ireland that the Labour party in office has given greater support to the maintenance of the Union than Her Majesty's Government of the Conservative party. That Government have been loyally followed through the Lobby over a lengthy period by my currently estranged colleagues of the Ulster Unionist party while the people of Northern Ireland have witnessed what they believe to be an on-going weakening of their constitutional position.
  The cause of democracy demands an end to secret government and requires the restoration of an accountable Administration, reflecting the will of the overwhelming majority of those representative of the entire community in Northern Ireland.
  10.7 pm
  Mr. Peter Robinson: It is not merely the exercise of the conventions of the House that encourages me to congratulate the hon. Member for North Down (Mr. McCartney) on his thoughtful and challenging address. He is, after all, my Member of Parliament as a resident of North Down, at least until the boundary revisions take place.
  Mr. John D. Taylor: Hear, hear.
  Mr. Robinson: The right hon. Gentleman no doubt hopes to be my Member of Parliament after the next election.
  The hon. Member for North Down gave us a brief analysis of events in Northern Ireland, one with which I concur. That will not be a shock to the Secretary of State. I believe that the hon. Gentleman will make a valuable contribution to debates within the House. Many of us, having had a trailer this evening as he skirted the bounds of parliamentary convention, will look forward to the occasions when he can take the handbrake off and let loose in the House. My colleagues and I look forward to working closely with him in the years ahead. I believe that we can do so for the benefit of Ulster and its people and for the benefit of the Union that we cherish.
  On the one hand, the debate this evening appears to be something of a ritual and, on the other hand, it could be said to be something of a fraud. The Secretary of State said that it was the renewal of direct rule. Those of us who live in Northern Ireland know that we do not have direct rule in Northern Ireland; it is anything but direct. The Secretary of State might be able to make that remark technically and legally, but everyone knows that he is almost the servant of Dublin. He can take no major decision without going, cap in hand, to seek the permission of the Dublin Government.
  If that were not bad enough, the Secretary of State now finds himself further confined by having to take decisions within the parameters of Irish Republican Army acceptability. When the Government take decisions for domestic reasons that depart from that yardstick, they are quickly brought back into line by IRA-orchestrated violence. Some of us will hold our breath in the next few weeks as we wait to see what sops will be offered to Republicans in order to balance—if that is a fair description—the release of Lee Clegg.
  The Government have followed a Republican agenda. They have done so from 8 December 1980 when the former Prime Minister signed the Dublin communique, which put the totality of relationships within these islands on the table for discussion, and they have continued with the Anglo-Irish Agreement of 1985, the Downing street declaration and now the framework document. The framework document, signed with the approval of John Bruton, sets up an all-Ireland body with a single purpose: to grow and grow until it exercises executive authority over the whole island of Ireland. Tory Members should blush when they reflect on how their party in government has betrayed the Unionists of Ulster.
  After 25 years of terrorism, we are being induced to believe that the disease of terrorism has been cured because, by concession and capitulation, a means of achieving some moments of respite from the pain has been discovered. There is no inherent peace in such a process. It is a surrender package, varnished with a specious and a deceitful gloss. It contains nothing that answers its appearance. Behind the facade of continuing peace, Unionists are invited to yield and to relinquish their rights and liberties. Peace is offered on IRA terms and those who are not disposed to embrace it are branded as warmongers, wreckers and spoilers.
  Meanwhile, the Provisional IRA continues to target and to train. It keeps its organisation intact while it stockpiles and develops new weapons. The IRA tells us that there is not—to quote one of its leading spokesmen

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  —a "snowball's chance in hell" of its handing over its weapons. During Prime Minister's Questions, the Prime Minister told us:
  "Prominent members of Sinn Fein were present at a number of those events. They are far from the only violent demonstrations organised by Sinn Fein in recent months. I think that everyone in Northern Ireland is aware of that fact".—[Official Report, 4 July 1995; Vol. 263, c. 140.]
  Everyone in Northern Ireland is indeed aware of that fact, but the Government have made a working assumption that the IRA has ended its violent campaign permanently. I asked the Secretary of State when he made his statement whether he would review his position in the event of violence and he said that he would do that. I hope that in his concluding remarks he will let us know what revision he has made of the IRA's permanent peace.
  Meanwhile, the guiltless victims of IRA terrorism are despised and forgotten while their murderous oppressors are elevated and rewarded. Is it any wonder that we see around us in Northern Ireland a demoralised and alienated Unionist community that has been systematically and intentionally marginalised? Terrorists are promoted and, immune to the consequences of their actions, the Government pander to the tormentors of the community. They leave in their wake a community without faith in the political process, without trust in those who govern them, without belief that democratic methods can redress their grievances and, worst of all, without hope.
  Under the cover of the renewal tonight, the Government, along with their Dublin partners, continue to pursue their all-Ireland programme. The Government raise a smokescreen to mask the betrayal by promising that their intentions will be subject to democratic consent. They do that by means of what the Prime Minister described as a triple-lock mechanism. I recall that the first of those mechanisms was that the agreement of political parties in Northern Ireland was required for the framework document proposal.
  As 13 of the 17 hon. Members representing Northern Ireland oppose that framework document, as do the two main Unionist parties representing the majority of people in Northern Ireland, does not the Secretary of State accept that there is not and will not be widespread acceptance of the framework proposals and, therefore, if the triple lock is to be applied and not to be considered a sham, the framework document should be ceremoniously shredded?
  I believe that the Government have no intention of applying the triple lock or of giving the people of Northern Ireland the opportunity to give or withhold their consent. The Government will learn that the principle of consent is not a device of political convenience to be offered and then denied. The principle of consent is more than a legal right. It is more than a political doctrine; it is a practical requirement. Without consent, Ulster cannot be governed and if the Government move to execute the framework programme the people of Northern Ireland will withdraw that consent.
  If, however, the Government wish to operate democratic principles in Northern Ireland and accept that consent does not exist for their framework proposals, they will find Unionists willing to work with them and co-operate in seeking arrangements that are capable of winning widespread power in the Province.
  My colleagues and I have already submitted to the Prime Minister and the Secretary of State an alternative talks process and alternative proposals for the
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  constitutional future of Northern Ireland. We are keen to talk to the Government about those proposals. We will not, however, enter into talks based on the rejected framework process, but if the Secretary of State seeks to engage us in those proposals which are workable and can receive the consent of a widespread section of our community, we are certainly willing to engage him in dialogue.
  I conclude for the sake of saving time, as other hon. Members wish to speak. The Government's present policy and their policies over all the years were based on the false assumption that there would inevitably be a united Ireland. I do not know whether they were convinced because of demographic changes or because they believed that the political argument had swung in that direction, but there is no inevitability about a united Ireland.
  The strength of argument in Northern Ireland shows a growing support for the Union and a more inclusive support for it. There is nothing new about the concept of an inclusive Union; that was the concept of Carson to which every traditional Unionist should be adhering. I believe that the overwhelming majority of the people—Protestant and Roman Catholic—will continue to support the Union. Instead of basing their policies on the false assumption that the Union is to be overthrown and a united Ireland is inevitable, the Government should build policies based on the firm conviction that the Union will remain and determine how best Northern Ireland should be governed within that Union.
  10.19 pm
  Mr. Seamus Mallon: It has been a rather uneasy House tonight for an Irish nationalist representative. Four elements of unionism have been heard—
  Mr. Trimble: They are all around you; you are surrounded.
  Mr. Mallon: We have heard not only the various strands of unionism which claim to represent all the people of the north of Ireland but the strand that emanates from the Government Front Bench. It has been an interesting pot pourri, and I have been trying to work out where all these strands of unionism coalesce. Of course they do not—for a very simple reason. There is no such thing as undiluted unionism, any more than there is such a thing as unadulterated nationalism. Tonight we have heard various attempts to define a form of unionism that best describes the mood and thoughts of the ordinary people of the north of Ireland.
  The ordinary people of the north of Ireland think many things. They have many philosophies and many objectives, and they have a very sensitive approach to the political process. But the one thing of which they are sure is that the most valuable part of their lives now is the peace that is on them. The most valuable part of their lives, based on that peace, is the principle of consent which, for the first time, has been accepted on the island of Ireland by every political party, by the Irish Government, by the British Government, by all the nationalist parties in the north of Ireland and by the Republic of Ireland. I do not yet speak for Sinn Fein's position, because it has not yet defined it in this regard.

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  If I may make so bold, I would point out what ordinary unionists and ordinary nationalists are thinking about at the moment. First, they are thinking about the absence of violence and killing; that is precious and it must be defended by us all. Secondly, they are thinking about the principle of consent which the British Government, along with the Irish Government, have written into the entire political equation: into the Anglo-Irish agreement, the joint declaration and the joint framework document. So the precious element of consent, which is the very contradiction of violence, is built into those three documents—which are opposed, we are told, by all elements of political unionism. One wonders who is reading unionism aright.
  I offer my congratulations to the new Member for North Down (Mr. McCartney). I apologise for my little sedentary intrusion into his speech, but I do not think that it will be the last. I wish him well in this House, and I have no doubt that he will add to my confusion as to what real unionists in the north of Ireland think and want.
  10.23 pm
  Sir Patrick Mayhew: We have had a characteristically lively debate. A good many vintage vehicles have been brought out of the garage and, with more or less noisy exhausts, have contributed to an enjoyable concours d'élégance.
  I congratulate the hon. Member for North Down (Mr. McCartney) on his election. His majority might have been a little less if the Conservative candidate had not rejected my offer to canvass for him. He began with a gracious tribute to his predecessor, Sir James Kilfedder, which all who are present in the Chamber will have appreciated. He has a great example to follow. Sir James was, as the hon. Gentleman said, a most remarkably dedicated constituency Member. I think that all of us will wish to try to attend his memorial service, which takes place in the Palace tomorrow.
  I thought that the hon. Gentleman might have been a little light. He took that approach in extolling the virtues of his new constituency, as is the custom. I can put things right. I was in the hon. Gentleman's constituency not very long ago, in Bangor. After an enjoyable visit to the council, I walked about with the mayor, Mr. Roy Bradford. It took me an hour and a quarter to travel 150 yd, so eager were the hon. Gentleman's new constituents to shake my hand, wish me well and urge me to keep up the good work.
  Mr. Trimble: Will the Secretary of State give way?
  Sir Patrick Mayhew: No. I have heard the hon. Gentleman.
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  I thank the hon. Member for Redcar (Ms Mowlam) for her welcome to me. As for the status of the team, it is well established and all its members are back. We all think ourselves very fortunate.
  I also thank the hon. Member for Redcar for the way in which she has responded to the Government's approach and the responsibilities of Opposition in the context of security in Northern Ireland. I hope that it will not do her a lot of damage if I say that I regard her attitude as highly responsible. I acknowledge that the hon. Lady is a doughty opponent on other matters of policy where she regards it as entirely right and proper to depart from the view that the Government are taking. That is an entirely proper line to take.
  We have said that in the lifetime of this Parliament we shall not proceed with the privatisation of water supply, not least because of the extremely Byzantine problems that are to be found in charging arrangements. We need not take further time about that.
  The right hon. Member for Lagan Valley (Mr. Molyneaux) is well known for not going overboard in responding to immediate changes. He is fairly canny, as most people would acknowledge with admiration. The right hon. Gentleman might have acknowledged that some 10 months have passed in which there has been an enormous reduction of terrorist violence. He might have acknowledged also that the economy has taken a pretty substantial turn for the better, that unemployment is falling fast and that employment is rising. I felt that he approached what he had to say in a negative way to which we are not accustomed. I am grateful, however, that he said that, looking to the future, he was optimistic. He was right to say that. I hope that the hon. Member for North Down will come also to share the optimism that—
  It being one and a half hours after the commencement of proceedings on the motion, MADAM DEPUTY SPEAKER put the Question, pursuant to Order [19 December].
  Question agreed to.
  Resolved,
  That the draft Northern Ireland Act 1974 (Interim Period Extension) Order 1995, which was laid before this House on 12th June, be approved.

  STATUTORY INSTRUMENTS, &c
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.),
  TRADE UNIONS (NORTHERN IRELAND)
  That the draft Trade Union and Labour Relations (Northern Ireland) Order 1995, which was laid before this House on 20th June, be approved.—[Mr. Kirkhope.]
PETITION

  Warley (Secure Unit)
  10.28 pm
  Mr. Eric Pickles: I beg to present a petition on behalf of my constituents within the village of Warley within my constituency. The petition contains more than 1,300 signatures. It represents the majority of the village of Warley, which is concerned about the granting of planning permission to itself by Essex county council to construct a secure unit.
  The petition reads:
  To the House of Commons
  The Petition of residents of the Parliamentary Constituency of Brentwood and Ongar Declares that they are opposed to the erection of a secure unit at Boyles Court on the grounds of the erosion of the Metropolitan Green Belt, impact on a Grade II Listed Building, loss of several mature trees and on grounds of public safety.
  The Petitioners therefore request that the House of Commons do urge the Secretary of State for the Environment to review the granting of Planning Permission to itself for the development of a Secure Unit at Boyles Court, Warley, Brentwood, Essex.
  And the Petitioners remain in duty bound to this honourable House.
  To lie upon the Table.

  Asthma Treatment (Leicestershire)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kirkhope.]
  10.30 pm
  Mr. David Tredinnick: I hoped—and still hope—to raise some of the problems facing asthma sufferers, but I had not bargained on having to make a speech just a day after a leadership challenge and on the night of a reshuffle. One's chances of getting some coverage in the newspapers tomorrow morning may be severely curtailed because of the remarkable events that have occurred.
  The background to the debate is simple. There are now more than 3 million asthma sufferers in Britain. Reports quote some 2,000 deaths nationally due to asthma every year, of which it is estimated that 80 per cent. are preventable. Research shows that 13 per cent. of children aged five to 17 have been diagnosed with asthma.
  The cost to the national health service in terms of prescriptions is astronomical—about £400 million a year—and the number of prescriptions has increased by more than three quarters in the past 10 years. In addition, the cost to the economy is something in the region of 7 million working days a year, £70 million in sickness benefit and £400 million in lost productivity.
  Why is the problem getting worse? Why is asthma the only treatable chronic condition in the western world which is increasing in frequency and severity? I suggest that there are various reasons. One that has been much in the news recently is house dust mites, which thrive in badly ventilated houses. We suspect that additional problems are caused by diet, smoking and traffic pollution with which I shall deal in a moment.
  There is a great deal of confusion among the public about the extent of the problem because conflicting messages are reaching them through the press. Many of those messages are scare stories. A recent report stated that asthma cases had doubled over the past 20 years and that one in five children suffered asthma symptoms after exercising. Another report said that 7 per cent. of boys and 8 per cent. of girls were taking medication for asthma. Those contentions need to be validated. My hon. Friend the Minister could do a lot worse than to commission studies enabling accurate statistics to be put across. Although I do not dispute the figures, the reports are evidence of great concern.
  In Leicestershire, a county of which I am proud to represent a part, an average of 20 people die from asthma each year, and there are approximately 50,000 sufferers there. A third of the people with asthma in Leicestershire have a substantial amount of time off work, and a third of asthmatic children are confined to bed for up to 10 days a year. A quarter of all the children with asthma have restricted sporting activity, and two thirds lose substantial time at school. In Leicestershire, we are addressing the problem through an asthma strategy group, which has been set up with the specific objective of increasing awareness through a guidelines pack, which is readily available, by supporting a school nurse asthma project for training nurses in schools, and by encouraging the development of parent support groups.

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  Leicestershire is at the forefront of counties which are addressing the problem of asthma, and I suggest to my hon. Friend that there are some lessons there that could be taken on board nationally. Leicestershire has made asthma a priority. The steering groups's developments include agreement for funding the appointment of a district asthma co-ordinator, the redistribution of £10,000 from the "Health of the Nation" budget, the development of a disease specification, which will be introduced in 1995–96, and the appointment of asthma nurse specialists in all acute units. The objectives in the local plan include a review of the adoption and implementation of clinical standards, asthma training for 90 per cent. of local nurses by 1995–96, and an audit of hospital admissions.
  Those initiatives, with the new nurse practitioner network and a community awareness and public education campaign, have greatly assisted the people who suffer from asthma in my constituency and elsewhere in the county to address the problem. Furthermore, in Hinckley, the main town in my constituency, there was sufficient concern about asthma for an asthma support group to be set up and for the mayor to choose asthma as her charity for the year. That demonstrates the concern on the ground. I have met parents in the Royal Infirmary in Leicester and in Hinckley who are members of that group and discussed their problems with them. Asthma is a terrifying experience for the parents of children who suffer from it.
  What is important about the support groups is that they help parents to understand the condition, to understand the treatment, why it is necessary, how to respond to the changes, the different uses for inhaled drugs, peak flow meters and the difference between preventive and symptomatic treatments. There is nothing more frightening than to have a child with asthma and not know what to do about it. I declare an interest as my own son has suffered from asthma and I speak from the heart when I say that it is a very frightening experience.
  Leicester city, which I do not represent, also has its own initiatives. Time prevents me from going into them in detail tonight, but pollution levels are certainly a concern. To my mind, pollution on the roads is one of the key problems that we have to address as we try to come to grips with this illness, which is on the increase. I believe that small-scale measures could achieve great effects. My hon. Friend on the Front Bench does not, as yet, represent the Department of Transport, but the need for measures to reduce the number of vehicles emitting diesel fumes is evident. There is scope for discussions with petrol supply and retail industries with a view to securing the introduction of stage II pump controls. There should be more research into the health effects of PM10s from diesel fumes. Anybody who drives along the M1, as my hon. Friend and I do many times when travelling to our constituencies, will be aware of the problems that those fumes cause.
  I referred to the issue of dust mites in the home. This is a little closer to my hon. Friend's Department. Not a lot is known about dust mites, but they cause problems for small children. These minuscule bugs live in eiderdowns and blankets. We must educate people about the problems caused to asthma sufferers by blankets that are not properly sterilised and cleaned. That could be done by means of an extended education programme.
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  I also believe—my hon. Friend will say that this is not his Department's responsibility, but he may wish to pass it on to his colleague at the Ministry of Agriculture, Fisheries and Food—that oilseed rape causes a problem, with those vast fields of yellow flowers that we see in the countryside nowadays. A couple of years ago my family stayed in a house surrounded by such fields, and I have no doubt that the gas, or scent. emanating from the flowers contributed to the respiratory problems that we experienced at the time—although I confess that my research in the Library was inconclusive.
  I have referred to some of the difficulties experienced by asthma sufferers, and some possible solutions. Westminster council has a welcome solution to the problem of traffic fumes: on-the-spot fines. A possible solution whose importance is underestimated, however, is alternative treatment. As my hon. Friend knows, I have been treasurer of the parliamentary group for alternative and complementary medicine for many years, and I believe that alternative medicine has a great deal to offer asthma sufferers. My son was treated by a homeopathic doctor. The Department of Health could do much worse than recognise the possibilities.
  I should say, in fairness to my hon. Friend the Minister, that his colleague Baroness Cumberlege recognises the need to integrate alternative medicine into the health service generally. I believe that a number of alternative treatments are relevant to asthma—not just homeopathy, but Chinese medicine and acupuncture. It is important for fundholding general practitioners and hospital doctors to understand the scope of the alternative treatments that are available. We should aim for integration of alternative and complementary medicine into the health service; my colleagues and I have campaigned for that for a long time. We also want health authorities and GPs fundholders to be free to purchase complementary therapies that would help asthma sufferers.
  As I have said, Leicestershire has been at the forefront in dealing with asthma. There are some very good support groups, such as the one in Hinckley, which help parents to understand the difficulties. There are two national requirements. First, there is poor co-ordination between the different groups responsible for asthma; voluntary groups do not have enough resources to co-ordinate their activities. My hon. Friend's Department could act decisively and effectively in that regard. Secondly, the Government could take a leaf out of Leicestershire's book and make asthma a priority in their programme. Leicestershire health authority has set aside additional resources, having reached an agreement on funding and redistributed resources from its budget.
  How effective it would be if my hon. Friend the Minister could tell us tonight that the Government will make dealing with asthma a "Health of the Nation" key objective. I believe that if he did so he would win many friends throughout the country. Asthma is perhaps the only illness of its kind that is on the increase, and affects people of all ages. We have much work to do. If my hon. Friend cannot give us an undertaking tonight to make asthma a "Health of the Nation" key objective, will he please consider the possibility in the near future?
  10.44 pm
  The Parliamentary Under-Secretary of State for Health (Mr. Tom Sackville): I congratulate my hon. Friend the Member for Bosworth (Mr. Tredinnick) on

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  raising this subject, and I commend Leicestershire health authority for the priority that it clearly attaches to asthma treatment. In doing so, it mirrors in an effective way the concerns of my Department about the burden that results from asthma, and about its increasing prevalence. I agree with what my hon. Friend said about the dreadful effects that that condition can have for children, and, indeed, for their parents.
  As my hon. Friend knows, asthma is estimated to affect about 4 per cent. of the population sufficiently severely for them to require regular medical supervision. We would estimate that there are some 2 million sufferers in England, or perhaps 2.5 million sufferers in the United Kingdom. A broad range of statistics on asthma was brought together in "Asthma: An Epidemiological Overview", which was produced by my Department and which I launched on 22 March this year. Recently, I supplied my hon. Friend with a copy, and I hope that he found it useful.
  Asthma costs the national health service a vast sum. The figure is about £450 million a year, of which £380 million represents NHS prescriptions. General practitioner consultations, hospital admissions and prescriptions for drugs used in asthma treatment suggest that the prevalence has been on the increase for many years.
  We do not, of course, know the causes for certain, but it is likely that they are connected with both genetic and environmental factors. It has been suggested by the media and by some doctors that the recent rise in prevalence is related to increasing levels or changing patterns of exposure to air pollutants, particularly those related to motor vehicles.
  As yet, there is no proven relationship between such pollution and asthma. Increasing levels of asthma have been recorded in countries such as Sweden, Fiji and New Zealand, which do not suffer from high levels of air pollutants. Other factors would seem to be involved, including air quality, maternal smoking and diet.
  Episodes of poor air quality make the health of some people with asthma worse by increasing either the frequency or severity of asthma attacks, but trigger factors, as they are known, for asthma also include other substances in the environment which induce allergic reactions. As my hon. Friend has said, those include house dust mites, pollen, fungal spores, respiratory infections such as cold and flu, and events such as exercise, emotion and stress. Some trigger factors could clearly be more easily avoided, such as exposure to cold air, to which some asthma sufferers are particularly susceptible, pets and animals, some medicines such as aspirin, and cigarette smoke.
  I was interested to hear my hon. Friend's comments on the possible effects of road traffic emissions on asthma sufferers. I mentioned that the effect of traffic emissions on asthma remains uncertain. Although air pollution can exacerbate symptoms, the evidence suggests that air pollution is not the main factor triggering asthma attacks in those who are susceptible to them. Nevertheless, we remain concerned to investigate those issues further and to do what is reasonable to reduce undesirable effects of traffic emissions, which may have other effects, as well as those on asthma sufferers.
  As my hon. Friend mentioned, the Government have developed proposals for improved management of air quality, set out in the document "Meeting the Challenge",
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  which was published by my right hon. Friend the Secretary of State for the Environment earlier this year. That provides a framework within which effective policies can be developed to improve air quality, and some of the key legislation needed has been included in the Environment Bill.
  Public health policy for asthma is aimed at keeping sufferers free of asthma symptoms, to enable as normal a life as possible. That is achieved by sufferers knowing what their individual trigger factors are and how to avoid them, and knowing what practical steps and medicines they may take to control their symptoms. Asthma is combated by provision of health care resources to enable people to manage their own conditions as far as possible.
  It is, of course, a matter for the professions concerned, and the British Thoracic Society produced revised guidelines in March 1993 which included advice on how patients should manage their asthma. The Department of Health drew the guidelines to the attention of health authorities in December of that year. I remind the House that it is for local health purchasers to determine the priority to be given to asthma services for their own populations.
  The Department of Health has provided a national framework for the provision of primary care for asthma in the new arrangements for health promotion and chronic disease management which we introduced in July 1993. Asthma is one of the target areas of that programme. Under it, general practitioners are eligible for fixed payments for setting up and overseeing an organised programme of care for asthma. Over 90 per cent. of all GPs have been approved to run such a programme.
  The advisory group on the medical aspects of air pollution episodes has also examined the evidence relating to the effects of episodes of elevated concentrations of individual air pollutants upon normal and asthmatic individuals. Since the publication of its reports, new evidence has been continually reviewed by another committee, the Committee on Medical Effects of Air Pollutants, for a range of pollutants including ozone, oxides of nitrogen, sulphur dioxide and particles.
  That committee has been asked for advice on links between asthma and exposure to low levels of air pollution. A sub-group was set up last year to examine the relevant evidence, and we expect its definitive advice in the autumn, after which a report will be published.
  Across Government more widely, my Department is working closely with the Department of the Environment and other Departments. The two Departments are organising a one-day conference in November on the causes of asthma and what everybody can do to alleviate its effects. In October last year, my Department, together with the Department of the Environment and the Medical Research Council, announced a major research initiative on air pollution and respiratory disease, including the possible links between air pollution and asthma. Over the next few years, a total of up to £5 million will be available if suitable high-quality projects are presented.
  Proposals were invited on a range of aspects, including the role of air pollutants, either individually or in combination, in respiratory disease, particularly asthma, and their possible interaction with other causes of respiratory disease. My hon. Friend referred, for example, to the role of factors such as house dust mites and tobacco smoke in asthma.

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  The effects of air pollution on health has also been identified as a priority area in the environmental health theme of my Department's programme, and a strategy for research is being developed. A number of relevant research projects are already being funded under the programme.
  The Health and Safety Executive, which is the responsibility of my right hon. and learned Friend the Secretary of State for Employment, is responsible for policy on prevention of occupational asthma. I know that the HSE is giving a high priority to reducing the incidence of asthma in that field. Its "Breathe Freely" campaign has raised awareness of the dangers of respiratory sensitisers, which are substances that create an allergic reaction in the respiratory system.
  It has also reminded employers of their duty under the Control of Substances Hazardous to Health Regulations to control exposure to them. The HSE continues to focus on respiratory sensitisers under its management of health risks campaign which it launched on 1 May.
  Mr. Tredinnick: It is interesting to hear about the range of research that is taking place. Is my hon. Friend's Department co-ordinating that research? When the Medical Research Council work and the other projects are complete, will there be a publication in which the findings will be amalgamated, so that they may be readily available to those who are concerned about asthma?
  Mr. Sackville: The principal body for carrying out research is the Medical Research Council, but there is a centrally commissioned programme in my Department, and we work closely with the Medical Research Council. I take note of what my hon. Friend says about the need to bring all these matters together, so that there can be some readily understood document which will tell all those concerned what is being done and outline the level of success that has been achieved.
  I turn to the question of public information, which relates to what my hon. Friend the Member for Bosworth has just said. More information certainly needs to be available to the public. I am sure that my hon. Friend is aware of the marvellous work of the National Asthma Campaign—the leading voluntary organisation in the subject—in offering support and information to people with asthma and their families through its national network of 200 branches.
  The NAC publishes leaflets, publications and videos, and has an asthma help line staffed by specialist asthma nurses. I understand that the help line received 20,000 calls last year. My Department is giving the NAC a grant to fund a member of staff to co-ordinate its work for children with asthma.
  In that connection, the Department for Education is in the process of drawing up a draft circular on the management of medication in schools. Its officials have
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  been working closely with my Department on this and talking to interested outside bodies, including the National Asthma Campaign. We certainly favour children with asthma being encouraged to manage their own condition as early as is consistent with their development.
  My hon. Friend called on the Government to include asthma as a key area in "The Health of the Nation". The House will be aware that that is the subject of a recent early-day motion. I should say, however, that, although the White Paper designated asthma as a strong contender for key area status, it was recognised that research was needed into its causes and into what could be done to prevent it.
  There are three criteria for key areas status. First, the area should be a major cause of premature or avoidable ill health, which asthma clearly is. Secondly, the area should be one where effective interventions are possible. There are, of course, known interventions for asthma which can potentially improve the prognosis of people who already have asthma, but much less is known about the factors which lead to the disease developing in the first place.
  Thirdly, it should be possible to set objectives and targets and monitor the progress towards them. That is certainly the most difficult of the three criteria for asthma to meet. Mortality targets, which would be one measure, would be of limited value by themselves, as—fortunately—deaths from asthma are relatively uncommon. Morbidity targets based on routine statistics would be difficult to interpret. For example, improvements in service provision could lead to an increase in numbers treated. Clearly it is important to identify effective interventions and ways of monitoring outcomes before considering whether it is appropriate to set targets.
  An ad hoc expert group has recently reported to the chief medical officer on possible interventions and targets for asthma so that it might be reconsidered for key area status in "The Health of the Nation". I assure my hon. Friend that we shall give that report full and careful consideration, together with the further reports on asthma that I have already mentioned, which are expected shortly.
  I reassure my hon. Friend and the House that the Government take the problem of asthma extremely seriously. I mentioned the range of national initiatives, and I am pleased that they are being developed locally in his area of Leicestershire. He suggested the need for a co-ordinated national policy. I shall therefore summarise our policy, which is quite simple.
  We will continue to improve our knowledge of the causes of the disease and do everything that we can to make life as normal as possible for those who suffer from this very distressing condition.
  Question put and agreed to.
  Adjourned accordingly at two minutes to Eleven o'clock.