Commons Sitting of 18 July 1995

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

    DOUBLE TAXATION RELIEF
    The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Address, as follows:
    I have received your Addresses praying that the Double Taxation Relief (Taxes on Income) (Belarus) Order 1995 and the Double Taxation Relief (Taxes on Income) (Bolivia) Order 1995 be made in the form of drafts laid before your House.
    I will comply with your request.

PRIVATE BUSINESS
  BIRMINGHAM ASSAY OFFICE BILL
  Lords amendment agreed to.
  BIRMINGHAM ASSAY OFFICE BILL

    LONDON LOCAL AUTHORITIES (No. 2) BILL [Lords] (By Order)
    Order for consideration, as amended, read.
    To be considered on Tuesday 17 October.

    BARINGS REPORT
    Ordered,
    That there be laid before this House a Return of the Report of the Inquiry into the circumstances of the collapse of Barings, conducted by the Board of Banking Supervision.—[Mr. McLoughlin.]

Oral Answers to Questions
  HEALTH

    Cycling and Walking
    Mr. Robathan: To ask the Secretary of State for Health what estimate he has made of the potential contribution of (a) cycling and (b) walking to the health of the nation. [33208]
    The Parliamentary Under-Secretary of State for Health (Mr. John Bowis): Responsible cycling and walking can improve physical and mental fitness and reduce the risk of coronary heart disease and stroke.
    Mr. Robathan: May I, as a fellow Leicestershire Member of Parliament, welcome the new Secretary of State to his first Question Time?
    I thank the Minister for that answer. Does he agree that activities such as cycling and walking can also improve blood pressure—particularly on a day like today when
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    people's blood pressure is unnecessarily raised by a fatuous and ridiculous rail strike? To that end, will my hon. Friend co-operate with his colleagues at the Departments of National Heritage and Transport, and others, including Education and Employment, to ensure that cycling and walking are encouraged by all Government Departments?
    Mr. Bowis: On behalf of my right hon. Friend, I am grateful for my hon. Friend's opening remarks; and I can confirm that he and I walked here for questions. I know of my hon. Friend's prowess as a cyclist. From time to time I am taken for a walk by my border terrier. We can certainly agree that cycling and walking are better for us than captaining losing tug-of-war teams, which he and I have both done.
    My hon. Friend's point is a serious one: deaths from coronary heart disease could be reduced if we all undertook more regular, moderate exercise. It is also undoubtedly true that the physical and mental health of the nation would be improved if we took more exercise and if there were fewer strikes by the trade unions affiliated to the Labour party.
    Mr. Tony Banks: If walking and cycling are so healthy, perhaps we should all be grateful to ASLEF for its strike, which means that people can walk and cycle to work. That is another way of looking at the dispute.
    It is all very well recommending walking and cycling in London, but the air outside is poisonous. When is the Minister, in collaboration with his colleagues, going to do something to improve the quality of our air so that it will be a pleasure to walk and cycle in London?
    Mr. Bowis: Of course, if public transport was not on strike, fewer people would be in cars, more would be on the railways, and there would be less air pollution. The hon. Gentleman is right, however, to say that the issue needs looking at. Together with our right hon. Friends in other Departments and in our committees, air pollution is being examined at present; but I hope that the hon. Gentleman will indulge in a little exercise whether or not the trains are on strike, so as to improve his mental as well as his physical health.
    Sir Jim Spicer: Does my hon. Friend agree that all exercise is important, not just cycling and walking? In that context, does my hon. Friend agree that one of the most successful campaigns in Britain was the one run by the Sports Council, in conjunction with the Health Education Authority, "50 Plus and all to Play For"? Will my hon. Friend give encouragement to a similar campaign on a continuing basis to encourage those of us who are getting on a bit?
    Mr. Bowis: First, I congratulate my hon. Friend on swimming the Thames for charity and raising, I think, some £16,000. That is a tremendous achievement. Next time, we look forward to him walking it.
    My hon. Friend is right to draw attention to that excellent campaign by the Sports Council and the HEA for sport for the over-50s. The message today goes not just to the over-50s—this links with the launch of my right hon. Friend the Prime Minister's sporting initiative, which is also good for the health of the nation—but to people of whatever age, including those over 65, to take up not only sport but moderate and regular exercise.

    Accident and Emergency Departments
    Ms Church: To ask the Secretary of State for Health how many accident and emergency departments have been temporarily closed in the last month. [33209]
    The Parliamentary Under-Secretary of State for Health (Mr. Tom Sackville): That information is not routinely collected, but I can tell the hon. Lady that the London ambulance service has no record of any temporary closures in the area of her constituency during the past month.
    Ms Church: I thank the Minister for his reply, but I am extremely shocked that such figures are not available nationally. The figures from the London ambulance service supplied to me show that in June alone eight units were temporarily or partially closed and a further seven were put on "avoid admittance". The Minister must respond to the fact that there is a serious and excess demand for accident and emergency places, particularly in London, and I ask him to review his policy, particularly on Oldchurch hospital, because at the moment the demand there is excessive.
    Mr. Sackville: Our hospitals are now seeing 13 million attendances a day which is a remarkable achievement for which the hon. Lady should give credit. This month, reasons for temporary closures included burst water mains in two cases, a power failure, an orthopaedic registrar taken ill and a shortage of junior medical staff. The hon. Lady should not seek to trivialise the difficulties that staff face.
    Sir Sydney Chapman: Having read the report of the Royal College of Surgeons containing the shocking statistic that one in four deaths in our accident and emergency departments is avoidable, does my hon. Friend agree that a significant reason for that is the fact that too many accident and emergency departments are fragmented and cannot deal with every type of accident? If the paramount priority of our NHS is to save lives, at least in our more densely populated areas there should be fewer but more comprehensively equipped accident and emergency departments which, apart from anything else, would ensure greater cover by consultants.
    Mr. Sackville: I welcome what my hon. Friend says because accident and emergency care has developed and changed more than almost any other part of the health service in recent years. Two things are needed: a network of paramedics—highly trained ambulance staff—who can treat patients on the ground and take them promptly to hospitals, and a network of high-tech accident and emergency units with access to all the major specialties. This is not about politics but about the medical facts of survival in accident and emergency units.
    Mrs. Beckett: I join the hon. Member for Blaby (Mr. Robathan) in welcoming the Secretary of State to his new responsibility. The Minister's answer about accident and emergency departments and temporary closures is extraordinary. He says that this is an area of medicine that has changed more than any other. One of the changes, as he should be aware, is that we have seen a pattern of temporary closures of accident and emergency units across the country—in Peterborough, Hull, Wales and Scotland. Clearly, there is a serious problem.
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    Does the hon. Gentleman recognise that, first, that is the kind of information that the public want and need, not the stuff in the league tables which the British Medical Association recently called pointless and misleading, and that it is his duty and that of his Department to collect information about what are serious gaps in the service?
    Mr. Sackville: The right hon. Lady is being ridiculous. The amount of time for which accident and emergency units are closed is a tiny fraction of the number of hours during which they are in operation. It is absurd to suggest that units do not inform each other of problems as they arise, or that they do not have systems enabling them to inform ambulance services.
    Closures will happen from time to time. Accident and emergency work is unpredictable: there may be large surges of demand, staff may not be able to come to work, and numerous other problems may arise.
    Mrs. Roe: First, may I add my congratulations to those that my right hon. Friend the Secretary of State has already received on his appointment?
    Will my hon. Friend confirm that consultant expansion in accident and emergency services has taken place more rapidly than in any other specialty, with more than 100 extra consultants appointed within the past 10 years?
    Mr. Sackville: That is true. The new faculty of accident and emergency came into being only a couple of years ago. There has been a rapid increase in the number of specialists, and a growing realisation that the latest techniques in accident and emergency treatment and resuscitation save many lives that would otherwise not have been saved.

    Consultants
    Dr. Wright: To ask the Secretary of State for Health what plans he has to review the working arrangements and contracts of consultants. [33210]
    The Secretary of State for Health (Mr. Stephen Dorrell): None. The working arrangements and contracts of consultants are a matter for individual national health service employers.
    Dr. Wright: Has the Secretary of State seen a recent report on consultants' working patterns by John Yates, who has advised the Government on waiting lists? In the light of that report, can the right hon. Gentleman explain why some consultant surgeons are operating five times as much as others? In particular, can he explain why some consultant surgeons who are working on maximum NHS contracts are finding it possible to work in the private sector for two or three half-days a week? John Yates has asked for a full and urgent inquiry; will the Minister give us one?
    Mr. Dorrell: Let me begin by thanking various hon. Members for their good wishes on my appointment. I hope that they will not evaporate too quickly.
    I am aware of the work that John Yates has done, but I do not agree with his conclusion, which appears to be that the planning of consultants' time is best handled at a national planning level. I think that it is best handled at the level of local management of the individual unit.
    The hon. Gentleman asked why individual consultants' working patterns vary in different parts of the national health service. The answer is that individual consultants'

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    agreements with local NHS employers vary in different parts of the NHS. I should have thought that not only Conservatives but Opposition Members would welcome that. Let me refer the hon. Gentleman to page 26 of the Labour party's NHS policy document, in which, under the heading "Staff: the most vital resource", Labour commits itself to the following proposition:
    "We favour local flexibility to meet local need."
    I agree at least with members of the Labour party who sign up to that policy.
    Mr. Rowe: I agree with my right hon. Friend about local arrangements. Does he agree with me that there is national anxiety about the work of consultants who are suspended from their own trusts? It strikes me as extraordinary that a consultant who has been suspended should be able to continue to work in the private sector without let or hindrance. There have also been far too many cases of consultants who have been suspended finding work in other trusts.
    Mr. Dorrell: I entirely agree that the maintenance of professional standards of medical conduct, both in the NHS and in private practice, is an important issue for the medical authorities and, ultimately, the General Medical Council to consider. I welcome the fact that the Medical (Professional Performance) Bill, which was passed earlier in the Session, will allow a more rigorous view to be taken by the medical authorities. I shall follow up my hon. Friend's point in that context.
    Ms Jowell: Why does the Department propose to stop collecting information about the availability and use of operating theatres? Is it not because the Government want to fiddle the figures for the number of operations that are carried out and cancelled, just as they have fiddled the unemployment figures over the past 10 years?
    Mr. Dorrell: No, it is much more straightforward than that. We should collect information that we are going to use; we should not waste taxpayers' resources by collecting information for which there is no effective use, so the test to be applied to all administrative routines in the national health service is: will this improve patient care? If it does not pass that test, the administrative routine will be abolished.

    West Sussex NHS
    Mr. Stephen: To ask the Secretary of State for Health what steps he is taking to strengthen the NHS in West Sussex. [33211]
    The Minister for Health (Mr. Gerald Malone): I am pleased to be able to tell my hon. Friend that more than £284 million, including £6 million in growth money, has been allocated to West Sussex this year for investment in health services. They will have nearly £12 million more growth money next year. There is also a five-year capital programme of more than £100 million. That represents a significant demonstration of commitment to the health of my hon. Friend's constituents.
    Mr. Stephen: On behalf of all my constituents, I thank my hon. Friend for the massive injection of cash that the Government have put into the local NHS. Will he join me in thanking not only the doctors and nurses, but the administrators, without whose skill and dedication the
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    local NHS would not have been able to treat more patients, and to a higher standard today than at any time in its history?
    Mr. Malone: My hon. Friend is right. It is team work of clinicians, administrators and everyone involved in the NHS that delivers high standards of excellent health care, but I must give him a warning. I mentioned growth money in his constituency and in that part of West Sussex. That comes from savings in bureaucracy from getting rid of regions, which the Labour party has pledged to restore. I ask him therefore to point that out to his constituents, and to tell them that, if they want that growth money to flow, they had better have a careful look at Labour party policy.

    Junior Doctors
    Mrs. Helen Jackson: To ask the Secretary of State for Health how many junior doctors are (a) contracted for and (b) working more than 72 hours per week. [33213]
    Mr. Malone: Our task forces reported that, as at 8 February this year, 768 hard-pressed on-call posts still required action to comply with our aim to bring all such posts within 72 contracted hours. That was a reduction of 88 per cent. from the position in March 1994. A further 1,776 posts in the less onerous, non-acute specialties are due to be brought down to 72 contracted hours by December 1996.
    Mrs. Jackson: I thank the Minister for his reply, but has he seen the big notices on motorways which say that tiredness can kill, and that applies to lorry drivers whose maximum working week is a mere 45 hours? Is he aware that the 72 contracted hours level that has been agreed is an average, not a maximum, and that as many as six out of 10 junior doctors may regularly be working more than 72 hours? Does he agree that an exhausted young doctor in a hospital ward where the nursing staff is overstretched must be a danger to patients' safety?
    Mr. Malone: I suggest that the hon. Lady considers the signs in her constituency, never mind signs on motorways. Northern general hospital has one of the best records in cutting hard-pressed posts—there are none at all over 72 hours. Only 14 per cent. of juniors are working more than 56 hours, which is less than half the national average, so perhaps, when she looks for success in this policy area, she might best look at home.
    Of course, we do not want junior doctors who are exhausted. That is why, since 1991, 1,150 extra doctors have been brought into the health service to help reduce hours and why we are determined not just to reach our targets on the 72-hour commitment, but to work with junior doctors to ensure that the real time worked comes down to 56 hours as well.
    Mr. Harry Greenway: Why do some junior doctors work much longer hours than the average and than those who work a normal week? Is better management required? Is work going on to achieve that?
    Mr. Malone: My hon. Friend is right to point out the variations that take place across specialties. The reason for that is straightforward. Different specialties require different work patterns. For example, in some specialties, a large proportion of the time is spent on call; in others,

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    the work is especially active. That is the reason for the variation across specialties, but of course we are trying to ensure that we come within the overall targets set.
    Mr. Nicholas Brown: I congratulate the Minister of State on surviving the ministerial reshuffle. Given the increasing commercial pressures being placed by the internal market on hospital trusts, and given that the Government recently announced that the contracts of junior doctors are to be held by the trusts, not by the region or the Department, will he confirm that the hours worked by junior doctors now stand to be negotiated locally and that the wages and conditions of junior doctors also stand to be negotiated locally by the hospital trusts?
    Mr. Malone: May I congratulate the hon. Gentleman on not being whisked off to Australia with the Leader of the Opposition to deliver a lecture, but remaining here to ensure that the health policy set by his leader is observed by the right hon. Member for Derby, South (Mrs. Beckett). The question of junior hospital doctors' contracts and the custody of them is perfectly straightforward. They are best held at trust level. If they were held at regional level, we should have the curious experience of doctors becoming civil servants, which is not what anyone wants. The details are still being discussed with junior doctors but we are alive to their concerns. Deans will be responsible for the educational aspect of their contracts. I hope that we shall be able to resolve the matter in the not too distant future.
    Mr. Waterson: Does my hon. Friend agree that the best measure of the Government's success in this area is not only that 96 per cent. or so of junior doctors are meeting the new deal targets on hours but that we are beginning to hear comments from the profession itself suggesting that junior doctors are missing out on vital experience because they are required to clock on and off, as it were, to meet some of those targets?
    Mr. Malone: My hon. Friend is quite right to point out that such comments are increasingly being made by junior hospital doctors, but, despite that, I must stress the Government's commitment to ensuring that those targets are met. We are determined that they should be met, but it depends, of course, how each trust configures the service. It must be done with two things in mind: reducing the burdens on junior doctors and ensuring that they get proper and flexible training.

    Parents (Travel Costs Allowance)
    Ms Lynne: To ask the Secretary of State for Health what plans his Department has to review the travel cost allowance and facilities provided for overnight accommodation for low-income parents of children undergoing major surgery outside their locality. [33214]
    Mr. Bowis: The 1993 Audit Commission report "Children First" showed that most hospitals provide facilities for parents to stay overnight at no charge. The hospital travel costs scheme for taking a child to hospital is kept under review. Community care grants for hospital visiting of children are a matter for my right hon. Friend the Secretary of State for Social Security.
    Ms Lynne: I am grateful to the Minister for that reply, but does he not think it unacceptable that parents whose children have to have major surgery in an area outside
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    their own have to search for funding either from the social fund or from charities to enable all their costs to be met? A constituent of mine eventually managed to obtain funding from the social fund, but it did not meet all the costs. She went to see her daughter who was having surgery in Birmingham but found it very difficult to manage. Will the Minister review the situation and introduce a rule whereby all NHS hospitals provide not only accommodation but transport costs?
    Mr. Bowis: The hon. Lady says that families should not have to hunt for funds. I have here a guide that contains information for parents of children going to hospital. We have a very good system of support for families on low incomes—if they are taking a child to hospital, they are covered by the hospital travel costs scheme and if they are visiting, they can have access to social fund community care grants. There is discretion for those above income support level if their journeys are regular and frequent.
    The hon. Lady should think carefully about what she said about travel beyond local boundaries. If a child is ill, one of course wishes that child to go wherever the best treatment is, and there are now many hospitals in major centres around the country where careful consideration is given to the needs of families. Increasingly, there are beds for parents and even beds next to the children's beds. I hope that the hon. Lady will consider what a success story that is.
    Dame Jill Knight: Will my hon. Friend not follow that line of questioning and give help only to children who have had major surgery? Does he accept that although leukaemia sufferers, for example, may not need major surgery, their parents need to be with them? Is he aware that voluntary bodies have set up hostels for just such cases, as happened in Birmingham? Will he listen with a sympathetic ear to any of them who ask for help?
    Mr. Bowis: I will always listen with a sympathetic ear to my hon. Friend. I know well of the success story of the voluntary hostels in Birmingham to which she has referred and I shall certainly look at it. As I promised, we shall keep the whole scheme under review. She knows too of the remarkably good facilities in the Birmingham children's hospital, with some 29 parents' beds and five flatlets available for families. There has been progress in that area and we want it to continue.

    Cigarette Smoking
    Mr. MacShane: To ask the Secretary of State for Health what action his Department is taking to reduce the prevalence of cigarette smoking among young people; and if he will make a statement. [33215]
    Mr. Sackville: Action is being taken across government to reduce smoking among young people.
    Mr. MacShane: Is the Minister aware that for many people the quintessential image of life in Conservative Britain is a young school girl or school leaver with a fag drooping out of his or her mouth? Is he further aware that the incidence of smoking among school girls is on the increase and that the money allocated to campaign against it has been cut by half in the past 12 months? Is not the fundamental problem that the Conservative Government

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    take any money in any form from tobacco companies rather than legislate in advertising or any other sphere to put the health of our young people first?
    Mr. Sackville: A Government who increase by a huge figure the taxation on tobacco in every Budget are hardly trying to encourage tobacco producers or the use of their product. The hon. Gentleman thinks that he is a good European. He may like to ask his friends in Brussels why they continue to pay £1 billion a year for the production of tobacco in southern Europe, and why at least one European country taxes tobacco so low that cigarettes are sold at a fifth of the level in this country. He might like to consider whether behind his question and his new-found interest is a certain whiff of Euro-hypocrisy.
    Mrs. Lait: Is my hon. Friend aware that one of the reasons why there has been an increase in smoking among young people is the prevalence of cheap, smuggled tobacco? What is he doing in the Council of Health Ministers to raise public awareness of that issue in the other European countries?
    Mr. Sackville: We are doing everything possible to persuade our European partners, in the spirit of harmonisation, to increase their taxation on tobacco. Of the major countries, we are by far the largest taxer of tobacco. I agree with my hon. Friend that just as it is very difficult to persuade young people not to do things on the ground that it is bad for their health, it is also very difficult to persuade them not to buy cigarettes cheaply across the channel and bring them into this country.
    Mr. Kirkwood: Is the Minister aware of the new moves being taken by the public health authorities in the United States to consider making tobacco and nicotine controlled substances under the dangerous drugs regime? Will he assure the House that the Department of Health will watch carefully what is happening in that regard? Would not the most effective way of dealing with smoking in young people be for the new ministerial team simply to ban the advertising of cigarettes available to young people?
    Mr. Sackville: Having brought the accursed habit of smoking from the American colonies originally, perhaps we can learn some lessons from them on how to reduce consumption here.

    GP Fundholders
    Mr. Duncan Smith: To ask the Secretary of State for Health how many fundholding general practitioners there are in Redbridge and Waltham Forest district. [33216]
    Mr. Dorrell: There are currently 86 general practitioners who are fundholders in the Redbridge and Waltham Forest family health services authority area serving an estimated 44 per cent. of the population.
    Mr. Duncan Smith: I thank my right hon. Friend for that information. Does he agree that one of the great success stories of fundholders has been the fact that they have helped improve standards across the board for all general practitioners by the use of innovation and best practice, not only by driving down the cost of the drug budget, but by bringing areas of medicine into their practice? Will my right hon. Friend undertake to do two things as a result: first to make it even easier for other
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    practitioners to become fundholders as fast as possible, and secondly to expose the nonsense of the Opposition, who seek to level downwards to get rid of best practice and innovation and to crush the whole idea of improvement among general practitioners?
    Mr. Dorrell: I entirely agree with both my hon. Friend's propositions. He will know that we are developing fundholding by extending the concept to include the total purchase of health care for a particular resident population and by extending it down the patient list size. There is now a fundholding scheme for relatively small general practices. Both of those are welcome developments which follow through the Government's policy of giving real budgets to doctors to allow them to make real choices. That is in preference to Labour's policy, which is to give notional budgets to doctors to allow them to make notional choices.
    It is an extraordinary commentary on the Labour party that, when it is given the choice between regional health authorities and fundholding practices, it chooses to keep regional health authorities and to abolish fundholding practices. That, of course, is before we have heard the word from Hayman Island about where the policy should go next.
    Mrs. Beckett: Surely the Secretary of State must be aware that, although there is no evidence to justify the statements just made by the hon. Member for Chingford (Mr. Duncan Smith)—there is no proper evidence and no evaluation behind those statements—there is growing evidence that GP commissioning is both more effective and less expensive than fundholding. As the Secretary of State seems to have overlooked them, I draw to his attention the recent remarks by Duncan Nichol, the former head of the health service executive. He said that he preferred GP commissioning and then said:
    "You don't necessarily need the budget in your hand but you need to influence it."
    As the evidence is on the side of GP commissioning rather than fundholding, why are the Secretary of State and his colleagues trying to discourage commissioning? Why are they wasting money and risking fragmenting the health service by forcing people to become fundholders?
    Mr. Dorrell: The right hon. Lady says that there is no evidence; that is not true. The efficiency with which fundholders use their resources has been assessed at between a 3.5 and 4 per cent. improvement year by year. The total cost of the administrative element of the fundholding budget is between 2 and 3 per cent. Even if one assumes that the total cost is extra cost, it is actually paid for by the efficiency achieved by fundholding doctors. In terms of the choice between notional commissioning and hard budgeting, I should like to hear the right hon. Lady explain why she thinks that a doctor is better able to deliver value for his patients if he is given a notional budget than he is if he is given the opportunity to commit real money to buy real care from real health service providers.

    Waiting Lists (Dorset)
    Mr. Ian Bruce: To ask the Secretary of State for Health what assessment he has made of the trend in waiting lists in Dorset compared to the rest of the country. [33217]
    Mr. Malone: The numbers of patients on waiting lists fell last year both in Dorset, by 1.3 per cent., and nationally, by 2 per cent. More importantly, Dorset hospitals have made considerable progress in reducing waiting times.
    Mr. Bruce: Does my hon. Friend agree that much of the success of the hospitals in Dorset can be explained by exactly what the right hon. Member for Derby, South (Mrs. Beckett) asked for—the evidence? The evidence is that going ahead quickly with fundholding and trusts has been extremely successful. Will my hon. Friend congratulate the people in the NHS in my constituency and throughout Dorset on their work? There is, perhaps, one cautionary tale. I would be grateful if my hon. Friend would look at dentists in Dorset to see whether he can get them as well sorted out as the rest of the health service in Dorset has been.
    Mr. Malone: On the last point, I am of course happy to look at the position of dentists. I am also happy to congratulate all those who work in hospitals in Dorset. There have been fantastic achievements. There were 97 six-month waiters in the West Dorset General Hospitals trust in September 1994. That figure is now down by 100 per cent. There was one six-month waiter at the Poole Hospital NHS trust in 1994; that figure is down by 100 per cent. The Dorset Healthcare trust had only three six-month waiters in 1994; that figure has been reduced by 100 per cent. At the Royal Bournemouth and Christchurch Hospitals NHS trust, there were 333 patients who had waited for more than six months at 30 September 1994; that figure is down by 100 per cent. That is a 100 per cent. success rate for west Dorset. My hon. Friend is right to congratulate all those who are responsible for delivering it.
    Mrs. Golding: The Minister may be interested to know that I worked in the Dorchester hospital many years ago. For that reason, I have taken a keen interest in what is happening in the area. The Minister quotes figures. He should be aware that 811 operations were cancelled in Dorset in the past financial year and that 20 per cent. of the patients involved were not readmitted within one month as agreed in the charter. The Minister will also know that nationally in the three months to March 1995, there was a 22 per cent. increase in operation cancellations. The number of patients who were not readmitted within one month increased massively to 49 per cent. on the previous three months.
    There is great concern that so many operations are being cancelled, often at the very last moment when patients have received their pre-medication and have been fully prepared for the theatre. Surely the Minister cannot continue to be complacent. The situation is causing extreme distress and inconvenience to many people, especially to children. What does he intend to do about it?
    Mr. Malone: I welcome the hon. Lady to the Dispatch Box and to her responsibilities. Cancellation of operations across the country as a whole is a matter for concern, and one that individual hospitals are addressing. Only last week I visited Basingstoke hospital, where a pre-admissions ward has reduced cancellations almost to zero. We must make such initiatives widely known throughout the country, so that the problem can be dealt with.

    Resource Allocation
    Mr. Timms: To ask the Secretary of State for Health when and how he intends to implement the modified weighted capitation formula in allocating resources to health authorities. [33188]
    Mr. Dorrell: The modified formula will be used as the basis of allocations to the new health authorities in 1996–97. Implementation will be gradual in order to safeguard continuity and stability of funding.
    Mr. Timms: The Secretary of State will be aware that the York university report commissioned by the Government and published in October showed conclusively that inner-city areas such as mine do not receive an adequate share of health service resources. In the light of that information, is the right hon. Gentleman satisfied with the fact that it has taken so long to introduce the new formula, and is he as alarmed as I am by the fact that, this year, for the first time, 24 per cent. of the resources allocated to health authorities are being distributed without reference to deprivation criteria? What initiatives can he announce to the House to ensure that people living in areas such as mine receive a fair deal in the allocation of health service resources?
    Mr. Dorrell: The hon. Gentleman asked what initiatives we have to ensure the fair allocation of resources throughout the health service. I entirely agree that fair allocation of resources is an important priority; that is why the York university work was done, at the Government's request, to ensure that the weighted capitation formula represented a fair way of distributing resources to purchaser health authorities. As for the hon. Gentleman's question about the 24 per cent., the York university work covered roughly 76 per cent. of health care—in-patient and day-patient care—but did not cover the assessment of need for community and other services. That element of health service care not covered by the York university work accounts for 24 per cent. of total resources. That is why that element is not covered by the formula.
    Mr. Jenkin: Does my right hon. Friend agree that in areas such as my constituency of Colchester, North there has historically been a lack of funds because of the unfair distribution of resources? I welcome the new formulae. Does my right hon. Friend also agree that waiting lists in places such as north-east Essex reflect the problem of unequal funding rather than a lack of efficiency in hospitals?
    Mr. Dorrell: My hon. Friend is right to say that the allocation of resources to his constituents needs updating. That is why we have changed the formula, and why the new formula will be used to distribute resources in future. [Interruption.] The right hon. Member for Sedgefield (Mr. Blair) has returned to us, and it would be wrong of me to let this moment pass without welcoming him back from his travels. Moses went to Mount Sinai and the right hon. Gentleman has been to Hayman Island. It is right for the whole House to welcome him on his return.
    Mr. Bayley: The Secretary of State paid a fulsome tribute to the York university researchers who did the work on which his new NHS funding formula is based, but he did not answer the question asked by my hon. Friend the Member for Newham, North-East

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    (Mr. Timms).Why has the Department entirely removed the needs weighting for the community health services part of the funding formula? When will the Government start increasing funding for underfunded health authorities in inner cities and in the north so that everybody in the country will get an equal and fair share of NHS funding?
    Mr. Dorrell: The answer is that the formula does not apply to the 24 per cent. to which the hon. Gentleman referred because it is not designed to apply to it. He asked when the process of change is to start, but the answer is that it has already started. This year, the regional health authority allocation to district health authorities is informed by the new formula, and we will ensure that future distributions are also informed by the formula.

    Finchley Memorial Hospital
    Mr. Booth: To ask the Secretary of State for Health if he will make a statement about the Finchley Memorial hospital. [33189]
    Mr. Bowis: The Finchley Memorial hospital is an excellent example of a community hospital providing a range of services to local people including rehabilitation and respite care, out-patient clinics and therapy services.
    Mr. Booth: My hon. Friend commends the Finchley Memorial hospital as a community hospital and for its excellent work. In launching the neighbouring community hospital in Edgware, will he hold up the Finchley Memorial hospital as an example of best practice, and so take the scare out of the scaremongering of Opposition Members?
    Mr. Bowis: My hon. Friend is absolutely right. The hospital is part of a pattern for the modern health service in providing community services, and those services have been backed by a further £15 million of primary care from Barnet health authority. That should provide a pattern for the future of which my hon. Friend can be proud.

  PRIME MINISTER

    Engagements
    Mr. Keith Hill: To ask the Prime Minister if he will list his official engagements for Tuesday 18 July. [33178]
    The Prime Minister (Mr. John Major): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Hill: Does the Prime Minister share—[Interruption.]
    Madam Speaker: Order. I must hear the question. Hon. Members must stop shouting.
    Mr. Hill: Does the Prime Minister share the public's concern about hon. Members who peddle political influence for private gain? If so, why is he rejecting Lord Nolan's plan that earnings from such activities should be declared? Where does he stand on the matter? Why, for once, does not he give a lead?
    The Prime Minister: When the hon. Gentleman began, I thought that he was going to comment on the rail strike. The fact that he is sponsored by the National Union of
    1446
    Rail, Maritime and Transport Workers might explain why he did not. The House will have an opportunity to discuss the matter that the hon. Gentleman has in mind, and I look forward to that.
    Mr. Sumberg: To ask the Prime Minister if he will list his official engagements for Tuesday 18 July. [33179]
    The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.
    Mr. Sumberg: Now that we have seen the quite ridiculous spectacle of the Labour leader travelling around Australia passing himself off as Margaret Thatcher, is it not time that my right hon. Friend reminded the House that while he was actively working in support of Margaret Thatcher's policies of low taxation, a strong national defence and moderate trade unionism, that very same Labour leader was actively and consistently opposing every single one of those policies?
    The Prime Minister: It seems to be the case that the Labour party in opposition today supports the policies that it opposed so vigorously in the 1980s. I have no doubt that the Labour party in opposition in the future will support the policies that it so vigorously opposes today.
    Mr. Blair rose—[Interruption.]
    Madam Speaker: Order.
    Mr. Blair: I would have slightly more respect for Conservative Members who say how shameful it is to have dealings with the Murdoch press if they had said that at the time of the 1992 general election.
    I have given the Prime Minister notice of this question on Bosnia. After the appalling events in Srebrenica and Zepa, does the Prime Minister agree, first, that rather than talk of withdrawal, having designated safe areas and encouraged people to enter them, it is our duty to pursue all practical means to uphold the United Nations mandate and prevent further ethnic cleansing; secondly, that we should use UNPROFOR to open up the supply road to Sarajevo; thirdly, that we must impress on our American colleagues the absolute necessity of practical support for our actions rather than just rhetoric; and, finally, that, as threat after threat has been made to the Bosnian Serbs but not carried out, over the next few days we must work out our bottom line and this time stick to it, otherwise the consequences for the United Nations and for the resolution of conflicts everywhere will be lasting and disastrous?
    The Prime Minister: The right hon. Gentleman and I spoke at length about Bosnia earlier this morning and I am grateful to him for saying at that time that he would raise the general question this afternoon.
    Let me say to the House on the back of the right hon. Gentleman's question that there are, in reality, only three options for the future in Bosnia. The first is to see events escalate from the present circumstances into full-scale war, which would need a huge NATO force, including American ground troops, if that were remotely practical. The second option is to try to continue the United Nations humanitarian and peacekeeping work. That is becoming more dangerous and hazardous as day succeeds day, and carrying on that work does not guarantee prevention of the sort of attacks that we have seen at Srebrenica and are seeing at Zepa at the moment. Against that, however, the

    1447
    activities of the United Nations are still saving a great number of lives and the activities of British troops in central Bosnia in particular have brought peace to an area where we saw bloodshed and carnage on a massive scale only two years ago. The third option is to withdraw UNPROFOR and then lift the arms embargo. It is possible that events will head in that direction but I believe that, if that were to happen, it would be a course that we would regret, and that the Bosnians would come to regret as well.
    There are no magic answers. What is clear—we need to be entirely clear about it—is that it is not practical to mix war fighting with peacekeeping. Of those difficult options, I am sure that the right way is to go on trying to keep the peace, trying to provide help and trying to promote negotiations, until or unless that becomes impossible.
    It is to deal with matters such as the specific points that the right hon. Gentleman raised that we have taken the lead this week in international efforts, including the meeting of chiefs of defence staff on Sunday, the visit of my right hon. Friend the Defence Secretary to Bosnia, the visit of my right hon. and learned Friend the Foreign Secretary to Washington, and the conference that we have called for Friday this week to try to deal specifically with questions such as those raised by the right hon. Gentleman and to determine a viable way forward for the protection forces and the diplomatic process. I hope that such a way can be found because, if it cannot, the alternatives for Bosnia and the whole region are potentially catastrophic.
    Sir Ivan Lawrence: Is my right hon. Friend aware that, thanks to the Government, the police and the courts, crime has been falling throughout the country for the past two years? In Staffordshire, crime has fallen by 14.5 per cent. and in the City of London it has halved. Does that not show that we are the party of law and order? As my hon. Friend the Member for Welwyn Hatfield (Mr. Evans) would say, by opposing every toughening measure that we have introduced, that lot over there are nothing but wind and soundbites.
    The Prime Minister: I am grateful to my hon. and learned Friend. I agree with his analysis and the accuracy of pointing out that the crime statistics are indeed falling and have been falling for some time. Neither the Government nor the police are complacent about the task that lies ahead and I commend a number of police constabularies for the innovative moves that they have made—Operation Bumblebee is but one example—to target particular types of crime. My right hon. and learned Friend the Home Secretary believes that it is important to continue in that fashion. We intend to do so, and to continue to give top priority to the battle against crime.
    Mr. Beith: If there is not to be a total and irreversible humiliation of the United Nations and all that it stands for in this desperate situation, do not clear and achievable objectives have to be identified and followed through? Would not one of those objectives be the maintenance and defence of a clear humanitarian route over Mount Igman to Sarajevo to relieve and supply that city?
    The Prime Minister: The right hon. Gentleman may be right about that. It is one of the matters that is being examined at the moment with the commanders on the ground. A route over Mount Igman would be suitable in the summer but perhaps less suitable in the winter. What
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    is necessary for Sarajevo is an access and egress route in both summer and winter, but I do not deny the importance of having proper access and egress over Mount Igman.
    The right hon. Gentleman and others should appreciate that it is necessary to look at the wider question as well as individual snippets of policy, such as the proposed route, in order to get a proper view of what is practicable and what it is possible to ask the forces to do and to maintain. I repeat that one cannot mix war fighting with peacekeeping. It is important for the safety of our troops and protection forces for that to be recognised. There is an element of action that can be taken, but we must leave it to the commanders on the ground to determine precisely where that line is drawn, unless the western democracies are prepared to cross that line entirely towards a war-fighting role. I see no indication that those powers are prepared to do that.
    Sir Malcolm Thornton: Will my right hon. Friend join me in congratulating the Royal Liverpool Philharmonic orchestra and its management on the completion of a highly successful summer pops concert programme that has given pleasure and enjoyment to 25,000 people? Will my right hon. Friend also reflect on the fact that it was held in the Merseyside development corporation area, which represents a continuing commitment to the Government's wish to regenerate the inner-city areas?
    The Prime Minister: I am happy to congratulate everyone concerned on what was clearly an attractive and worthwhile event. My hon. Friend is right to point out the proposals that we have carried out for some years to regenerate the inner-city areas. There is a good deal more to come, and I believe that people up and down the country will welcome it.
    Mr. Winnick: To ask the Prime Minister if he will list his official engagements for Tuesday 18 July. [33180]
    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.
    Mr. Winnick: Do the Prime Minister and the leaders of other western democracies understand how deeply betrayed the people of Bosnia feel? They live, or did live, in so-called safe areas, but they have been given no protection in the face of Serbian aggression. If it was right, as I believe that it was, for the House to pass legislation about alleged Nazi war criminals living in Britain, what are we and the international community going to do about those war criminals in Bosnia today who are ethnic cleansing, mass murdering, raping and committing other such war crimes? Will any action be taken to bring those war criminals to justice?
    The Prime Minister: The hon. Gentleman knows the answer to that because it has been given in the House on a number of occasions—he knows that the answer is yes. I know that the hon. Gentleman feels deeply about this matter, but he should not underestimate the work done by the aid agencies and United Nations troops, who have aided those agencies to carry out work that otherwise would have been impossible to complete. Many people are alive today who would not have been but for that action, which was largely led by this country and British troops.
    Mr. Churchill: I fully appreciate the difficulties confronting my right hon. Friend in the decisions that he

    1449
    must take with his fellow national leaders over Bosnia. Is he aware, however, that the honour of Britain is engaged in the defence of the safe haven of Gorazde, which the Government established, and which is guarded by 200 Royal Welch Fusiliers? Is it not now incumbent on us to ensure the safety of those tens of thousands of the civilian population who have flocked there? Will he make sure that we and our allies, together with the United States, do all in our power to ensure that Gorazde does not fall?
    The Prime Minister: I am conscious of that, but my hon. Friend would be the first to realise that it would not be appropriate for me to expand on that matter.
    Mr. Illsley: To ask the Prime Minister if he will list his official engagements for Tuesday 18 July. [33181]
    The Prime Minister: I refer the hon. Gentleman to the reply I gave some moments ago.
    Mr. Illsley: Does the Prime Minister realise that the recommendations of the Greenbury committee will do nothing to curb the obscene pay rises that have been
    1450
    awarded to the directors and chief executives of privatised utilities? Does he further realise that the announcement yesterday about taxation will affect the half a million ordinary employees who have share options? Is it not time that the Prime Minister took action to curb excessive pay awards in major companies rather than increasing the tax burden on ordinary employees?
    The Prime Minister: I know that it is coming to the end of term, but that is pretty rich from the hon. Gentleman. The Labour party has been calling for share options to be taxed as income for some time. Just as some Members now appear to be calling for a 50 per cent. tax rate on earnings, here is the hon. Gentleman talking about reducing taxes. There seems to be a lack of conjunction between the Front Bench and the Back Bench.
    As far as other matters are concerned, I believe that the right hon. Member for Sedgefield (Mr. Blair) said yesterday, some way away,
    "There is, believe it or not, still prejudice against success".
    Well, there sits the prejudice—right along the Labour Benches.

Business of the House
3.30pm
The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): I should like to make a short business statement. The business for tomorrow—[Interruption.]
Madam Speaker: Order. This is a most important statement, which the House should pay attention to. Would those Members who are leaving please do so quietly, because the remainder of us want to hear what it is all about?
Mr. Newton: The business for tomorrow will now be as follows:
Until 2.30 pm, there will be debates on the motion for the Adjournment of the House.
For three hours, there will be a debate on the First Report of the Select Committee on Standards in Public Life.
Consideration of Lords amendments to the Children (Scotland) Bill.
That will be followed by a debate on Bosnia on a motion for the Adjournment of the House, for a further three hours.
Mrs. Ann Taylor: May I thank the Leader of the House for that statement, and say that we recognise the need for a debate on Bosnia in the present circumstances? Obviously, he is right to make arrangements for the House to discuss that specific matter in a specific debate, rather than using the Wednesday morning debate for that purpose. We shall also understand if the Prime Minister and the Leader of the House feel it necessary to recall Parliament in the recess, given the speed with which events may move.
May I ask the Leader of the House whether he can clarify the position of the Foreign Secretary, who was here a few moments ago for Question Time? I understand that the Foreign Secretary is going to Washington shortly. Surely it would be possible for him to delay that visit so that he can participate in that debate tomorrow, and surely it will be right for him to do so.
Finally, I do not want to quibble with the statement that the right hon. Gentleman has just made, but, in view of the fanfare last week when the Prime Minister launched his sports policy, may we ask whether that debate will be rearranged—or will sport be put back on the back burner?
Mr. Newton: I welcome the hon. Lady's generally constructive and supportive remarks. I shall return to her last point in a moment.
As far as the debate on Bosnia is concerned, my right hon. and learned Friend the Foreign Secretary is going to Washington, as my right hon. Friend the Prime Minister said, and I believe that most people in the House will regard it as important that he should play his full part in the international discussions that need to be associated with effective action in Bosnia. The debate in the House will be taken on behalf of the Government by my right hon. Friend the Secretary of State for Defence and my hon. Friend the Minister of State, Foreign and Commonwealth Office, the hon. Member for Upminster (Sir N. Bonsor).
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There is, of course, no suggestion of putting sport on the back burner. I believe that it will be universally agreed that Bosnia must come ahead of it tomorrow, but of course I shall make every effort to provide time for a debate on sport in the spillover.
Mr. Archy Kirkwood: I am happy to endorse the change in the business for tomorrow; it is absolutely right and proper that the House should have an opportunity to discuss the Bosnian situation before the summer recess. Will the Leader of the House give an assurance that it will not be a substitute for a recall of Parliament, if the circumstances dictate that Parliament should be recalled?
Secondly, I hope that I can assist the right hon. Gentleman by assuring him—I think that I speak for most hon. Members from Scotland—that the Lords amendments to the Children (Scotland) Bill are largely uncontentious and should be taken more or less formally to enable the House to go straight to the debate on Bosnia, as is right and proper in the circumstances.
Mr. Newton: On the Children (Scotland) Bill, I should make it clear that that business was inserted following representations from both sides of the House, and on the clear understanding that the amendments are uncontentious and should pass through the House without difficulty. The business will not impede the debate on Bosnia. I am grateful for the hon. Gentleman's affirmation of that fact on behalf of the Liberal Democrats.
On the hon. Gentleman's first point, yes, I think that I have shown—by this statement and various other changes that I have made, including the recall of Parliament during the short recess—that the Prime Minister and I are always willing to make appropriate arrangements as circumstances necessitate.
Mr. Nigel Spearing: Why did not the Leader of the House make it clear in his statement that the important debate on Bosnia was, in effect, replacing the planned debate on sport? Does he recall that, on Friday at 9.30 am, I said that, despite the presence of the Minister responsible for sport on the Front Bench, there was to be no statement in the House at 11 am, although one was made at Millwall football ground? Does not the right hon. Gentleman agree that he could perfectly easily move the motion tomorrow at 10 o'clock to suspend the rule, so that we could have a debate on sport for two or three hours? If he does not do that, he might well be accused of putting sport on the back burner.
Mr. Newton: I have already said something on that subject to the hon. Member for Dewsbury (Mrs. Taylor), and it would be a ridiculous charge if pressed. I also think that it would be ridiculous for anyone to think anything other than that, in today's circumstances, it is more appropriate to debate Bosnia tomorrow.
Mr. John Marshall: While I recognise the need to replace the debate on sport, does my right hon. Friend accept that a sum of £100 million for a sports academy gives the lie to those who say that the Government are putting sport on the back burner?
Mr. Newton: My hon. Friend is as helpful to me from below the Gangway as he used to be from above it.
Mr. Tony Banks: Why can we not have the debate on Bosnia on an Executive motion

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from the Government, so that we can vote at the end of it and the will of the House can be made known to the country at large? If the Prime Minister has his summit meeting on Friday, would it not be appropriate to suspend the Adjournment of the House for the summer recess until next week?
Mr. Newton: I do not think it would, especially given what I have already said by implication to the hon. Member for Dewsbury, and more directly to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), about our willingness to make appropriate arrangements—for example, for a recall—should that prove necessary.
Mr. Andrew Faulds: Is the right hon. Gentleman aware that his assurance about a recall of the House was perhaps not quite as categoric as it should have been? May we have an absolute assurance that, if this Government of supine gentlemen plan a retreat from Bosnia, in the scuttle they intend, the House has a chance to debate the matter before it is done?
Mr. Newton: I shall try to keep my tone down, despite the way in which the hon. Gentleman raised—
Mr. Faulds: Bloody disgrace.
Madam Speaker: Order. The hon. Member for Warley, East (Mr. Faulds) should keep his temper—nobody in the House wants to hear it.
Mr. Newton: I shall say as calmly as I can to the hon. Gentleman that, if we felt that Bosnia did not matter, we would not have recalled Parliament during the recent short recess precisely because of an important development that needed to be debated.
Mrs. Maria Fyfe: May I thank the Leader of the House for responding to a request to bring forward the Children (Scotland) Bill tomorrow, which is much appreciated by all those involved in Scotland? Will he tell us now that all possible steps will be taken to ensure that that legislation is implemented as quickly as possible?
Mr. Newton: That is the purpose of inserting the legislation in tomorrow's business, and I am grateful to everyone who has co-operated in the process, including the hon. Lady.
Mr. Chris Mullin: Why are the Government attempting to push through the draft Broadcasting (Restrictions on the Holding of Licences) (Amendment) Order 1995 on the nod this afternoon, when it was rejected in Committee only last week?
Madam Speaker: Order. The hon. Gentleman is quite out of order. We are concerned only with the very narrow business statement about tomorrow's change of business. As I am sure there are no more questions about that, we will move on to the statement from the Chancellor of the Exchequer.

Barings
3.39 pm
The Chancellor of the Exchequer (Mr. Kenneth Clarke): With permission, Madam Speaker, I should like to make a statement about the Board of Banking Supervision's inquiry into the collapse of Barings. I set up the inquiry in my statement to the House on 27 February and I have recently received the board's report from the Bank of England.
Since receiving the report, I have had to consider very carefully the legal considerations relevant to publication. I am sure that it is right for Parliament to have the report in all its detail, so that its consideration of the Board of Banking Supervision's conclusions and the lessons to be learned can be properly informed.
I have concluded that the balance of the public interest lies firmly in favour of publishing the full report. The report is being published today without any deletions, and copies are available from the Vote Office. I am very grateful to the board and to the investigating team for the huge effort they have put into compiling the report. They have done a thorough and a speedy job.
The report's main findings are: the losses were incurred by unauthorised and concealed trading activities within Barings Futures Singapore; the true position was not noticed earlier because of serious failures of controls and managerial confusion within the Barings group; and the true position had not been detected prior to the collapse by the external auditors, supervisors or regulators of Barings.
The Board of Banking Supervision was not able to gain access to all the information that it would have liked. In particular, it was unable to determine Nick Leeson's motives or whether he was acting alone, because of serious difficulties in obtaining information from Singapore. The obstacles were, I understand, legal ones, and there were some problems in providing the Singapore investigators with all the information that they, in turn, sought from London.
However, it was clearly important to ensure as complete an exchange of information as possible, and I wrote twice to the Finance Minister in Singapore seeking his help in obtaining the co-operation of the authorities there. It is regrettable that serious legal obstacles remained that prevented all the relevant documents from being provided to our board.
Leeson himself was invited to co-operate with the inquiry, but he declined to do so. Through his solicitors, he has been informed of the conclusions that the board has reached about his part in the collapse. His solicitors wrote to the board on 22 June saying that the report's conclusions were inaccurate in various respects, but they did not provide any further details of his response.
The report describes how the concealment of the true nature of dealings in Singapore and the build-up of losses from unauthorised trading began almost as soon as Nick Leeson joined Barings Futures Singapore as general manager and head trader in 1992. By the end of 1993, the cumulative loss was more than £20 million and, by the end of 1994, it was more than £200 million. Losses then leaped spectacularly in the first few weeks of 1995, and, after the collapse on 26 February, the cumulative loss was a staggering £827 million.

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Leeson successfully sought to conceal those huge losses throughout by a complex and systematic process of deception and false reporting. Such a massive unauthorised position could not have been established if there had been an effective system of management, financial and operating controls within Barings. The report details a great number of failings, and I shall give the House some examples.
The money required to fund the losses came primarily from London. It was advanced to Singapore with no independent check on the validity of the requests, or any attempt to reconcile them to any known trading position. If management in London had sought to examine the information from Singapore to support the requests for funds, they should have discovered that the information that they were being given was meaningless.
Barings management in London seem generally to have believed that the money being sent to Singapore was being lent to clients to facilitate their trading. However, the credit aspects of these advances were never formally reviewed or considered by the credit committee.
Barings management did not question why they were apparently lending more than £300 million to clients to trade when they had collateral of only about £31 million from clients for those trades. The management of Barings did not question the extraordinarily high levels of apparent profitability of supposed arbitrage dealings in Singapore, which were regarded as being without risk.
In the view of the Board of Banking Supervision, those profits should have been viewed as abnormal and questionable, and the extraordinary profitability reported in 1994 should have attracted the close and thorough attention of the management long before the collapse.
Despite Leeson's efforts at concealment, some information on the account that he used to hide his losses was available to London, but it was never analysed. No one in Barings accepted responsibility for Leeson's activities for the whole of 1994. His deception was made easier as he was not only a trader but was in charge of the so-called back office, which processed the paperwork associated with trading. In 1994, Barings' internal auditors recommended that, as a trader, he should not have this responsibility for the back office. Barings failed to implement that recommendation.
There were also serious and consistent failures and errors in the bank's exposure reports to the Bank of England and in other reports to the Securities and Futures Authority, which made it less likely that they would be alerted to evidence of a problem.
Coopers and Lybrand Singapore was the auditor for Barings Futures Singapore for 1994. In preparing these accounts, the auditor expressed the view that the controls of Barings Futures Singapore were satisfactory. This conclusion is not easy to reconcile with the lack of segregation of duties within the Singapore subsidiary which I have just described.
For both 1993 and 1994, the auditor of the London operations was Coopers and Lybrand London. The report also raises doubts over the effectiveness of its testing of Barings' internal controls. The board considers that more thorough tests would have been likely to reveal the inadequate support for the funding requests from Singapore, but the 1994 audit had not been fully
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completed, and it will never be known whether Coopers would have raised with the management the important issues which had apparently not been identified or addressed by the time of the collapse.
The independent members of the Board of Banking Supervision were separately asked by me to review the role of the United Kingdom regulators, particularly the Bank of England, in the events leading to the collapse. The board was assisted in this inquiry by a team of accountants, lawyers and derivatives experts, all drawn from outside the Bank of England.
The board does not consider that the events leading up to the collapse point to the need for any fundamental change to the framework of regulation in the United Kingdom; but there is, it concludes, a need for improvements in the implementation of existing arrangements. [Laughter.] The arrangements are only as good as the people who carry them out.
The board considers that the Bank of England reasonably placed reliance on local regulators of the overseas operations, and was also entitled to place reliance on the explanations of the management for the profitability of these operations, and on the other information provided by Barings. Although the regulatory reports from Barings to regulators did contain information that was relevant to the collapse, they did not contain material information which could have alerted the regulators to the existence of the unauthorised positions that had been taken.
The board identified a number of shortcomings in implementation by the Bank of England. It considers that an error of judgment was made in 1993, in giving Barings Brothers and Company an "informal concession" in relation to the normal obligation of a bank to notify in advance exposures representing more than 25 per cent. of its capital base. The time taken by the Bank of England to address the policy issues involved resulted in what the board judged to be an unacceptable delay of almost two years in reimposing the 25 per cent. limit. The Board of Banking Supervision was unable to determine whether the delay on the part of the Bank of England in imposing that limit was a contributing factor in Barings' collapse.
The board also considers that the Bank of England displayed a lack of rigour in the analysis leading to the decision to permit Barings Securities Ltd. and Barings Brothers to be supervised on a joint, or so-called solo consolidation, basis, and in failing to review the decision. Solo consolidation of the two companies need not have resulted in a reduction in control over the advance of funds to the Singapore subsidiary, but in the case of Barings that was the practical effect.
The report draws lessons for the management of banks such as Barings, and for regulators and auditors. The Bank of England has accepted all the recommendations relevant to it, and I am placing copies of the Bank's detailed response in the Library of the House. The only other regulator for which the Board of Banking Supervision draws lessons is the Securities and Futures Authority, which will respond once it has studied the report.
The collapse of the Barings group was clearly a very serious matter, and caused great damage to the reputation of the City of London. It has led to loss for a number of investors in Barings. However, the takeover by ING has stabilised the group, and averted the prospect of far greater loss. Nothing has happened since my earlier

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statement, and there is nothing in the report, to make me doubt my view that it would have been wrong to use public funds to rescue Barings.
Finally, I should like to remind the House of an important point. No regulatory system can provide a 100 per cent. guarantee against a bank failure, especially where there is a deliberate intention on the part of individual traders to conceal or deceive, combined with inadequate management controls. In cases such as this, it is important that lessons are learned quickly and promulgated widely, so that all parties, including the management of other financial institutions, can learn from the unfortunate example.
The speed and openness of the process of inquiry is the best way to give confidence to the public and to the City. The Bank of England has already responded positively to the report. It is essential that the management of all financial firms do the same.
Mr. Gordon Brown: We now know from today's 350-page report that the entire capital of Britain's oldest merchant bank was transferred out of the country against the law, without any supervisor or regulator either noticing or finding out.
We now know also from the exposure in the pages of the report that, along the line, Barings' managers, directors, accountants and regulators were also subject to error. We now know also—an astonishing admission from the Bank of England in the report—that there were no guidelines or systems in place to deal with the problem.
Does not the 350-page report reveal not just the blame that must attach to Mr. Leeson, who gambled away a bank and who awaits trial in Singapore, but the fact that the system of regulation designed to detect and check irregularities is now also on trial? Is it really sufficient for the Chancellor, in a statement virtually devoid of significant recommendations for policy change, to tell us that all that is needed is a new memorandum of understanding with the Securities and Futures Authority and a better understanding by the Bank of England of non-banking business and the management structure of banks—all of which we should have expected to have been automatically in place years ago? We have had a statement from the Chancellor that suggests the need rather than answers the case for reform.
Given that the report has discovered not just serious failures of controls and managerial confusion in Barings, but that warnings were ignored from 1992 onwards, why were such failings not identified or dealt with by the regulatory authorities in advance of the collapse? There is no answer to that in the report we have.
Will action be taken against the management of Barings under the Banking Act? Do we have an assurance that they will not be allowed to take senior management positions in other banks, except under the most stringent controls? Will the Chancellor join me in criticising those officials still in post whose management has left pensioners without their savings, and who have disgracefully insisted on taking their share of £95 million in bonuses? That will cause considerable public anger.
What does the Chancellor have to say in response to Mr. Andrew Crockett of the Bank for International Settlements, who warned in January of the risks arising from banks increasingly using the derivatives trade to generate their biggest profits, and with Barings, as the report says, making its system of remuneration for senior
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executives throughout the bank heavily dependent on profits generated from derivatives? Was not the system itself inherently unstable? Will the Chancellor tell us why no requirements have yet been imposed on other banks to ensure the existence of adequate and greater controls to detect excessive exposure on a daily basis?
As for the role of the Bank of England, is it really right for a junior official in the Bank to carry the can? The report reveals that just about everyone in the know in Singapore, including many newspapers—and, indeed, many in London—was aware of the problems of Barings; but not, it seems, the Bank of England, which should have been the first to know, but apparently was the last to be told.
Is it not clear that the report has provided a damning indictment of the Bank of England's whole approach to the supervision of the banking system? On page 244, the Bank admits that it relied on an informal network of understanding, and made informal concessions—as the Chancellor said—to a management that it now concedes were shambolic. It was thought reasonable to rely on local regulators—regulators who have refused to co-operate in the investigation.
A statement on page 245 symbolises the whole problem:
"There does not appear to have been any guideline or system in place within the Bank for determining … the situation".
Does that not illustrate everything that is wrong with the Bank's approach—an excessive reliance on the old boys network—and does it not demonstrate the need for tougher regulatory controls?
Can the Chancellor really be satisfied with a concluding statement in the report that says only:
"the Bank should explore ways of increasing its understanding of the non-banking business"?
Why is it only now that the Bank proposes to co-operate with the SFA in a better way, and why does it propose only at this stage
"to prepare internal guidelines to assist its staff"?
Is it not symptomatic of the whole culture of complacency that the Governor said only last August that there was no need to worry about the derivatives market, because
"We now have an expert team monitoring derivatives",
getting better all the time? Was it not also over-complacent to dismiss the Americans as "over-excited" by the need for regulation, and to say of derivatives traders such as Barings:
"These people know what they are doing, whether it's at director level or the chaps on the desk"?
These failures reflect not just incompetence, but a flawed structure of regulation. Is it not time to listen to the advice that has come from within London, from the Bank for International Settlements, to learn from the experience of the Securities and Exchange Commission, and to ensure that the regulatory system, nationally and internationally, matches the realities of global trading in the 1990s?
Will the Chancellor now set up a review to consider these matters, and also to consider whether the Bank of England should continue in its regulatory role, or should pass it to a new banking commission? After three significant and embarrassing failures—Johnson Matthey, the Bank of Credit and Commerce International and now Barings—we must do far more than the Chancellor has

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announced today to ensure effective supervision, and, for savers and investors, to ensure that there is far greater confidence in the integrity of our financial system.
Mr. Clarke: Like everyone else, the hon. Gentleman will no doubt study the report and reach sensible conclusions in the end.
First, let me deal with the Government's role. When Barings collapsed, the Government first took a full part in attempts to sort out the affair that led to ING taking over the bank, and to early fears of substantial losses being minimised. We were not panicked into using public funds to bail out the bank. I then immediately asked the Board of Banking Supervision to exercise its proper function and inquire into the matter, so that the House and the public would know the facts of the case and the lessons to be learned as quickly as possible. We were criticised for acting in that way, but the board has produced a copious report.
As the hon. Gentleman conceded, the report pulls no punches. It describes the facts in considerable detail, and it requires considerable study. Hours of reading are needed to catch up with precisely what went on in Singapore and London, in the bank and elsewhere. The report spares no one from criticism; it has exposed the failures, as far as is possible at this stage, for anyone to read.
The strictures that the hon. Gentleman heaped on Barings management are somewhat understated, compared with those in the report. So far as I am aware, all those responsible in Barings management are no longer with Barings, having left that bank as a result of action taken by the new owners and Barings. Similarly, the man most responsible for the supervision of Barings inside the Bank of England has resigned from that Bank. The attempt to get behind that and to ignore, perhaps, at this stage, on inadequate study, the report's findings on how carefully the trading in London was concealed, and how completely the failure of control inside Barings was concealed, is a mistake.
Having obtained the facts for the House and the lessons to be learned, I now commend the report to the House for study, no doubt, for debate, or for whatever else we wish to do in due course when people wish to consider this matter properly. Meanwhile, open inquiry, full disclosure and a hard-hitting, independent report are the best way of restoring confidence in the Bank of England.
Certainly we need to improve collaboration between supervisors in different countries, a process that has been well advanced by the Basle committee, but this underlines the need to take it further. It is not true that the Singapore authorities flatly refused to co-operate; there was proper reason. The Monetary Authority of Singapore and the Singapore Monetary Exchange are well-regulated bodies, and the reputation of Singapore and the City of London is high in the international arena.
On both sides of this divide, there are legal constraints imposed by the regulatory authorities on the disclosure of information, and that is the only thing that has stood in the way of the full information that will no doubt emerge in due course, when the entire Singapore and London picture is revealed.
There are failings inside the Bank, which is why 17 recommendations are addressed to the Bank and why it has accepted those recommendations and is addressing
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them, but, with the greatest respect, if one has a regulatory system that the board says is fundamentally right as a framework, it is fully effective only if the efficiency of the people operating it is as good as the ingenuity of the people who are trying to conceal information.
Frankly, just renaming the whole thing and having a new banking commission in a spirit of, "Something must be done, so let's move a lot of brass plates about and have the same people doing the regulating, but call them a different name and put them in a different institution," is a facile response to such a serious matter.
The hon. Member for Dunfermline, East (Mr. Brown) leaps off into the general question of derivatives, which is an important and serious matter. The report makes it clear that the cause of the collapse in this case was not the nature of the derivatives markets, although it is true that derivatives, because of their gearing, enable big positions to be run up more quickly than could occur in the ordinary futures market.
In that market, and in any international trading of this type, if people are skilful enough in their systematic concealing of the true nature of dealing, and if the people responsible for them, in the bank or outside, are complacent enough not seriously to get beneath it, this sort of thing occurs.
Mr. Gordon Brown: Complacent.
Mr. Clarke: The hon. Gentleman says, "Complacent." That is the criticism in the real world that could be hurled at many of the senior people in Barings and in the Bank of England.
Mr. Brown: Hindsight.
Mr. Clarke: It is all very well having hindsight. I have hindsight. The board has hindsight. I compete with the hon. Gentleman in imposing strictures on all those people who have lost their jobs. Any hon. Member putting himself in their position realises that it never crossed their minds that they might be playing some small part in such a huge and systematic process.
Obviously, however, it is clear that the systems inside financial institutions and inside the Bank of England had to be tightened up to ensure that absolutely no complacency or anything else could allow this sort of thing to slip through in future. That action has been taken because of the prompt, open and effective action of this country's Government in discharging their obligations to the House.
Mr. Tristan Garel-Jones: Is my right hon. and learned Friend aware that, during his statement, he mentioned the name of my constituent, Mr. Nick Leeson, on about a dozen occasions? Does it not strike my right hon. and learned Friend as odd, to say the very least, as it certainly does both Mr. Leeson's family and most of my constituents, that Mr. Leeson, who is clearly a central figure in this matter, should be sitting in a prison in a member state of the European Union, awaiting extradition to Singapore, when he has made it clear that he is anxious to make a clean breast of this matter in his own country?
Does it not strike my right hon. and learned Friend as surprising, in relation to what I think is a good report that will help to re-establish confidence in the City, that someone who has such a contribution to make should not have been invited to return to this country to make a clean

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breast of his position, and therefore to enhance the sort of inquiries that my right hon. and learned Friend wishes to pursue?
Mr. Clarke: I appreciate the fact that my right hon. Friend is speaking on behalf of the legitimate interests of his constituent, which is what he and I are elected to the House to do. However, it is not possible to produce a board report that does not make copious references to Mr. Leeson, given that he was personally responsible for the trading and settlement of transactions that ran up a total of £827 million in losses and broke the bank where he was employed.
When it came to publication, I carefully considered Mr. Leeson's position and the public interest. Mr. Leeson must be dealt with by due process of law on whatever charges may be brought against him in whatever jurisdiction, but it seemed to me that the overriding public interest was to restore confidence in the City of London and our regulatory authorities, and to meet the Government's obligations to the House and let the House know as much as we knew, so that it can in due course reach a considered conclusion.
As for Mr. Leeson's possible trials, he was a resident of Singapore, and therefore made himself subject to the laws and jurisdiction of Singapore. If he goes back to Singapore, he will no doubt have a fair trial—[HON. MEMBERS: "Oh."] I am sorry that half the Labour party still thinks that mention of foreigners means that there is no justice to be had. We are dealing with trading in Singapore. I have no doubt that, when considering extradition, the German authorities will consider the nature of the charges against Mr. Leeson, the prospects of a trial there, and, quite properly, German extradition law and whether he should be extradited.
The question whether Mr. Leeson faces charges in this country is a matter for the prosecuting authorities and the Serious Fraud Office, not for Ministers. It is hardly surprising that proceedings are going ahead in Germany, and the British Government can play no part in determining whether Mr. Leeson is extradited from Germany. We cannot repeat the sneers of the Opposition, who seem to think that one should not extradite Brits to foreign countries even when they seem to have been engaged in unauthorised trading activities in Singapore and the concealment of those activities, which resulted in considerable loss for other people.
Mr. Nick Harvey: The report and the Chancellor's statement are scathing about the Barings management, but what lessons are the regulatory authorities going to learn? If there is be no fundamental change, despite what the Chancellor sees as the Bank of England's lack of rigour, can we at least be reassured that there is to be new vigilance with regard to the same people running the front and back office or new restrictions on individuals' trading positions?
What comfort is there in the statement for small investors who believed that they were investing safely in the Queen's bank? Will the Chancellor press the new owners and the banking sector to compensate them, at least in part?
Mr. Clarke: The House can in due course debate the regulatory system, but the board, which put an enormous amount of work into studying the matter, concluded that the framework of regulation is not the problem.
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May I make a very loose analogy, of which I hope people will not make too light a use? In a system of law—for example, criminal law, to enter another sphere—if a policeman makes mistakes, it does not mean that the criminal law is defective and should be changed by Parliament. What is important in that instance is that the police take on board the lessons and ensure that those who work for them investigate properly and do not allow things to pass them by which should not have passed them by. That is a rough analogy with what we are facing now.
As for the hon. Gentleman's two specific points, separation between front of house and back of house, between trading and settlements, is, as I understand it, absolutely fundamental to the proper financial control of any action of this kind. I know of no one in the City of London who does not take it as elementary that there should be a separation of responsibilities between the front of house and the back of house.
That is a serious criticism of Barings in the report, but no one out there in any financial house has any grounds to believe that a new rule is required. Anyone should be caught up by his management and regulator if it is discovered that there is no proper separation. Mr. Leeson was in charge of the entire Singapore arrangement—trading and settlements—in Barings Futures Singapore.
I cannot remember the last point that the hon. Gentleman mentioned.
Mr. Harvey: Compensation.
Mr. Clarke: As far as compensation for people is concerned, the losses have been hugely reduced by the successful acquisition of Barings by the Dutch bank, as have those of the 4,000 employees of Barings, most of whom were trading successfully in a good bank and had nothing whatever to do with these operations in Singapore. If one takes a stake in the capital of a company and something goes wrong with the capital and the company goes down, it does not seem obvious to me that one can instantly look for compensation elsewhere.
Several hon. Members rose—
Madam Speaker: Order. Many hon. Members are seeking to be called, and I must ask for the co-operation of the House. I would like brisk questions, a single question from each Member, and I must ask the Chancellor for brisk answers.
Sir Peter Tapsell: Has the attention of my right hon. and learned Friend been drawn to figures published by the Bank for International Settlements which estimates that the worldwide market in derivatives grew from $1 trillion in 1986 to $45 trillion by the end of 1994; a more than fortyfold increase in eight years, to which the Bank of England now plans to add by introducing a strips market in gilts; that the co-operation between national regulators of this market is wholly inadequate; and that there is actual competition between derivative markets in various parts of the world, so that they often positively refuse to pass on information to each other—for instance, between the Singapore and Osaka stock exchanges?
Is not it clear that, unless better international regulation is introduced, we will have a succession of Barings-type collapses throughout the financial markets of the western world?
Mr. Clarke: There is indeed a huge growth in derivative markets all over the world. It is part of the

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rapidly changing nature of financial markets. I have already conceded that trading in any form of derivative with the new financial instruments now emerging is more highly geared, so that positions can rapidly become more exposed than those in ordinary cash futures markets or anything of that kind.
This report again comes to the conclusion that the collapse was not caused because we were in derivative markets. The collapse was caused because a single trader, from the moment that he arrived there, started concealing what he was doing from the authorities in London, which had a complete collapse of management controls and failed to detect what he was doing. That could have happened in any kind of market.
Subject to that, I agree with my hon. Friend about the importance of much closer collaboration between the supervising authorities in different countries. That becomes ever more important as we see these markets explode at the rate that they are doing, and I am sure that the Bank of England is in the forefront of those who want to extend the present Basle arrangements wider and wider across the globe, especially into the Asian markets which he describes.
Mr. Robert Sheldon: Does the Chancellor of the Exchequer realise that we have been in this position before? This is not the first occasion that we have investigated in this House. There have been other cases, and the same kind of complacency seems to go on from inquiry to inquiry. Does he not understand that the Bank of England's role in supervision is seriously flawed? It has good friends, it relies on the friendships that it has acquired, and that is not good enough.
The regulations we require demand a certain amount of scepticism. That is not the province of the Bank. The Bank does not behave in such a way. What we really need is a proper regulator, and the Chancellor should turn his attention to that.
Mr. Clarke: I do not think that the Bingham report can be described as complacent. Indeed, this Board of Banking Supervision report cannot be described as complacent. It is no good coming along with set attitudes before the report has even been presented and saying that is complacent or a whitewash, or anything like that. It is an extremely hard-hitting report, with positive recommendations, which have to be acted on by the Bank and by any financial institution. It is no good putting up stereotypes of the old boys network being relied on. This report gives no credulity at all to that kind of broad-brush allegation.
What happened was that the responsible people in the Bank, and one under the responsibility of the man who has now gone, gave an informal concession to the 25 per cent. limit, which was then allowed to run for two years before they were told that no such concession should be allowed. For that and other reasons, there are 17 recommendations addressed to the Bank, and they should be answered and acted on by the Bank, as they are going to be.
It is scratching about and trying to find something new to state, "Never mind the recommendations, we now want a brand new institution to be set up." A brand new institution would probably have exactly the same people
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working in it as those who work in the Bank of England. It would have to start from scratch, carrying out the recommendations of the Board of Banking Supervision.
Mr. David Shaw: Can my right hon. and learned Friend assure the House that this speedy report will result in action? We all welcome the fact that the report has been obtained efficiently and effectively. Can my right hon. and learned Friend, however, assure the House that the action that will result will be that a proper financial review will take place of the financial controls in every bank operating outside London, in respect of their derivatives, futures and options operations? It is clear that the way in which the Bank of England went about its regulation was totally inadequate, and that it did not have proper reporting systems set up in this regard.
Mr. Clarke: I very much trust that such a review is taking place in every financial institution that has been remotely involved in the derivatives market or has significant exposures of any kind. One aftermath of Barings in practice is undoubtedly that every similar institution throughout the globe is trying to ensure that its system protects it against any rogue trader exposing it to such enormous sums that the bank can be brought down or anything like it.
I trust that every institution will have in place the internal financial controls to ensure that no single trader is reporting as profit transactions that are actually losses which he is hiding away in some undisclosed account. That is what Mr. Leeson was doing in Singapore, among other things, to try to conceal and to limit his exposure in the trades in which he was taking part.
I agree with my hon. Friend. The difference is that it is no good pretending that the Government can review the internal auditing procedures of every bank in London. There is no way in which, as the board concedes, the Bank of England can go over every internal audit inside London. We all know that catastrophic errors were made in this case. All institutions, not just Barings and its new owners, the Bank of England and all other regulators, should now be reading the report and taking action, as my hon. Friend rightly demands, on its recommendations.
Mr. Giles Radice: As the Chancellor's statement has made clear, the report on the Barings crash reveals massive failures by auditors, by supervisors and by regulators. What action does the Chancellor propose should be taken?
Mr. Clarke: The action I have taken is that, within five or six months, from February to July, I have had produced an extremely comprehensive report setting out all the facts and presenting lengthy recommendations about the steps that should be taken by the Bank of England and by others to ensure that the best protection possible is given against such problems in future.
If I had heeded half the requests that were put to me in the aftermath of Barings, when everyone was trying to be wise after the event and everyone wanted some great new judicial study to be set up, we would not have got what we have now, which is a concrete report of great length and thoroughness, which sets out recommendations that now have to be acted on. That is the responsibility of Government and that is why I am accountable to the House for the way in which we do that. I advise the hon. Gentleman now to study the report and to follow it up, if

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he wishes. He may wish to ensure that the supervisory authorities are taking action as they committed themselves to do in the light of this disaster.
Mrs. Teresa Gorman: Given, as my right hon. and learned Friend has said, that there was a massive failure of supervision in this country of Mr. Leeson's activities, and given that he is a British subject working for a British bank and investing largely British funds, is it not appropriate at least to consider extraditing him back to this country, where the whole story can come out? Mr. Leeson has offered to co-operate with the Serious Fraud Office. Would that not be better than having him hung out to dry while people in this country are able to walk away from their basic responsibility for this whole business?
Mr. Clarke: It is not like that. The question of prosecuting is not for Ministers, but for prosecuting authorities. Whether anybody is charged with an offence in this country, or whether anybody's extradition to this country is sought, is not a matter in which the Chancellor of the Exchequer of any Government should properly take a role. To do so would be simply to set aside the rule of law.
As I have said of Mr. Leeson, he went to take charge of his bank's operations in Singapore, operating on the highly sophisticated market of the Singapore Monetary Exchange, subject to the controls of that exchange and of the Monetary Authority of Singapore. If one goes to live and work in Singapore, one accepts the jurisdiction of Singapore and the laws of Singapore. If one leaves Singapore afterwards, one is entitled to challenge any request for extradition to Singapore which the Singapore authorities make.
Those are matters for the Singapore and German courts, not for the British Government. It would be a bizarre policy stance for the British Government to say that we wanted our prosecuting authorities to bring charges that they are not at the moment minded to bring, in order to rescue somebody from extradition proceedings that he faces in Germany to send him back to Singapore to face charges. That is nothing to do with me; I have neither good will nor ill will towards Mr. Leeson. It is up to him and his lawyers to handle their current problem, which is the extradition proceedings in Germany.
Mr. Brian Sedgemore: Is the Chancellor aware that, when the Governor of the Bank of England gave evidence to the Treasury and Civil Service Select Committee, he said that to transfer more than 100 per cent. of the share capital of Barings bank to Singapore without the permission of the Bank of England was a criminal offence, and that such permission had not been given in that case? Does that mean that criminal proceedings will take place against Barings bank, or is the Chancellor saying that some informal non-legally binding concession constitutes a bar to legal action?
Mr. Clarke: The question of criminal charges is not a matter for me—nor, in my opinion, should it be up to a Minister of the Crown to decide whether any individual should be prosecuted for such things. No doubt the Governor of the Bank of England gave the reply that the hon. Gentleman mentioned, because normally there is a
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25 per cent. limit on exposure compared with the capital value of a bank, and in certain circumstances there could be a criminal offence.
It is not a matter for me, but it would appear that, on that occasion, an informal concession had been given by the responsible official in the Bank of England without referring the matter up to anything like the level of the Governor. It is for the Serious Fraud Office to decide whether an informal concession stands in the way of any prosecution. The whole point of the board's report is to bring such matters out, and it is now for the responsible authorities to take action or not to take action, depending on the evidence that we now have, or on any evidence to which they have access, in support of what the board reports.
Mr. Mark Wolfson: I have listened carefully to what the Chancellor has said about Mr. Leeson's position, but it seems to me astonishing and unsatisfactory that the investigation took place here in the City of London without Mr. Leeson's being involved face to face. In the light of the extreme incompetence demonstrated by Barings management, I hope that, whatever may happen to Mr. Lees.on afterwards, it is not too late to bring him back to undergo an investigation.
Mr. Clarke: No one here has the powers to extradite somebody from another country to give evidence to such a board of inquiry. Mr. Leeson was invited to co-operate with the inquiry, and people would have been sent to interview him had he been willing. But he declined to co-operate, and all we received was a bland questioning of the accuracy of the report, by his solicitors.
Even if Mr. Leeson wished to come to this country, he is inconvenienced at the moment by the fact that he is in a German gaol facing German extradition proceedings. It is more than likely that, if he came to this country, he would face extradition proceedings here too, because no doubt the Singapore authorities would seek to extradite him from this country. Those are not matters for me—nor, with the greatest respect, are they matters for the House. They are matters for the prosecuting and legal authorities in the various countries involved.
Mr. Dennis Skinner: Has it ever crossed the Chancellor's mind that, in the whole series of crashes in the financial world that have extended over many years—in fact, throughout the 16 years that the Tory Government have been in power—[AN HON. MEMBER: "And Maxwell."] Yes, that as well—and Johnson Matthey. When each crash happened, we were told that things would be put right, that the Bank of England would deal with things, and that people would be put in place to watch over what happened.
But since then, there has been not only the Bank of Credit and Commerce International but a whole catalogue of others. Many of the people on the Treasury Bench come from the belly of the banking establishment, and they are always spouting, "Don't let Labour in, they'll lose your money." Yet this is a Government who in 1992 lost £10 billion in an afternoon, and never went near a betting shop.
I have some advice for the Chancellor of the Exchequer. Instead of talking about investing in derivatives, why do the Government not resign and let the British people invest in the future instead?
Mr. Clarke: I can recall three such collapses in a number of years. The City of London is the major

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international centre for financial dealings across the exchanges, and it has an extremely good reputation for regulation. That reputation is reinforced by the promptness with which we produce inquiries of this kind with a full disclosure of the facts, and also by the fact that we are seen to be taking action in the light of those inquiries.
I said at the end of my statement that it is impossible to devise any system which gives a total guarantee that nobody will ever successfully beat the system. Our system is as good as anywhere in the world, and it must be—as far as we can create it—the best in the world to keep up the reputation of the City of London. The Government have never been charged with direct responsibility for supervising banking. Even the hon. Member for Dunfermline, East (Mr. Brown) is not suggesting that the Treasury or the Government should take control. The attempt by the hon. Member for Bolsover (Mr. Skinner) to make party political points is completely pointless.
Just to show how people can be deceived—we all remember the case of Robert Maxwell, which my hon. Friend the Member for Dover (Mr. Shaw) helpfully recalled. I remember that Mr. Maxwell was the hero of the hour at the Trades Union Congress that I attended, and he practically owned the Labour party. Everybody at the time said that they had doubts about Mr. Maxwell's financial propriety, but they took the money, went to the parties and were patronised by Mr. Maxwell. So we do not want the Labour establishment coming here to tell us that we are deficient in regulating the City of London.
Mr. Quentin Davies: Does my right hon. and learned Friend agree that the very fact that we have this public report stands in fine contrast to the practices in other jurisdictions? For example, as far I know, the French authorities have still not produced a public report on the appalling shambles at Credit Lyonnais.
Since the report exposes the most monumental record of management incompetence and failure, does my right hon. and learned Friend agree that it is extremely important for the integrity and international reputation of the City that those involved in that management negligence are not allowed in future to occupy positions of responsibility in financial institutions?
Mr. Clarke: I am grateful to my hon. Friend, and I am sure that he is right. There are other authorities in the world that might be capable of producing as full and frank a response to a problem of this kind as we have done, but there are not very many. There are quite a lot of authorities that would never do it, and quite a lot that—I hope—will learn from our report and our openness. That openness and rapidity of response and reaction is the best reassurance for people who are looking for prudent management and the safety of their funds in the City of London.
As far as I am aware, all the significant people in the management of Barings who were named in the report are no longer with Barings, and the person responsible in the Bank of England is no longer there. Should any of them seek to re-enter the financial services market, they will have an opportunity to do so, but they will have to satisfy the regulators about the propriety of their return.
Ms Diane Abbott: Does the Chancellor accept that the idea that Leeson acted completely on his own—the so-called rogue trader theory—is increasingly less credible? Has he read the sentence in the conclusions of the report which says:
"Moreover, we cannot rule out the possibility that Leeson may have been acting in concert with one or more persons"?
Mr. Clarke: I made reference to that comment in the report in my statement, and I accept that. It is clear that Leeson traded in an unauthorised and concealed way. He opened—very rapidly after he arrived—account No. 88888, which was concealed from the management in London, although references to it might have been picked up later in London. He hid losses in that account to make his transactions appear profitable when they were making a loss. When he was finally pressed on the margins and could not find finance, Leeson created apparent financial obligations that were not there, and I recommend that the hon. Lady see what he did.
If we get all the details and papers from Singapore—these may well emerge in due course, when the Singapore authorities have completed their processes—we may be able to rule out the possibility that others were involved. But it is not possible to get away from the fact at the heart of the matter, that this man was in charge of trading and settlements. For reasons at the moment best known to himself, he was not disclosing—indeed, he was systematically concealing—the true nature of that trading to all those in the Barings group in London.
Mr. Nigel Forman: As it appears from everything that my right hon. and learned Friend has said this afternoon that none of the dramatis personae—whether traders, managers, regulators, supervisors or auditors—comes particularly well out of this story, and as few of us have yet had a chance to read this long and important report, will my right hon. and learned Friend at least keep an open mind on the important political point that it may be necessary to take subsequent action on mature consideration once he and his colleagues have had a chance to look further at all the implications? He should not close off that possibility yet.
Mr. Clarke: I shall certainly heed my hon. Friend's wise advice. I think that he is correct. I have published this report at the earliest possible moment, which I appreciate is on the eve of the parliamentary recess. To have held it back until after the recess would have caused unreasonable delay.
My main concern is to re-establish the reputation of the City of London and ensure that every possible lesson is learned from this collapse. We can all read the report properly, and there is plenty of time for more mature consideration. Many people with expertise on the subject, both inside the House and outside, will no doubt come forward with proposals for more precautions against such events happening again.
The Government will keep an open mind and are open to sensible suggestions. What I am rebutting today is off-the-cuff bright ideas that are not in the report. The report makes a full disclosure and many recommendations, and hon. Members should now consider it seriously and decide whether they have a substantial contribution to make on further protection.
Mr. Denis MacShane: The Chancellor has used parliamentary privilege to find Nick Leeson

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guilty, and now wants him sent back to Changi gaol to disappear for ever. That is odd behaviour for a lawyer, given that Ministers can instruct prosecuting authorities on extradition matters.
On the main point of public policy, the Chancellor has displayed extraordinary complacency, and the Bank of England has issued a press release saying that nothing fundamental needs to be changed. How soon will it be before people with investments through PEPs or pension funds that are traded overseas have a regulatory body independent of the Bank of England to oversee how banks in this country handle those investments? Leaving it with the Bank of England ensures that, in future, our money will be as unsafe as the Bank of England. The Chancellor should heed the recommendation of my hon. Friend the shadow Chancellor in that regard.
Mr. Clarke: I have said all that I need to say about the legal position. These matters must be settled by due process of law, which is a matter for neither the Government nor this House. Nor can it be resolved by emotional references to overseas jurisdictions, as though courts outside this country are necessarily inferior to those in this country, and therefore British subjects should not appear before them. Hon. Members should make a more objective judgment than that.
On the hon. Gentleman's criticism of the Bank of England, of course the Bank must act as it said it would act on each of the 17 recommendations addressed to it. But it is simplistic politics to say that we should take those matters away from the Bank of England and set up a new banking commission, which presumably will operate the same Banking Act within the same framework, as though one had taken determined action that would improve matters.
We have a good system of regulation in the City of London. The Bank of England is a highly acclaimed regulator, and, when mistakes are made, it is for the Bank of England in the first place to act on them. The independent board charged with the purpose has recommended that there is no immediate need to change the Banking Act which this House has put in place.
Sir Anthony Grant: What explanation did the inquiry obtain from Barings senior management about why the extraordinary situation prevailed whereby Leeson was both trader and back office settlement manager? As that most unusual and improper position was apparently known for some time, not only to senior Barings management but to other people, why did not the Bank of England know about it?
Mr. Clarke: First, the internal audit of Barings disclosed that matter in 1994. It must be said, in response to my hon. Friend's incredulity that this should continue, that there is no doubt that Barings failed to take any steps in the light of that.
Although the Bank of England cannot check every internal audit in a bank—that would not be physically possible—nevertheless the report sets out a number of warning signs that should have been heeded. The key matter is whether the Bank should have acted more quickly on the informal concession, apparently given temporarily, on the 25 per cent. limit. The board was unable to come to a conclusion as to whether, had something been done in less than two years on that
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informal concession, all the problems, including the failure to separate front of house from back of house, might not have to come to light.
Mr. Peter Hain: Can we be clear that the Chancellor is asking us to accept the following proposition: that a cunning rogue trader hoodwinks the entire management of one of the oldest banks in the country; then lifts two fingers at all the regulatory controls; and then cons the supervising authorities of the Bank of England? Is the right hon. and learned Gentleman really saying that no policy reforms, not even the tiniest, are necessary to prevent that sort of thing from happening again?
Mr. Clarke: The regulators regulate a bank, acting on the information they receive from senior management and the best information that they can get from that bank. They make proper inquiry, as they should, but the Bank of England cannot be expected to have access to gossip, rumour and details of transactions in all the subsidiaries of that bank.
Mr. Hain: It is amazing.
Mr. Clarke: The hon. Gentleman shakes his head and says that it is amazing. I recommend him to read the report. It is amazing that Mr. Leeson in Singapore opened the account in 1992; and that in early 1995 he had lost more than £800 million, yet the management in London had still not detected that he was trading in an unauthorised way on such a scale.
Mr. Skinner: Do you believe it?
Mr. Clarke: The hon. Member for Bolsover (Mr. Skinner) is straying slightly out of order.
Madam Speaker: Order. The hon. Member for Bolsover (Mr. Skinner) has had his question.
Mr. Clarke: The hon. Member for Bolsover asks me, do I believe it? I accept that the report offers a description of the total collapse of management control. I do not see what motive people in Barings in London could have had for ignoring information they had and allowing their bank to collapse, and them to lose their jobs. The fact is that it is incredible that no system of financial control should exist in such a bank.
Mr. Anthony Coombs: Is not one of the principal lessons of this abysmal episode that the Bank of England seems to have significantly underestimated the effect of the huge increase in derivatives trading, which was mentioned earlier, upon the profitability and viability of banks? That effect was compounded in this instance by the informal concession, which seems to have lain unnoticed for two years. What assurances can the Chancellor give us that such informal concessions will no longer be made by anybody from the Bank of England? What can he say about the extent of derivatives trading and possible control of it?
Mr. Clarke: On the key matter of derivatives trading, the collapse of Barings was not caused because the trading was in derivatives. I think everybody would concede that the rapid and remarkable build-up of the exposure between January of this year and the end of February was no doubt partly because derivatives were being used. I believe that 61,000 separate trades were entered into, all

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apparently on the assumption that the collapse in the Japanese market following the Kobe earthquake was about to be reversed. Quite a lot of the bank's money was staked on that assumption.
The kind of unauthorised trading entered into, and lack of financial and management control, meant that the bank could get into difficulties regardless of derivatives. Derivatives deserve serious examination, but the collapse of Barings does not offer a case against all derivatives. Derivatives exist in considerable part to protect against risk. The bank in London did not realise that the derivatives were exposed, high-risk positions. Because of its lack of control, it believed that the trade was almost risk-free, arbitrage business, taking advantage of differences in price which could occur for the same commodity in Osaka and in Singapore.
The report again amazes the ordinary reader, because no one questioned how such enormous and risk-free profitability had somehow been discovered by one trader in Singapore. That failure underlines the fact that one must have in place not only elementary financial controls in banks, but strict and rigorous controls of credit and risk, and a proper line of management responsibility. Those are necessary in modern financial markets, because huge exposures can be run up rapidly if some bank tries to proceed without such controls and management in place.
Mr. Keith Vaz: The Chancellor acknowledged that the criticism of the Bank of England contained in the report is even more savage than the criticism contained in the Bingham report. Will he tell the House what is so special about Mr. Eddie George that he is able to survive such harsh criticism, relating to the past three years, and will he tell the House how many of the 17 recommendations made by the report are broadly similar to the recommendations made by Lord Justice Bingham?
Mr. Clarke: I did not describe the criticism as savage. There are 17 recommendations, but they do not go to the regulatory structure of the Bank of England, and they do not go to the management controls of the Bank of England. They go to the way in which the responsible people carried out their obligations, including what appears to be a straightforward lapse of giving that informal concession and, two years later, readdressing themselves to the problem and saying that no further concession could be given. The report is not as damning of the Bank of England as it is of Barings, but it is important that the Bank acts on the 17 recommendations.
On the last point, I have not compared the recommendations in the Bingham report with the precise recommendations in the Board of Banking Supervision's report, but I do not believe that they are the same. At no
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point does the board's report say that the Bank failed to act on things on which it had been told to act after the Bingham inquiry.
Mr. Alistair Darling: Is it not significant that the report had to conclude that the Bank of England should find ways of increasing its understanding of non-banking business for which it is responsible, such as financial services business and derivatives? It also concludes, at paragraph 13.61:
"There does not appear to have been any guideline or system in place within the Bank for determining whether the situation…was … such that it could affect the well-being of the bank."
Is that not the ultimate indictment on a central bank, when there are such fundamental failures?
Does not the Chancellor understand that there is a clear public interest in ensuring the integrity of the supervisory system of this country, not only with the Bank of England, but with the Securities and Futures Authority, and that he simply cannot brush off that whole affair as mainly the activities of one rogue trader, or rely on 17 weak recommendations which only touch on the fundamental problems that confront us? The sooner he realises that not only the Opposition but many Conservative Back Benchers believe that a thorough overhaul of the regulatory system is long overdue, the better it will be for this country's international reputation.
Mr. Clarke: I am not brushing off anything; indeed, I keep coming to the House, somewhat repetitively, with full descriptions of what happened at Barings; with announcements that I am setting up inquiries, and producing the results of inquiries which answer almost all the questions on the facts that could conceivably be answered before the Singapore authorities have produced their side of the arrangements; and with recommendations on which we shall act.
The question to which the hon. Gentleman specifically refers covers the position that exists in the real world, where the Bank of England is the lead supervisor for a group that contains banks and other financial services organisations. It is true that we need to keep readdressing the extent to which the necessary skills are there in the Bank when one consolidates those organisations for a regulatory purpose, and the relationships between the Bank and the Securities and Futures Authority, to ensure that those large, complex modern businesses are adequately regulated.
I repeat: we have one of the best regulatory systems in the world, and our openness and promptness in reacting to those problems help strengthen that reputation. It is nonsense to believe that the House must legislate every time and start inventing new organisations, as though that will give a 100 per cent. guarantee that, in the modern financial markets, it will never be possible for a rogue trader to lead to any problems of any kind.

Standards in Public Life
4.43 pm
The Chancellor of the Duchy of Lancaster (Mr. Roger Freeman): With permission, Madam Speaker, I should like to make a statement to the House on the Government's response to the first report of the Committee on Standards in Public Life, which is being presented to the House today as Cm 2931.
My right hon. Friend and distinguished predecessor, the right hon. Member for Wirral, West (Mr. Hunt), told the House on 18 May that the Government accepted the broad thrust of these recommendations. The response covers all the recommendations addressed to Government: 45 of 55 recommendations in all.
The Prime Minister has made it clear that he is determined to uphold the highest standards in public life. The response details the Government's plans for implementation and action in respect of all the 45 recommendations addressed to Government. It also sets out further proposals for a new civil service code, and for a new introduction to "Questions of Procedure for Ministers".
We accept the Nolan committee's recommendation that Ministers should be brought within the scope of the Advisory Committee on Business Appointments. The response emphasises the great importance of continuing interchange between business and commercial life and ministerial office. We should do nothing to deter talented people with private sector experience from entering public life, and nothing that prevents those who have completed their ministerial career from applying that experience to the benefit of British industry and commerce.
The Nolan committee strongly supported that principle, and to translate it into action, we shall draw up rules setting out specific criteria, to be administered by the Advisory Committee on Business Appointments, to establish the circumstances in which Ministers should be advised to delay a particular appointment, or make its acceptance subject to conditions.
We intend to publish a text for consultation before introducing the rules from the start of the next Session of Parliament. We intend to have a debate on that and the White Paper as a whole in the spillover session.
We shall also consult to the same timetable on an extension of business appointments rules to Ministers' special advisers.
On the registration of hospitality accepted by Ministers, our response builds on the arrangements for registration of Members' interests in the House and on the guidance already contained in "Questions of Procedure for Ministers", that Ministers should not accept hospitality that would or might appear to place them under an obligation. In the words of the Select Committee on Members' Interests,
"it is neither possible nor desirable to make a clear distinction between a Minister's conduct as a Minister and his conduct as a Member of Parliament."
We shall act quickly and positively on the Nolan committee's recommendations concerning appointments and propriety in public bodies and the national health service, building on many of the continuing initiatives that the committee endorsed. In particular, we shall appoint a new Commissioner for Public Appointments, to offer
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guidance, monitor and audit departmental appointment procedures. That post will be advertised in a matter of days.
We shall extend the use of advisory panels, including an independent element, to advise on appointments to executive public bodies and the national health service. That has been successfully piloted in several sectors. All Departments will introduce their own arrangements as soon as practical to allow the new commissioner to influence the procedures introduced. We believe that, at the outside, that will require no more than 12 months.
My hon. Friend the Parliamentary Secretary, Office of Public Service announced last month a review of the legal framework governing propriety and accountability in public bodies, and their arrangements for external audit. We intend to reach preliminary conclusions by the end of the year, well ahead of the timetable envisaged in the committee's report.
We have accepted the recommendations of Lord Nolan's committee that there should be opportunities under the civil service code for a civil servant to express worries about actions in which he or she is not personally involved, and for nominated officials to investigate anxieties expressed confidentially.
Our consultation period on the civil service code will now be extended to mid-September, to allow further opportunities for comment. We accept the Nolan committee's recommendation that implementation need not then await a legislative opportunity, and we intend to have the code in action before the end of the calendar year.
I am confident that the action that we have set out will show the House and the whole country our determination to take practical steps that will uphold and sustain the highest standards of propriety while ensuring that men and women of talent and experience continue to contribute to public life.
Mrs. Ann Taylor: May I thank the right hon. Gentleman for his statement and welcome him to his new role as Chancellor of the Duchy of Lancaster? His statement was brief, as statements should be, but of considerable importance to the conduct of government by Ministers and by civil servants. We welcome many of the details in the White Paper that discuss the 45 recommendations for Government action in the Nolan report. We have detailed concerns about some of the proposals, and we shall pursue them in the promised debate in the autumn.
The Minister should be aware that, while we welcome many of the details, we of course recall that the review has come about only because the Prime Minister was forced to ask Lord Nolan to report because of all the Government abuses of recent years. Will the Minister acknowledge that the Nolan committee accepted many of the specific points put forward by Labour, such as the quarantine on post-ministerial appointments? We made those points despite the outright opposition of the Government, so we welcome this minor U-turn by Ministers today. Does the Chancellor of the Duchy of Lancaster stand by the evidence given by his predecessor to the Nolan committee, that there was no problem and no real case to answer?
On the Nolan committee's recommendations on quangos and the actions proposed by the Government, will the Minister confirm that the Nolan report quotes the

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National Audit Office figure of £52 billion as the amount of public money spent by unaccountable quangos, with little or no democratic accountability to the public? Will the Minister acknowledge that the Nolan committee's remit on the subject of quango appointments was extremely narrow and did not allow for a full examination of all aspects of quangos? Will he confirm that, while modification of the appointments system is necessary, it will not stop the growth in the quango state, which is one of the fundamental problems undermining the principle of democratic accountability?
Is the Minister aware that we welcome the recommendations on the civil service code? We believe that civil servants who want to raise serious issues should be able to do so with confidence that that will not prejudice their position. Is the right hon. Gentleman aware that, while we welcome the time scale that he has laid down for the introduction of a code, we still believe that legislation on the subject is necessary? If the Government were to press ahead with it, they would have our full co-operation.
With regard to the conduct of and procedures for Ministers, is what the Minister has announced today yet another illusion of openness? Does he realise that publishing the code does not guarantee good behaviour by Ministers and that no Government should have a free hand to mount cover-ups at will? Several of the phrases in the new code will cause concern. I am thinking of phrases such as,
"Ministers must not knowingly mislead Parliament".
We all know that sometimes Ministers choose not to know. Another such phrase is:
"withholding information only when disclosure would not be in the public interest".
It is Ministers who will determine whether that is in the public interest.
Does the Minister accept that the spirit of the Nolan report demands not just new codes of conduct, useful though they may be, but a new attitude on the part of Ministers to replace the arrogance that has become the hallmark of the Government after too long in office? The elected dictatorship must give way to an Executive with a sense of service to the people it seeks to serve.
If confidence is to be restored in our parliamentary democracy, and if the Government and the Conservatives are serious about the need for transparency, will the Chancellor of the Duchy of Lancaster consider removing the Government's veto of an early inquiry by the Nolan committee into the funding of political parties?
Mr. Freeman: I thank the hon. Lady for her kind comments on my new office, which were much appreciated.
Mr. Dennis Skinner: The Minister has a new suit for the job too.
Mr. Freeman: Unlike the hon. Gentleman, I normally wear a proper suit.
The Nolan report said that the great majority of men and women in public life are honest, hard-working and observe high ethical standards. The slur that some—I do not necessarily charge the hon. Lady with this—make about the standards of public life, implying that those in
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public life, whether Ministers' special advisers or civil servants, are dishonest, do not work hard and do not observe high ethical standards, is utterly wrong. We have probably the best civil service in the world. I was brought up to believe what Professor Crick, then of the London School of Economics, strongly believed—that politics is an honourable profession. I am sure that all those on the Conservative Front Bench would believe that it is right to allay fears that have come about as public perceptions have changed in recent years. That is why the Government have come forward promptly, before the recess, and accepted the Nolan recommendations.
As for the civil service code, we do not want civil servants to have their positions prejudiced. I accept what the hon. Lady said. I am happy to consult the Opposition Front-Bench team on the way forward in terms of placing in statute a new civil service code, which we intend to implement before the end of the year. I cannot promise to give the timetable of any legislation, but if the hon. Lady will join me on further discussions on that subject, it would be appreciated.
On the subject of Ministers' conduct as contained in the guidance given by the Prime Minister to all Ministers, I shall deal with the proposed amendment, which is contained in the White Paper. As to the phrase, "knowingly" to mislead, I am sure that it is apparent to the House that sometimes Ministers who are not fully aware of the facts at the time give answers to the House. That has occurred on a number of occasions—according to my researches, it has occurred over the past 40 or 50 years with Ministers of both parties when in government. The requirement is that Ministers should not knowingly mislead the House.
On the subject of what is not in the public interest, the hon. Lady will know that we have had out for consultation for more than six months, published in "Open Government", Cmnd. 2290, the specific reasons why it is sometimes necessary not to disclose certain facts because to do so would be against the public interest. I believe that the hon. Lady was reminded of what the proposals were by my predecessor in a letter in March—she has yet to respond. I am not aware of any problems that the hon. Lady or the House should have about those categories, which include defence, security, international relations, communications with the royal household, law enforcement and legal proceedings, and operations of the public service, such as setting bank rates. Those are well-established categories and are entirely defensible.
On the subject of what the hon. Lady described as the veto on what Lord Nolan may be doing, that is a matter for my right hon. Friend the Prime Minister, and I am sure that he will read the record.
Mr. David Hunt: I warmly congratulate my right hon. Friend on his promotion to the Cabinet and his appointment as Chancellor of the Duchy of Lancaster. I praise him on his speedy and effective response on behalf of the Government to the Nolan committee's report. I thank him for his earlier words and strongly support his determination to implement the important recommendations and bring to an end a sorry chapter in British public life, which has been characterised by allegations, slurs and innuendoes, mainly from the Opposition. Those allegations have subsequently been found to be completely without foundation.

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The evidence given on behalf of the Government and contained in chapter 1 of the Nolan committee's report shows that much of the public's anxiety about standards in public life is based on perceptions and beliefs that are not supported by the facts. My right hon. Friend has done much today to restore public confidence in our high standards in public life.
Mr. Freeman: I am most grateful to my right hon. Friend for those remarks and for his personal references. He is correct in what he says about the public's perceptions of the conduct of Ministers, civil servants and hon. Members in the House—and we are to debate that issue tomorrow. The Government do not deny that fact. That is why we have moved positively, quickly and sensibly without jeopardising the essential principle of retaining an interchange of men and women of talent, interest and commitment between the private and public sectors.
Mr. Robert Maclennan: Does the Chancellor of the Duchy of Lancaster recognise that his predecessor must be entirely wrong in his assertion that the series of proposals can draw a line through the scandals that led to the investigations of Lord Justice Scott, which will keep alive in the public's mind the systematic attempts by his colleagues to withhold information? Against that background, we must consider the adequacy of the proposal to codify in the rules of ministerial behaviour a provision that allows Ministers to withhold information if they deem it to be in the public interest to do so. Does the Chancellor accept that other countries that pursue openness through freedom of information legislation have always had some independent mechanism for judging whether the public interest is served by Ministers withholding the facts?
Mr. Freeman: The hon. Gentleman will have noted the Government's commitment to hold a debate in the spillover period, and doubtless he will be able to raise those issues then. The Government took the initiative by publishing the White Paper "Open Government" earlier this year. It set out the issues very clearly and it gave specific and sensible examples of where it would be in the public interest to withhold information. I believe that we pursue open and sensible government in this country.
Sir Peter Emery: Does my right hon. Friend accept my praise for bringing forward such a forthright statement so quickly? I think that he will accept that much of the background work was done by my right hon. Friend the Member for Wirral, West (Mr. Hunt) before he left office. We should pay tribute to both my right hon. Friends for the work that they have done in preparing the statement that was presented to the House today. Very few people would have expected such a speedy response from the Government, and I am sure that the public welcome it.
I shall make a personal observation on the matter of "knowingly" misleading the House. As a Minister, I misled an hon. Gentleman quite unwittingly from the Dispatch Box when I was not aware of all the facts. When those facts were pointed out to me later that day, I returned to the Chamber and apologised to the hon. Gentleman and to the House for what I had said. That sort of incident can occur quite openly. The idea that a Minister always knows everything that goes on in his or her Department is absolute nonsense, and we must understand that from the word go.
Mr. Freeman: My right hon. Friend, like me and my right hon. Friend the Deputy Prime Minister, lives in the real world and I accept his remarks entirely. When he has a chance to read the White Paper, he will see that it deals with the conduct and procedure for Ministers. It states on page 32:
"Ministers must not knowingly mislead Parliament … They must be as open as possible with Parliament and the public".
It continues:
"Ministers … should correct any inadvertent errors at the earliest opportunity".
It has long been the tradition in the House to report errors promptly when they are discovered, by statements in the Chamber or by way of written answers.
Mr. D. N. Campbell-Savours: Does not the inclusion of the word "knowingly" invite civil servants deliberately to mislead Ministers on occasion, because they recognise that the whole principle of contempt breaks down in the House of Commons? Ministers simply have not grasped that fact.
Has the Minister seen the hundreds of questions that I have tabled over the past six months, many of which—particularly those about lobbying—have received a reply referring to disproportionate costs? It is clearly not a question of cost: Ministers simply did not want to answer the questions. I have received answers of that nature from the former President of the Board of Trade, who is present in the Chamber. He clearly did not want to reveal information about lobbyist activities in his Department.
Lord Nolan is representing the public interest when he says that Ministers must not mislead Parliament, and that that principle should be incorporated in a code. He understands that Ministers do mislead Parliament under the present arrangements.
Mr. Freeman: I do not think that the House accepts the hon. Gentleman's perhaps inadvertent slur on the civil service. The civil service has a draft code of conduct open for consultation and I repeat the Government's commitment to implement that code, following proper consultation, by the end of the year. If the hon. Gentleman has the chance to read the code, he will see that civil servants are under the same obligation as Ministers to ensure that Parliament is not misled.
The hon. Gentleman also referred to the matter of disproportionate cost. I have answered many written questions by referring to disproportionate cost. The solution lies in the hands of hon. Members, who must ensure that their questions are as specific as possible. It is unreasonable to expect Ministers to answer—at great public expense—open questions, which would sometimes take many weeks or months to respond to properly. If the question is specific, it can be answered.
Mr. Michael Stephen: Will my right hon. Friend remind the Liberal Democrat spokesman, the hon. Member for Caithness and Sutherland (Mr. Maclennan), that a public interest immunity certificate is not a gagging device that enables the Executive to withhold information from the courts? Will my right hon. Friend confirm that when a Minister signs a public interest immunity certificate, it simply places the matter before the judge, and it is the judge—not the Minister—who decides whether the evidence can be admitted in the proceedings?
Mr. Freeman: My hon. Friend is absolutely right. Public interest immunity certificates, which were signed

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on the advice of the Attorney-General by both Labour and Conservative Ministers at the appropriate times, simply identify to the court documents that the judge may sensibly consider withholding from public scrutiny. The court, not Ministers, must decide what information is made public. In recent cases, the judge has exercised his right to agree or to disagree with Ministers; but the judge must make that decision.
Mrs. Ann Clwyd: The Minister cannot get away with misleading the House this afternoon. We receive the same answers time after time. I have in my hand a clutch of answers that I received from Ministers this morning, and many of them refer to disproportionate cost. The Minister said that if the question is open, the answer will be "disproportionate cost". However, I asked a very specific question about the Government's aid to Indonesia for a particular project and I received the answer: "disproportionate cost".
I have asked about 150 similar questions during the past six months, and time and again I have received the answer, "disproportionate cost". I once asked the Foreign and Commonwealth Office about the cost of one embassy in one country and I was informed that it had taken 106 hours to find the answer to my question. That is absolutely ridiculous. Members of the public are led to believe that Opposition Members can ask questions and that Ministers are obliged to answer them. The public are being conned by the Minister this afternoon.
Mr. Freeman: I shall try to answer the hon. Lady's question in a constructive manner. I appreciate that there are sometimes problems. I suggest that, in some cases, it might profit the hon. Lady to write or to speak to the Ministers concerned instead of sending in written questions that must often receive a very brief reply. If the hon. Lady has problems obtaining information that can be provided sensibly and at proportionate cost, instead of sending the Ministry a battery of questions, why does she not adopt my pragmatic advice and speak to the Ministry or the Minister direct?
Mr. John Butcher: What is a public figure; and how do we define "influence"? It is argued that those who are paid out of public funds—Members of Parliament, for instance—and who, because of their position, are seen to have influence and are therefore retained by the private sector, should sign a register.
May I put it to my right hon. Friend that there is a hole in Nolan? There is another group of public figures who have influence, who are paid for out of public funds, and who are sometimes hired by the private sector because of their influential positions—but they never have to declare anything. Entirely at random I think of, say, the presenters of the "Today" programme in the morning. They are paid for out of public funds; they have huge influence; they pride themselves on their quasi-constitutional position: questioning the Executive and taking up the agenda. Should they not also declare their earnings from outside, which allegedly exceed their earnings from the BBC? My right hon. Friend may think that a cynical point; perhaps on investigation the comparison may prove to be more exact than we think.
Mr. Freeman: It is an unfair and unequal life for Ministers as compared with the media, certainly with
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respect to registration of hospitality. We suggest that Ministers enter in the House of Commons Register hospitality amounting to more than £160—the rule that applies to Members of this House—when that amount might reasonably be thought by others to influence a Minister, if the Minister actually accepts the hospitality.
My hon. Friend will be well aware that prudent Ministers, taking advice if necessary from their permanent secretaries, do not accept hospitality when it might be thought by others outside the House that their judgment and decision making might be influenced.
Mr. Skinner: Is the Minister aware that the only real way of dealing with this problem of Ministers and Members of Parliament is to ensure that all hon. Members have one job and one job only? That job is to represent constituents, so there should be no conflict of interest. If the right hon. Gentleman intends to introduce some sort of quarantine period for Ministers, does he realise what the problem will be? In come a Labour Government, and 110 Tory Ministers will be looking for plum jobs. We are going to democratise quangos, so all the people who hold those jobs at the moment will be competing with Tory Ministers for the remaining jobs.
I have a suggestion: the quarantine will snap. So it would be better for Tory Ministers to do now what the right hon. Member for Wirral, West (Mr. Hunt) has already done—he got out early to pick up the plum jobs.
Mr. Freeman: I look forward to serving as a Minister for a long time to come—certainly beyond the hon. Gentleman's retirement.
Mr. Nigel Spearing: Does the Chancellor recall quoting the Select Committee a few moments ago, to the effect that it could not make a major distinction between Ministers of the Crown and Members of this House? No one expects a Minister of the Crown to divulge information or give of his time for an outside consideration. If that is so, and as we are all in another sense public servants, should not the same principle apply in the same way to all Members of Parliament? They should make no contracts, and come to no arrangements relating to information or time, with outside bodies by virtue of the office that they hold. If the Government are saying that, they are right—unless they are applying it only to hospitality.
Mr. Freeman: The responsibilities of Ministers are very different from those of Members of Parliament. The requirements are extremely onerous: no Minister can retain any outside employment except under very limited and specific circumstances. It seems to me right, therefore, that the Government, who have this afternoon accepted in the White Paper the spirit of the Select Committee's remarks on the registration of hospitality, should say that Ministers should register it, but as Members of this House. The tests are different, but the requirement and the responsibility remain the same.
Mr. Peter Bottomley: Like many who go into military service, many who enter the civil service and political service do so not because they offer the best earning jobs but because those people think it important to do the job, and to do it well. I welcome what my right hon. Friend said about the advice for people in the civil service. When I was a junior Minister, I told my civil servants that if I did something they thought wrong or

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misleading, they should tell me the first time, tell the permanent secretary the second time, and tell The Guardian the third time. Most of them managed to avoid telling The Guardian.
Finally, may I suggest that people in Parliament, whether Ministers or not, should apply the local newspaper test and ask themselves whether they are doing something that they would not like to see appear in their local newspaper? If the answer is yes, they should either not do it or tell the paper.
Mr. Freeman: In the proposed code of conduct for civil servants, we propose a wider definition of concerns—a wider number of issues—than Nolan recommended. We say that if a civil servant is concerned about the conduct of his or her Minister, initially the matter should be raised with the Department. That is likely to mean the permanent secretary. If the civil servant is still concerned, the matter can be raised with the civil service commissioners, and if they are not satisfied with the response from the Department or the Minister, the commissioners will report to Parliament. That seems a sensible and practical way forward. It protects the confidentiality that must exist between the Ministers and civil servants, while still permitting civil servants worried about certain actions or policies to raise their legitimate concerns.
Mr. David Shaw: If the Government really believe in openness and no cover-ups, what are they doing to ensure that full details are published of the trips to Washington and Gleneagles by the Leader of the Opposition; and of how the Industrial Research Trust finances his office? What are the Government doing about that?
Mr. Freeman: Opposition Front Benchers are not Ministers and are therefore not covered by this response—and long may that remain so.
Mr. Chris Mullin: The Minister failed to respond to the last point made by my hon. Friend the Member for Dewsbury (Mrs. Taylor)—that if the Government want to be taken seriously in their desire to improve public confidence in public life, they will have to persuade the Prime Minister to remove the veto on Lord Nolan's studying the funding of political parties. Will he please respond to that point now?
Mr. Freeman: I think I did respond to it—it is a matter for the Prime Minister, not for me.
Mr. David Winnick: Is the Minister aware that it was wholly unacceptable that former Cabinet Ministers, out of office for only a very short time—weeks in some cases—joined the boards of industries that they had been responsible for privatising? Moreover, other Cabinet Ministers, having left office, joined the boards of organisations that had had dealings with the Departments in which those Ministers had served. What is now being recommended is likely also to be unacceptable, because this Government will probably choose the three-month period, not the two-year period. What happened in the past was inexcusable and was, no doubt, one reason why it was considered necessary to let Nolan investigate.
Mr. Freeman: When the hon. Gentleman has the opportunity, he will, I am sure, consult pages 4 and 5 of the White Paper, which set out the criteria that the
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Advisory Committee on Business Appointments should use when determining whether there should be a waiting period of up to two years before a former Minister takes an appointment. He will note that there are three specific criteria. The first is:
"has the individual been in a position which could lay him or her open to the suggestion that the appointment was in some way a reward for past favours?"
The second is:
"Has he or she been in a position where he or she has in fact had access to trade secrets of competitors or knowledge of immediately impending Government policy which would give his or her company an unfair advantage?"
The third is:
"is there another specific reason why acceptance of the appointment would give rise to justifiable public concern?"
We have left in the criteria the role of the advisory committee to consider justifiable public concern, but we want it to look as specifically as possible at what the objection may be. The intention is not to have a generic ban on returning to certain professions, or to former employment or family businesses; it is to look at the specifics of a case so that there should be no presumption that for former Ministers there should automatically be a two-year ban.
Mr. Tony Banks: I refer the Chancellor to recommendation 21 on page 8, relating to official gifts to Ministers. Why have I been unsuccessful in obtaining from Ministers and the Prime Minister a list of official gifts? What is the big secret about those gifts? How come that in the United States, the President has to publish a full list of gifts, which are put on public display, yet gifts that are given to Ministers in their official capacities by grateful Governments or people overseas remain a state secret? Are Ministers walking around with arms full of golden Rolexes given to them by sundry oil sheiks? What is the secret?
Mr. Freeman: As a former Minister of State for Defence Procurement, I was sometimes offered, but sometimes declined, such gifts. The rules are clear and I repeat them briefly for the hon. Gentleman's benefit. If a gift that is given personally to a Minister, which is inscribed or given specifically to an individual, has a value in excess of £125, the Minister may not retain it. If it exceeds that value, he or she can pay for it and there is a prompt valuation by outside experts. The gift will be either retained or handled in a discreet fashion in order not to cause offence to a foreign Government. [Interruption.] Discreet in the sense that offence should not be caused to the donor, not discreet in the sense of trying to cover something up. Those rules are clear. [Interruption.] The hon. Gentleman can pursue his general question. I shall be happy to respond when I have researched the facts. If the hon. Gentleman cares to write to me, I shall respond. [Interruption.] The hon. Gentleman laughs. I have sought to respond to such written questions, including from the hon. Gentleman, on literally hundreds of occasions, as fully and fairly as possible.
Mr. Harry Barnes: One of the public's perceptions is that Members of Parliament should be full time without paid outside interests. That is the majority submission that was put to the Nolan committee by the public, although it did not accept that. Surely the public are correct. They should expect their elected representatives to work on their behalf using the

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procedures of the House to further the public's interests, not to seek to serve other interests outside. If they want to serve other interests outside, there are many unpaid voluntary jobs in which they could be involved. It is surprising that the outside interests that are considered are always the well-paid ones.
Mr. Freeman: I respect the hon. Gentleman's opinion, although I do not agree with it and neither do many of his colleagues. Therefore, the hon. Gentleman speaks for himself, not for the Labour party. My accountability to the House relates to Ministers and the civil service. I shall be here tomorrow to listen to the hon. Gentleman's contribution, if he catches your eye, Madam Speaker. It is a matter for Parliament to decide, not Government. The Government make decisions on the conduct of Ministers, special advisers and civil servants, but the House makes its own rules for hon. Members.
Mr. Tom King: Is my right hon. Friend aware that the answer that he gave to the hon. Member for Newham, North-West (Mr. Banks) is extremely accurate? He seems to be completely puzzled about what happens to presents given to Ministers. My right hon. Friend is right to say that they are smartly removed by private secretaries if their value is above a certain level. Since two of the gifts that I received as Secretary of State for Defence were a Heckler and Koch machine pistol and a kalashnikov, it may be of reassurance to the House to know that they were swiftly removed from me.
Is my right hon. Friend aware that the question asked by the hon. Member for Walsall, North (Mr. Winnick) is the real justification for my right hon. Friend's answer about the need for procedures for Ministers and for their eligibility to come under the advisory committee? The hon. Gentleman has repeated precisely the falsehood about the conduct of Ministers retiring from the House and going to work for nationalised industries. The evidence given to the Nolan committee was that not a single Member of the House who retired as a Minister was in breach of the two-year rule suggested by the advisory committee.
Mr. Freeman: I am grateful to my right hon. Friend, who is a distinguished member of the Nolan committee.
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I am grateful to him for his comments and contribution to the exchanges. With regard to the past record, I agree with him. Too often there is innuendo and smear, not a substantiated charge. Some Opposition Members are in the business of trying to stir up public perception erroneously. Ministers are perfectly happy to defend themselves against specific charges, not the general smear, which has too often been the case in the past.
Mr. John Carlisle: On a point of order, Madam Speaker.
Madam Speaker: Point of order, Mr. Carlisle.
Mr. Peter Shore rose—
Madam Speaker: I am sorry. I have one more very important right hon. Member to call. Mr. Peter Shore.
Mr. Shore: Thank you, Madam Speaker. In that mood, I begin by saying that I am broadly very happy with the forthcoming statement made by the Minister. But in one particular he should think further and, in particular, in time for the next debate that we shall have during the overspill period. I refer him again to the section on the conduct and procedure for Ministers and the new form of words that says:
"Ministers must not knowingly mislead Parliament … withholding information only when disclosure would not be in the public interest".
We know the difficulties of interpreting the public interest, but a stronger form of words is needed, such as, "only in those very exceptional circumstances when disclosure is not in the public interest," or "when disclosure is clearly and certainly not in the public interest". But to leave that in its present form allows for far more latitude than is healthy for Ministers of either side of the House.
Mr. Freeman: That is a helpful suggestion. I referred to the document on open government, although I got the year of publication wrong—I think that it was 1993. I shall certainly go back and have a look at the cross-references that I was trying to draw out to those cases where public disclosure might not be in anyone's interest. I shall come back to the House during the debate with perhaps more thoughtful proposals on how more generally we can either cross-refer or define those circumstances.

Points of Order
5.27 pm
Mr. John Carlisle: On a point of order, Madam Speaker. You will be aware that this evening the House will consider the draft Broadcasting (Restrictions on the Holding of Licences) (Amendment) Order 1995, which was considered in the Standing Committee on Statutory Instruments, &c. last Wednesday and rejected on a vote. It was also considered last evening in another place by their Lordships when it was passed but opposition was expressed to it.
Is it correct, Madam Speaker, that the Statutory Instruments Committee having rejected the order, the Government can bring the order before the House after 10 o'clock when no debate is to be allowed, though I understand that a Division may be called, on a matter of enormous importance to the shareholders of Chiltern Radio, many of whom are my constituents? If the Government can ignore what the Statutory Instruments Committee said last week and bring the order before the House, what is the point of having such a Committee in the first place?
Mr. Barry Sheerman: Further to that point of order, Madam Speaker. I have no constituency interest in this, but it seems strange that the Statutory Instruments Committee last week failed to approve the order. It was rejected in the Commons—a point raised eloquently last night by two members of the other place—and the Government used a wheeze to introduce the order: the wheeze that, traditionally, the Front Bench in the House of Lords does not oppose an order of this kind, introduced in this way.
We have just been discussing parliamentary scrutiny. In this instance, parliamentary scrutiny does not exist. The issue is important: the Government have wheedled to get their own way. First they cannot pass the measure by means of parliamentary scrutiny in a House of Commons Committee; then they bounce it into the House of Lords, preventing us from subjecting it to proper scrutiny here. Now it has returned to the House, but we shall not be able to debate it or tell any of our colleagues, on the Floor of the House, what has occurred. It would require a very diligent Member of Parliament to discover that such wheedling insinuations were being made.
Sir David Madel rose—
Madam Speaker: Order. No doubt the hon. Gentleman is going to make the same point.
Sir David Madel: It is on a constituency matter, Madam Speaker.
Madam Speaker: All right, I will hear it.
Sir David Madel: On a point of order, Madam Speaker. The Chiltern radio station to which my hon. Friend the Member for Luton, North (Mr. Carlisle) referred is in my constituency; a number of its employees are my constituents, and share my hon. Friend's anxiety. I hope, Madam Speaker, that you will be able to rule in accordance with what he has sought.
Madam Speaker: The hon. Gentleman is not absolutely correct. When the statutory instrument went
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before the Committee, it did not reject it; it voted—on the Chairman's casting vote—that it had not considered the instrument.
Standing Order No. 101 gives the Committee no power, once the vote has been taken, other than to report the matter to the House, and that is what is taking place. Nothing irregular has occurred. Although the motion may not be debated tonight, it must still be decided, and hon. Members may vote against it if they wish. Nothing irregular has occurred in this place; Standing Order No. 101 requires the procedure that has taken place to be carried out.
Several hon. Members rose—
Madam Speaker: There can be no further point of order. I have just answered the point of order, and I cannot change the Standing Orders. I cannot take a further point of order. I am trying to be helpful, but I have already given the answer.
Mr. John Carlisle: On a separate point of order, Madam Speaker. I think that you should know that the takeover panel has instructed Chiltern Radio not to use any form of political lobbying in relation to the legislation. Indeed, the panel has prevented it from approaching Members of Parliament on that very basis. At the same time, the hostile bidder, Great Western Radio, is employing the lobbying firm GJW. On that basis, is it right for the takeover panel to have banned political lobbying?
Madam Speaker: Order. If the hon. Gentleman will allow me to say so, this sounds very much like a matter of privilege. I hope that he will go no further now, but will immediately write to me about the matter if what he says is correct. If he had said that in the first place, I might have been able to be more helpful. I hope that he will write to me straight away.
Mr. Sheerman: On a fresh point of order, Madam Speaker.
Madam Speaker: The hon. Gentleman cannot raise it. It is now a matter of privilege.
Mr. Sheerman: The point relates to privilege.
Madam Speaker: The hon. Gentleman cannot relate it to privilege. I am sorry; I am trying to be helpful to the House. Points of order cannot be related to privilege. I am waiting for a letter from the hon. Member for Luton, North (Mr. Carlisle), and the hon. Gentleman must not now disturb that procedure.
Mr. Nigel Spearing: On a point of order, Madam Speaker.
Madam Speaker: I know that the hon. Gentleman understands our procedures.
Mr. Spearing: The whole House is grateful to you, Madam Speaker, for the information relating to a possible Division on motions 6 and 7. If the timed debates that precede those motions are completed at or after 10 pm, will the motions be automatically exempted? If no order applies—either automatically, under Standing Orders, or by resolution—am I not right in thinking that neither motion, if objected to, will be passed tonight?
Madam Speaker: I am advised that that is not correct. The Questions on the motions must be put.
Mr. Jeff Rooker: On a point of order, Madam Speaker. I am reluctant to intervene, but, on the basis of what you have told the hon. Member for Luton, North (Mr. Carlisle) in regard to motion 6, if the hon. Gentleman wrote to you before the motion was reached and you therefore decided that a prima facie breach of privilege might be involved, would you then not put the Questions on the motions?
Madam Speaker: Not necessarily; I would have to consider what the hon. Member for Luton, North had told me. He ought to write to me speedily, however, and I ought to try to deal with the matter speedily, if I am to be allowed to do so. Basically, this is a matter for the Government, but I want to consider what the hon. Gentleman has told me when I examine it in the context of privilege—if I am allowed to do so.

House of Commons (Abolition)
5.35 pm
Mr. Andrew Rowe (Mid-Kent): I beg to move,
That leave be given to bring in a Bill to abolish the House of Commons in its present form.
The House of Commons (Abolition) Bill has only one clause, which proposes the abolition of the House of Commons in its present form—and, of course, we have the power to do that. There is no doubt of the extent of the House's power; the debate must be about the use that we make of it. Are we effectively organised to lead the United Kingdom into the 21st century? I do not believe that we are, and I am not alone in that belief. In the past four years, the percentage of the population who believe that Parliament is doing a bad job has risen from 16 per cent. to 30 per cent.
The worst feature of our present state is not just that we have no effective mechanism for examining and reforming ourselves; it is that we do not care a jot about it. My right hon. and hon. Friends on the Procedure Committee work extraordinarily hard to improve the workings of the House: they have already altered the hours that we sit and amended the budgetary procedures following the change to a unified Budget, and may well provide us with a creche, in time. I do not belittle those improvements, but I doubt that they are the sort of changes that our critics have in mind.
What do those people have in mind? First, there are our procedures for examining the legislative proposals of the European Union. Every hon. Member knows that our present procedures are a sham. We have decreed that European legislation is decided by Ministers, reported to the House as a fait accompli and, very occasionally, debated, sometimes as long as two years after its introduction. The subordinate legislation goes to two Standing Committees, where my colleagues seek manfully to cope with a flood of regulations in which the House takes little or no interest, except in a handful of cases. No one here believes that that is adequate to protect the national interest; no one outside believes it either. Yet we do nothing to correct it, or even to consider how we might correct it.
This sovereign House of Commons is so careless of our own and the nation's future that we will not even look at the mechanisms that we have to scrutinise and debate European Union legislation whose impact on this place and on the nation grows daily. Any idea that we might copy Denmark, where the Folketing can ascertain whether Ministers have kept to their brief—or Belgium, where Members of the European Parliament have a role to play alongside Belgian national Members of Parliament—evokes contempt. Before we lambast the law makers of Brussels, we might look at ourselves.
Again, we seem wholly insouciant about who becomes a Member of Parliament. The Nolan committee makes recommendations that may radically affect recruitment to this place, and we still do not look at how Members of Parliament arrive here. In my lifetime, there has been a huge change in the attitudes of business to the political aspirations of its employees. Once businesses were often supportive of the ambitions of staff who wanted to enter Parliament: they would give them time off to fight elections, or sometimes offer to hold open a place for them if they were beaten in a subsequent election.

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That has all changed. Firms now tell an aspiring politician at an early stage of his career that he must choose between politics and the company. The result is that the House has fewer Members with business experience at even middle management level than for a century. The public, who know that our future depends on our ability to make and sell things, recognise that that is nonsense. It might not matter quite so much if Ministers were not drawn almost exclusively from Government Back Benchers, but they are, and we do not care enough to do anything about it.
Take our relations with parliamentary pressure groups. Fuelled by often colossal subscription income, becoming increasingly sophisticated every year, and able to command wide media coverage, single-issue pressure groups' influence over the House and the Government has risen to the point where one recently wrote to hon. Members to tell us what Bill it would be introducing next Session. I admire the colleague who wrote back robustly to say that she had always understood that it was for Members of Parliament or the Government to initiate legislation, but the pressure group was only stating the truth. Few large ones will have any problem about persuading a Back Bencher to pick up one of their Bills when Members have neither the resources nor the expertise to create a Bill on their own. That is a significant development and we all know it. It may be healthy or it may not, but we do not care enough either way to take the trouble to examine it.
Almost every week, a Member will rise and complain to you, Mr. Deputy Speaker, that some Government statement has been made outside the House, when propriety suggests that it should have been made to us first. It has become a meaningless ritual. We all know that if anyone in this place, a Minister or Back Bencher, wants to create an impact with an announcement, it is better to tell the media first. We know it, we pretend that we resent it, but we will not even consider examining our procedures to fashion a more effective partnership between this place and the media. The meaningless adherence to the shibboleths of a previous era simply brings the House into public contempt. We know it. We do nothing about it.
Take the roof off an ants' nest and one will see a myriad of ants scurrying about, all desperately busy. I have no doubt that, if one could ask them, each ant would say that it had never been so busy. Take the roof off the House of Commons and a similar scene would be revealed: hon. Members scurrying about, carrying heaps of paper, dashing to be on time for a Standing Committee, where they will be discouraged from saying anything at all, talking endlessly down the telephone to resolve a welfare case that in a citizens advice bureau would be pursued by a part-time volunteer.
I have no doubt that almost all my colleagues work desperately hard. I wonder how much of value we contribute to the governance of the United Kingdom. In 1991, the House approved more than 2,200 pages of legislation and 2,945 statutory instruments. That is 13 pages of law and 18 statutory instruments every working day. What a burden for all our citizens, which is largely unexamined in this place and which recently has got worse.
The public are better educated, better informed and more sophisticated than ever before. They sent us here to call the Executive to account, but we allow the Executive more power and less accountability with every passing
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year. We have required every institution in the land—universities, the professions, business, big and small, schools, hospitals, and local authorities—to subject themselves to rigorous testing and radical change. They have mechanisms for passing on from one generation to the next the wisdom learned through experience; we do not. They learn from organisations all over the world; we do not. Only here, where their revolutions have been demanded or approved, is no planned change discernible. Only here do we make no provision even to consider whether we should change. No one in here cares. A swollen Executive relies on its existing members, the ambition of its aspirants or the exhaustion of its former members to keep this sovereign House in its posture of supine subservience.
Today, I have not sought to list solutions; those come later. Unless we first demonstrate an interest in self-improvement, there is no point in bothering about detailed proposals.
This sovereign House of Commons, whose power is, to all intents and purposes, absolute, once before got out of touch with public sentiment. On that occasion, an hon. Member came to the Chamber with soldiers and told the Members debating on these Benches:
"You have stayed in this place too long and there is no health in you. In the name of God, go."
If we are not one day to suffer the same fate, we need to ask ourselves how best to fit ourselves for the next millennium.
5.44 pm
Mr. Tony Banks: I wish to oppose the motion moved by the hon. Member for Mid-Kent (Mr. Rowe). It is not fair for him to say that none of us cares and that we might as well leave this place. Perhaps he has been listening to the advice of his hon. Friend the Member for Welwyn Hatfield (Mr. Evans), who said, "If you're fed up with being a Tory Member of Parliament, vote for John Major." I do not know how the hon. Gentleman voted in that leadership election, but it is wrong to say that people do not care about the procedures of this place and about the need to make it more responsive to people's wishes and needs.
I agree with many of the sentiments that the hon. Member for Mid-Kent has expressed and some of the analysis, but I do not agree with his solution, which is to abolish the House of Commons in a one-clause Bill. That is a ludicrous proposal. It is like saying that I have a bad headache and to deal with it I will knock my head off. That seems a rather extreme cure to offer.
Much needs to be changed in this place and in the way in which we organise both government and politics. The hon. Gentleman should have dealt with some of the solutions. He was good and long on analysis, but incredibly short on solution. He said, for example, that we do not hold the Executive to account, but we have spent three hours attempting to do so through questions to Ministers and the Prime Minister. We have had three statements and an opportunity to cross-examine Ministers. Ministers do not like that experience and it is ludicrous that, on Thursday, we will start a summer recess that lasts right through to 16 October. Despite what some hon. Members say, that is not a holiday for Members of Parliament, but it is a rest cure for Ministers because they

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will not have to come to the House and account for their actions. It makes a manifest nonsense of the claim that the legislature controls the Executive.
During that long summer recess, government will continue, but without the inconvenience of Ministers coming here to expose themselves to examination. [Interruption.] I am sorry. That is not a felicitous phrase to use in the context of Conservative Ministers these days, but hon. Members on both sides of the House know what I am getting at. We know that there will be press conferences, and initiatives. On Friday, the summit on Bosnia which the Prime Minister was talking about will take place, but we will be safely away in our constituencies and we will not be able to ask the Prime Minister, Ministers, or the Foreign Secretary when he returns from Washington, what is being done and said in Parliament's name. Parliament has no say in those decisions.
We need to reorganise the year, with sittings interspersed with regular and shorter recesses. Even when we are here during a Session, we are often denied the opportunity to debate and decide on issues of national and international importance. That is why Members are forced to raise what are in effect spurious points of order. Before the debate on this Bill, we had one of the most genuine exchanges on points of order that I have heard for many a year in this place, but normally it is not like that. We are forced to use Standing Order No. 20 applications and spurious points of order—[Interruption.] Hello! The mafia has turned up—to raise issues that we feel strongly about.
In this place, I want us to debate what people are debating in the Builders Arms, my local pub. It is ridiculous that people can debate and discuss significant issues outside this place, but that we are denied the opportunity to do so.
One of the main reasons why we are often treated with contempt by the Government is that the Government do not need us; nor do they even need the payroll vote in some important respects. Far too many decisions are taken in the House using royal prerogative powers. The Prime Minister is an elected dictator. Hailsham said that about a Labour Prime Minister, but it could more accurately have been said about Baroness Thatcher, who was an elected dictator. Her majority meant that she had no need to apologise to the country or the House. Had she wanted to
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add an eighth day to the week, she had the political majority to enable her to do so. We do not want dictatorial powers being exercised by the Prime Minister through the royal prerogative.
Tomorrow we are going to have a debate on Bosnia. It is only a debate—no one will ask us anything and we shall not vote on what we should do. Ministers can ignore us or heed us, as they please. The decision as to whether our troops should become involved in military activity or withdraw will be taken using the royal prerogative powers rather than following a decision taken by the House. In effect, a raft of decisions affecting every single man, woman and child does not even have to be discussed in the House. The House of Commons is not asked for its permission. [Interruption.] I am disagreeing with the solution suggested by the hon. Member for Mid-Kent. He should have specified ways to change the House to make its operation more efficient. There are so many changes that could be made.
Personally, I believe that we need to change the way in which we vote. Let us have proportional representation; we might then achieve a balance in the House that is far more in keeping with the wishes of the people. Let us have fixed-term Parliaments; let us abolish the House of Lords and the monarchy. Those are ways to make the House more efficient. We should not follow the path outlined by the hon. Gentleman and abolish the House of Commons in a single-clause Bill.
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 proceeded to a Division; but no Member being willing to act as Teller, MR. DEPUTY SPEAKER declared that the Ayes had it.
Question agreed to.
Bill ordered to be brought in by Mr. Andrew Rowe, Mr. Gyles Brandreth, Mr. Michael Fabricant, Mr. Christopher Gill, Mr. Andrew Mackinlay and Dr. Tony Wright.

HOUSE OF COMMONS (ABOLITION)
Mr. Andrew Rowe accordingly presented a Bill to abolish the House of Commons in its present form: And the same was read the First time; and ordered to be read a Second time upon Friday 20 October and to be printed. [Bill 169.]

Metropolitan Railway Grant
5.54 pm
The Minister for Railways and Roads (Mr. John Watts): I beg to move,
That the Special Grant Report (No. 15) (Metropolitan Railway Grant 1995–96) (House of Commons Paper No. 470), which was laid before this House on 14th June be approved.
Had my hon. Friend the Member for Mid-Kent (Mr. Rowe) managed to get his Bill through all its stages immediately, I might not have had the opportunity to detain the House briefly with this motion.
The special grant report sets out the measures that we are proposing to take to ensure that passenger transport executives in England obtain financial cover for the additional costs that fall to PTEs and passenger transport authorities this financial year—1995–96—as a result of railway restructuring. The House has already considered and approved the Scottish version of this report in Standing Committee on 5 July. That report covered the Strathclyde passenger transport authority.
The restructuring of the railways has changed the basis and level of charges for PTE rail services. Before April 1994, the PTEs were treated as marginal users of the network, under British Rail's charging hierarchy. The new charging systems endeavour to reflect the full cost of service provision in order to maximise transparency.
Railtrack's access charges and the rolling stock companies' leasing charges need to be at a level which will cover the cost of renewals investment and earn a return on their investment. Train operators also need to earn a rate of return on their operations. These adjustments reflect the real economic costs of providing the services in question.
Before April 1994, the Government provided support in respect of the PTE-funded railway passenger services solely by the provision of additional sums within the revenue support grant paid to metropolitan district councils. That support is known as the bolt-on. The total for the English PTAs is apportioned among the metropolitan district councils by formula. Although the sums are not hypothecated, the allocations for individual PTEs are published in the annual revenue support grant distribution report. The PTAs levy their constituent district councils to cover the expenditure requirements of their respective PTEs.
The revised charging regime that followed rail restructuring in April 1994 was unable to provide, at an early enough stage in the calculations of RSG for the year 1994–95, sufficient detail of access charges and rolling stock leasing charges to identify fully the extra charges to the PTEs. Consequently, the Government introduced the metropolitan railway grant as a transitional measure in 1994–95 to meet the funding gap between the bolt-on and the extra costs of the revised charging regime.
Calculation of MRG takes as the starting point the services for which the PTEs contracted in 1993–94, and the amount of grant represents the difference between the costs of providing those services under the old pre-April 1994 and new post-April 1994 charging systems. MRG was paid in 1994–95 by the Department of Transport direct to the PTAs, and the position remains the same under this report. The earlier report instituting MRG in England was debated in Standing Committee in May last year.
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Because of the regulator's review of access charges, and the further development of the ROSCOs' and Railtrack's charging mechanisms, sufficiently detailed data on those charges were not available early enough to feed into the calculations of RSG for this financial year. In the circumstances, Ministers decided that, subject to parliamentary approval, MRG should be extended to cover the current financial year. The text of the report has been the subject of consultation with the PTEs and other interested bodies, including BR and the Association of Metropolitan Authorities. The report outlines the background to the PTEs' past and current funding arrangements, and sets out how the MRG will be calculated and the conditions attached to the payment of it.
Annex A to the report sets out some of the background to the PTAs, PTEs and rail support, and particularly how revenue support was provided by central Government in the past, and why it was necessary to introduce MRG in 1994–95. Annex B simply lists the English PTAs which will be paid MRG. Annex C sets out how MRG is to be calculated in 1995–96. The starting point is an individual PTA's relevant expenditure: BR's gross charges for providing railway passenger services to the PTE in 1995–96.
As the purpose of MRG is to compensate for the financial effects of restructuring, it is necessary first to deduct from the total charges the charges levied in 1993–94 on the old basis, and secondly, to deduct inflation on the 1993–94 cost base. Thirdly, a deduction is made in respect of payments made or to be made in 1995–96 under certain deeds of assumption governing the payment of money to PTEs to cover past capital grants to British Rail by the PTEs. Fourthly, there will be an adjustment—an addition to the grant total—to take account of any underpayment of MRG to the PTAs in the last financial year. The end result of that calculation will be the amount of MRG payable.
In the case of West Yorkshire and West Midlands, there will be a deduction in respect of the cost on the 1993–94 charging basis of service enhancements which followed from improvements in infrastructure. The final annex, annex D, sets out the conditions with which the Secretary of State has decided that the PTAs must comply in respect of payment of this grant.
The report covers this financial year, it ensures that PTAs and PTEs receive the additional costs that fall to them from rail restructuring for this financial year, and I commend it to the House.
6.1 pm
Mr. Henry McLeish: This is a very important motion, and I am grateful that we have an opportunity to discuss it on the Floor of the House.
Being a decent, honourable man, the Minister will never talk about privatisation. It is called restructuring. The Government never talk about artificial markets, but we have charging hierarchies.
Mr. Watts: The hon. Gentleman will know that last week I was very happy to talk about privatisation. It is a matter of accuracy that this report deals with the consequences of restructuring. As he will know, we have not yet let the first of the franchises for the private operation of passenger services. That will come later this year: he has only to wait a while.
Mr. McLeish: I am grateful for that intervention, which enables us again to realise that the Government are making no progress with the franchising of railways—and thank goodness.
It is important to consider the point about restructuring versus privatisation. We bring this report to the Floor of the House because it is all about privatisation of the railways. It is not about restructuring: it is about the dismemberment of BR into 95 bits. Part of the problem is that there are seven PTAs—one in Scotland, and six in England which are the subject of the motion. We will suffer greatly at the hands of this Government.
We will not divide the House on this issue, because, in a sense, if one creates a crazy situation, one has to pay up. That is what the Government are doing. They are bailing themselves out of a financial situation of horrific proportions, with which I shall deal.
We are concerned about what this money is to be used for. If the allocation was about providing more trains in Yorkshire, Merseyside and Greater Manchester, or more services, stations, railway stock or signalling, it would be something to debate. This report shows the price of privatisation—nothing more, nothing less. That is why, in tabling the motion, apart from using words to provide a camouflage for what the Government are doing, they will not tell the British people or this House what that money will be spent on. Our case tonight will tackle that issue, because it is germane not only to the motion but to the use of the money voted through tonight.
Of course nobody doubts that the PTAs have done an excellent job. They provide an opportunity to attempt public-private integration, to tackle congestion, and to address an integrated public transport network. So there is no dispute about their track record. The motion is about the cash they will get in the financial year 1995–96, yet huge questions are unresolved about what happens in 1996 and 1997 if this crazy privatisation should proceed to the extent desired by Conservatives Members.
This evening, we do not want to disguise our central proposition. If, as I said, the motion was about services, that would be one debate. Our proposition is that, for the foreseeable future, this Government are willing to squander £250 million every year to pay for privatisation involving the passenger transport authorities. That is worth repeating, because, until now, the PTAs have received regular support through the revenue support grant. That has averaged perhaps £100 million, £120 million or £130 million a year. This year, the PTAs will receive a staggering £380 million—an increase of £250 million.
Mr. Hugh Bayley: Does my hon. Friend agree that a good way of illustrating the sum involved is by saying that £380 million was three times the amount of money needed to save the York carriage works by building another tranche of some 100 new carriages for use on suburban railways? The Government could have financed the building of 300 carriages for that amount of money and improved service to the public, instead of using it as a financing mechanism for privatisation.
Mr. McLeish: My hon. Friend is absolutely right. The opportunity cost of this folly will become evident this evening, because we will talk about the amount of money involved: £380 million. If it was a once-for-all increase of £250 million, it would still be a staggering sum of money. Ministers who always lecture the Opposition on probity
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in public expenditure are about to spend £250 million on simply nothing over the next five or 10 years—if they stay in power and privatisation proceeds on the basis that they want.
Obviously, I and my hon. Friends want to explore this crucial issue. To pay the price of privatisation, the PTAs will receive a 172 per cent. increase in the amount of money that they have to spend.
We have tried time and again to capture the right language properly to project what a monumental piece of stupidity privatisation is. Not only is it destroying the railways and threatening the PTAs, but it is squandering taxpayers' money on a grand scale. I hope that the Minister will address that central point. Will he confirm that we are right, and that money is being squandered, or is there some other reason behind the massive sum being poured into the black hole of the PTAs?
We have talked about the benefits that have accrued to the country of having PTAs, as I hope that all hon. Members would agree, but let us consider what is happening up and down the country. My hon. Friend the Member for York (Mr. Bayley) put his finger on what is wrong. Excellent schemes are being developed in every PTA in the country, they are desperately keen to provide integrated public transport, and they are yearning for stability.
The report highlights a policy in contrast to all those aspirations. If we had £300 million or £250 million to spend every year, what would we spend it on? The Government must tell us why, when there are so many priorities on the railways, they want to waste that money in such a way.
It goes without saying that this week, the Secretary of State for the Environment will meet representatives of local authorities. What would local authorities do with a quarter of a billion pounds across their departments? It is vital to stress that point, although it is outwith the report in the sense that other parts of local government are not covered by it. However, I know some chairmen of education, some chairmen of housing and some chairmen of other council departments in the Association of Metropolitan Authorities who would like to get their hands on a quarter of a billion pounds. The money is up for grabs. It is basically the price of madness—the price of privatisation.
The Minister might tell us about the discussions he has had with his colleagues about his being allowed to spend such an amount to support an artificial internal market, while other Ministers are desperate to get money to spend in the run-up to the next general election.
Mr. John Gunnell: Does my hon. Friend agree that local authority spending may not be as irrelevant to the matter as he suggests? When the bolt-on comes in for the next financial year, the money will go straight to the district councils. They will have the choice whether to spend the money on railway services or hold on to it for other purposes.
Mr. McLeish: My hon. Friend is absolutely right. This is a point that I shall address in a few minutes, because it is one of the uncertainties that has an impact on discussions about the railways and the PTAs.
My hon. Friend makes the valid point that, if the Government move from a specific metropolitan railway grant to a system in which the money is absorbed into the

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revenue support grant, there can be no guarantee that the money, which has been fed in for the railways, will get through a system that is under strain at present. The sum is massive, and the PTAs will depend on the good will of the local authorities to deliver the cash so that they can deliver the services. That is an important point.
Before leaving the question of cost and moving on to the uncertainties, it is worth repeating some of the ridiculous figures. Based on the PTAs' submission to the Select Committee on Transport, we know that South Yorkshire has a 150 per cent. increase to provide the same level of services. Strathclyde region, which is not covered by the report but which is relevant to the debate, will experience a 238 per cent. increase to run the same railway services this year as it ran last year.
The Minister must be alarmed that he is seeking the House's approval to spend a quarter of a billion pounds. Can the Minister be embarrassed?
Mr. Watts indicated dissent
Mr. McLeish: The Minister indicates that he cannot be; I know that he does not mean it: I am sure that he can be embarrassed. We are 20 months away from a general election, and the country is informed that we have no money to spend. Why is it that we have so much money to spend on PTAs that we are talking about not £100 million or £200 million, but a quarter of a billion pounds every year? The Minister listens, and I am sure that he agrees that that is a large sum, which could be put to far better use.
Mr. Watts: Did I hear the hon. Gentleman correctly? Was he suggesting that it would be better not to spend this money on the provision of railway services in the metropolitan areas, but to spend it on something else? That is not an argument that I have heard from any of the PTEs.
Mr. McLeish: We should not have to spend such a sum if we did not have privatisation of the railway system. The privatisation of the railway system is logically and directly linked to the financial madness before the House this evening, and the Minister knows it. Of course we would like to spend money in productive ways on our railways. Until we stop privatisation—until we halt the madness—that will not be possible.
The Association of Metropolitan Authorities is obviously concerned about the future. It has on its hands a situation about which it can do nothing. It wants to provide the best services possible, but it cannot improve its services. Yet it still has to process the financial merry-go-round whereby the Treasury will give it extra money.
The Government will pay hand over fist to fatten up Railtrack and the leasing companies for privatisation, and they will, of course, pay money to the train operating companies. The AMA is not happy about the financial merry-go-round, as the Minister well knows. The Government are, however, paying the piper, and the AMA has to dance to the tune.
What about the future? Is the Minister willing this evening to give us a cast-iron guarantee that, beyond 1995–96, there will be no going back on a commitment to fund every extra penny of cost that the PTAs in England and in Scotland will have to pay for this privatisation? That point is vital, because the report leaves matters hanging in the balance.
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At present, if the AMA and its constituent authorities accept the 1995–96 settlement, they will have to spend the money against a background of no guarantees about the kind of railway system they will have. They do not know whether the train operators will be franchised. They do not know what charges the leasing companies will impose, and what charges Railtrack will impose. It is important that we, as a responsible Parliament, ensure this evening that the Minister gives the guarantees that will be required if privatisation proceeds.
The next point concerns the transparency of the cash. Everyone knows that, at present, a grant is a fixed sum, it is given to the PTAs, and it can be spent. If it is then subsumed into the revenue support grant settlement, there is no guarantee that it will be delivered to the railways. There is no guarantee that the grant will be transparent in the sense that it can be discussed in the House. If the grant is subsumed in the RSG, there is no possibility that we shall have an order to debate. How can the nation, Parliament and the PTAs be reassured that public finance is being used for the purposes that the House intends?
I have already alluded to the next consideration. We live in uncertain times. The railways are a complete shambles, entirely due to the Government's policies on privatisation. This evening, we are saying to the PTAs, "Yes, you can have this quarter of a billion extra, and just get on with providing services." But the PTAs have no idea what the railways will look like in one month's, two months', six months' or a year's time. That is crass irresponsibility on the part of Government.
The Minister must tell us this evening whether Railtrack charges will be stabilised. Will not leasing companies fleece the train operators and the PTAs? Will we have stability in this so-called "artificial market"? What is the future for the railways, which impinges so heavily on what is happening with the PTAs?
The other important issue in terms of the RSG is capping. We must be reassured that the machinery of delivering special help to the railways through the RSG will not be the subject of capping procedures. We need a hard assurance on that, because it is no good for the Minister to say to the House, "Yes, it is a matter that we are looking at. Yes, it is a matter that we want to have further discussions on." Obviously, this deal will not be worth the paper it is written on if we do not have specific guarantees about what is going on. The long-term commitment of the PTAs is meaningless without long-term assurances about future funding and about the future of the railways.
I hope that the Minister will come clean about what the money is specifically to be used for. Is it really for the railways, or is it merely intended to prop up an artificial internal market to allow the Government to get on with privatisation, which no one wants outwith a small ideological clique in the Conservative party?
How can we ask the PTAs to continue to do such an excellent job, if their whole future is surrounded by uncertainty, by the notion that money may not be available, and by the possibility of the Government being hellbent on putting much of the railways into the private sector? It is worth while for the report to be brought to the Floor of the House, because it is the kind of matter that the Government like to smuggle through in Committee, so that they do not have to explain to anyone what they are doing and why the money is being used in

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a particular way. At the end of the day, they are doing no service to this House and they are certainly doing no service to the passenger transport authorities.
6.18 pm
Mr. Keith Hill: As you will be aware, Mr. Deputy Speaker, my interest in the matters before us has already been declared in earlier exchanges—by the Prime Minister, in fact. I am sponsored by the National Union of Rail, Maritime and Transport Workers. However, at least I and other Members of Parliament sponsored by the rail unions have an interest in and a concern for the future of the railways—a concern that is obviously not shared by Conservative Members, judging by the scandalously empty Benches behind the Minister.
I should begin by welcoming the fact that at least the metropolitan railway grant is being paid. As the Minister said, last year it was expected to be a one-off transitional grant, designed to meet the extra costs of the restructured railway. The passenger transport authorities and the passenger transport executives were left in considerable uncertainty about the funding of future operations this year, until the late decision formally announced on 14 June that the Government would make further MRGs for the current year.
The force of many of the representations to the Transport Select Committee in the course of its inquiry into railway finances was that, as a result of that delay, the PTAs felt themselves to be up against the wire in making decisions about future services, given the long lead times involved in making contracts with operators and then composing timetables.
That is extremely unsatisfactory for authorities responsible for such a major part of the railway network. It is worth remembering that the rail services in PTA areas carry twice as many passengers as the former InterCity part of British Rail, and account for three quarters of those carried by the regional railways. In total, PTAs act as a channel of provision for just under one fifth of the overall net subsidy required by the rail network.
It is therefore vital that the Government get the future funding of those authorities right. As my hon. Friend the Member for Fife, Central (Mr. McLeish) said, we know that the Government have decided from 1996£97 to return to payments towards the section 20 rail services by means of revenue support grant under the terms of the so-called standard spending assessment bolt-on that flowed from the Local Government Act 1988.
The Minister must be aware that the PTEs have expressed some dissatisfaction with the formula used to calculate the bolt-on. No precise detail about it has ever been made public, and we have no precise information about the way in which the bolt-on is made up, but, according to the PTEs, the money involved appears to be allocated on the basis of a combination of route miles and infrastructure costs. Again, the data involved have not been made public, and there is a strong suspicion within the PTEs that the information base may be flawed.
I am sure that the Minister will recall that, in 1994, the Environment Select Committee's report on standard spending assessments called for maximum transparency in their preparation. It is sincerely to be hoped that the Government will live up to the commitment of the most
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recent of many Secretaries of State for Transport to total transparency concerning the section 20 bolt-ons. Furthermore, the Minister himself has made an unequivocal commitment that future funding will match in full the level of support currently allocated by means of the metropolitan railway grant and the bolt-on. The Opposition will want to give that commitment the most detailed scrutiny in due course.
Even if future funding by the Government is at 100 per cent. of the present levels, the method they have chosen for making the grants is still bound to create uncertainty about the long-term provision of local rail services. The Government may make a virtue of the discretion that the grants paid to metropolitan district councils under the bolt-on arrangements offer to such authorities, but, as my hon. Friend the Member for Fife, Central has already said, the fact that such grants are not ring-fenced means that they could be diverted from rail services to bus services, or even to non-transport services.
Rail services, by their very nature, involve long-term commitments to investment in infrastructure improvements and, above all nowadays, to rolling stock leasing. It will certainly be regrettable if the inevitable uncertainties arising from the new system of funding for PTE rail services cause their level to decline. There is no doubt that the changes in the funding mechanism, together with the restructuring of the railways under privatisation, have given rise to a series of grievances and anxieties within the PTAs and PTEs.
For example, under the new track access regime, PTEs are now charged for the use of track on the basis of the periods for which the trains they support occupy the track. However, because local trains are slower, more frequent, and stop at more stations than InterCity trains, the PTAs legitimately feel that they are being asked to pay a higher proportion of the total costs, despite the fact that the heavier, faster trains run by InterCity train operating units cause more track damage.
Moreover, there is a general complaint among both the PTAs and the PTEs about the significant rise in the costs quoted by Railtrack for new works. In some cases, those have doubled, and there has been a similar escalation in the fees charged by Railtrack for design and supervision. That comes on top of the added complexity affecting all major new projects that has been caused by privatisation itself.
For example, in the past, a plan for an electrification scheme would simply have been agreed among the PTE, British Rail and the Department of Transport. But now, such a project involves many more agencies and businesses, especially if there is to be a transfer of rolling stock between services on other parts of the network as part of the project.
Even entering into an agreement for the provision of services has become considerably more problematical under privatisation, and PTAs will naturally be more hesitant about incurring substantial loan debt liability as parties to franchise agreements stretching over periods of seven or more years, unless they have firm assurances about funding for both revenue and capital purposes—funding that will be available for the full period of the franchise. However, there is no sign whatever that such a commitment will be forthcoming from the Government.
Underpinning all those anxieties and uncertainties, as my hon. Friend has argued, are the astronomical increases in charges to PTAs arising from the restructuring of

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railway finances from April last year. That has meant that the net claim on central Government funding for PTAs has increased from just over £130 million to the present £355 million-plus.
If nothing else, even if the future bolt-on covers the extra costs, it is bound to make metropolitan district councils think twice about passing on such colossal sums to PTAs. Of course, the Government will argue at one level that those are notional figures, and that the new money-go-round means that all the extra expenditure will flow back to the Treasury at the end of the day, at no extra cost to the taxpayer.
That may be true before Railtrack is sold off, but what will happen after the flotation, if it ever happens? There is no suggestion by the Government that there will be any significant decline in the charges levied by Railtrack, other than the marginal adjustments already proposed by the regulator. As we understand it, there is certainly no suggestion that the Government are planning to spend less on what constitutes essentially the same level of section 20 services. If they do plan to spend less, the Minister should certainly tell us about that this evening.
However, if Railtrack is sold off, the money will not go back to the Treasury next time. That money will be going into the pockets of Railtrack shareholders. In pursuit of their madcap goal of rail privatisation, the Government have massively increased public spending on the railways to enrich a handful of privateers at the expense of the rail passenger and the taxpayer. It is a racket and a scandal, and the Government will not be forgiven for it.
6.29 pm
Mr. Paul Tyler: The Minister made a valiant attempt at the outset of the debate to suggest that restructuring and privatisation were somehow totally different. Perhaps I could remind him of his letter to the chairman of the public transport committee of the Association of Metropolitan Authorities, dated 30 June, in which he said:
"I understand your concern that any additional costs arising as a result of rail privatisation in 1996/97 could have a further impact on districts' budgets."
We would not be talking about the costs of restructuring were it not for the fact that the Government are hellbent on privatisation.
The passenger transport authorities in England which are the subject of the report have calculated the additional costs which they anticipate as a direct financial consequence of rail privatisation. They are as follows: West Midlands, £35.626 million; West Yorkshire, £28.254 million; Tyne and Wear, £3.951 million; South Yorkshire, £12.012 million; Merseyside, £49.894 million; Greater Manchester, £48.162 million. These are huge sums.
The hon. Member for Fife, Central (Mr. McLeish) was right to indicate the scale or weight of that investment. My only comment on the hon. Gentleman's contribution to the debate is that I wish that he had been as forthright, both in his speech and in his vote, in support of our motion last week on the sale of Railtrack as many of his colleagues on the Back Benches were. We welcomed their support.
This is an extraordinary chronicle of indecision and imprecision, a result of which will be major costs for the organisations concerned. I have seen the correspondence between the Minister and the AMA in recent weeks, and
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the one thing that stands out clearly is that the Department has left it to the very last minute to clarify the essential elements of the package that it is bringing before the House tonight. The status of the capping regime if the report is passed, and its provisions continued into next year, is still unclear. I hope that the Minister will address that point when he winds up this evening.
In terms of the travelling public, there is likely to be a hiatus in the services provided in metropolitan areas by the PTAs and PTEs. Our primary concern this evening should be the effect on the quality of services provided by Greater Manchester, West Midlands or wherever. Is there an implication for fare levels? Most important of all, will there be an impact on council tax payers? Will they have to pick up the bill? It is by no means clear from the exchange of correspondence between the Minister and the AMA that the last point has been tackled.
In a letter dated 29 June, the chairman of the AMA's transport committee specifically asked the Minister to address three points. He wanted clarification that
"the control total for support in 1996/97 is set at an adequate level taking proper account of the outcome of 1995/96 funding including provision through MRG … the additional costs will be supported 100 per cent. by Government funding and that no part of that cost shall fall on the council tax payers of the metropolitan district councils … any future capping criteria applicable to metropolitan district councils will recognise these costs of rail privatisation as reflected in the PTA levy and that due allowance be made in districts' budgets in order that the increased levy can be fully absorbed without impacting on other districts' spending."
The Minister's letter to which I referred was a short one. I do not pronounce him guilty of that—we could all do with short letters at times—but it did not explicitly address those queries. This evening, we should ask the Minister to be explicit.
If anybody is in any doubt about the possible impact of the transitional changes on the areas concerned, they should consider the position of Greater Manchester, where the PTA's charges as a result of the change in arrangements have risen from £40 million to £90 million—a huge sum. Greater Manchester is the second largest metropolitan authority, and must negotiate with 10 districts. This could be very damaging, and potentially dangerous for the whole mechanism of apportioning grant to the public transport system in Greater Manchester. As a result—I hope that the Minister will be able to comment on this—all three political parties represented on the PTA have agreed to sever their links with British Rail, and have pulled out of their section 20 agreement under the Transport Act 1968.
The potential for chaos is such that those responsible for trying to make sense of the madness are finding it impossible to do so under the terms of the section 20 agreement. Given that Greater Manchester has the biggest collection of urban rail services of those authorities to which metropolitan railway grant is paid, and given that it has the largest number of district councils for which MRG is available, one can see the complexity of the matter. The Government's last-minute indecision is causing real hardship and confusion, and the impact on the travelling public could be considerable.
I do not think that the last-minute brinkmanship in the negotiations does the Department of Transport or the House any credit. It puts a lot of people who have a heavy responsibility for providing public transport in metropolitan areas at a considerable disadvantage. Inevitably, that will put the travelling public at a disadvantage as well.
6.36 pm
Mr. John Gunnell: As you have taken the Chair, Madam Deputy Speaker, and replaced my hon. Friend the Member for Pontefract and Castleford (Sir G. Lofthouse), I am left as the only Member in the Chamber who represents an area covered by a metropolitan railway grant. It surprises me that the Government Benches are so empty. I can think of a number of Conservative Members who represent seats in former metropolitan county areas. I can also think of a number of marginal seats in West Yorkshire.
Mr. Bayley: Does my hon. Friend believe that the almost total absence of Conservative Members suggests that there has been a collapse in support for rail privatisation among Conservative Members, and that they are no longer prepared to support Ministers in this ill-guided venture?
Mr. Gunnell: That certainly is the case. Conservative Members recognise the damage that is being caused by privatisation.
Mr. Andrew Rowe (Mid-Kent): That is far from being the case. The real answer is that, on a day when amazing rail strikes are paralysing the nation, the benefits of rail privatisation are so self-evident that there is no need for Conservative Members to be present in large numbers.
Mr. Gunnell: That may be the hon. Gentleman's view, but it is not the view of the majority of the travelling public, and I am sure that he knows that. Many marginal seats will be affected by the removal of the grant, and by the promise that the Minister gave to the metropolitan authorities in a letter to the chairman of the public transport committee of the Association of Metropolitan Authorities. He made it clear that the 1995–96 settlement would continue to guarantee additional costs.
I welcome the report because it ensures that services in metropolitan county areas will continue. As I represent a seat in West Yorkshire, I am glad that the West Yorkshire passenger transport authority, which we built up over many years, is to remain. It must be said that its grant remains at the 1993–94 levels. Will the Minister say what reductions will be made? He referred specifically to reductions that would be made in West Yorkshire as a result of the changes in service there since 1993–94, and I am sure that he could give me the costs.
Mr. Watts: I was explaining that, in calculating the amount of metropolitan railway grant starting from the total cost of current services at current costs, it is necessary to make an adjustment in respect of the West Yorkshire and West Midlands PTAs for the 1993–94 cost equivalent of the enhancement in services that they have made subsequently. They are therefore compensated for the increased cost of services that arise from restructuring. But by not taking account of the cost that they were already bearing and for which they were already supported through their existing level of bolt-on grant, they do not receive the whole of the cost, effectively for a second time.
If I led the hon. Gentleman to believe that I was suggesting a reduction in current funding, which would lead to a reduction in services, that was not my intention.
Mr. Gunnell: I thank the Minister for that explanation. I had understood that the grant was meant to cover services
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that existed at the end of 1993–94 but that, where improvements had been made, the Minister anticipated that the cost of those improvements would be borne by the passenger transport authority. Is he saying that, in future, Government grant will cover services that existed on 1 April 1994 but that if any authority has increased its services, that increase will fall on the authority's resources?
Mr. Watts: Not from 1994. The services to which I referred in West Yorkshire and the West Midlands had been planned, and infrastructure investment had been made for them. They came into operation after the end of the financial year 1993–94, and are included in the existing base bolt-on. They are also covered by the metropolitan railway grant, which I hope that the House will approve tonight. Beyond the current year, however, any changes in service that local authorities wish to make will have to be funded out of whatever provision they receive from that level of funding, which I propose should be provided when we move from MRG to the new enhanced bolt-on. Current services are covered by MRG in respect of the effects of restructuring, and will continue to be funded in the future when we take the existing bolt-on plus the existing MRG and carry that forward into an enhanced revenue support grant bolt-on.
Mr. Gunnell: I thank the Minister for that explanation, which enables me to make a point that has not been made in the debate so far. During the period in which I, as leader of West Yorkshire metropolitan council, had some responsibility for transport, we were developing new railway services. We opened stations and introduced new routes, and improvements were made to the service. A big potential for rail in metropolitan areas is not yet being fulfilled. My concern about the additional costs that will arise as a result of privatisation is that they will make it much more difficult for those who exercise responsibility locally to bring about the developments in service that the public want.
Mr. Bayley: In annex A to the report that we are debating, the Government say:
"prior to railway restructuring on 1 April 1994, PTEs were generally charged by BR on a marginal cost basis that did not reflect the full costs of service provision."
When British Rail was a public service, it was right to try to enhance the service to the public by recouping only the marginal costs. But the Government's proposal implies that any future improvement of railway services in metropolitan areas will be charged at full cost to make Railtrack, once it is in the private sector, more profitable. As the leader of a former metropolitan council, will my hon. Friend give us his view on whether the proposed regime will make it harder for local authorities to enhance their local rail services in future and move people off the roads and on to the railways?
Mr. Gunnell: I thank my hon. Friend for his comments. It is basically the same point as I made to the Minister. I was about to come to the phrase about "marginal costs". One of my jobs in the past was to be involved in the negotiations between the passenger transport authority and British Rail. British Rail made sure, on every point where it had any flexibility, that it charged the maximum amount that it could. We had very tough negotiations within the terms of section 20, and the Minister would have expected British Rail to give us a tough time on the costs of those arrangements. So significant charges were paid.

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I refer specifically to West Yorkshire, where one can see clearly the cost of privatisation. My understanding of the £28.254 million is different from that of the hon. Member for North Cornwall (Mr. Tyler). I understand that we are not at a stage where we can say what the total cost of the bill will be. Only at the end of the financial year 1995–96—in April 1996—will the final bill be known and paid, because it depends on two factors: first, the level of grant; and, secondly, the revenue from train fares in 1995–96.
I am sure that the Minister will tell me if I have misunderstood the report, but I understand that the old section 20 money is covered by that £28 million, less income from what I would call the "fare box", although it is not quite a fare box in the case of trains. In addition, there will be a metropolitan railway grant, which happens to be about the same amount—some £30 million altogether for West Yorkshire. So the total cost of services in West Yorkshire in the current financial year will be a total of £58 million, which is a staggering increase on the figure before privatisation. Indeed, it represents more than double the costs.
In my time, fares covered 27 per cent. of the necessary money. We felt that 27 per cent. was low because ratepayers always compared the amount that came in from fares on the rail system with the amount that came in through fares on the bus system. They may have felt that they were not getting a good deal, but one knew that there were many vital, strategic reasons why it was important to maintain the rail network. We therefore gave that additional commitment.
According to the proposal, fares will account for less than 20 per cent. of total costs. The Minister should spell out clearly where the required additional money has gone. Opposition Members believe that the total bill to be paid as metropolitan railway grant is a not-so hidden subsidy towards the privatisation process.
The Minister is correct to say that the privatisation proposals have not got very far, but he also made it clear that the Government's efforts will continue. He anticipates that franchises will be awarded next year. Passenger transport executives and district councils are worried about the future implications of those changes. They believe that the prices charged will fluctuate.
The Minister has spoken to the PTEs and district councils about Railtrack and the restructuring that has taken place—the preparation for privatisation means that services have been split up in readiness for sell-off. He believes that the additional costs incurred as a result of those changes have stabilised. That may be so, but the rail system is not stable, because of the Government's intention to press on with railway sell-offs. Once that becomes reality, what control will the Government have on the rate of return charged by private companies? If the rate of return is higher than the current rate allowed to Railtrack and the other subsidiaries, the final bill to be covered by the metropolitan railway grant will be larger than the current one. District councils and PTEs are naturally anxious to know whether the 100 per cent. commitment on offer is a 100 per cent. commitment relating not just to bills now incurred, but towards the additional bill that will be incurred as a result of changes in current railway arrangements.
I agree with my hon. Friends that those additional costs are the most staggering and, at the moment, the most transparent and obvious cost of privatisation. I agree with
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my hon. Friend the Member for Fife, Central (Mr. McLeish) that the grant represents appalling expenditure on what is, at present, a theoretical system. It will enable dogma to be put into practice.
The structure of the railways will be changed, but the PTEs are doing their best to ensure that their services will continue to operate effectively in the new system, despite the fact that they will find themselves having to pay enormous extra charges. To date, the Government have been prepared to underwrite such charges because they regard the principle of rail services as important. I am not asking the Government to consider whether those charges should be paid, because it is vital to offer those services, but whether the cost of the proposed changed arrangements is worth it. We are worried about the future and I hope that the Minister can allay our fears.
Unless it is not possible for district councils to do so, they will be extremely tempted not to pass on the entire amount of grant that they receive for the provision of rail services. I know how joint services have been provided in former metropolitan county areas, and if there is no statutory rule, the budget has always been determined by that district that wishes to pay the least for those services. Most of the districts are hard up as a result of Government restrictions on local government finance. If councillors were able to decide to use just a little of the money put aside for rail services for their other services, I am sure that they would be strongly tempted to do so. I want to see how the Government will make the sum in question transparent, because unless they do that and make sure that the total sum is passed on, we cannot be sure that the money will automatically go to the PTEs. If they provide those assurances, why change the system? It will simply make life a little more complex for PTEs.
The Government must explain how authorities that normally are subject to capping will escape it when the grant represents a large increase in expenditure. What is the parallel for the end-of-year adjustments that will be made to the grant? The Minister is aware that, by April 1996, he will be in a position to make such adjustments. The RSG system—the Minister's bolt on-system—is not as flexible as the current system. How will he make such end-of-year adjustments according to the new bolt-on system?
Will the Minister underwrite the costs if, as we fear, privatisation and franchising go ahead despite the fact that costs have not stabilised? I know that he has answered those questions in letters to the metropolitan authorities, but we need to hear his answer tonight.
We have said nothing about fares. At the moment, PTEs have the power to set fares and to specify participation in multi-modal ticketing systems for travel within metropolitan areas. Will the Minister confirm that those passenger transport authorities will continue to hold those powers in the future? At the moment, they make important decisions that relate directly to the level of use of a rail service because there is a direct connection between the cost of a fare and passenger use. Will they continue to exercise that power in the future?
If the additional costs arising from rail development are borne by the passenger transport authorities, perhaps the Minister will be willing to explain to us how decisions will be reached on fares, if that is no longer to be the responsibility of those authorities. It is important that the power to determine fares for local services is held locally.
6.57 pm
Ms Glenda Jackson: I begin by declaring an interest as the only Member of the House to be sponsored by the train drivers union, the Associated Society of Locomotive Engineers and Firemen, ASLEF.
The metropolitan railway grant is paid by the Government to the six passenger transport executives in England and Strathclyde regional council in Scotland for additional costs which, according to the Department of Transport's special grant report of 5 May 1994, result from
"the restructuring of the railways in Great Britain following the passage of the Railways Act 1993, and the introduction of new charging regimes reflecting re-evaluation of assets, new rates of return to be earned by the railways and revised principles for the attribution of costs amongst different rail services".
As my hon. Friend the Member for Fife, Central (Mr. McLeish) so tellingly said, according to the Department of Transport, restructuring is a euphemism for privatisation. There were at least three more such euphemisms in that quotation from the special grant report.
The metropolitan railway grant has been introduced because of the massive increase in the cost of operating rail services as a result of the introduction of track access charging regimes. In 1993–94, before track access charging was introduced, the public service obligation grant, the grant paid by the Government to British Rail to support socially necessary but non-profit-making services, was £949 million. A year later, with the introduction of track access charging, PSO support had almost doubled, to £1.7 billion. Adding in the metropolitan railway grant payment of £224 million, the introduction of track access charging increased the cost of operating rail services throughout the network by almost £2 billion in a single year.
At present, that money has not been lost to the taxpayer. That is because the PSO grant is paid to the franchising director, who passes the PSO grant to train operators in the form of track subsidy. Train operators then pass the grant on to Railtrack, which, because it remains a nationally owned company, returns that money to the Treasury. That is the money-go-round, as my hon. Friend the Member for Streatham (Mr. Hill) so accurately called it.
However, if Railtrack is privatised, the money paid by the taxpayer in track access charges will pass from the train operators to Railtrack's shareholders. Similarly, if the metropolitan railway grant is axed and local authorities are forced to increase council tax bills to support existing rail services, that money will go to Railtrack's shareholders. Even if the MRG is continued after 1996, it will simply mean that the taxpayer's subsidy will end up in the pockets of the shareholders of Railtrack and the private train operators.
The Government have said that they will provide MRG funding for an additional year, 1995–96, but that, after 1995–96, MRG funding will cease. At that time, any subsidy to support PTE services will be subsumed into the revenue support grant, when it will no longer be ring-fenced. If MRG funding is cut, councils contributing to the PTEs will have to supplement their contribution by increasing council tax bills or cutting services. Neither will be welcomed by the people of the country as a course of action.
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It is not as though people are not only too willing to use their railways if the services are there for them so to do. I take the example of the St. Albans-Watford Abbey Flyer. That was a service funded by Hertfordshire county council, which is not part of a passenger transport executive. The council supported a Sunday service much used by the people of St. Albans. The cost of operating that service was £15,000. The council, however, was informed by North London railways in April 1995 that, as a result of the costs imposed by the new track access charging regime, council tax payers would have to find an additional £50,000 if they wanted that Sunday service to continue.
Another example is the electrification of the Bradford-London InterCity route, at a cost of£40 million. On completion of the project, InterCity East Coast found that the new access regime meant that it was uneconomic to run additional electric units, and it was forced to continue to run diesel trains along newly electrified track.
It is vital to the country, not least on environmental grounds, that we are encouraged and facilitated in using our railways, and that there is expansion of the railways. The PTAs have made a valuable contribution to that expansion and to the use of our railway system. They are more than eager to continue to provide that service, but the Government do not appear concerned to help them in that aim. The Government are concerned to break up our existing rail network system in this benighted attempt to privatise. As my hon. Friends said, the support for the Government's proposals among Conservative Members would appear to be nil, because the Conservative Benches are almost empty.
One can understand why Conservative Members would back off from the Conservative Government's proposals for Railtrack. A recent national opinion poll showed that 55 per cent. of the Conservative party's supporters oppose rail privatisation, one in six Conservative supporters are considering abandoning the party on that issue alone and 42 per cent. of Conservative supporters believe that services will become worse after privatisation.
Overall, 69 per cent. of all those questioned said that they opposed the selling off of our railways. That is the opinion of the majority of people in this country. The excesses which, as my hon. Friend the Member for Fife, Central said, the Government have entered into in spending a quarter of a billion pounds on increasing the metropolitan railway grant—grand not to provide better services to the travelling public, not to support overstretched metropolitan authorities, but simply to fatten up our railway services for privatisation—is something that we should vote against.
7.3 pm
Mr. Watts: In their speeches, the hon. Member for Fife, Central (Mr. McLeish) and several of his hon. Friends appeared to be under the misconception that new costs, and indeed new money, were involved in the arrangements. The figure of a quarter of a billion pounds was bandied about.
That is not the case. The costs were always there. It always cost money to provide the infrastructure over which services ran and to provide rolling stock. In the old arrangements, those costs were hidden, and covered by cross-subsidies. In the new structure of the railway, the various elements of costs are identified and attributed where they fall.

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That applies to the instance cited by the hon. Member for Hampstead and Highgate (Ms Jackson). The costs of running the service supported, I think, by St. Albans, were always there, but effectively they were covered by the subsidy from general taxpayers, not by those for whom the additional service was provided.
Mr. McLeish: That is an ingenious method of trying to camouflage the real costs. Is the Minister arguing that, in the old system, the quarter of a billion pounds worth of costs to which he is now contributing was lost in the system, and a generous British Rail picked up the bill for all those costs? That seems astonishing, but I shall leave the proposition to discover whether the Minister agrees.
Mr. Watts: What happened was that the costs of the use of the track, for example, were being, I suppose, attributed to other operating units within British Rail. They were not being attributed to PTE services. In a sense, it did not matter. That was all simply taxpayers' money being put in and there was no intention in the industry to identify what anything cost. The purpose of the restructuring is to ensure that there is transparency—I shall discuss transparency in the matter of grant later—so that costs can be identified and attributed where they belong.
Mr. McLeish: There has been talk that the public service obligation grant nearly doubled; the increase in the metropolitan railway grant is now a quarter of a billion pounds extra. Are we to believe that those figures are not a cost to the taxpayer? Are we to believe that, before the so-called restructuring, all those costs were there but hidden, or paid for by some benevolent despot sitting in British Rail? That must be nonsense.
We are witnessing—as the Minister will surely agree—a naked attempt to fatten up certain elements of British Rail for the private sector and the creation of an artificial internal market, being supported by my money and the taxpayers of Britain. Is not that the case?
Mr. Watts: No, that is not the case. The costs were always there. The way in which they have been accounted for has changed, so that they are identified separately and can be attributed properly.
The hon. Gentleman asked me about costs for the future. In future years, as I believe I said in an intervention in the speech of the hon. Member for Morley and Leeds, South (Mr. Gunnell), the funding that is being provided through metropolitan railway grant will be continued into the new bolt-on revenue support grant enhancement. The difference is in the method of distribution, which will be through the revenue support grant mechanism, not by direct grant from my Department.
I found it unusual to hear Opposition Members argue that central Government should have more control and more direction of the way in which local government spends money. I understand the anxieties that some Labour Members may have that the constituent authorities of PTAs might not spend railway money on railway services. As I believe that the Labour party controls most of those authorities, if Labour Members have those anxieties, I suggest that that is a matter for the brethren to take up among themselves. I find it extraordinary that that argument should be deployed in this debate.
The hon. Members for Fife, Central and for Morley and Leeds, South raised issues that have been the subject of detailed discussion, correspondence and meetings between myself and my officials and the members of the PTAs and PTEs.
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The first of those issues, to which I referred earlier, involves transparency. Due to the way in which the grant is to be paid in future, through the revenue support grant, the members of the PTAs and PTEs, quite reasonably, want to know whether there is a way in which that funding can still be identified so that they can argue their corner with the mean-spirited Labour authorities, to ensure that the money being provided by taxpayers to support passenger services in the metropolitan areas is fed through to the PTEs so that the services can continue. We had discussions and correspondence on the subject. Councillor Dowd, on behalf of the members of the Association of Metropolitan Authorities' PTA committee, agreed with me that the detail of how to achieve that aim could be left to officials to determine. We had agreed on the principles by which it would be done. My understanding is that the authorities are satisfied that a method can be found. Our undertaking is that we shall advise each PTA and each of its constituent authorities of the precise amount provided to them through the bolt-on enhancement for their rail services.
A more important concern is whether the continued funding will be adequate. I believe that, through the way in which MRG has been developed, we have found a way of identifying the additional costs of restructuring or in preparation for privatisation—I am not shy of using that word. As has been said, at the end of the financial year we are able to make any adjustments necessary to arrive at the precise level of grant that should be paid in respect of those additional charges.
This financial year is one in which we have reached a steady state on charging. The regulator has completed his review of track access charges and told Railtrack the amount by which those charges must be reduced this year and in ensuing years. Therefore, that major element of cost is settled. Similarly, as contracts for the leasing of rolling stock between the rolling stock companies and the train operating companies are in place, those costs are determined. The PTEs and the franchising director will be entering into contracts with train operators to supply the specified services. For all those reasons, I believe that we shall have reached a steady state. We have also agreed that, if significant additional costs arise and are identified, we shall take steps to make good that shortfall. I gave that undertaking in a letter dated 30 June this year to Councillor Dowd.
Mr. McLeish: While I accept the Minister's assurances that he is trying to work out a formula to ensure that the PTAs will be in no worse a position in future, I cannot resist the temptation to ask a final question. If the metropolitan railway grant costs £350 million this year, is it right that the Government are willing to spend £2 billion over the next five years to support the so-called restructuring of the industry? That restructuring will produce no extra services, but will fatten up the elements of British Rail, as my hon. Friends have suggested.
Mr. Watts: I do not recognise the figures that the hon. Gentleman is using. In 1994–95, MRG amounted to £146 million for the PTEs. In 1995–96, the figure is £145 million, or £103 million net of the payments under deeds of assumption. I am willing to give the hon. Gentleman the assurance that we intend to continue funding PTEs at that level, so that they can continue to provide the services that are provided now.

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We reached an early and amicable agreement with representatives of the PTAs on matters of principle. I do not think that they are left with any doubts about the good faith of the assurances that I have given to them in meetings and letters, and which I have been happy to repeat. We shall work together constructively to ensure that the mechanisms are in place to deliver what I have undertaken to do.
Clearly, with the substantial sums involved in the grants—whether we use the figures of the hon. Member for Fife, Central or the ones that I have given—there is a justifiable concern that, if no adjustment is made to the capping regime and the authorities merely do what they should and pass on the money so that rail services can be provided, they could end up with capping difficulties. I have had discussions with my colleagues in the Department of the Environment and there is agreement that there will be an adjustment in the capping regime to take account of the extra funding being provided to the constituent authorities of the PTAs. As a consequence, they will be in no better or no worse a position as regards capping.
I have had further and recent correspondence with my hon. Friend the Minister for Local Government, Housing and Urban Regeneration following the most recent letter from Councillor Dowd. We are in the process of agreeing that an adjustment can be made to capping principles to reflect any further identified costs that arise in 1996–97. We have gone as far as the PTAs have asked us to do in meeting their concerns. I continue to be ready to discuss any matters that cause them concern. We wish PTAs to continue to fulfil the important role that they play in the provision of passenger rail services. We do not wish any matters of detail to stand in their way.
The hon. Member for Streatham (Mr. Hill) said that track access charges go straight into the pockets of Railtrack shareholders. He is assuming a heavy rate of profit. The major part of track access charges will be used to fund the running costs and the track repairs and, importantly, to provide the funds for investment in the core network, to maintain its integrity.
Hon. Members who were here for the debate last week will recall that I explained that the rail regulator had agreed on a track access charging regime to ensure that Railtrack had funding of about £600 million available for reinvestment. A small element that represents profit will go to the company, and it may distribute it to its
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shareholders. But it is a gross exaggeration to suggest that a figure of anything like a quarter of a billion pounds will end up in the pockets of shareholders.
The hon. Member for North Cornwall (Mr. Tyler) asked me about the withdrawal of the Manchester PTE on the instructions of its PTA. I have had no explanation from the PTA about why it made that decision. Of more importance is the fact that that decision will have no impact on the services provided for passengers. If Manchester thinks that it can take its ball away, it will quickly find that it does not own the ball; it is my ball and I shall take it away and give it to the franchising director. He will act, in place of the PTE, on behalf of passengers if the PTA does not wish to continue to participate.
The hon. Member for Morley and Leeds, South asked me about the fare-setting powers of PTEs. Those are not affected because, under the arrangements, PTEs continue to take the revenue risk and the grant regime covers the increased costs that they incur. The hon. Gentleman also asked why more of my right hon. and hon. Friends were not present in the Chamber. There is a simple answer to that question: they have confidence both in the arrangements that we are putting in place and in the skill of the experienced members of the PTAs, who I assure the House are very good at fighting their corner and defending their position.
One reason for moving away from MRG to distribution via the revenue support grant is that, if we stuck with MRG, it would have the effect of ossifying the services that are provided. We would continue to have to look back to costs that were incurred in 1993–94 and to compare them with current costs. Through the move to the revenue support grant as the main support mechanism, PTAs and PTEs will regain the flexibility that they had, prior to restructuring, to make changes to the services that they provide, but within the same quantum of available funding.
I hope that I have allayed the concerns that hon. Members have expressed on behalf of the PTAs and on their own behalf. I assure the hon. Member for Morley and Leeds, South that I shall write to him about the fairly detailed financial points that he raised concerning the breakdown of the budget of the PTE in his area. I would rather do that than conjure figures out of the air. I hope that the House will approve the motion.
Question put and agreed to.
Resolved,
That the Special Grant Report (No. 15) (Metropolitan Railway Grant 1995–96) (House of Commons Paper No. 470), which was laid before this House on 14th June be approved.

Sea Fisheries
7.21 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Tony Baldry): I beg to move,
That the Fishing Vessels (Safety Improvements) (Grants) Scheme 1995 (S.I., 1995, No. 1609), dated 28th June 1995, a copy of which was laid before this House on 28th June, be approved.
Madam Deputy Speaker (Dame Janet Fookes): I understand that with this, it will be convenient to discuss the following motion:
That the Fishing Vessels (Decommissioning) Scheme 1995 (S.I., 1995, No. 1610), dated 4th July 1995, a copy of which was laid before this House on 4th July, be approved.
Mr. Baldry: This is the first occasion on which I have opened a debate on fisheries since moving to my new position as Minister with responsibility for fisheries. I am glad to take over that important responsibility from my hon. Friend the Member for Fylde (Mr. Jack). He gained a lofty reputation for the care and skill that he devoted to the interests of the fishing industry and I hope to sustain that standard during my tenure in office. I also hope to maintain close contact with the industry and with hon. Members on both sides of the House who have particular interests in the fishing industry.
I appreciate that the industry faces some challenges and I recognise that hon. Members on both sides of the House are concerned about their constituents who are involved in the industry. Fishing is an important industry, which makes an important contribution to the economy of the coastal areas around fishing ports. It is also a hazardous industry, and we all respect the fishermen who go out in all weather to bring in the much needed catches.
I am glad that today's debate gives me an early opportunity to hear the views of right hon. and hon. Members at first hand. It also has the more immediate value of allowing me to introduce the 1995–96 decommissioning scheme. The importance of decommissioning is very clear. Yesterday I had my first meeting with the fishing industry when I visited Grimsby and met representatives of the national fishing organisations from all over the country. They are in no doubt that overcapacity lies at the root of many of the industry's problems.
Striking a better balance between capacity, the quotas and other fishing opportunities will make our industry more efficient and viable. The need to tackle overcapacity is also recognised in our obligations under the European Union multi-annual guidance programme targets. The decommissioning schemes that have been in place for the past two years—and which will continue for three more years—are designed to make a key contribution to achieving the targets.
Mr. Alex Salmond: I welcome the new Minister to his post and I offer him an early opportunity to make a name for himself. He will have noticed from the scheme that one part of the decommissioning proposals excludes shell fishermen from taking advantage of the new scheme. Does he concede that that exclusion might have the perverse effect of encouraging shell fishermen to diversify into whitefish stocks in order to qualify for the next decommissioning tranche? That is a possible, if not probable, outcome of
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the measure that is before us. Will the Minister re-examine that aspect of the scheme, bearing in mind the fact that, as he is new to his post, he will be willing to listen and consult about such matters?
Mr. Baldry: I am grateful to the hon. Gentleman for his kind comments. As he knows, the multi-annual guidance programme was divided into 10 segments. We have met our obligations under some of those segments, including the nephrops and shellfish segment. I am conscious of the fact that vessels could move between different segments and that each year we will have to examine the various segments and take measures that are appropriate in that year. But we have met our obligations for the nephrops segment and, as I shall explain in greater detail later, it would not be sensible to spend money on a segment when we have already met our commitments in that regard.
Mr. Archy Kirkwood: That is an extremely important point in the debate. The Minister must accept—I think that he has accepted it implicitly—that the nephrops prawn fishery is interchangeable with some of the pressurised whitefish stocks. Although he is unable to make any changes because the orders for the 1995 scheme cannot be amended, did I detect a slight opening of the door with regard to a change in the exemption for 1996?
Mr. Baldry: That was both implicit and explicit in what I said. Each year one has to gauge the progress that one has made in relation to the scheme. At present, we have met our commitments for the nephrops segment and so this year it does not make sense to spend money on that segment. The hon. Gentleman and I cannot predict what might happen in future and therefore one must respond to matters as they develop year after year.
Mrs. Jacqui Lait: I add my congratulations to those of other hon. Members on the Minister's appearance at the Dispatch Box in his new role. I hope that he will visit the inshore fishermen at Hastings and Rye.
My hon. Friend may be aware that most of the vessels in the Hastings fleet are smaller than 10 m. According to the National Federation of Fishermen's Organisations, there is an 11.7 per cent. overcapacity in that sector. Will my hon. Friend confirm whether he has any proposals to assist vessels that are smaller than 10 m?
Mr. Baldry: We are assisting those vessels that are set out in the scheme. There is a finite amount of money; I am sure that that is self-evident. We must use that money as best we can to take out capacity where we believe that that can best be achieved. That is why the scheme is described in its current terms. My hon. Friend can rest assured that I look forward to visiting Hastings and meeting with industry representatives to hear the problems of the inshore fishermen and to consider whether any more assistance can be provided for them.
Decommissioning is not a cheap option and we must ensure that we get good value for what we spend. The MAGP target requires a 19 per cent. reduction in the base line set for 1991. We initially committed £25 million to decommissioning. The first two schemes have shown that we can achieve worthwhile reductions in capacity. So far, we have taken out 297 vessels, representing more than 10,000 tonnes or 4.6 per cent. of the fleet.

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This year, and for the next two years, we will increase the amount available each year by 50 per cent. to £12 million. That should increase the impact of the scheme substantially and the licence aggregation penalties should contribute further to the target. We are also looking carefully at the accuracy of the fleet register to ensure that it represents active fishing vessels. With all of those contributions, I am sure that we will make good—and, I hope, faster—progress towards the MAGP targets.
Mr. Nick Ainger: Can the Minister assure the House that with the additional money for decommissioning, the MAGP for 1996 will be met? If not, what is he going to do about it? If we do not meet those targets, which are to be enforced by the EU, the British fishing industry will face a disaster in 1996—it will have to make sudden and massive reductions.
Mr. Baldry: It is premature to speculate about the position that we will reach. Our determination to make good progress is demonstrated by the increase in funds from £25 million to £53 million—significant sums of money. But we need at the same time to be ready to back up the fleet reduction with the necessary controls and quota management measures. Quotas must be managed effectively, along with the various technical conservation measures on gear types, net sizes, minimum landing sizes, closed areas and so on. There must also be proper enforcement so that fishermen of all member states comply with these rules. I already know from my conversations with the industry the justifiable strength of feeling that there need to be uniform standards for all. Progress has been made on that, and I aim to ensure that we keep up the pressure to make further headway.
An important aspect of decommissioning is that we want it to contribute to a reduction in fishing effort. It is the reduction in effort which in future years will bring dividends for our fishermen, with increased fish stocks and the potential for bigger quotas. For that reason, we shall continue to monitor the fishing effort of the fleet remaining after decommissioning. If it became evident that the effort was increasing, and so undoing the benefits of decommissioning, we would need to take action to contain effort. We made that clear when we introduced the 1994–95 scheme; and the signs so far are that there has been a real reduction in effort.
The 1995–96 scheme is similar to its predecessors in providing for a tendering system to ensure best value for money and in continuing the requirements for permanent scrapping and the surrender of licences. The main criteria for eligibility are also unchanged; that is to say, vessels must be seaworthy, over 10 m in overall length, over 10 years old and, of course, UK-registered and licensed.
We retain the requirement that vessels must have spent at least 100 days at sea on fishing trips in each of the past two years. This ensures that we are spending money decommissioning vessels which are genuinely active. There is little point in taking out vessels which scarcely fish. In calculating days fishing, we have provided for account to be taken of fishing in Norwegian waters south of 62 deg north. That reflects the wishes of the industry and is reasonable, given that such fishing is, in effect, on a par with fishing in Community waters. Distant-water fishing remains excluded because the distant-water fleet has already achieved its MAGP target.
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We have reviewed the licence eligibility for this year's scheme in the light of changes to the licensing regime introduced earlier this year. Instead of a requirement to hold a full pressure stock licence, we have decided to widen eligibility to vessels holding most other whitefish licences. That reflects the fact that some of these stocks, which were not considered to be full pressure stocks, are now facing difficulties—reinforcing the need for a reduction in fishing effort.
An important part of securing good value from this scheme is to ensure that it is correctly targeted on the right segments of the fleet. For the setting of MAGP targets, the fleet is divided into 10 distinct segments. Some segments of the fleet either have achieved or can be expected to achieve the targets without further intervention. The distant-water fleet and the under-10 m vessel segment, which my hon. Friend the Member for Hastings and Rye (Mrs. Lait) mentioned, were excluded from eligibility last year for this reason. Because the target for nephrops vessels has also now been met we have decided that they too should be excluded from this year's scheme. It would not be right to use funds from this scheme to decommission vessels in a segment that has already achieved its target.
The Government do, however, recognise that there are particular structural problems in Northern Ireland, where over 50 per cent. of the fleet consists of nephrops vessels and over 50 per cent. of these are more than 30 years of age. In view of these structural problems, my noble Friend Baroness Denton, the Northern Ireland Fisheries Minister, is proposing to introduce a separate Northern Ireland scheme with the objective of tackling the particular structural problems in the Northern Irish nephrops fleet. Details will be announced as soon as the scheme has been finalised.
Mr. Calum Macdonald: Will the Minister also consider the Western Isles and west coast nephrops fleet, which has a profile very similar to that of the Northern Irish fleet, being heavily dominated by the nephrops fisheries? The majority of the boats are over 30 years of age. As the Government have recognised that the nephrops fleet has met its targets, would it not be right and sensible now to introduce a scheme allowing for the modernisation of that fleet?
Mr. Baldry: It is entirely understandable that the hon. Gentleman should argue that case on behalf of his constituents. I have to consider the fact that there is a finite sum of money, which has to be used as effectively as possible. The simple fact is that in respect of certain segments—under-10 m, distant-water and nephrops fleets—we have met the requirements; and I could not therefore justify spending more money on those segments.
As I have said, my noble Friend intends to implement a separate Northern Ireland scheme that reflects the structural problems of its fleet.
Mr. James Molyneaux: I join others in congratulating the Minister on his appointment. I hope that we will have many brisk exchanges across the Floor of the House. I welcome what he has just said about Northern Ireland. While I am by no means hostile to the claims of the Scottish fishermen and their representatives here in this House, I would like to thank the Minister and his noble Friend for their efforts. Given the special problems of Northern Ireland, slightly different as they are from those

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just referred to, we are most grateful. It will give great encouragement to, and be much appreciated by, the hard-working fishermen of Northern Ireland.
Mr. Baldry: I am grateful for the right hon. Gentleman's comments. I hope too that we will maintain a brisk dialogue. I hope that throughout the House there will be great understanding of an industry that faces a great many challenges that we want to try to meet together.
For each of the 1993 and 1994 schemes we made it clear that once a vessel had been accepted for decommissioning, we would expect decommissioning to go ahead. If a vessel owner failed to stand by the commitment, the vessel would be excluded from the next scheme. This rule was adopted to discourage speculative bids which were in practice unlikely to be carried through. Too many such bids would disrupt the scheme and make it difficult to manage.
We are continuing with this rule. However, after one year's exclusion from the scheme we think it right to allow a vessel to be re-entered. This is to take account of the fact that circumstances can change. A vessel might, for example, have a new owner, or business circumstances could be quite different. This means that a vessel which was accepted for decommissioning in 1993 but was withdrawn from the scheme can now be entered again in 1995. This provision will affect only a few cases, but I hope that it will be seen as a useful sign of our wish to be flexible.
I should like to say a word about the implications of the increased amount available for decommissioning this year. We have £12 million, and we intend that it should enable a substantially increased number of vessels to be decommissioned. The tendering system that we have used is well understood by fishermen and we have seen that it can give good value for money. We shall be looking at the bids carefully this year and will not accept bids unless they give good value. If necessary, we reserve the right to spend less than the full amount available. The residue could then be used for a second tender later in the year.
I am sure we will get a good response, with competitive bids. But we have the option to have a second round if that seems likely to give better value. The closing date for applications is 8 September 1995 and application forms will soon be available in local fishery offices.
I now turn to the second scheme, concerning fishing vessel safety grants. Safety at sea is a matter of deep concern to all who are involved with the fishing industry. It is a hazardous industry and I am pleased that we have a grant scheme which can help somewhat towards ensuring the safety of fishermen.
Dr. Norman A. Godman: Will the Minister confirm that, under the terms of the grants scheme, an owner of a vessel can purchase survival suits for all the members of his crew or crews, and that the grant will cover the total cost of such a purchase? I am not talking here about survival suits that can be worn while fishermen go about their work, but about those suits in which, following the foundering or capsizing of a vessel, men can survive for several hours. I want to say something about this later, but I seek an assurance from the Minister that the safety improvements grants scheme will allow for the purchase of such essential safety equipment.
Mr. Baldry: The grant is available for equipment which is necessary in order to obtain the safety certificate. I shall come to the hon. Gentleman's point, but one must understand the genesis of the scheme.
The new scheme replaces the 1993 scheme and applies to fishing vessels which have to obtain a Department of Transport safety certificate under the Fishing Vessel (Safety Provisions) Rules 1975. The new scheme follows the 1993 scheme in that grant will be available for meeting the requirements of the Department of Transport's safety certificate which applies to vessels with a registered length of 12 m or over. Grant will be available for equipment which is necessary to obtain the safety certificate. That includes life rafts, UHF radios, rockets, flares and radio beacons which broadcast the position of a vessel if it founders. Those are all important for safety although I do not pretend that it is an exclusive list.
The Marine Safety Agency continues to investigate practical solutions to the problems of effective in-water thermal protection for fishermen in the event of falls overboard or evacuation. In connection with falls overboard, the Marine Safety Agency has established a minimum specification for a constant-wear buoyancy aid which, in conjunction with other measures, will improve a fisherman's chances of survival until a recovery from the water. The agency is at present conducting trials of such aids, but it is not necessary to have such aids to fulfil the requirements of the safety certificate. For those reasons, the answer to the hon. Gentleman's question is no.
The scheme has been modified so that items such as engines and structural work will no longer be eligible for assistance. Those are not safety requirements in the usual sense. One needs to understand that this is a grant with a specific focus. It seeks to ensure that vessels meet the requirements of the Department of Transport's safety certificate.
Dr. Godman: The Minister himself said that the safety of our fishermen is an important matter and I readily take his point that the primary responsibility for the occupational safety of our fishermen lies with the Department of Transport. But despite his regrettable answer, fishing vessels from certain other member states of the European Union are not allowed to put to sea unless they carry a survival suit for each member of the crew. Surely that is what we should be aiming for in the United Kingdom.
Mr. Baldry: When I met representatives of the industry yesterday I made it clear that I hoped that we would meet at regular intervals. When I was in the Department of the Environment and had responsibility, among other things, for the construction industry, I had meetings with its representatives every three weeks and sometimes more often. During the course of those meetings we regularly discussed a range of subjects. I have no doubt that one of the subjects that the industry will wish to discuss with me is safety in all its aspects.
I make no specific response to the hon. Gentleman's point, but there is a broader aspect. One of the points representatives of the industry made to me yesterday is that they are concerned about the weight of regulation that is bearing down on the industry. The temptation to take the totality of all the regulations of every other EU member state and say that they should apply in the United Kingdom would place an intolerable burden on the industry.

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If there are concerns about aspects of safety, of course it is important to consider them. But within the context of the scheme and the money that is being made available, I am sure that the House and the industry will welcome the extra money for safety targeted at the specific purpose of ensuring that vessels meet the requirements of the Department of Transport's safety certificate.
Mr. Ainger: I accept that the scheme concerns vessels of more than 12 m, but the Minister will know that the industry is concerned about vessels of under 12 m. In letters that I exchanged with his predecessor, the impression was that the Government were considering that and recognised that there was a problem in that area. Can he assure the House that he will continue to consider the matter and possibly bring forward a scheme to assist vessels of under 12 m?
Mr. Baldry: The 1975 safety code does not require significant safety measures for vessels under 12 m. Once the new safety code for those vessels is finalised, of course I shall consider carefully whether there are any implications for the safety grant scheme. I hope that the hon. Gentleman and the industry will be reassured by that.
Grant rates are unchanged. Vessels between 12 m and 33 m will receive 30 per cent. and those above 33 m, 10 per cent. In due course, some of those eligible under the present national scheme will be able instead to receive EC grant for safety work under the Fisheries and Aquaculture Structures (Grants) Regulations 1995 which will implement the European Commission's financial instrument for fisheries guidance. Those regulations will provide EC grant for exactly the same purposes as the national safety improvement scheme.
I hope to make an announcement about the EC grants as soon as the detailed financial and administrative arrangements have been finalised. However, until the EC scheme is launched all applications will be considered for grant under the motion that we are discussing today. That means that we can thereby avoid any delay in providing assistance to the industry for safety works. The scheme will operate until the end of 1999. It demonstrates the Government's commitment to make fishing a safer occupation for all those who take considerable risk to supply us with fish for our tables.
I hope that the House will agree that the two schemes represent useful measures providing real benefits for fishermen and the fishing industry. They demonstrate the Government's commitment to the fishing industry and our desire to put it on a sounder and safer footing for the future. I commend the motions to the House.
7.47 pm
Mr. Elliot Morley: I, too, welcome the Minister to his first debate on the fishing industry. I am sure that, from the representations that he will already have had from the industry and those Members who represent fishing interests, he will be aware of the problems that the industry has been facing. As a new Minister with a new team, he has an opportunity to take a fresh look at some of those problems, and I hope that he does so.
The Opposition clearly support the way in which the instrument dealing with the safety grant is structured. In particular, I endorse the sensible points made by my hon.
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Friend the Member for Greenock and Port Glasgow (Dr. Godman) about flotation suits. With his family connections with the industry, he will know of their importance, and of the risks that fishermen take.
It is strange that flotation suits made by British companies are exported to Canada because it is compulsory for Canadian fishing boats to have such equipment, yet apparently such equipment is not eligible for grant under the scheme. I am glad that the Minister says that the matter is being considered, but the issue has been raised for a number of years now. I wonder how long it takes to make a decision. I should say, for the record, that the company that makes the suits is in Scunthorpe, so I have an interest.
The Minister must be aware of the years of delay that elapsed before the introduction of the scheme. To be fair, hon. Members on both sides of the House have pressed the Minister about the need for a decommissioning scheme at a time when the fishing fleets of other member states have benefited from such schemes. I believe that it all goes back to the mistakes that were made in the decommissioning of the Humber deep-sea fleet. The trauma that the right hon. Member for Suffolk, Coastal (Mr. Gummer) seems to have suffered as a result of those mistakes has pervaded the Ministry, and has made the introduction of a scheme difficult.
Mr. Austin Mitchell: I think my hon. Friend will agree that the Government and the fishing industry would not be in their present position if the Government had listened earlier to our advocacy of a decommissioning scheme. The Minister will be able to avoid numerous problems now if he listens to our further proposal that the scheme should pay compensation to fishermen who lose their jobs—for they will be out of work as surely as the fishing vessels. We also propose that the money should become not just a dole or burial grant to make room for Spanish vessels, but a means of restructuring the industry to make it more efficient and effective.
Mr. Morley: My hon. Friend has made his points consistently for many years, and previous Ministers would have done well to listen to them.
The Government's increase in the decommissioning grant followed the risk of a rebellion in January. That was the most expensive vote in the House for some time, but the money was welcome as far as it went. Nevertheless, having accepted the arguments about the need for the decommissioning scheme to make progress, the Government would surely have done better to accelerate the provision of existing funds rather than spreading them over a number of years, in order to make progress in the reduction of fleet capacity and the meeting of multi-annual guidance programme targets.
I wish to raise four important points. The first is the one I have just made about the need to accelerate the scheme. The Minister's reference to the possibility of a second round if money is available this year is welcome, but I feel that, in future, the scheme should be front-loaded to provide the money as quickly as possible. Secondly, the scheme should be linked with structural aid for communities, as my hon. Friend the Member for Great Grimsby (Mr. Mitchell) pointed out. Thirdly, the effect on the boat-building sector should be recognised; and, fourthly, the rules should be reviewed.

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The lack of progress has been mentioned several times to the Minister. Our fishing fleet has been at a severe disadvantage as a result of the delay. Our fleet is aging, and while we remain so far from our MAGP targets, no grants for rebuilding are available from the European Commission—hence the problems facing the shipbuilding industry.
Figures provided by the Scottish Fishermen's Federation show how far we have fallen behind in the utilisation of European structural grants. The federation points out that, since the beginning of decommissioning, Spain has received £208 million and France £55.3 million, while United Kingdom fleets have received£19.15 million—2.8 per cent. of the total.
That is a very small amount. It hardly puts our country's interests first, and it certainly does not demonstrate that the Government put those interests at the heart of Europe. Other countries are getting a far better deal, mainly because they are not so slow in making their contribution to European grants, and because they have been less negative about working within the European Union.
Secondly, we must recognise the effect of decommissioning on communities that depend on the fishing industry, such as in Northern Ireland, parts of Scotland and, indeed, Grimsby. Decommissioning affects not just direct but indirect employment, especially in the fishery supply industry. There are schemes such as Pesca, but that is a modest programme.
There are also schemes such as objective 1 and objective 5b. As the Minister will know from his time in the Department of the Environment, however, those schemes depend on contributions from local government—and, in the present circumstances, local government finances are far too tight. I know that the Minister has received representations from local authorities about that.
The Commission has proposed socio-economic measures that would allow early retirement schemes for fishermen, but the Government's response has been very negative. The Minister should recognise that fishing crews of decommissioned boats should be given support.
That brings me to my third point: the effect on boat building. I know that the Minister has recieved representations from the boat-building industry, and I urge him to pay careful attention to them. I believe that there is a case for a "scrap-and-build" scheme within the licence aggregation policy, which aims to reduce capacity. The industry is willing to discuss the possibility of such a scheme. I hope that the Minister recognises the pressure on that industry, and the fact that many parts of industry depend on it for jobs. I particularly hope that he will reconsider the rule that requires scrapping of vessels.
As I have said in previous debates, there is a demand for decommissioned boats, particularly in developing countries. I have told the Ministry that private interests in Sri Lanka are willing to enter into a scheme to obtain such boats; I also know that aid agencies in Mozambique would be willing to use them as part of an overseas aid programme. That could involve refitting in boat yards, and provide jobs as part of an Overseas Development Administration scheme.
I see no logic in scrapping the boats. As the Minister knows, now that the licensing schemes are in place, there is little chance of decommissioned boats returning to the fleet and causing the problems with which scrapping is
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intended to deal. I shall write to the Minister again, so that he can consult the ODA about whether such a scheme is feasible.
Fourthly, a number of concerns have been expressed about the rules of application of the scheme. I shall concentrate on one, which involves the use of fleet segmentation and the exclusion of nephrops trawlers in the current round. That has been raised by Conservative Members. The logic is very shaky; it is based on the use of segmentation as an adminstrative tool.
The Minister must be aware that most boats involved in nephrops fishing are involved in a mixed fishery. Northern Ireland and the Western Isles have particular problems. I welcome the fact that a special scheme is being considered for Northern Ireland, but the Minister should also consider the Western Isles, where 90 per cent. of the fleet is involved in nephrops fishing. Why should the whitefish and nephrops sectors not be combined? The two types of boat tend to be involved in the same fishery.
The Minister should also reconsider the one-year cut-off for the reference period, which is unduly restrictive. Many of the boats have been fishing for whitefish over a three-year period. Such an approach would encourage nephrops boats to pursue whitefish fisheries even more, just as a form of guarantee.
If the Ministry accepts that the nephrops sector has reached its targets under the European Union rules, should not that sector reapply for building grants and restructuring aid? If he is still excluding that sector from grant applications, there is no logic in excluding it from applying for the decommissioning scheme. I hope that he gives some thought to that as well.
The whole point of decommissioning can be seen only as part of an overall fishing strategy. The problem is that this Government do not seem to have such a strategy. What we have within the common fisheries policy is deeply flawed and does not enjoy the fishing industry's support, as I am sure the Minister will have heard.
The time is well overdue for a fundamental review of the CFP. Labour Members are fully committed to that, although we will continue to argue not only for a generous, effective and efficient decommissioning scheme, but for an overall strategy that guarantees a sustainable fishing industry and the future of our fishing communities around our coast, because nothing less will be acceptable.
8 pm
Mr. David Harris (St. Ives): I join others in welcoming not just my hon. Friend the Minister of State, but other Ministers who have taken over responsibility for fishing in Scotland and in Northern Ireland. In doing so, I pay tribute, as I did at Question Time the other day, to the previous Minister of State, my hon. Friend the Member for Fylde (Mr. Jack), who did a marvellous job in transforming relationships between the Government and the industry, especially by his open-door policy, and by the way in which he did his utmost to rebuild relationships between Whitehall and fishermen's organisations.
I pay tribute also to my hon. Friend the Member for Dumfries (Sir H. Monro).
Mr. Baldry: Our right hon. Friend.
Mr. Harris: I beg his pardon. I pay tribute to my right hon. Friend the Member for Dumfries. It is nice to see

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him back on the Back Benches. I am sure that in some ways he is relieved to be here, and I look forward to his taking part again, as he always did in the past, in fishing debates.
There has been a change in personnel outside Whitehall. The chief executive of the National Federation of Fishermen's Organisations, Mr. Richard Banks, has left that post. I am sure that I speak for all the English Members in saying how much we value all the help he gave us, and that we welcome his successor, Mr. Barrie Deas, to that important post.
I was delighted to hear my hon. Friend the Minister of State say that yesterday he visited the National Federation of Fishermen's Organisations. Again I speak for all Members who have the honour to represent fishing constituencies and ports when I say that we all lean heavily on fishing organisations and the NFFO, and I am sure that Scottish colleagues do likewise with the Scottish Fishermen's Federation. If there are common threads running through our speeches, perhaps, sparing their blushes, some of those threads have been spun by those fishing organisations.
Mr. Paul Tyler: I am especially grateful to the hon. Gentleman for giving way so early in his speech, and I endorse what he said not just about the Minister, but about the change of personnel in the National Federation of Fishermen's Organisations. In view of the hon. Member's previous trenchant criticisms of the tie-up provision that still hangs over the industry, does he agree that the best possible compliment that the new Minister could pay to the NFFO would be permanently to remove that sword of Damocles from over its head?
Mr. Harris: Yes. I said just as much at Question Time last week, when I told my hon. Friend—I followed this up in private discussions with him last week—that that was what I personally thought should happen.
The first of the statutory instruments before us today relates to safety improvement grants. After receiving representations from Elizabeth Stevenson, secretary of the Cornish Fish Producers Organisation, I wrote to the Minister's predecessor about one aspect of the statutory instrument: the exclusion for grant purposes of any work done on fishing boats of a structural nature.
I was interested to hear what my hon. Friend said on that point, but I ask him to reconsider it, bearing in mind the fact that some structural work is directly related to safety measures. I refer especially to such fixtures on boats as shelter decks, wheelhouses and other structural aspects of a vessel which enhance the safety of the vessel and the fishermen who sail it.
Of course, our main attention tonight must be on the second statutory instrument, relating to decommissioning. I agree with what the hon. Member for Glanford and Scunthorpe (Mr. Morley) said, when he briefly reviewed the history of the decommissioning issue. I well remember the campaign that hon. Members on both sides of the House fought, joining forces.
I remember in particular the contributions in that regard of the late Alick Buchanan-Smith. We urged, pressed and kicked the Government on that issue, because those who represent fishing constituencies all recognised that
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decommissioning had a vital role to play in trying to achieve the essential balance between capacity and availability of stocks.
Of course, decommissioning is not the complete answer, and it is certainly not a panacea. No magic wand can be waved that will suddenly make all the deep-seated problems of the industry disappear. There are dangers in too much reliance on decommissioning. If some boats are taken out without controls on the fishing effort of those that are left in the industry, we will be back to square one, but decommissioning is an essential component in a package of measures, and I am delighted that, belatedly, the Government have recognised that. Perhaps it took the threat or, in my case, the actual event of a revolt on these Benches, to bring about an increase in the amount of money available for the decommissioning scheme.
The decommissioning scheme brings certain problems, and I support the points that have been made by the Opposition spokesman and that will no doubt be made by others on the exclusion of the prawn boats. The Minister must reconsider that, and the segmented approach. I understand the reasons that he has given, but frankly, I am not convinced by them.
The points about the unfortunate effect in recent years on the boat-building industry are valid. Perhaps the question of an aging fleet is the most important. In some parts of the country, including some ports in the south-west, the fleet is geriatric, as you, Madam Deputy Speaker, know, because you are no stranger to some of those fishing ports, particularly the Barbican. The way in which our fleet has aged is extremely worrying. While controlling capacity, we must find a sensible way of improving the age profile of the fleet. That is essential.
We must never lose sight of one reason why we are in this mess. I am afraid that it goes back to that constant refrain that I have voiced in the House, as have many others: the diabolical way in which Spain has transferred so many vessels to our register. We hope to meet in large measure our multi-annual guidance programme when we remove those vessels from our register through the Merchant Shipping Act 1988. By the perverse judgment of the European Court of Justice, many of them have returned. To a large degree, that sabotaged our attempt to reduce the capacity of the fleet.
Is it not ironic that the figures which have already been mentioned reveal that, from 1987 to 1993, Spain one way or another—through construction, modernisation or decommissioning grants—received £208 million, whereas the United Kingdom fleet received a paltry £19 million, yet so much of our trouble has been caused by boats from Spain?
I also endorse what the hon. Member for Glanford and Scunthorpe said about the Government's insistence that vessels should be scrapped. About a fortnight ago, I was pleased to attend a ceremony at Land's End at which one decommissioned boat—the Confide—was preserved, albeit on land, as a fishing exhibition. I hope that it will play its part in stimulating further the tremendous interest that exists—thank goodness—in the fishing industry.
However, I am sure that we could save many more vessels. I was saddened that my request for a vessel from Penzance to be saved was rejected. It could have been used to train youngsters under the auspices of no less a person than the Bishop of Truro. I do not think that he was going to skipper it himself, but the Church's Fund

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for Social Responsibility in Cornwall would have made good use of it. Sadly, the request was denied, and the vessel had to be destroyed.
I always understood that the scrapping of vessels was done at the insistence of the Commission itself and to meet the requirements of the scheme. However, I was told today by Mr. Bob Allan from the Scottish Fishermen's Federation that that is not the case. If he is right—I am sure he must be—one has to ask why on earth we are following a policy that is different from that of other member states. I hope that the Minister will deal with that point. I am sure that we could make sensible use of some of these vessels without their returning to the fleet.
I conclude my remarks at this point, because many other hon. Members wish to speak. I welcome the increased money for decommissioning, but urge Ministers to consider the various points that have already emerged in today's debate and which will no doubt be reinforced. I also endorse what the Opposition spokesman said about finding a better way to provide security for what remains of the fishing industry. In that regard, I warmly welcome the review that the previous Minister started, which I know is being continued under the present Minister—the review of the common fisheries policy and our attitude to it.
8.12 pm
Mr. Robert Hughes: I, too, welcome the two new Ministers to their posts. I especially congratulate the Under-Secretary of State for Scotland, the hon. Member for Aberdeen, South (Mr. Robertson) on his first ministerial post.
When the two new Ministers come to deal with the fishing industry, they will find that there has never been such disenchantment with the common fisheries policy. There is a ground swell of antagonism and distrust. The hon. Member for Aberdeen, South will know that many sections of the industry are arguing very strongly that we should have nothing more to do with the CFP, that we should simply get out and take back control of our industry.
In the fishing debate earlier this year, I recall saying that the above suggestion was not feasible, although I appreciate that it makes it very difficult for Ministers to tackle the problems of the industry when there is such division in it, about the CFP at least. Fishermen are crying out for some new lead and some new policies.
The fact that two new Ministers are now at the Dispatch Box—one from the Ministry of Agriculture, Fisheries and Food and one from the Scottish Office—means that there is the possibility of a fresh approach and some new thinking. Some might say that that is rather naive on my part. I am certainly not saying that all previous Government thinking is to be cast aside, but I think that there is the possibility of a fresh approach. The Minister of State certainly showed that he was willing to listen. He said that although we have to accept or reject the current statutory instruments, they were not set in stone and could perhaps be changed. I therefore join those who welcome the new decommissioning scheme, as far as it goes.
It is clear that there are problems with the way in which the scheme is formulated. Anyone who speaks to those working in the fishing industry will know that individual sectors have different problems. This is beginning to sound like a tea party at which we all congratulate
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Ministers. [HON. MEMBERS: "Invite them over."] I think that some of my hon. Friends behind me are getting worried and might put their jovial interventions in a different light when they come to speak.
The Minister of State said that in his previous job he regularly met representatives of the construction industry and hopes in his new job to meet representatives of the fishing industry. In doing so, I hope that he will meet not only our good friends in the Scottish Fishermen's Federation and the National Federation of Fishermen's Organisations but people from the trade unions who represent workers in the industry.
I hope that the Minister will recognise that there are probably now more jobs on land in the processing and production side than there are at sea. The processing side of the industry should be involved in any discussions. Some of us have been working for many years to put an end to the age-old antagonism between those who caught the fish and those who bought the fish, and the two sides now work more closely together. We need to foster not only the interests of one sector of the industry but the best interests of the whole industry.
The Minister said that he would reconsider the exclusion of the nephrops fleet from the decommissioning scheme, which is to be welcomed. I do not want to get involved in a welter of self-congratulation, but there is no doubt that Back Benchers of all parties—I pay a special tribute to the hon. Member for St. Ives (Mr. Harris) in this regard—compelled the Government to accept a decommissioning scheme.
Mr. Baldry: I would not want my earlier comments to be taken as more of a concession than they were. In response to several interventions from Scottish Members, I said that of course it was true that vessels could move into nephrops fishery and that if sufficient moved that the nephrops target was in doubt, we could include nephrops vessels in the scheme in later years. My point was that the scheme would have to examined year on year, not that I was going to review the decision that this statutory instrument is set for this year.
Mr. Hughes: I am grateful to the Minister for bringing me back to the harsh truths of reality. I am sorry if I gave the impression that I expected the current proposal to be changed. I of course accept that we have to take it as it stands, but the Minister said that this scheme is for this year, that next year he would examine the circumstances again and that the point made about the nephrops fleet might be taken into account. Incidentally, I welcome the Minister of Agriculture, Fisheries and Food to the Front Bench and to his new post. We shall await with bated breath the Minister's conclusions, but I take at face value his comment that these matters will be re-examined.
Although decommissioning is valuable, one of the phrases used this afternoon—I forget by whom exactly, but I think that it was a member of the Scottish Fishermen's Federation—was that we should be thinking beyond decommissioning. That is a good way to put it. We need to do exactly that and bring some stability to the industry so that fishermen know where they stand. The problem is that we have gone from crisis to crisis, not knowing where we were going from one year to the next. If the decommissioning scheme enables us to get a better look at the future, it will be valuable.

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It has been pointed out that the difficulty with the decommissioning scheme is that it is a scrapping scheme to get vessels taken out of service. It was suggested that it would be valuable if decommissioned vessels could be allowed to go elsewhere, either to serve some useful purpose outside the fishing industry or to go to Mozambique or Sri Lanka, for example, where they would be useful. The Government seem to think that if all the vessels were taken to Sri Lanka or Mozambique for decommissioning, they would somehow find their way back into the UK fishing fleet, which is beyond any reason.
We need a scrap-and-build policy. Since there has not been decommissioning and because we have not met the multi-annual guidance programme, no grants have been available to build new vessels for a very long time indeed. The fleet is aging. While I welcome the marine safety grant scheme, an unsound or old vessel can be unsafe despite the fact that it has modern radar, or whatever equipment is needed, attached to it.
We should look at a scrap-and-build policy because to compete and be a viable industry in future, even with a limited fishing effort, vessels have to be up to date. We know that other countries are modernising their fleet like there is no tomorrow and we will be left with a fleet under such tremendous pressure that it will not be able to do the job that it wants: catch fish in reasonable numbers and at a reasonable price.
These matters spread beyond the fishing fleet itself and into the fishing communities. Since the Minister made the point in his press release, I would expect him to say in his winding-up speech how valuable the Pesca scheme is in aiding the fishing communities. We are told that the £1.1 million going to the north-east of Scotland will have to be matched by £1.1 million from local authority funds. When the authorities asked the Government about that, the Government said that the authorities already had that money, which is very odd because the local authority grants were finally settled before the announcement of the Pesca scheme. How could the local communities or the Government predict the scheme—with a crystal ball? I hope that the Government will consider that carefully.
I want to raise with the Under-Secretary of State for Scotland the Government's attitude to the socio-economic measures brought forward by the European Commission. The Government's behaviour in this matter is the worst possible example of holding in national hands a policy with which they disagree in Europe. Many people in the fishing industry want control of their own affairs with as much leeway as possible in European Union policy, yet the Government say that they will vote against the Commission's proposals to allow for early retirement of fishermen and lump sums to be paid to fishermen who lose their jobs, and that even if they are outvoted and the proposals go through under majority voting, they intend to do absolutely nothing about the proposals and will not implement them.
I hope that the Under-Secretary will take a much more robust attitude. I hope that he will say that there are people in desperate trouble. He will have had, as I have had, since we occasionally exchange constituents' letters—constituents do not always know which constituency they are in—many letters from trawlermen who have had difficulty getting money out of the Department of
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Employment's ex gratia scheme. He will know, therefore, of the hardship of people who have lost their jobs in the trawling industry. That hardship will be mirrored—indeed it is already being matched—by those who lose their jobs because of decommissioning and the reduction of fishing effort. He will therefore bring experience to his post and he should be much more sympathetic towards the socio-economic measures.
I hope that the Under-Secretary will not rest on some nationalistic idea—I had better not use the word nationalistic in relation to the hon. Member for Aberdeen, South. I hope that he will have much less of a national interest factor and recognise that some European Union proposals are good and that we ought to implement them. This short debate has given us the opportunity to say which parts of the Government's policy we agree with and which parts we wish to see an advance on. I hope that the Government will realise that, provided that they take an open approach to their responsibilities, they will have our support. If they do not, they know perfectly well that they will have to face the wrath of this House, and it will not be pleasant.
8.24 pm
Mr. Alex Salmond: I welcome both the new Fisheries Ministers. I am slightly disappointed that the Scottish Under-Secretary is the junior of the two again, and I hope that the Fisheries Ministers from other Departments will not take advantage of their hon. Friend's inexperience. That hope relates to two matters: first to the European negotiations at which the hon. Member for Aberdeen, South (Mr. Robertson) might well be the only Scottish representative. In the last six months of last year, the right hon. Member for Dumfries (Sir H. Monro), who is a very experienced Member of the House, represented Scotland on three occasions—the only three occasions on which Scotland was directly represented by Scottish Office Ministers out of a total of 48 Council meetings.
Secondly, during a number of years, Scottish Office civil servants, Opposition Members and even a few rebel Conservatives, as we have heard earlier, were advocating a policy of decommissioning which was frustrated and halted by what I thought were the largely personal prejudices of the then Minister of Agriculture, Fisheries and Food, based on his unfortunate experiences in his early ministerial career over the previous decommissioning scheme. We are now paying the price, as has become evident in this debate, for those wasted years.
I took a careful note of what one of the fisheries representatives said to me in the briefing earlier this afternoon. He said that the fishing industry is still
"wallowing in the broken water of do nothing years".
I understand that the statistics which have been quoted to Ministers from Opposition and Government Members were supplied to the Scottish Fishermen's Federation by my colleague in the European Parliament, Winnie Ewing, the Member of the European Parliament for the Highlands and Islands. I am sure that my hon. Friend in the European Parliament will be delighted that the statistics have been put to such good use in this debate.
They are shameful statistics from a European and United Kingdom point of view. Of total funding from 1987 to 1993, 2.8 per cent. has come to the UK, in contrast to the huge amounts, as the hon. Member for St.

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Ives (Mr. Harris) rightly said, which have gone to the Spanish fleet. The UK fleet has been at a substantial competitive disadvantage over that period as funds have gone elsewhere. Not only that, of course, but the lack of a decommissioning scheme in those years has imbalanced the whole fisheries policy so that funds are nowhere near the targets for MAGP or anything else—not just because of the flags of convenience vessels, although they were important, but because of the failure of policy and the failure to act.
The points made in this debate are very important and interrelate with the two schemes before us this evening. If there is a combination of older fishing vessels and probably younger skippers, since that is the trend in the industry at the moment, going into deeper waters, there is a key safety consideration. The lack of reinvestment in the fishing fleet means that the average age of the vessels is increasing. Ten years ago, the average age of UK vessels, especially Scottish fishing vessels, was much less than the European average. Now it is greater than the European average. We have one of the older fleets in the EU and that raises implications for safety in fishing as well as for the competitiveness of our industry compared to others.
We have about five member companies in the British Boatbuilders Association, of which only two are currently building boats. The arguments for a scrap-and-build policy are very important. It is not a question, as the Minister seems to think in following his predecessors by saying, that we cannot have a decommissioning policy on one hand and a reinvestment policy on the other. That is exactly the policy being pursued in our competitor countries across the Union. If we do not have such a policy, the Government will be putting our fishing vessels at a grievous disadvantage compared to the other fishing fleets. I am sure that the Minister would like to change that policy direction in his first days in the post.
I shall make three brief points to amplify some of the detail in the debate. The case made by the hon. Member for Glanford and Scunthorpe (Mr. Morley) was very good. Given the legacy of the lack of a decommissioning scheme in the crucial years of the 1980s, there surely would be a good argument for a catch-up policy to accelerate the commitment in the early years of the scheme to try to get back to something like the targets that we have to meet. That policy option must be available to the Minister and surely should be one for careful consideration. Should the scheme be front-loaded to catch up and try to redeem some of the mistakes of the past?
The Minister has qualified the flexibility that he seemed to show earlier in the debate. His point about the nephrops fishery does not stand up to a moment's serious examination. There has already been an increasing shift in capacity into the nephrops fishery in the North sea from the Fladen fishery in the current year. The two fisheries are heavily interrelated. The idiocy of the regulations is shown if one compares a nephrops fisherman with a scalloper. If a scalloper had a pressured stock licence, he would be eligible for the terms of the decommissioning scheme. Yet if that person qualified for decommissioning, he would not put any whitefish back into the pool to be available for the other fishermen who are under such pressure from quotas at present. A prawner boat would put whitefish back into the pool, yet that prawner is excluded from taking advantage of the decommissioning scheme.
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We must understand the interrelationship between the fisheries. One cannot close off one option and expect that the position will stay still; closing off one option has an impact on the other cross-fisheries. I hope that the Minister will seriously consider being more flexible as quickly as possible. If he does not, he will find that there is more effort in the nephrops fishery, and that the situation has changed again for next year. I hope that he will pay attention to that point.
The Minister's immediate predecessor, the hon. Member for Fylde (Mr. Jack), in a fairly critical fishing vote which was closely contested in the House, made a declaration to his hon. Friends on the Back Benches. He said that he would not stand for fishermen from Scotland or England being put at a competitive disadvantage to other European fleets with the onset of fisheries regulation. Even now in the decommissioning scheme, that is happening. We have heard of the scrap-and-build policy which is available to fishermen across the Community, but not to fishermen here.
We have had examples of boats for alternative use. I am grateful to Bill Farquhar from the Macduff shipyard for giving me an example. The Jean de la Lune was chosen to lead the parade of sail in the recent tall ships festival in Leith. It was actually a converted French fishing boat which had been commissioned out of the fishing fleet. Given the experience of the early 1980s, I can understand ministerial caution on this aspect. I am, however, certain that the Scottish Office inspectorate and the MAFF inspectorate are quite capable of telling the difference between a tall ship with sails and a working fishing boat. Some flexibility in this aspect would bring us into line with our European colleagues and would generate some much-needed work for our hard-pressed boatyards.
I hope that the Minister will look at boat building as an issue in itself. For many of us from the western approaches of Scotland and from the north-east corner of Scotland, fishing is a dominant part of our communities. In one village in my constituency, 65 per cent. of employment is generated by the fishing industry. I hope that the Minister understands why we cannot tolerate our fishermen, in what are hard times anyway, being placed at a competitive disadvantage to other European fleets. Although we welcome the decommissioning scheme, we ask that some effort is made by the new ministerial team to redress the errors of the past and to allow our fishermen the support to which they are entitled.
8.33 pm
Mr. David Porter: I shall concentrate on decommissioning. The hon. Member for Great Grimsby (Mr. Mitchell) has already flagged up the issue. Before the Government belatedly and rather grudgingly introduced the decommissioning scheme, I advocated that there should be such a scheme. Like other hon. Members, I recall that the entire House was in favour of the scheme, with the exception of my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), the then Minister of Agriculture, Fisheries and Food, who opposed it. I felt that if we had to obey multi-annual guidance programme rules, which were bizarre enough at the outset, the whole scheme seemed superficially appealing, especially if 70 per cent. of the grants were recoverable from Europe. In other words, the Community was giving us back our own money. What I advocated was a whole industry scheme, which we have not got.

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The miners got £35,000 a man; we do not have anything like such a scheme, which compensates all parts of the industry. There could be a trickle-down effect if boat owners pay some money to ships' crews, to land staff, to fish merchants and, yes, to boat builders as well—in other words, to the whole industry. However, it is the owners who have had the investment and the risks, so, realistically, that is not very likely to happen. What happens to the other men whose jobs are destroyed when boat owners take decommissioning grants? Not only are they directly out of work, but their likelihood of further work is reduced because the fleet in a port becomes smaller. It is a vicious circle.
So the whole nightmare of the common fisheries policy, with all its hideous consequences, goes on, using taxpayers' money to put people out of work so that our competitors can better fish us out of more work. That is exactly how people perceive the problem in the ports.
To come this year with a new tranche of decommissioning and to claim that it is the solution would be laughable if it was not tragic. As a result of previous shortfalls, unattached licence entitlements and an attempt to fine-tune the system bureaucratically, we are left, in the words of the National Federation of Fishermen's Organisations, with
"a collection of contradictions and anomalies. Almost every boundary in fleet segmentation is open to challenge on grounds of illogicality, inequality and irrelevance."
One cannot fine-tune a leviathan. The idea that one can part-buy out an allegedly excess fleet pushes out any idea that fish stock shortages can be addressed by some other method. The mechanism has become untouchable, just as the grotesque concept that all fish stocks are a common resource open to all has become untouchable.
Decommissioning, like all aspects of the CFP, is not succeeding. If the fleet is reduced by 4.5 per cent. tonnage while the actual tonnage goes up by 3.3 per cent., that is hardly success. Discards remain a problem and quotas are becoming a blunt instrument that cannot legally leave a man making a living in most cases. So what do we do? Should we scrap the CFP and start again? Oh no, we just come up with some more schemes and mechanisms to destroy the market in a naturally renewable resource.
I welcome my hon. Friend the Minister of State to his new job. However, he faces a task that he cannot win. He already knows that the fishing industry has more regulation than the nuclear industry and that most of it is unnecessary. If he does not take steps deliberately to swap fish out of Lowestoft, as his predecessor did, I look forward to working with him. I have submitted a paper to his CFP review panel on how we can negotiate reform of the CFP by negotiating to leave it. My hon. Friend has not ruled out that option for consideration, yet his parliamentary answers, one given to me only yesterday, are sticking to the old line of, "All is well and just one more tinkering and we'll be there."
My hon. Friend the Minister says that international co-operation on conservation management is essential. I agree; we can all agree on that. However, the CFP is not an example of good international co-operation. The scheme tonight is just another piece in the whole discredited policy, and because it is not a whole industry scheme, if it is put to the vote, I could not in all conscience vote for it.
8.37 pm
Mr. Archy Kirkwood: I shall be brief because I know that the Minister needs at least nine or 10 minutes for the wind-up; that is right and proper. The schemes should be approved, but in so saying, I hope that the Minister—I accept that the tone in which he opened the debate was sympathetic, which is much to be welcomed in view of his new responsibilities—will not take it from the tone of the debate, in which I have concurred with just about everything that has been said on both sides about some of the wider issues, that these matters are not urgent and important.
I shall concentrate on the shorter-term question of the nephrops fishery, which is an immediate and urgent matter for re-examination, for the reasons that have been explained. In the longer term, we shall look for reconsideration of the historically negative view that the Government have taken of decommissioning schemes and some of the wider European Union schemes.
My local fishing industry believes that it has paid a high price as a result of that historically negative attitude. That attitude has left us, as has been said, with a fishing industry that is short on the construction, modernisation and commissioning grants that have been available to our competitors. I, too, think that it is a scandal that the Spanish fishermen have pocketed £208 million to rebuild their fleet while we have receipts of a mere £19 million—only 2.8 per cent. of the total funds available. That means that, inevitably, our fleet cannot stay safe, modern and competitive. I hope that the Minister and the new ministerial team will consider that as a matter of urgency.
There is one thing that I want the Minister and his team to consider more than anything else, although I know that it will be difficult to try to persuade the Treasury. I want them to bring forward some of the money, because £12 million over three years is not nearly as useful as releasing the money in one block, so that it can be drawn down as necessary to provide the essential cash flow for the scrap-and-build policies and for the yards that are suffering difficulties.
The nephrops fishery is important too, and I hope that the Minister will undertake to meet some of us with individual local concerns in the course of his reconsideration. If the 1995 scheme is ruled out because the schemes are unamendable, I hope that he will see his way clear to listening carefully to the representations by Members with legitimate concerns.
I have a plea from the Eyemouth and District Fishermen's Association, saying:
"many boats have gone to the prawn fishing over the past two years due to the shortage of white fish inshore and the poor prices."
I am sure that that is right. There is suspicion that the figures that formed the basis of the decisions that Ministers have taken on the 1995 scheme may be out of date. Indeed, I believe that the decisions were based on 1993 figures. There is evidence that over the past two years there has been a substantial shift to nephrops out of whitefish pressure stocks, and that is a matter of real concern.
What has been said about the development of the Fladen grounds persuades me that there has been a substantial change, and that, too, needs to be considered as a matter of urgency. I also hope that, over the next year or two, when the wider issues concerning some of the elements of the scheme—such as the fact that we do not

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allow decommissioning to take place when boats go out of European Union waters, or when boats have been taken out of the fishing capacity—are being considered, urgent attention will be paid to those problems.
Better provision for decommissioning, together with rebuilding grants paid for with EU funds and even-handed access to Community assistance, are essential if the United Kingdom fishing fleet is to remain viable and competitive in Europe.
8.41 pm
The Parliamentary Under-Secretary of State for Scotland (Mr. Raymond S. Robertson): I begin by paying tribute to the work done in his three years as the Minister responsible for Scottish fisheries by my right hon. Friend the Member for Dumfries (Sir H. Monro). Everyone involved in the industry will agree that he was indeed a doughty fighter, and I am aware that his combination of experience mixed with guile will make him a difficult act to follow. I also thank hon. Members for their kind remarks about my appointment.
We have had a useful debate. Decommissioning is an issue of great importance to the fishing industry, not least because it forms a crucial part of the Government's strategy for tackling the problems that we currently face—principally the fact that too many boats are chasing too few fish.
We are not alone in that. The problem is widespread. Within the European Union, we are addressing it by setting targets for the reduction of fishing effort, so everyone in Europe is heading for the same goal. We are committed to meeting the targets, and decommissioning will help us towards that goal. As is equally important, it will help us to achieve a more secure future for the fishing industry, which is what I believe all hon. Members who took part in the debate want.
It is surely right that we should be prepared to make sacrifices today to secure longer-term prosperity. That is why in January the Government announced a further £28 million for decommissioning over the next three years. To respond to a question asked by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), my hon. Friend the Minister of State said that £.12 million would be available each year for the next three years, not £12 million overall for the next three years.
The 1995 scheme represents an attempt to achieve a better balance between the number of fishing vessels and the number of fish. Some hon. Members have said that we should be prepared to provide more money overall, but that would require savings to be found elsewhere, and suggestions for that were rather thin on the ground during the debate. I hope and believe that we have the balance about right; £12 million of taxpayers' money this year and in each of the next two years is a significant and realistic contribution from public funds.
As has been said, that is only one part of the Government's on-going financial commitment to the fishing industry. We are spending large sums on monitoring fish stocks and on enforcing regulations, both of which we do in order to protect fishermen's incomes. We have also committed about £10 million to help with development at three Scottish fishing harbours, and there is the Pesca money, which the hon. Member for Aberdeen, North (Mr. Hughes) mentioned. I can tell him that it is not only local authorities that can come up with the
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matching funds. Others can come in too, notably local enterprise companies. I should have thought that the hon. Gentleman would welcome the fact that in Grampian we have been able to secure the lion's share of the Pesca money.
Some hon. Members have said that we should be prepared to fix a higher level of compensation for vessel owners. However, the scheme is designed neither to provide social security nor to facilitate reinvestment. We ask fishermen to tell us how much they need to buy themselves out of the industry, and each person gives us a figure. We pick those that offer the best value for money so as to achieve the maximum reduction in capacity at the minimum cost.
Some people—such as the hon. Members for Banff and Buchan (Mr. Salmond), for Roxburgh and Berwickshire and for Western Isles (Mr. Macdonald)—have criticised us for excluding nephrops. Of course, I recognise that there will be disappointment for vessel owners who would have liked to apply for decommissioning grants this year. But the bottom line is that we have met, and indeed exceeded, our European target for reducing capacity in the prawn fishery. We have reached that position because so many nephrops boats were successful in earlier rounds.
It would not be sensible—
Mr. Macdonald: I accept what the Minister is saying, at least with regard to area VI, but is not the logic of that that the fishery should now become eligible for reinvestment and rebuilding grants? If that is happening in the Northern Ireland fishery, will the Minister examine the case and find out whether the same terms could be applied to the west coast fishery?
Mr. Robertson: I shall come back to that, but Northern Ireland is a special case.
It would not be sensible or right to divert funds to achieve more decommissioning in the nephrops sector generally when other sectors are still so far short of their targets. For example, the important demersal trawling segment still has to be reduced by 17 per cent. to meet its multi-annual guidance programme target, while the beam trawler segment has to face a reduction of more than 35 per cent. to meet its target.
During the debate on the decommissioning scheme last year, the hon. Member for Glanford and Scunthorpe (Mr. Morley) suggested that the scheme should be more carefully targeted. He said that the scheme
"needs to be considered on a sectoral basis, where the pressure is."—[Official Report, 14 July 1995; Vol. 246, c. 1209.]
I find it odd that now he is criticising us for being more focused and considering quite carefully how best we can meet our MAGP targets.
It would be wrong for the Government to continue to reduce nephrops fishing capacity in a general way. Equally, we must have regard to the local impact of our decision to withdraw grants for decommissioning nephrops boats. As my hon. Friend the Minister of State said, the position of the fleet in Northern Ireland requires more careful thought. The industry in Northern Ireland is in greater difficulty than elsewhere in the United Kingdom, with about half the fleet, which is much older than fleets elsewhere, in the nephrops sector. As my hon. Friend also said, the Government have concluded that Northern Ireland warrants special treatment to help with the process of restructuring.

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However, I make it clear to the House that I listen to what the industry says. The Scottish Fishermen's Federation has suggested that because some whitefish vessels may move into the nephrops sector, the MAGP target for nephrops may not be met next year. I give the House a firm commitment that we shall review all the eligibility criteria next year in the light of vessel movements between sectors, and of the current round of decommissioning.
I assure hon. Members that if the MAGP target for nephrops is not met next year, the Government will be prepared to reintroduce those species into the scheme. I want hon. Members on both sides of the House to be clear that the exclusion of nephrops vessels this year in no way sets a precedent for 1996. If the hon. Member for Roxburgh and Berwickshire and his hon. Friends want to come to see me this time next year, when we sit down to prepare the initiative, of course my door will be open.
We should not allow the industry to wither on the vine. The Government share the industry's concern that its future profitability should lead to healthy reinvestment in modern vessels. Some hon. Members, especially the hon. Member for Aberdeen, North, have said that we should reintroduce a scrap-and-build scheme aimed at ensuring that the age profile of the fleet does not become distorted. I fear that we cannot contemplate such a move while we are so far adrift from our capacity targets. To encourage investment now would increase rather than reduce our fishing effort.
However, I share hon. Members' concern that unsafe vessels should not be forced to sea by economic circumstances, placing the lives of their crews at risk.
Mrs. Margaret Ewing: Most of us want to see the introduction of a scrap-and-build policy because of the importance of making our fleet competitive. But if the Government are ruling that out totally, would it be
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possible to abolish the scrap-only policy and allow our boatyards to convert decommissioned vessels into, for example, pleasure boats, which provide employment in many coastal communities?
Mr. Robertson: On my first day as a Minister, I said to the industry what I shall say to the hon. Lady now—my door will be open for anyone to come in with constructive proposals for the future of the fishing industry and the fishing fleet. If the hon. Lady wants to come and see me with some of her constituents who are involved in the industry, she will find that my door is open.
We are committed to assisting in improvements to the safety of the fleet, and I commend to the House not just the decommissioning scheme, which will take out some of the older boats, but the safety improvement grants scheme, which will help upgrade the facilities of those that remain.
In conclusion, we have covered much ground in the debate. Some see the common fisheries policy as the source of all our ills, but there is no doubt that we would in any circumstances need to agree with our neighbours to share the common resources of the sea or the necessary means to avoid their decimation. Our targets are, I believe, equitable, and the costs of achieving them are borne in part by the EU. The Government are committed to working towards a more financially stable and secure fishing industry. I believe that the two schemes before the House will make a substantial contribution to that end, and I commend them both to the House.
Question put and agreed to.
Resolved,
That the Fishing Vessels (Safety Improvements) (Grants) Scheme 1995 (S.I., 1995, No. 1609), dated 28th June 1995, a copy of which was laid before this House on 28th June, be approved.
Resolved,
That the Fishing Vessels (Decommissioning) Scheme 1995 (S.I., 1995, No. 1610), dated 4th July 1995, a copy of which was laid before this House on 4th July, be approved.—[Mr. Burns.]

Appropriation (Northern Ireland)
Mr. Deputy Speaker (Mr. Michael Morris): Before I call the Minister to open the debate, it might be helpful to make it clear that the debate may cover all matters for which the Northern Ireland Departments, as distinct from the Northern Ireland Office, are responsible. Police and security are the principal excluded subjects.
8.51 pm
The Minister of State, Northern Ireland Office (Sir John Wheeler): I beg to move,
That the draft Appropriation (No. 2) (Northern Ireland) Order 1995, which was laid before this House on 8th June, be approved.
The draft order, which covers the main estimates for Northern Ireland Departments, authorises expenditure of £3,437 million for the current financial year. Taken together with the sum voted on account in March, this brings the total estimates provision for Northern Ireland Departments to £6,142 million, an increase of 4 per cent. on the 1994–95 provisional outturn. The order also authorises the use of additional receipts to meet an excess vote in 1993–94.
The sums sought for individual services are set out in the estimates booklet, which is, as usual, available from the Vote Office. As you have said, Mr. Deputy Speaker, the estimates for the Northern Ireland Office for law and order services are not covered by the order.
As is customary on these occasions, I shall highlight the main items in the estimates, starting with the Department of Agriculture. The net provision in the two agriculture votes amounts to some £155 million. In vote 1, some £21 million is to fund EC and national agriculture and fishery support measures which apply throughout the United Kingdom.
In addition to the various pre-funded market support measures under the common agricultural policy, the vote includes some £6 million to assist structural improvements by way of various capital and other grants. Some £14 million is to provide support for farming in special areas by means of headage payments on hill cattle and sheep.
In vote 2, some £133 million is for on-going regional services and support measures. This includes £60 million for the development of the agriculture and agricultural products industries and for scientific and veterinary services. Some £38 million is for farm support, enhancement of the countryside and fisheries and forestry services. Some £23 million is for central administration, and £5 million is for the rural development programme.
In the Department of Economic Development's vote 1, some £135 million is required for the Industrial Development Board. This will enable the board to continue to support and assist industrial development in Northern Ireland, mainly through the provision of factory buildings and selective assistance to industry.
The terrorist ceasefires announced last year, coupled with overseas interest in Northern Ireland as an attractive investment location, have significantly improved the prospect of achieving and sustaining higher levels of economic growth in the next few years. The board will continue actively to assist firms to set up and expand in Northern Ireland, and has set itself a target of securing 20 inward investment projects, involving some 4,500 job promotions during the current year.
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In vote 2, some £95 million is required. Some £33 million is for the Local Enterprise Development Unit, Northern Ireland's small business agency. This will allow the agency to maintain its excellent track record in developing, strengthening and improving the competitiveness of small firms in Northern Ireland.
Some £16 million is for the Industrial Research and Technology Unit, primarily to promote the competitiveness of local companies through increased industrial innovation, research and development and by technology transfer. This underlines the importance that the Government attach to helping Northern Ireland industry to grasp the emerging technological opportunities which underpin successful economic development.
Finally in this vote, £13.6 million is for the Northern Ireland tourist board to support the tourist industry in Northern Ireland. While 1994 saw the sixth consecutive rise in visitor figures—with a record 1.29 million people coming to Northern Ireland—the prospects, with the continuing ceasefires, for this year and beyond are very encouraging, with increasing interest in what Northern Ireland has to offer as a holiday destination.
In vote 3, £203 million is for the Training and Employment Agency. This will enable the agency to continue to provide a range of comprehensive training and support measures, and includes £77 million to fund almost 16,000 places under a new job skills training programme, and for on-going expenditure on a new training facility in west Belfast.
Some £55 million is for the Action for Community Employment programme, which will provide some 10,000 places for long-term unemployed adults in projects of community benefit. Some £18 million spread over a number of programmes is to assist companies improve their competitiveness by developing the skills of their work force, and to provide training for those intending to pursue management careers in industry.
In respect of the Department of the Environment, in vote 1, £180 million is for roads, transport and ports. That includes some £150 million for the development, operation and maintenance of Northern Ireland's public road system. Emphasis continues to be placed on the maintenance of the road system, with expenditure of almost £1 million more than in 1994–95.
The maintenance programme is complemented by new road construction, and local minor road improvement and safety schemes. Construction work on stage 1 of the Belfast cross-harbour road bridge project was completed in 1994. Work on the second stage of the project linking the M3 Lagan bridge to the Sydenham bypass is scheduled for completion by the end of 1997.
Vote 2 covers housing, where some £203 million will provide assistance mainly to the Northern Ireland Housing Executive, and to the voluntary housing movement. When net borrowing and the Housing Executive's rents and capital receipts are taken into account, the total resources available for housing this year will be some £593 million. That is an increase of £20 million over 1994–95, and will support the continued improvement of housing conditions.
Vote 3 covers expenditure on water and sewerage services, on which gross expenditure is estimated at £202 million. Some £94 million is for capital expenditure, and £108 million for operational and maintenance purposes.
In vote 4, £142 million is for environmental services. That includes some £35 million for urban regeneration measures, which continue to be targeted at areas of social,

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economic and environmental needs. As in previous years, it will generate much higher overall investment through the successful partnerships that have been established with the private sector. Provision for the new Public Record Office of Northern Ireland Agency, launched in April 1995, is also covered within this vote.
The estimates for the Department of Education seek a total of £1,380 million, an increase of 4.3 per cent. over last year's provision. Vote 1 includes £842 million for recurrent expenditure by education and library boards, an increase of £39 million over 1994–95. That includes £794 million for schools and colleges of further education, which will help maintain the pupil-teacher ratio at present levels. Some £48 million is for libraries, youth services and administration and £41 million is for boards' capital projects.
That includes the provision of new laboratories and technology workshops to enable further progress to be made on education reforms. Some £143 million is for voluntary schools, and £15 million is for integrated schools, an increase of some £4 million over 1994–95.
In vote 2, £119 million is for local universities, to enable them to maintain parity of provision with comparable universities in the rest of the United Kingdom. Some £124 million is for student support, including grants and student loans. The vote also covers expenditure on a range of youth, sport, community and cultural activities, including some £16 million for arts and museums and some £3 million for community relations.
Mr. Roy Beggs: How much of the money allocated to education in Northern Ireland is contributed to meeting the cost of educating in Northern Ireland students from the Irish Republic? Does the United Kingdom manage to get that money back from the European Union?
Sir John Wheeler: I cannot supply an answer off the cuff on how much money from the estimates is spent on educating persons from the Republic of Ireland, but if I can give the hon. Gentleman more detailed information in the fulness of time, I shall ensure that he has it.
Mr. William Ross: I have listened carefully as the right hon. Gentleman has detailed the sums to be spent on various aspects of education. He will be well aware that a large school building programme was launched in Northern Ireland in the 1950s and 1960s. Many of those schools had a fairly limited design life, and are now coming to the end of it. What provision are the Government making in future years to replace those schools?
Sir John Wheeler: I am indeed aware that many of the school buildings erected in Northern Ireland in the 1950s and 1960s, as was common elsewhere in the United Kingdom, and in other countries too, have perhaps completed their useful cycle. That concern is borne in upon me by the Minister of State who is responsible for the Department of Education. He urges upon me the necessity of finding ever-increasing sums of money to meet that particular difficulty. I can assure the hon. Gentleman that I shall attend to it when the coffers permit.
In vote 3, gross provision of some £224 million is for the Department's administration and other costs. That includes £122 million for the Social Security Agency, £19
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million for the Child Support Agency, and some £13 million for the health and personal social services management executive.
In vote 4, £1,463 million is for social security benefit expenditure administered by the Social Security Agency. That represents an increase of 5.8 per cent. on last year. It covers not only the general uprating of benefits from April 1995, but an increasing number of beneficiaries.
In vote 5, £406 million is to cover expenditure on the independent living fund, housing benefit, the social fund and payments to the Northern Ireland national insurance fund.
Finally on the Department of Finance and Personnel, within votes 1 and 3, some £5.6 million is for the community relations programme. Together with the expenditure by the Department of Education, total spending on the community relations programme will be some £8.7 million. That reflects the importance which the Government continue to attach to community relations in Northern Ireland.
I have drawn attention to the main provisions of the estimates. In replying to the debate, the Under-Secretary of State will respond to the points raised. I commend the order to the House.
9.7 pm
Mr. John Spellar: A couple of weeks ago the House considered the renewal of direct rule. That debate necessarily concentrated, although not exclusively, on political issues and the peace process. Today's appropriation debate traditionally allows us, as the Minister made clear, to consider the day-to-day economic issues facing Northern Ireland. Some of those are problems shared with the rest of the United Kingdom, while others are more specialised and unique to Northern Ireland. Although I wish to be comprehensive in my coverage of those issues, I am aware that a number of hon. Members representing Northern Ireland want to participate in the debate and raise particular issues of concern to their constituents.
I should like to deal first with the economy. We greatly welcome the recent reduction in levels of unemployment in Northern Ireland, especially among the long-term unemployed. We also welcome the Secretary of State's acknowledgement in his speech to the House on 5 July that that rate is still too high. We note the extremely high levels of unemployment in some especially deprived areas. Although we record the significant progress already made, we must do more to reduce the appalling level of unemployment, which, let us remind ourselves, is still officially around 12 per cent. We must especially try to reduce long-term unemployment, which is one fifth of that total—a far greater proportion than in the rest of the United Kingdom.
Those levels of unemployment are economically disastrous and socially damaging, as I am sure that we are all aware. We want action to target social need and to tackle the relative deprivation of specific areas and pockets in Northern Ireland. Measures to tackle unemployment must be accompanied by enforced fair employment legislation. In that, I commend the proposals recently made by my hon. Friend the Member for Falkirk, East (Mr. Connarty).
The recent reduction in unemployment also reflects the encouraging fact that Northern Ireland industry is enjoying similar growth to the rest of the country in the

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manufacturing sector and is ahead of the game on export-led growth. As the Minister and the House will be aware, that was reinforced by figures in yesterday's Financial Times, showing that Northern Ireland had the fastest growth this year of any region in the United Kingdom.
We should also acknowledge that, since our last appropriation debate in the Chamber, there has been welcome news of new orders for Shorts and for Harland and Wolff—both important employers, and key parts of the sector employing skilled and technical labour in Northern Ireland. Harland and Wolff received an order from British Petroleum for a floating production system, which is especially welcome as it may well offer access to a whole new world market as oil production moves further and further offshore.
The Ministers will remember that both Opposition Front-Benchers and hon. Members from Northern Ireland have pressed that case, and the need to secure the future of Harland and Wolff, very strongly in the Chamber, and I am sure that we all welcome the news.
We are awaiting the follow-up from the Washington conference and hoping for new investment for other industries from that. We need to echo tonight the concerns expressed by Baroness Denton that the recent disturbances should not discourage inward investors and frustrate the strenuous efforts that we have all put in on behalf of Northern Ireland and inward investment there.
Inward investment—increased investment from the United States and elsewhere—will provide some new job opportunities, we hope a considerable number, in the medium to long term. However, as Labour Members have repeatedly emphasised from the Dispatch Box, Northern Ireland urgently needs a new economic strategy, including an immediate action programme for jobs and longer-term measures focusing on investment, innovation and training. I notice the figures in the Minister's report emphasising the work being put into training, but we must ensure that, for example, the modern apprenticeship ends up with real apprenticeship leading to real skilled work, instead of being regarded as a make-weight training measure.
Northern Ireland needs a change of direction and a new economic strategy that includes measures to help small businesses, which comprise a considerable sector—indeed, a far larger sector of business in Northern Ireland than in the rest of the UK economy—a unified framework for skills training, incentives for businesses to take on long-term unemployed people and to focus on long-term unemployed people, and improvements in nursery care to help in that process.
I say in a slightly stronger tone that we are worried that the Government might be seen to be undermining some of those efforts by ignoring their own guidelines on fair treatment. I shall refer to those later.
However, the fruits of that endeavour are more in the future, and other sectors have considerable difficulties now. The Minister will not be surprised to hear that I once again draw attention to the plight of the construction industry and, more, that I accuse his Department of complacency in its response to the industry's difficulties.
Let us be frank. The problems that confront the industry partly result from a welcome outcome of the peace—the reduction in property damage, in the work undertaken to rectify that and in insurance claims. The Minister will know that I mentioned the problems of the construction
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industry in the appropriation debate on 8 March 1995. Since then, we have suggested to the Department many measures that could alleviate the crisis. Not only have Opposition Front Benchers drawn attention to that, but the Northern Ireland construction employers have lobbied Ministers and the Department. I also know that that concern is shared by Northern Ireland Members of Parliament who see the situation unfolding. From here, the response seems to be complacency and inertia. The main priority seems to be dogma-driven administrative reorganisation—perhaps arranging a trade sale from the Highways Agency. We are seeing political gestures rather than ways of dealing with the economic realities.
It is not as though the need does not exist. When we discussed appropriation measures in March the hon. Member for Antrim, East (Mr. Beggs)—I see that he is present tonight—raised the need of Lame harbour and the transport system in his constituency. The hon. Member for South Down (Mr. McGrady) highlighted the problem of more rural roads in his constituency. The auditor general has put the backlog of road maintenance at £60 million, while the Minister referred to an extra £1 million for road maintenance. The question one must ask is how far that will go to rectify the £60 million backlog?
The Minister of State, Northern Ireland Office, the hon. Member for Devizes (Mr. Ancram) has announced a welcome, if slightly over-hyped, expansion of the school-building programme. That lies behind the question by the hon. Member for Londonderry, East (Mr. Ross). We have pressed the Department to accelerate the programme. We should remember that the money has already been committed and budgeted for in the Northern Ireland budget. The replies have been extremely complacent. That complacency was to some extent reflected in what we heard from the Minister of State, Northern Ireland Office, the right hon. Member for Westminster, North (Sir J. Wheeler), tonight. The money has been budgeted for and, by bringing forward the programme, we could start stimulating the construction industry.
There is a similar picture in housing. There were only 567 new starts in the public sector in the first quarter of this year, in the face of increasing housing need. There are 22,000 people on the waiting list in Northern Ireland—7,000 in the Belfast area alone. The result of all that in the industry—not my figure or the construction employers' figure, but the figure in the Government's own press release of 10 July—is a 14.5 per cent. drop in construction activity in Northern Ireland over the past year. That is the reality facing the industry and those who work in it. That reality also faces the thousands of young men who hoped to work in the industry, but who now have idle hands.
Unfortunately, for the Government, the dogmas of competitive tendering, hiving off, market testing and—a new word to have entered the political vocabulary—agentisation, are a higher priority. Not only does that distract from the urgent tasks in hand, but it is extremely worrying for the future of Northern Ireland.
The Opposition know the commitment of local councillors and local councils to working for their communities. Today, my hon. Friend the shadow Secretary of State, the hon. Member for Redcar (Ms Mowlam), has been in Ards attending the sixth in a series of economic conferences with local councils, industry, unions and the community. My hon. Friend the Member

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for Clydebank and Milngavie (Mr. Worthington) has also been over there. We know the impressive commitment of those local councils.
The Government, for their part, have stated their objective clearly. They say that they wish to restore greater power and responsibility to Northern Ireland's locally elected representatives within a framework of new political agreements which would attract widespread support and take account of Northern Ireland's wider relationship with the United Kingdom and the Republic of Ireland. But the question that underlies that is: what will those locally elected representatives be left to run?
At an accelerating speed the Northern Ireland Office is forcing the pace of breaking up and contracting out, even at the expense of its own fair employment guidelines. It seems to be trying to run a scorched earth policy in Northern Ireland. The philosophy seems to be that if the Northern Ireland Office cannot run it, none of the locally elected representatives can. That is a profoundly undemocratic approach and is extremely worrying for the future and development of local authority work in Northern Ireland and attempts to give responsibility and decision-making powers to those representatives.
That approach can be demonstrated even more graphically in the health service, where the fanatical commitment to compulsory competitive tendering has united opposition across the political spectrum and the communities, not least in the Down and Lisburn area. Here the Government have chosen to allow trusts blatantly to ignore their policy appraisal and fair treatment guidelines. Yet, in response to problems raised by some of the American legislative representatives, they use those guidelines to reassure the American Administration of their good intentions in the area of equal opportunities. The Government have ignored the unequal manner in which cuts will affect women employees who face reductions in wages and conditions.
The opposition to the changes goes far beyond the immediate work force and its unions—Unison and the General, Municipal, Boilermakers and Allied Trades Union. It extends throughout the community, including local councils—I have met local representatives from all political parties—and Members of Parliament, most notably those from the Ulster Unionist party and the Social Democratic and Labour party.
The Government seem to have learnt nothing from their disastrous experience of changing the health service in Great Britain, which has caused massive disruption and a huge increase in bureaucracy. The right hon. Member for Wokingham (Mr. Redwood) drew attention to some of the unfortunate results of the changes that have taken place in England and Wales. Instead, the Government are moving at break-neck speed to establish the same system in Northern Ireland, against the overwhelming wishes of the people and of their elected representatives.
Popular opposition has had some success in slowing down the Government's drive in one area. That opposition, combined with some administrative difficulties, has slowed down the drive towards privatising water. As a consequence, the Government made the welcome announcement that there would be no privatisation of water this side of the next general election.
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However, it is also true that the Government's attempts to strip the water authorities of most of their functions will make them a very easy target for privatisation in the unlikely event that the Conservatives win the next general election. It will make the water authorities very vulnerable to a trade sale and, in the meantime, the water industry will be undermined considerably.
We have learnt from the privatisation of water in England and Wales that the certain outcomes are that water charges will increase, metering will be installed, and the fat cats in charge of the water industry will get even fatter. But the people of Northern Ireland do not have to look to England to see what privatisation means in practice. Electricity privatisation has not narrowed the gap between electricity prices in Northern Ireland and in Britain, which has widened to an estimated 30 per cent. That is obviously of enormous concern to hard-pressed householders in Northern Ireland as well as in terms of inward investment.
I understand that representatives from some of the Northern Ireland parties have met the Minister to discuss the issue. They have expressed their concern at the dramatically widening gap in electricity prices. They are extremely worried that, despite some expressions of concern, the Government have taken no action in that area. I hope that, in his winding-up speech, the Minister will be able to give those Northern Ireland Members of Parliament and the people of Northern Ireland some idea of what will be done to close that substantial gap, which has widened even further.
We have put forward some specific proposals. But when Northern Ireland Members of Parliament and I pressed for the transfer of sulphur quotas from England to Northern Ireland, the result was yet more inertia. It is quite astonishing that the Government can transfer carbon dioxide quotas within the European Union from the northern European countries to Spain and yet find it impossible to transfer sulphur quotas from England to Northern Ireland. That is a disgrace. The Northern Ireland Office should press the Department of the Environment to ensure that that transfer takes place.
As you can imagine, Mr. Deputy Speaker, I could refer to a host of other issues—I see the relieved look on your face now that I have indicated that I do not intend to pursue them. I recognise the state of play in this parliamentary Session—I hope to be called by the Chair to speak next Session—and I also recognise the need for Members of Parliament from Northern Ireland to put their constituents' cases.
In conclusion, I urge the Minister to pay greater heed to the wishes of the people of Northern Ireland and to draw back from the application of rigid dogma, of which I hope that I have given some examples tonight.
9.24 pm
Rev. Martin Smyth: Perhaps the small number of Northern Ireland Members here tonight pinpoints a certain insensitivity on the part of the Northern Ireland Office—arranging the debate to suit itself—or of the business managers. Someone, it seems, was unaware that this is the high holiday period in Northern Ireland. Others can take their holidays in August with their families, but this is our holiday time. Hitherto, this debate has always been held in the last week of June. I repeat: we are right in the middle of the main holiday period in Northern Ireland.

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I should like to mention another sort of insensitivity as well. The hon. Member for Warley, West (Mr. Spellar) mentioned a meeting of representatives of the SDLP and the Ulster Unionist party with the Prime Minister, to deal with economic issues. I confess that we sometimes wonder what the agenda really is.
That meeting should have made the headlines, but, as certain people emerged from the meeting with the Prime Minister, they carried with them—furtively—the announcement that the Secretary of State for Northern Ireland was to shake hands in Washington with the erstwhile Member for Belfast, West—who never sat in this place but who, when he did not win a seat, wanted to come and speak here.
As a result, we have witnessed a charade which has meant that the wrong headlines in the newspapers displaced one of the most important developments in Northern Ireland for some time. I mention that merely because I believe that the House should be aware of some of the problems. We are sometimes told that, if all the parties in Northern Ireland will work together for the good of all the people, things will happen. Latterly, it has appeared to us that there is a different agenda. Things do not happen when we work together, as the hon. Member for Warley, West said of council co-operation.
In June last year, the Minister of State, Northern Ireland Office, the hon. Member for Devizes (Mr. Ancram), winding up the debate, chided us for not talking up Northern Ireland. He said that anyone listening would have heard only laments and groans. I said then that part of our task is to pinpoint areas of need, but today I want to record some of the promising developments in the Province.
There has been reference to cuts in the construction industry. Earlier, the Minister referred to the cross-harbour bridge. The contract for that was completed within time and within budget—one of the few occasions in the United Kingdom when such work has been completed within the contract time and budget. The construction industry could have been rewarded by being allowed to get on with the much needed second-stage development.
In Northern Ireland, we await the arrival of supermarkets which have spotted an opportunity there. Some of us have been telling them about the opportunity for a long time. They did not need the so-called peace process to give them the dividend they want. Entrepreneurial people in Marks and Spencer, British Home Stores and other groups have already discovered better returns on their investments in Northern Ireland. In the worst possible times they were prepared to do the best possible things—and they succeeded.
I hope that those who come in future will make equally successful investments; but the infrastructure could already have been under way in North Down and the cross-harbour reaches. I look forward to an early start on completing the project.
There are other important matters. In that debate, my hon. Friend the Member for Upper Bann (Mr. Trimble) asked the then Minister how many pure visitors there were in total. We were later given a figure of one in five. I wonder whether the purity has increased, or whether the ethnic people are still coming back.
We are always accused of having showery weather, but this year we have had outstanding weather and have sent many a person back to the homeland blistered and burnt
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because they did not expect that it would be so warm in Northern Ireland. It is a good place for tourists and visitors. I have to be frank and admit that, as in some other places, there is a "not in my back yard" approach, because we want the beaches for ourselves. However, we welcome tourists and visitors.
As the Minister has responsibility for the environment, I hope that tonight he will help us on questions that have been regularly raised about Orlit houses. Last time, they were raised by my right hon. Friend the Member for Lagan Valley (Mr. Molyneaux) and my hon. Friend the Member for Antrim, South (Mr. Forsythe). Will Northern Ireland and its people continue to be disadvantaged when others have been helped along with that poor housing which was built in the past?
I come now to the vote for the Department of Education, and in particular a thorny problem which is causing deep concern. I admit that we are told that it is only for discussion at this stage, and that the Minister has not yet made his decision. But we have been down this road many times, and it has been rare that Ministers in Northern Ireland have gone back on a discussion document and overruled the thinking that has come forth from the Department.
I refer to the wonderful decision that the best way to reform education provision in Northern Ireland is to cut the number of boards from five to four, and to amalgamate the Belfast education and library board with the South Eastern education and library board. That is supposed to save about £2 million. But when one takes into account the redundancy payments to those who will be laid off, I suspect that that figure will be neutralised, so that cannot be a valid reason.
The consensus among those involved is that the amalgamation is a bad idea, and is on the table only so that the Department can save face. It was not even an option in the first consultation period. It became an option only when the Department found out that its other proposals would not work. The South Eastern board represents a massive, largely rural area. The proposal has been brought forward by a Department which has meddled in a sectarian way with the administration of education in the Province.
The five boards supervised the controlled schools, the maintained schools and the integrated schools right up to the Department. As I understand it, they have worked remarkably well, but, at the behest of one branch of the Church, the Council for Catholic Maintained Schools was brought into being. As a result, the mainline Protestant denominations, who in the past were pioneers in the provision of education facilities in Northern Ireland, transferred their schools with the understanding that there would be an education system for people in Northern Ireland. They were given transferrers' rights, and, bit by bit, those rights have been eroded. Why?
I want to put it on the record that I have been invited on 2 September as a former student in Magee university college to mark the 150th anniversary of the Martha McCrea Foundation. That was a liberal arts college in Londonderry with a theological faculty attached, which was open from the outset to all students irrespective of where they came from. In my day, it was attended by members of the Roman Catholic community.
Because the administration of Northern Ireland observed the letter of the law as laid down in the Government of Ireland Act 1921, as I went to that college,

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I was not given a scholarship. I was qualified to attend either Queen's university, Belfast or Trinity college, Dublin; had I attended either, I would have been eligible for both scholarship and grant.
We are told that Northern Ireland has discriminated against the Roman Catholic community in favour of the Protestant community. It seems to me that discrimination at that level began only under so-called direct rule. I believe that more than £2 million has been set aside this year for the administration of the Council for Catholic Maintained Schools. Is that why one of the boards—where both Roman Catholics and Protestants are employed—must be got rid of? Is it to finance that departure in the education system?
Will the Minister reconsider the foolish suggestion that has been made? The proposed amalgamation is likely to affect the education of children in both border areas. It will create a super-board much larger than the others; administration will be unwieldy, and it is feared that the less well-off areas will siphon off a disproportionate amount of the available funds.
My hon. Friends have already raised the issue of the fabric of our schools. I am talking not only about maintained schools, but about controlled schools—schools that were built just after the war. I went to a grammar school whose prefabricated buildings were erected after the first world war; I visited the same classroom 30 years later. We are now asking young people to attend classes in prefabricated structures, 40 or 50 years after those structures were built.
One such building is in what is now known as Wellington college, in south Belfast. In an attempt to meet the Government's demand for co-education and rationalisation, Carolan grammar school—a girls' school—was amalgamated with Annadale grammar school, a boys' school, to form Wellington college. Development was promised, but it has not taken place. Now the intention is to move Deramore high school—which was a secondary modern—to Larkfield, leaving the inner city of Belfast devoid of secondary state education.
We have argued against it, but the intention is to move the growing enrolment of young people at Wellington college to the Deramore buildings. That is intended to happen in September, but no money is available for the improvements that are required to bring the school up to the standard that is needed for modern grammar school education, particularly in science. That is a scandal and a disgrace.
Other avenues must be considered. One school has had financial provision for the employment of an additional teacher this coming September. The school, however, is bulked out and no accommodation is available. When the case for the additional teacher was made, surely the school's plea for additional accommodation funding should have been heeded. Here we have an extra teacher with no place. If this summer weather continues, perhaps she will go back to teach in the old hedge schools, out in the hedges of the country.
The irony is that, one year ago, a school not five miles away was allowed to dispose of a mobile classroom for £150.
Mr. Beggs: I know a little about the disposal of mobile classrooms. The fact that that mobile was disposed of for
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£150 would suggest that it was in the same state as many of the mobiles in the North Eastern education and library board region, where we could not even get an offer of £150 for one mobile, because of the poor and dangerous state into which it had developed over the years.
Rev. Martin Smyth: I accept my hon. Friend's point, but the my point is that, if that mobile was available and had been used at that school, but was surplus to requirements, and if the school could not afford either a new mobile or an extended building, surely better housekeeping arrangements should have been made than disposing of the mobile for £150, and leaving a school with an extra teacher and extra children, but no place in which to teach them.
May I turn to health? A problem is developing in Northern Ireland which I have discovered has also developed in England and Wales and in Scotland. That problem involves the closure especially of geriatric facilities and statutory homes. Ostensibly, the reason for closing and disposing of many of those homes is that they are out of date, and that it would cost too much to modernise them.
Too many residential and nursing homes have been provided in the private sector. Sooner or later, we will come unstuck on that one, as the owners will not be making the profit that they should be making, and we do not have the statutory provision.
What I have discovered is causing a great deal of concern where health needs exists. Who pays for health need in a residential nursing home? Is it, as here, the local authority, under social services, or is it the health service? In Northern Ireland, that should not be a problem, because there is an integrated health and social services system. However, an elderly person was put into a nursing home not because that was the family's choice—remember "patients first", and that "patients' choice" is the cry—but because the doctor could not get the lady into a hospital. No bed was available, so they had to put her into the nursing home, and of course the family must pick up the tab.
I understood that, in the national health service, we have treatment free at the point of delivery. When that matter was raised with the Minister, the answer came back that the general practitioner was acting as the agent of the family; but the GP was acting simply as a doctor who had a patient who needed hospital care, which was not provided or available, and which had to be provided in a nursing home. That argument is false.
Having said that, I put it on record that the South and East Belfast community trust is one of the most progressive community trusts in the United Kingdom. In fact, it has been taking part in a European experiment, and will in all probability be the United Kingdom's centre of excellence for care in the community. I pay tribute to the trust's board, executive and staff, who are pushing ahead to get the best possible care for people in the community. That is the thrust of our community care programme.
People discovered, as some of us on the Select Committee said some years ago, that it may not necessarily be cheap care. Some went in for community care because they thought that it would save money on long-term care, but, if the average person is looked after in his own home, he will find that, no matter where he roams, there is no place like home. That notion is being found helpful in the south Belfast area.

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I now raise a subject that affects everyone, and certainly those involved in looking after young people under five who have special needs. The bureaucratic approach is to state that a child under five can be wheeled in a pram. I remember that, when I was a lad, my mother wheeled me to school, then to hospital, and then back to school for five or six weeks, but I am not speaking now of such a situation. I am thinking of a child who might not even be expected to live beyond five years but who, at three years old, needs to be lifted and led, as they say.
I received a letter from a Minister saying that it is not the diagnosis but the effect that is the deciding factor. Therefore, a youngster who is unable to walk, who is partially sighted and who has other problems, is supposed to be left at home. I disagree entirely, because someone will have to be at home to look after him. The parents will then have to take the youngster with them, but the youngster cannot go on public transport. He needs a private taxi, because the parents cannot afford a car and do not qualify for a mobility allowance, because of a bureaucratic decision that children under five do not need it.
The Northern Ireland Office has experimented in other spheres; perhaps it should now lead the rest of the nation in acting more humanely. One may be taught the theory of social care, and one may even be involved in hospital work, but unless one is faced with a child such as I have described, one cannot understand the real problems. I ask the Minister to think again about the problem.
I shall conclude, because my colleagues want to speak. I am, however, aware that we have a bit longer than usual tonight, because of the absence of some who might have spoken for an hour if they had had the opportunity. We have been talking about building a complete European network and building tunnels, so may I ask whether any consideration has been given to bridging the most expensive expanse of water by building a tunnel from Portpatrick to Donaghadee?
9.48 pm
Mr. Clifford Forsythe: We tend, in these debates, to go round the houses, the street lamps and the pot holes, but my hon. Friends and I will do our best to keep our comments reasonably to the point and try to stick to the important issues that we can think of.
I want to mention just one constituency matter that is relevant to the Department of the Environment vote 3 on water and sewerage services. I had the unfortunate experience of making representations to have a drainage pipe fitted in Ballycorr road, Ballyclare, so that flooding of houses there, which had gone on for years, would cease. I am glad to say that, eventually, the work was done. I was assured that everything was under control and that I would not need to bring my plumbing expertise to bear any longer. Unfortunately, there was flooding again last month and there has been more flooding this month.
I raise the point for one reason. I was informed by my constituents that, when they asked why the problem had recurred, they were told quite bluntly by those who came to see them that it recurred because there was not enough money to fit the proper pipe. Will the Minister tell the House whether that was indeed the case and whether piecemeal work was done—not to solve the problem, but to keep a few people quiet? Is not that a waste of money? If the money is not supplied at the beginning and the proper size piping is not fitted, public money is wasted.
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I again put on record my and—I am sure—my party's objection to water privatisation in Northern Ireland. We are glad that it is not going ahead, but we would still oppose such a proposal if it were to be presented some time in the future.
I shall move on to the Department of Health and Social Services vote and raise a matter that is dear to the heart—perhaps that is the wrong expression—of some of my hon. Friends. I refer, of course, to the Child Support Agency. As I am a member of the Select Committee on Social Security and since I have a little experience of the subject, I receive an awful lot of the complaints made to my hon. Friends which need investigation.
I had a case recently of a working wife. A court decided that payments were to be made to her. She has three children and had been receiving a very small amount of family credit, but when those payments came to the notice of the CSA, she was immediately put on its books. Unfortunately, when the assessment was made, the court order was stopped by the CSA and she received no money from the courts. Not only did she not receive court order payments, she did not receive any money from the CSA either. The CSA simply said, "Hard luck, that is the way that it works. We are afraid that we cannot do anything for you." Naturally I am raising that matter in other places, but I must put it on record that, if that is the way the legislation works—I understand that it is—it is a disgrace.
I have said before in the House that every party agreed with the child support operation and that it should work for the benefit of children and those who look after them. When the House passes legislation that creates a problem such as I have described, the sooner it is cleared up the better.
Mr. Beggs: Does my hon. Friend agree that, such is the stress and strain being put on many young men in Northern Ireland who are setting up second homes, but who feel a real duty to children by a former wife, they are almost on the point of nervous breakdown? As an alternative, they are contemplating giving up secure employment because they cannot afford to live on what is left of their earnings after the CSA payments are taken out.
Does my hon. Friend agree that greater allowance must be given to responsible fathers who seek to provide overnight stays for their children, sometimes for as many as 100 days a year, so that they can keep the family relationship going? Those men get no relief from payment and some change must be made soon.
Mr. Forsythe: I thank my hon. Friend for his comments. I know that such things are happening not only in Northern Ireland, but in the rest of the United Kingdom. The legislation does not allow for certain expenses, so problems occur. I am sure that the Minister, the Secretary of State and the Department concerned are examining the problem to see whether things can be made a little easier. The object of the exercise was to look after the children. It would be most unfortunate if those who are in employment were to give up their job to look after their second family.
Leaving the legislation to one side, we find that there are still incorrect assessments. We also find that, when assessments are made, they are not being paid—sometimes for good reasons. It takes too long to make assessments, and arrears may go back some time to when assessments were first made. Those who want to pay and to look after their children, and those who need the money

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to look after the children, find themselves heavily in debt, which causes great problems. I hope that the Department is still considering that problem, which applies—unfortunately—to the whole of the United Kingdom. Child support is an example of a very good idea that seems to have gone wrong.
In Northern Ireland, the attendance allowance board has to decide whether an allowance should be paid in certain medical cases. It made decisions about young children with diabetes, but, sadly, its decisions were different from those taken in Great Britain. When I asked the Minister about those decisions, he simply said that they were a matter for the attendance allowance board.
I should like the Minister to tell me—he can write to me if he does not have the answer now—who made the policy decision that the attendance allowance board in Northern Ireland would not treat young children with diabetes in the same way as they were being treated in the rest of the United Kingdom. It is a simple question. To say that the Northern Ireland attendance allowance board treated children in Northern Ireland differently from children in Scotland, in Wales and in England is not an answer. I want the Minister to tell me who made the policy decision that children with diabetes in Northern Ireland should be treated differently from children in the rest of the United Kingdom.
I am also rather worried about planning, where changes are proposed. Although we like changes in planning if we think that they will mean an improvement, the situation is not satisfactory if we still find different decisions being made in different parts of Northern Ireland. Planning permission is given for golf courses all over Northern Ireland, yet other applications which seem to have a good case are disregarded. There must be a lot of golfers among the planners; we certainly have a lot of golf courses.
For example, planning permission was given for a golf course in part of my constituency but, for whatever reason, the scheme did not go ahead. Quite nearby, a church required its manse to be extended but, because the existing building could not be extended, there was an application for planning permission for a new manse close to the church. When the people there inquired about the application, they were told that they had no chance of getting permission for the much-needed manse even though it was for a minister who encourages many local activities other than golf—including some sport and all sorts of other things—which are good for the rural community. I hope that, although the initial inquiry was frowned on, good sense will provide an answer.
Mr. William Ross: My hon. Friend has drawn attention to one of the cases in which the agricultural requirement for planning permission in rural areas should be set aside. The matter has been overlooked in the past. Can we rest assured that planners will be instructed to treat dwellings for clergy on the same basis as agricultural buildings?
Mr. Forsythe: I agree with my hon. Friend, and I hope that the Minister is listening. I am sure that he is. As he is a sympathetic Minister, I am sure that he will give us a good answer.
I hope that the Pensions Bill will be introduced in Northern Ireland as quickly as it is in Great Britain—even simultaneously, perhaps. There are still some aspects of it
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with which we disagree, such as the lack of pensioner trustees. None the less, I hope that it will be introduced in Northern Ireland as in Great Britain.
My hon. Friend the Member for Belfast, South (Rev. Martin Smyth) mentioned the Eastern health board, which looks after Muckamore Abbey, a hospital for mentally handicapped patients that lies in the Northern health board area. Unfortunately, the Eastern board—or, rather, its successor—is thinking about making changes or, perhaps, even closing it.
It would cause great sadness if all the dedicated and expert staff were pushed to one side and disregarded. Many patients in Muckamore Abbey need to be in such a hospital. Although the hospital is funded by the Eastern board, the patients come from all over Northern Ireland. The hospital has a tremendous reputation and has been doing a wonderful job for years, so I hope that that it and the expertise there will not be lost to the whole community in Northern Ireland. It should not be beyond the scope of the Department to make its views known, and to say that the abbey should be updated to continue to look after those who are unable to go into the community. There are still many people who are not able to do that.
The last thing that I want to mention is the statement made today in the House about the Nolan report. Can the Minister tell us what the situation is with regard to the report's application in Northern Ireland? The Chancellor of the Duchy of Lancaster said today:
"We shall act quickly and positively on the Nolan committee's recommendations concerning appointments and propriety in public bodies".
In other words, quangos. He went on to say:
"In particular we shall appoint a new commissioner for public appointments to offer guidance, monitor and audit departmental appointment procedures. This post will be advertised in a matter of days."
Will the commissioner cover Northern Ireland? Will he be responsible for the quangos that are created in Northern Ireland? Are we to have a separate commissioner in Northern Ireland? Will we have a committee, as is mentioned in recommendations 36 and 37 in the Government's response to the Nolan committee? The recommendations say that all appointments to such bodies
"should be made after advice from a Panel or Committee which includes an independent element."
Recommendations 34 and 35 of the Government's response to the Nolan committee really hit home as far as Northern Ireland Members are concerned. Recommendation 34 talks about merit, and says that
"The Government welcomes the recommendation which reflects, as the Committee recognises, a long-standing and continuing practice which is 'deeply ingrained in British public life'."
Members of my party would certainly agree with that, although there have been a number of occasions when we have felt that that has not been applied in Northern Ireland.
Recommendation 35 talks about the skills and balance of those who are appointed to such bodies. I am afraid that there has not been a great deal of balance in those appointed to be members of such bodies in Northern Ireland. Even if the Minister does not tell us that all of the measures are to be applied in Northern Ireland, I hope that he will have read the Government's response to the Nolan committee report and that he will see that it is

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implemented as soon as possible in Northern Ireland. I can assure the Minister that that would be one case when he would have our full support.
10.8 pm
Mr. Roy Beggs: Vote 2 addresses expenditure for housing services, including certain grants in aid. Throughout my constituency, the right to buy introduced by the Government has encouraged and enabled many former tenants to purchase their homes from the Northern Ireland Housing Executive. These new owner-occupiers have made impressive improvements to their homes. Many of those who have recently purchased their homes do not qualify for any modernisation grant. Neighbouring properties still owned by the Housing Executive are undergoing extensive renovation and refurbishment, so those who recently purchased their homes and do not qualify for a grant feel, to some extent, let down. Another concern is replacement grant, with which my hon. Friend the Member for Londonderry, East (Mr. Ross) will deal.
I appeal for greater priority to be given by the Housing Executive to providing adequate heating facilities in all the older Housing Executive properties. Many of those properties are more than 30 years old and still have only one heating point. In many, the high cost of electricity prohibits sufficient heating to prevent dampness and mildew on walls and ceilings, which even causes dampness to bedclothes. The provision of adequate heating could contribute significantly to improving the general health of adults and young children in many housing estates throughout Northern Ireland.
Therefore, will the Minister endeavour to ensure that the Northern Ireland Housing Executive has sufficient funds available to approve grants to applicants who seek to carry out much-needed improvements to their homes? Families in my constituency are living in mobiles because the old farm accommodation is not up to public health standards and people have been waiting for months for approval from the Northern Ireland Housing Executive, but apparently insufficient money is available. If work is started before approval is given, no grant is payable.
So here is an opportunity, at a time when we need to assist the construction industry, to protect thousands of jobs and create hundreds of new ones, to make money available to the Northern Ireland Housing Executive to enable it to grant approvals so that people can get on with home improvements.
Rev. Martin Smyth: Does my hon. Friend agree that it would be even more helpful if the Housing Executive collected all the details required at once, instead of spinning it out over months and then, rather than simply allocating on the date of application, give priority to those with greatest need for weather proofing or whatever else is required in their homes?
Mr. Beggs: I endorse my hon. Friend's suggestion. When people make an application, it is important that the officer who visits the home takes a little time while he is there to offer guidance so that the applicants know precisely all that is required of them. Sadly, the Housing Executive makes too many repeat requests to applicants for additional information. Regrettably, it does not start consideration within the grant approval queue until all the information that it requests is available. I hope that
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managers will exercise good sense and, where it is urgently required, keep a roof over people's heads by granting approval at an early date, but if the Housing Executive's regional office does not have the funds to release, nobody can benefit.
I mentioned the priority that should be given to upgrading heating in people's homes and the difficulties experienced because people cannot afford the expense of electricity in Northern Ireland. I was disappointed that the Minister of State who opened this debate, the right hon. Member for Westminster, North (Mr. Wheeler), made no reference to anything being done in the immediate future to reduce the high cost of electricity to both domestic and industrial consumers. I simply ask when we can expect a significant reduction in electricity prices in Northern Ireland.
The water service staff of the Department of the Environment have been responsive to the cries for help from my constituents of Fernagh drive, Fernagh gardens and Fernagh avenue of Newtownabbey, County Antrim, when their properties and homes have been flooded. It is an absolute disgrace that the occupiers of those houses should lose carpets and all their household furniture on the ground floor every time there is a heavy rainfall. That occurred most recently on 11 June, when heavy rainfall draining into the sewage and storm drain disposal system resulted in a foul mix of rainwater and sewage flooding backyards and entering sub-floors through ventilators. Because that water could not get away, it built up and entered homes underneath back doors. Those unfortunate householders have lost everything, and not for the first time. The Department is aware of the problem. Help is what is needed now, not sympathy from officials.
The roadway at Fernagh gardens does not even have a single gulley to take rainwater away. If there ever were any gulleys on that roadway, they have been tarmacked over for a long time. It is obvious that the existing sewerage and rainwater drainage system cannot cope, so I appeal to the Minister to take steps to see that that nuisance does not happen again. My constituents deserve to be protected from future flooding and that will be possible only when a proper drainage and sewerage system is put in place.
Can the Minister tell the House whether any provision is being made to enable area boards to build new nursery schools or to adapt empty classrooms in primary schools to create nursery wings? Are any additional training courses being funded by the Department of Education to provide the trained staff who will be required to cater for those children who will benefit from the increased access to pre-school nursery education that has been announced for Northern Ireland, commencing in the school year, 1996–97?
Is there sufficient funding in the allocations that have been announced tonight to address the urgent need to replace old school buildings, some of which are in a dangerous condition? Is there sufficient funding to replace mobile classrooms across Northern Ireland with permanent accommodation? Will funding be made available to help voluntary grammar schools, such as Dalriada in North Antrim, where parents have already contributed to raise their share of the necessary funding for new modern facilities to enable the national curriculum to be delivered? When those in the private sector have spent years fund raising and collected the required amount, it is a great pity that progress,

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redevelopment and new improvements are delayed because the Department of Education cannot match that private funding.
I would like an assurance tonight that, subject to a suitable site being obtained in the Millbrook-Larne area of my constituency, such expenditure as is necessary will be made available to the North Eastern education and library board to enable Millbrook primary school to be relocated to a safer and more secure site.
In common with the hon. Member for Warley, West (Mr. Spellar), my colleagues and I welcome the steady decline in unemployment in Northern Ireland. However, we have a long way to go in tackling the problems of long-term unemployment.
At this time of great expectation of increased inward investment, may I again place on record the growing perception that my constituency, as a mainly Unionist constituency, has been and is being discriminated against, and is not obtaining a proportionate share of new investment? We have lost many large employers over the years—Imperial Chemical Industries, Courtaulds, Carrera Rothmans, GEC Alsthom, Klingers Yarns and many more.
I welcome recent investment, but not enough jobs have been created to make up for jobs lost to date, in spite of the excellent record of good industrial relations throughout Northern Ireland and the fact that we have a well-educated, highly skilled and willing work force.
I endorse and fully support the remarks made by my hon. Friend the Member for Belfast, South (Rev. Martin Smyth) regarding the Department of Education's proposals for change. I emphasise yet again the cross-party commitment to opposing the removal or abolition of the South Eastern education and library board. That proposal has caused widespread worry. In the proposals, it was suggested that, in future, the education and library boards might be responsible for funding the voluntary grammar schools. It would be helpful if we were told tonight what advantages are likely to accrue to voluntary grammar schools, should funding responsibility be transferred from the Department of Education to the area boards.
There is already evidence of a tourism boom in Northern Ireland, but also evidence of a serious shortage of bed accommodation. It was encouraging to hear the recent welcome announcement by the Minister responsible for economic development of new hotel developments that we can expect in the near future. May we have an assurance that the Minister will request the Northern Ireland tourist board to speed up assessment of proposals for grant aid to provide new bedroom accommodation, and to provide active help to local hoteliers instead of repeatedly moving the goalposts and delaying projects, some of which might have been completed months ago but have not started?
The hon. Member for Warley, West mentioned recent difficulties in Northern Ireland. In conclusion, I remind the House that the very limited recent disruption in Northern Ireland has been less damaging to the Northern Ireland economy than the daily cost to the United Kingdom economy of the recent rail stoppages. There is good will throughout Northern Ireland. The best way to secure the peace is to continue to attract and support inward investment and to locate new manufacturing industry in places where it is accessible to all sections of the community.
10.23 pm
Mr. William Ross: Whenever our debate is held somewhat earlier than this one, usually several Members from Northern Ireland and several Labour and Conservative Members take part. This evening, we are confronted with acres of green leather with very few inhabitants.
Mr. Peter Bottomley: It is the marching season.
Mr. Ross: The hon. Gentleman has experience in Northern Ireland. No doubt, whenever I sit down, he will express his point of view about what should be done, as he takes a keen interest in those matters.
There is one notable figure missing this evening: Jim Kilfedder is no longer with us. He was an assiduous attender at such debates and always fought his case well for the people of North Down. He is sadly missed in the House. Although we on this Bench did not always agree with Jim, we have always been prepared to admit that he was active in pursuing his constituents' interests, not least in debates such as tonight's. One hopes that his successor will, on future occasions, adopt the same approach. He has conspicuously failed to do so this evening. Jim Kilfedder defended the interests of the people of Northern Ireland with honour and he deserves a word of praise from this Bench in tonight's debate and I am glad of the opportunity to make a few remarks about him.
There are a number of subjects that we can talk about in the debate, which involves the second tranche of Northern Ireland expenditure. It is the second bite of the cherry that we have every year. The debate is important to Northern Ireland. It is the time when we bend the Minister's. We not only ask him about expenditure for the current year, but to look forward to succeeding years so that the mistakes and problems of expenditure, which we see appearing, and which have appeared, as they always do, can be attended to. The Minister can then take steps to alter course before he makes his decisions about who will receive the money and how much they will have to spend next year and the year after.
The Minister has already heard from this Bench this evening and on former occasions what our priorities are in each aspect The priorities are sometimes party based—in relation to strategic spending in Northern Ireland—and, on many occasions, they are constituency based. The debate gives us the opportunity to make our case to the Minister.
There is deep concern on these Benches about the proposed reorganisation of the Department of the Environment. We see that as the continuing mushroom growth of quangoland. There are far too many quangos in Northern Ireland. It is no good the Under-Secretary of State for Northern Ireland, the hon. Member for Cambridgeshire, North-East (Mr. Moss), shaking his head. When he replies, he will probably say that that has to do with next steps agencies, but next steps are just that—only steps, one following the other. The next step invariably leads to a quango, if that creature can be created. We know where that has led: Northern Ireland is being run more and more by people who have never dared to put their name on the ballot paper, and never will because they know what the result would be. Such people are totally untouchable by the electorate; their activities and power in Northern Ireland are resented by the entire population of that place. It is no good the Minister shaking his head.
Rev. Martin Smyth rose—
Mr. Ross: Does my hon. Friend wish to intervene? I know that he has strong views on the subject and I am happy to give way to him.
Rev. Martin Smyth: I appreciate the hon. Member giving way. Does he accept that it is not a valid argument for a Minister to say that the Government are following through the pattern in this place when they regularly tell us that Northern Ireland is different and we must do other things there? Is it not time that they returned to accountable democracy so that civil servants are accountable to people who know about the issues?
Mr. Ross: I accept what my hon. Friend says—if he had let me continue for a minute or two I was about to say it myself. As it happens, I go further: we have seen the end result of such moves on this side of the Irish sea and we have no particular wish to feed the fat cats as there is not nearly as much cream in Northern Ireland as there is here. I fear that whenever they got the cream, there would be precious little left for the ordinary man or woman. I am surprised that we have not heard some hurrahs from the two Labour Members—no doubt they will get round to it when they think about it.
Many of the matters that are in the hands of quangos would be far better and properly run by Government agencies. In Northern Ireland we have a long tradition of running such matters efficiently. If we had democratic control, we would be even more efficient.
My hon. Friend the Member for Antrim, East (Mr. Beggs) expressed regret that the right hon. Member for Westminster, North (Sir J. Wheeler), who opened the debate for the Government, did not refer to the cost of electricity. I did not hear him talk at length about the Washington conference either and the benefits that will supposedly flow from it; nor about the money—the peace dividend—that was to come from the European Community. No doubt in his wind-up speech the Minister will tell us what advances have been made in that area and what inquiries have resulted from the conferences in Belfast and Washington.
The Minister should also confirm whether a rush of people from the United Kingdom and the United States have inquired about the possibility of expanding their activities to Northern Ireland. Furthermore, will he assure the House that when investors appear they will be taken not only to West Belfast or Londonderry but to many locations in my constituency, East Antrim, South Antrim and to other parts of Northern Ireland which need more job opportunities, but which were largely ignored in the past 25 years whenever money and investment came to Northern Ireland?
There is a myth about rich Protestant areas. One has only to look at the unemployment figures in places such as Coleraine to realise that the people there face real hardship. There is migration out of those areas and, if we are to keep our best young people at home, we must provide investment and employment opportunities. We have seen precious little of that in recent years.
Do the Government recognise the need to support home-based industry? Home-based industry must receive treatment that is as generous as that given to foreign firms. When incoming firms seek skilled workers, will the Government ensure that there are training facilities available in Northern Ireland? We do not want to repeat
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the experience of the Benelux factory at Limavady, which recruited its first 10 or 12 highly skilled workers from Sligo.
There is not much point spending British taxpayers' money building a factory in Limavady to provide employment for people from the Irish Republic. Many of my constituents would have been happy to seek training and obtain employment at the factory. It is interesting that the factory managers went to Sligo and that they did not recruit their highly skilled workers in England. I have also been informed that the factory advertised for shop floor workers in the Irish Republic before advertising in Northern Ireland. I hope that the Minister will inform the noble Baroness Denton, who has responsibility for that area, that I am totally dissatisfied with the civil service answer that I received from her a few weeks ago on the issue. I shall take up the matter with her in the near future.
Will the Minister confirm that the purchase of the Apache helicopter from the United States will be accompanied by the most strenuous efforts to ensure not only that Starstreak is fitted to those helicopters destined for the United Kingdom armed forces but that every effort will be made to sell it to the Americans to be fitted to the 800 helicopters that the United States already has in service? That would be a tremendous boost to the Starstreak programme in Northern Ireland. The massive benefits that would accrue to Belfast and technological advances in the field that would flow to the United Kingdom would be very welcome indeed. We talked to people in the United States about that matter when we attended the conference. We did not spend all of our time wandering around and listening to others; we went out and did our best for the people of Northern Ireland and for our highly skilled work force at home.
Over the years, we have seen the large-scale removal of civil service jobs from the provincial centres mainly to Londonderry. That is greatly resented. We hope that when civil service jobs are moved around the Province other places will again be given some consideration. There seems to be a definite effort to shift incoming employment to certain areas to keep the natives peaceful. The view is that Protestant areas are nice and quiet anyway, so they do not need to be given anything. There is rising anger about that, some of which boiled over in Portadown a week ago.
There has been reference to restoring to the people of Northern Ireland some measure of democratic responsibility. My hon. Friend the Member for Belfast, South (Rev. Martin Smyth) mentioned that. We face the problem, however, of where any elected representatives might sit, since the Government were so good at looking after the Commons Chamber in Stormont that they let it burn down. Perhaps the Minister will be so kind as to tell us what progress has been made on the refurbishment of the Chamber, and whether it will be restored to its former glory. It was a very important public building in Northern Ireland, and there has been a remarkable silence about the whole affair for many months. We have waited long enough for firm decisions to have been taken, and I hope that the Minister will be able to make an announcement this evening. The next time water hydrants are checked over, and no water is found in them, perhaps someone will attempt to find out why.
Mr. Andrew Mackinlay: And the Senate Chamber.
Mr. Ross: I fully appreciate that; perhaps the hon. Gentleman will make his own speech when I sit down.
As the House knows, I own a farm—although it is a long time since I turned a furrow with a plough. That is sad in some ways. The work is sometimes better than here: at least 76,000 constituents cannot ring one up and issue a telling off, six days a week. There is some concern in Northern Ireland about possible changes to tenancy law. Certainly, the Department of Agriculture was asking for people's views on it. What on earth are the Government trying to do? What is the intention behind such possible changes? The system that we have has worked perfectly well for many years. It is very flexible, and there have been no problems with it.
We have another problem, too, related to agriculture. I wrote recently to the Minister about Ballinahone bog. I hope that he understood some of what I said in that letter. I hope that he realises that the matter will not rest there. I want to come and see him, as do others concerned with that area of scientific interest. It is an important bog, and there are important implications for those with peat-cutting rights in the bog. Their interests are being overridden, with no consideration given to their case. I hope, when I come to see the Minister, that those responsible for the decision will be present to defend what I regard as indefensible. People have cut peat there for centuries, and the small-scale cutting going on will never do that massive bog any harm at all.
When trees are cut down after about 35 years on bogs in the hills, a great deal of wreckage is left behind. That problem needs dealing with rather more carefully than it has been dealt with hitherto.
I turn briefly to the system of Housing Executive grants, touched on by my hon. Friend the Member for Antrim, East. Formerly, such grants were related to the condition of a house. The system has now changed from that sound Conservative principle to the much more socialist principle of means testing. Perhaps this is a case of the Tories stealing some unsuitable clothing from Labour—rather than the other way round, for a change. The consequence that flows from that change has been a grant system that is totally at variance with what is needed in Northern Ireland.
We had a good system but we now have a bad system. We must look at it carefully again and try to achieve a sensible system which gives a reasonable amount of help to a large number of people rather than, as is now happening, large amounts of help going to a relatively small number of people.
My hon. Friend the Member for Antrim, East referred to the long delay from initial application. I do not want the Minister to stand up at the Dispatch Box tonight and tell me that it takes only X months. If he does, I shall point out that that is not the time taken from the initial inquiry, which is where it should be, but from about two thirds of the way through the procedure. That is when the Housing Executive clock starts ticking in order to give a completely false impression of the speed with which all the applications for grant aid are being processed.
That is nonsense; we all know that it is nonsense. It is an abomination that any Minister should stand at the Dispatch Box and defend the indefensible in that matter. It is just not good enough. I hope that he will not start feeding me the nonsense that the Housing Executive has tried to feed me in the past over this matter.
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The Minister knows that since I came into the House 21 years ago, I was one of those who advocated a replacement grant as opposed to a repair or improvement grant. The hon. Member for South Down (Mr. McGrady) has advocated a similar policy since he entered the House. But we did not get that. We asked that whenever a dwelling was in bad condition the Housing Executive should have the choice of paying a repair grant or paying roughly the same grant to replace the dwelling. What we actually got was a means-tested grant, which can run up to £40,000 in some cases—a ridiculous sum. The end result of that is that many people now cannot get a grant at all because of the large sums that are going to individual houses.
If a replacement grant on really poor-quality rural housing that should have been knocked down, for which we had asked, and equivalent to the grant paid towards repairing a house, had been implemented, the problems that we now face would never have come about. It is because of the way in which the Housing Executive has manipulated the whole thing over the years that we have the present dreadful situation.
Mr. Beggs: Is it not the case that to qualify for virtually the full cost of a replacement dwelling, individuals will ensure that they have no assets to declare and that they will contrive to be unemployed for a sufficiently long period in order to qualify for what is a full 100 per cent. gift from Government, more than could have been saved through a lifetime of hard work?
Mr. Ross: What my hon. Friend says may well be true in some cases, but I personally have not come across that. Anyone that I know who has applied for and been given a replacement grant has been in poor health and poor circumstances. But I can see that what my hon. Friend says could be done, and if it could be done we can rest assured that humanity will do it. Of that I have no doubt whatever.
My final point concerns the problem with Housing Executive allocations to pointed cases. In the town of Limavady one or two dwellings have gone to pointed cases in the last two or three years. All the others have gone to priority cases. That is quite a large number of houses every year. I feel sure that the situation in the rest of my constituency is very much the same, especially in urban areas. The largest percentage of those priority cases seems to be made up of young girls with babies.
A social problem is not being addressed. We are merely applying some ointment by giving those people houses and allowing the state to keep them. We are leaving young married couples who want to start a family in poor accommodation. Will the Minister examine the "points" and "priority" system of letting houses in Northern Ireland, and consider what can be done to give people a fairer crack of the whip than they have been given for many months and, in some cases, years?
The non-fossil fuel obligation entered into by Her Majesty's Government has led to a messy situation. I have considered the matter in some detail, because of the hullabaloo surrounding hydro-electric schemes in Northern Ireland. I have spoken to the Minister's officials, and to officials in the Department of Economic Development. The Government seem to have signed up to produce a certain amount of electricity from renewable sources—wind, water and wave power, for instance—before anyone could quantify what was available from those sources on a sound economic basis.

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Having entered into that obligation, the Government are trying to produce a certain amount of electricity by some means, regardless of cost to the environment or financial cost. I believe that they have started from, as it were, the wrong end. We are probably trapped, but we should not allow that to run away with our common sense. I am talking not about windmills—although I hope to return to the subject in a future debate—but about the whole question of the generation for sale of hydro-electric power in Northern Ireland, which will have a wider application throughout the United Kingdom.
Northern Ireland contains a good many rivers that are valuable fisheries for migratory salmon and sea trout. The fishermen, and the owners of the fisheries, have rights; they have economic assets that should be protected. Those who want to generate electricity also have rights, because they own the water-power rights on the river. They have a legal entitlement to develop such sites and make use of them. As it happens, I own such a site—although it has not been in regular use for some years, for reasons that I need not go into. Until a few years ago I ran my own domestic electricity supply from it, and I hope to do so again in the future.
The Government must find a way through the problems involved in those interlocking rights and benefits. When I spoke to officials, I was gratified to discover how much work and thought had been expended. I hope to talk to the Minister and his officials again. I know something about the matter, as an angler who has netted migratory fish in his younger days on a commercial basis, who owns a water mill and whose family has used water mills for centuries. I want a proper balance to be established. If we do not find a solution now, the problem will create headaches for many years.
Mr. David Wilshire: I hear what the hon. Gentleman is saying about electricity generation. No doubt he is aware that the Northern Ireland Select Committee is considering electricity prices; has he submitted his views to the Committee? If not, would he be willing to do so? The Committee is anxious to find the cheapest way of generating electricity in Northern Ireland.
Mr. Ross: I hear what the hon. Gentleman says, but most of the schemes that I am dealing with this evening and that are available in Northern Ireland are small, run of the river schemes. They are a tiny proportion of the whole. Of course, I would be happy to talk to the Select Committee about the matter at any time, but I want to get my own mind clear on what can and cannot be done on this issue because it is important, although small scale in the generality of electricity generation. It is important to all individual interests in each individual river and site involved. A number of different interlocking issues are to be addressed and resolved before we go on.
Rev. Martin Smyth: My hon. Friend raises the question of non-fossil fuels. Does he agree that the people of Northern Ireland are paying the ransom because the Government decided to ignore the advice against privatisation that we gave in Northern Ireland in the Northern Ireland Committee. Now no one can develop alternative sources of generation for some more years, and the cost of electricity prices rises. Belfast West power station could be turned to waste disposal and would be an amenity to the city, yet it cannot go down that road because of undertakings given to the purchasers of the generating stations.
Mr. Ross: Of course the hon. Gentleman is correct in what he says, with regard not only to the possibility of generating electricity from waste, which has not been fully explored, although I know that some people are considering that, but to the fact that a huge quantity of lignite is sitting in the ground in Northern Ireland and could be used for generation. By doing that, instead of importing electricity from Scotland, England and Wales, we could export it down the line and make a bit of money out of it. I agree with what my hon. Friend says.
The reality is that we could touch on an enormous number of subjects such as this in Northern Ireland in this debate. I am sorry to keep a number of hon. Members sitting around just in case there is a vote; we will not divide, so they can go home if they like.
Mr. Jeremy Corbyn: I have the Adjournment debate to come.
Mr. Ross: I know that the hon. Gentleman has the Adjournment debate. Hon. Members will probably stay and listen to him as well. [Interruption.] I promise that I will read the debate.
This debate is a chance for the representatives of the people of Northern Ireland to put forward the concerns that each of them has, and we have tried to make use of that this evening.
I finish by asking one simple question of the Minister. We recently had a letter from his right hon. Friend the Secretary of State for Social Security telling us about the huge amount of social security fraud that has been detected, and what steps have been taken to detect even more of it. Will the Minister assure us that similar steps are being taken in all parts of Northern Ireland, and will he quantify the level of fraud that has been detected and stopped?
10.52 pm
The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Malcolm Moss): This has been a wide-ranging debate. I shall attempt to answer as many as possible of the questions posed to me this evening, but, for the vast majority, I shall be writing to the hon. Members concerned.
I should like to take the opportunity, as did the hon. Member for Warley, West (Mr. Spellar), to consider the Province's economic prospects. The distortion and dislocation that the local economy has undoubtedly suffered in the past 25 years or so may never fully be measured, but, despite the terrorist campaign, the Northern Ireland economy has performed remarkably well, especially in recent years.
The recent news on the economy is extremely encouraging. It is growing relatively faster than the national economy. The seasonally adjusted unemployment figure has fallen in 11 of the past 12 months and, in the year to December 1994, the output level of Northern Ireland production industries has risen by 5.8 per cent. In manufacturing industries, it has risen by 6.8 per cent. That optimistic picture contrasts sharply with that painted by the hon. Member for Warley, West.
As on a number of other occasions, the hon. Gentleman raised the subject of the so-called plight of the construction industry. In the first quarter of 1995, some reductions have taken place in construction output compared with 1994, but the main factor in the decrease

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was a drop in the private category of construction work—the category that includes retail and office developments—and not a drop in construction work funded from public expenditure. In fact, the estimated value of construction work from planned public expenditure in 1995–96 is £861 million, some £18 million higher than in the previous year. The redevelopment of the Royal Victoria hospital, at a cost of more than £64 million, which I announced recently, is only one example of how public sector projects are benefiting the construction industry.
We are, of course, helping the industry in appropriate ways by, for example, promoting a training ethos and improving skill levels among the employed and the unemployed. I am glad to be able to report that the number of unemployed construction workers in the Province has fallen by 2,058 over the year to May 1995.
The hon. Members for Warley, West and for Londonderry, East (Mr. Ross) continued to mislead the House and themselves with regard to the process of agentisation. Agencies will remain accountable through their chief executives to Ministers, and Ministers in turn are responsible to Parliament. The relationship between agencies, Departments and Ministers will be governed by a published framework document, which a future national or local administration would be able to amend. Agentisation does not prejudice how a devolved administration would exercise its responsibilities. Some time ago, I wrote to all Northern Ireland Members inviting them to meet me to discuss agentisation but, as yet, I have not had the pleasure of a reply from them.
The hon. Member for Warley, West also mentioned policy appraisal and fair treatment, or PAFT. He alluded to a dispute—
Rev. Martin Smyth: Will the Minister give way?
Mr. Moss: If I must.
Rev. Martin Smyth: I wonder whether the Minister misunderstood the letter that was sent to us asking us to discuss development in Belfast, because we have not received any information about an agency.
Mr. Moss: I was referring to the process of agentisation in the Department of the Environment, which I know exercises the minds of hon. Members. I repeat the invitation for hon. Members to come and talk to me about it, because they seem to be labouring under the misapprehension that agencies are non-departmental bodies. They are not; everyone working in an agency within the DOE will be a civil servant.
The hon. Member for Warley, West spoke of a dispute in the Down Lisburn trust. I must tell him that the dispute was engineered by Unison to further its campaign against the Government's market-testing policy. Unison took the matter to court and lost the case. However, in the absence of a written judgment, I do not feel that it is appropriate to comment on the details of that case at this juncture, other than to say that I fully support the Down Lisburn trust in its competitive processes.
The current situation is likely to release some £700,000 each year over the next five years, a total of some £3.5 million. That is in addition to the £500,000 a year already being saved in that trust as a result of the first round of
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market testing, which began five years ago. To put the figures in context, let me tell the House that the £700,000 a year of savings from competitive tendering equates to a total of more than 450 elective surgery cases each and every year.
The question of water privatisation—
Mr. Spellar rose—
Mr. Moss: I must press on. Time is short.
The hon. Members for Warley, West and for Antrim, South (Mr. Forsythe) mentioned water privatisation. I am happy to confirm once again from the Dispatch Box that there will be no water privatisation in the lifetime of this Parliament. I see that the hon. Member for Antrim, East (Mr. Beggs) knows the words and can repeat them.
If we are to make progress, however, we need to facilitate a more commercial approach to the provision of water and sewerage services, by establishing more direct customer billing to separate funding from the overall local taxation arrangements. While detailed proposals have yet to be produced, a consultation document will be issued in advance of any change to existing arrangements. I again confirm that routine metering of purely domestic water supplies is not under consideration.
Mr. Spellar: Does the Minister believe that it is appropriate and right that health trusts should apply the PAFT guidelines in considering bids for compulsory competitive tendering?
Mr. Moss: I am happy to confirm that we have written to the trusts to say that they should consider the PAFT guidelines, but initially, because it was policy appraisal, we deemed it appropriate that those guidelines should be the responsibility of the health boards and the management executive, and not at the operational level of trusts.
The hon. Member for Warley, West also raised the question of sulphur quotas. We are looking carefully at that, but at the end of the day, there is no guarantee that it will lead to lower electricity prices. It will depend on the relevant price movements of the sulphur oil, as he well knows, but we are looking into it.
On electricity, raised by the hon. Members for Warley, West and for Antrim, East, prices in Northern Ireland have in real terms been fairly stable since privatisation. The problem we face is that prices appear to be rising rapidly because they are falling in Great Britain. Price regulation is really a matter for the industry and the regulator, but the Government are certainly prepared to help by, for example, allocating large amounts out of the European programme to the cost of the gas and electricity interconnectors. Indeed, my right hon. and learned Friend the Secretary of State recently announced the provision of additional assistance, to ensure that Northern Ireland consumers will enjoy equivalent benefits to their counterparts in Great Britain when the nuclear levy is abolished in 1996.
The hon. Member for Belfast, South (Rev. Martin Smyth) mentioned Orlit dwellings. I repeat what I have said in correspondence to him and his hon. Friends, that we could not justify new legislation or any spending of public money to help people who purchased Orlit dwellings in the private sector. He also mentioned the cross-harbour bridge, and I am happy to say that work has recently commenced on the first part of the direct link

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between the M3 Lagan bridge and the Sydenham bypass and is scheduled for completion in April 1996. That will be followed by a second contract to reconstruct the Ballymacarrett flyover and complete the link to the Sydenham bypass before the end of 1997.
The reorganisation of education boards was raised by the hon. Member for Belfast, South and others, including—I think—the hon. Member for Antrim, East. We announced proposals for changes on 10 April. The two-month consultation period ended on 9 June and the Government are now considering the various representations received before the final decisions are made. It is important to say that any proposals made for such changes were based on sound educational reasons and not the reasons that the hon. Member for Belfast, South inferred.
The hon. Member for Antrim, South referred to the Child Support Agency and the attendance allowance, which he has already written to me about. I shall write to him on that and on the Pensions Bill and implications for Nolan.
The hon. Members for Antrim, East and for Londonderry, East raised with me issues relating to the Housing Executive and grants. There were some teething problems with the introduction of the 1992 grant schemes, which resulted in a slower uptake of processing than had originally been anticipated. However, those difficulties have now been overcome and the grant approval rate increased significantly, with expenditure in 1994–95 exceeding the allocation of £32.5 million. An additional £1.6 million funding was approved. Faced with increasing demands on grant expenditure, the allocation for 1995–96 has been increased yet again to £38 million.
The hon. Member the Antrim, East mentioned some problems with flooding on a housing estate. I ask him to write to me with details of that, and I shall certainly look into it. The issue raised on nursery education and the construction of new schools is another matter that I can take up with my right hon. Friend the Minister of State.
Mr. William Ross: On a point of order, Madam Deputy Speaker. The Minister seems to be in a desperate rush, yet he has until 11.51 pm to speak, so he has plenty of time.
Madam Deputy Speaker: That is not a matter for the Chair until we reach that time.
Mr. Moss: So many questions have been fired at me in the past 20 minutes that I could not possibly have detected the answers in my brief. I promise, as I said at the beginning of my speech, to write to hon. Members on the matters that I do not cover.
The time taken to process renovation grant applications was also raised and I shall be happy to write to the hon. Member for Antrim, East showing him that, in fact, our performance in that area has greatly improved.
I now come to the contribution by the hon. Member for Londonderry, East. I have here a long list of questions that he posed to me. I know that he endeavoured on the trip to Washington with his colleagues to talk to the American counterparts on Starstreak. It may well be that some of his work there has borne fruit. I take on board his comments about speaking to our colleagues in the Ministry of Defence to ensure that the Americans are apprised of the value of that piece of equipment.
The Stormont Parliament rebuilding and refurbishment is well under way. I shall issue a statement in the near future on the matter. The hon. Gentleman is due to come to visit me to discuss Ballinahone bog and I look forward to seeing him in the near future.
Question put and agreed to.
Resolved,
That the draft Appropriation (No. 2) (Northern Ireland) Order 1995, which was laid before this House on 8th June, be approved.

CRIMINAL EVIDENCE BILL [Lords]
Order for Second Reading read.
Motion made, and Question put forthwith, pursuant to Standing Order No. 90(6), That the Bill be read a Second time.
Question agreed to.
Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).

Statutory Instruments, &c.
11.6 pm
Madam Deputy Speaker (Dame Janet Fookes): We now come to motion 6.
Mr. Dennis Skinner: On a point of order, Madam Deputy Speaker. You may have been made aware of the exchanges that took place earlier between Back-Bench Members on both sides and Madam Speaker in respect of the next two orders and in respect of the fact that the Daily Mail and other bidders are engaged in mopping up the radio stations in the Chilterns and elsewhere. Madam Speaker said that she might be able to make a statement on the question of privilege in view of the fact that, although the matter has been spoken about in the House of Lords, apparently Members of the House of Commons have not had a chance to debate it. The only way in which hon. Members can do anything at all tonight is to make an attempt to challenge the payroll vote. Did Madam Speaker convey anything for us to hear in respect of the two motions? Will the Minister of State, Department of National Heritage withdraw them?
Madam Deputy Speaker: I was aware of the situation. Madam Speaker has not given me any information on the matter.
Mr. John Carlisle: Further to that point of order, Madam Deputy Speaker. It may help the House if I tell hon. Members that I have received a reply from Madam Speaker about whether there was a breach of privilege by the takeover panel on the basis of the lobbying of Members. Her reply was that in her view, there was no breach of privilege by that body.
Mr. Barry Sheerman: Further to that point of order, Madam Deputy Speaker. I am not concerned with the privilege issue. It has come to my knowledge, since the comments by Madam Speaker this afternoon, that there is a serious constitutional matter. We have been discussing with Members of the House of Lords the fact that a precedent has been set in the past few days. A motion that went before a Standing Committee of the House of Commons and was defeated, rather than coming to the Chamber for scrutiny, was then tabled in the House of Lords, very unusually, for debate last night on a motion that, as you know, Madam Deputy Speaker, was not contested by the Opposition, so it had a relatively clear run. It is now back this evening, but not to be discussed. Not many Members would know, if we had not raised the matter today, that the motion had been defeated in Standing Committee—
Madam Deputy Speaker: Order. This is turning into a debate. Hon. Members will be aware that this matter has to be decided forthwith. It is, of course, open to hon. Members to vote either for or against, according to their choice.
Mr. Jeremy Corbyn: On a point of order, Madam Deputy Speaker.
Madam Deputy Speaker: Is this a different point of order?
Mr. Corbyn: My point of order is this. How did this statutory instrument ever get to the House of Lords if it had not been to the House of Commons first?
Madam Deputy Speaker: It can go to either.
Mr. Sheerman: On a point of order, Madam Deputy Speaker.
Madam Deputy Speaker: Is it a different point of order?
Mr. Sheerman: I have been in the House since 1979. I have never seen such evidence of obvious chicanery. Hon. Members are being prevented from discussing an issue. This influences your constituency, Madam Deputy Speaker, as well as others. A monopoly run by the Daily Mail will take over the franchises—
Madam Deputy Speaker: Order. I can operate only according to the rules in this House at this moment. I have told hon. Members that if they wish to vote against the motion, they can do so. I am now going to put the Question.
Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.),

BROADCASTING
That the draft Broadcasting (Restrictions on the Holding of Licences) (Amendment) Order 1995, which was laid before this House on 23rd May, be approved.—[Mr. Kirkhope.]
The House divided: Ayes 112, Noes 39.

Division No. 208]

[11.09 pm

AYES

Ainsworth, Peter (East Surrey)

Forsyth, Rt Hon Michael (Stirling)

Allason, Rupert (Torbay)

Forsythe, Clifford (S Antrim)

Amess, David

Forth, Eric

Arbuthnot, James

Freeman, Rt Hon Roger

Baker, Nicholas (North Dorset)

French, Douglas

Bates, Michael

Gillan, Cheryl

Beggs, Roy

Goodlad, Rt Hon Alastair

Booth, Hartley

Greenway, Harry (Ealing N)

Boswell, Tim

Greenway, John (Ryedale)

Bottomley, Peter (Eltham)

Griffiths, Peter (Portsmouth, N)

Browning, Mrs Angela

Harris, David

Burns, Simon

Heald, Oliver

Burt, Alistair

Hendry, Charles

Butcher, John

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

Butler, Peter

Hughes, Robert G (Harrow W)

Carttiss, Michael

Hunt, Rt Hon David (Wirral W)

Chapman, Sir Sydney

Jack, Michael

Clappison, James

Jones, Robert B (W Hertfdshr)

Clifton-Brown, Geoffrey

King, Rt Hon Tom

Congdon, David

Kirkhope, Timothy

Conway, Derek

Knapman, Roger

Coombs, Simon (Swindon)

Knight, Mrs Angela (Erewash)

Cope, Rt Hon Sir John

Knight, Greg (Derby N)

Cran, James

Kynoch, George (Kincardine)

Davies, Quentin (Stamford)

Lait, Mrs Jacqui

Day, Stephen

Lang, Rt Hon Ian

Deva, Nirj Joseph

Legg, Barry

Devlin, Tim

Lidington, David

Douglas-Hamilton, Lord James

Lord, Michael

Dover, Den

MacKay, Andrew

Duncan, Alan

Maclean, Rt Hon David

Eggar, Rt Hon Tim

McLoughlin, Patrick

Emery, Rt Hon Sir Peter

Martin, David (Portsmouth S)

Evans, Roger (Monmouth)

Mawhinney, Rt Hon Dr Brian

Fenner, Dame Peggy

Merchant, Piers

Forman, Nigel

Mitchell, Andrew (Gedling)

1569

Moss, Malcolm

Taylor, Ian (Esher)

Newton, Rt Hon Tony

Taylor, John M (Solihull)

Nicholson, Emma (Devon West)

Taylor, Sir Teddy (Southend, E)

Page, Richard

Thomason, Roy

Pattie, Rt Hon Sir Geoffrey

Thompson, Sir Donald (C'er V)

Pickles, Eric

Thompson, Patrick (Norwich N)

Redwood, Rt Hon John

Thurnham, Peter

Richards, Rod

Townsend, Cyril D (Bexl'yh'th)

Robertson, Raymond (Ab'd'n S)

Trend, Michael

Ross, William (E Londonderry)

Waterson, Nigel

Rumbold, Rt Hon Dame Angela

Wells, Bowen

Sackville, Tom

Whittingdale, John

Shaw, David (Dover)

Widdecombe, Ann

Shepherd, Colin (Hereford)

Willetts, David

Sims, Roger

Wilshire, David

Spencer, Sir Derek

Wolfson, Mark

Spink, Dr Robert

Wood, Timothy

Sproat, Iain

Young, Rt Hon Sir George

Stanley, Rt Hon Sir John

Stephen, Michael

Tellers for the Ayes:

Sweeney, Walter

Dr. Liam Fox and Mr. Gary Streeter.

Sykes, John

NOES

Adams, Mrs Irene

Loyden, Eddie

Barnes, Harry

Lynne, Ms Liz

Beith, Rt Hon A J

McAllion, John

Campbell, Menzies (Fife NE)

McKelvey, William

Clarke, Eric (Midlothian)

Mackinlay, Andrew

Corbyn, Jeremy

Maclennan, Robert

Dixon, Don

Mahon, Alice

Donohoe, Brian H

Michael, Alun

Etherington, Bill

Michie, Bill (Sheffield Heeley)

Evans, John (St Helens N)

Miller, Andrew

Fabricant, Michael

Primarolo, Dawn

Foster, Don (Bath)

Sheerman, Barry

Fry, Sir Peter

Spellar, John

Hood, Jimmy

Timms, Stephen

Howarth, George (Knowsley North)

Tyler, Paul

Hoyle, Doug

Welsh, Andrew

Jones, Nigel (Cheltenham)

Wray, Jimmy

Kennedy, Charles (Ross, C&S)

Kirkwood, Archy

Tellers for the Noes:

Lewis, Terry

Mr. David Hanson and Mr. John Carlisle.

Lloyd, Tony (Stretford)

Question accordingly agreed to.
Madam Deputy Speaker: We now come to motion 7.
Mr. Sheerman: On a point of order, Madam Deputy Speaker. Labour Members understand that the same method was used for this order—
Mr. Andrew MacKay (Lord Commissioner to the Treasury): Stop playing to the Gallery.
Mr. Sheerman: I am not playing to the Gallery. This matter is far more important than the hon. Gentleman understands or will ever understand; it is about public and parliamentary scrutiny and honesty in British politics.
This order is similar to the previous order and enables the Daily Mail, Capital and GWR to take over and monopolise radio stations in the south of England for political purposes.
Madam Deputy Speaker: The hon. Gentleman has made his point. I can do nothing further from the Chair.
Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.),
That the draft Broadcasting (Independent Productions) (Amendment) Order 1995, which was laid before this House on 29th June, be approved.—[Mr. Kirkhope.]
The House divided: Ayes 113, Noes 31.

Division No. 209]

[11.20 pm

AYES

Ainsworth, Peter (East Surrey)

Kynoch, George (Kincardine)

Allason, Rupert (Torbay)

Lait, Mrs Jacqui

Amess, David

Lang, Rt Hon Ian

Arbuthnot, James

Legg, Barry

Baker, Nicholas (North Dorset)

Lidington, David

Beggs, Roy

Lord, Michael

Booth, Hartley

MacKay, Andrew

Boswell, Tim

Maclean, Rt Hon David

Bottomley, Peter (Eltham)

McLoughlin, Patrick

Browning, Mrs Angela

Martin, David (Portsmouth S)

Burns, Simon

Mawhinney, Rt Hon Dr Brian

Burt, Alistair

Merchant, Piers

Butcher, John

Mitchell, Andrew (Gedling)

Butler, Peter

Moss, Malcolm

Carlisle, John (Luton North)

Newton, Rt Hon Tony

Carttiss, Michael

Nicholls, Patrick

Chapman, Sir Sydney

Nicholson, Emma (Devon West)

Clappison, James

Page, Richard

Clifton-Brown, Geoffrey

Pattie, Rt Hon Sir Geoffrey

Congdon, David

Peacock, Mrs Elizabeth

Conway, Derek

Pickles, Eric

Coombs, Simon (Swindon)

Redwood, Rt Hon John

Cope, Rt Hon Sir John

Richards, Rod

Cran, James

Robertson, Raymond (Ab'd'n S)

Davies, Quentin (Stamford)

Ross, William (E Londonderry)

Day, Stephen

Rumbold, Rt Hon Dame Angela

Devlin, Tim

Sackville, Tom

Douglas-Hamilton, Lord James

Shaw, David (Dover)

Dover, Den

Shepherd, Colin (Hereford)

Duncan, Alan

Sims, Roger

Eggar, Rt Hon Tim

Spencer, Sir Derek

Emery, Rt Hon Sir Peter

Spink, Dr Robert

Evans, Roger (Monmouth)

Sporat, Iain

Fabricant, Michael

Stanley, Rt Hon Sir John

Fenner, Dame Peggy

Stephen, Michael

Forman, Nigel

Streeter, Gary

Forsyth, Rt Hon Michael (Stirling)

Sweeney, Walter

Forth, Eric

Sykes, John

Fox, Dr Liam (Woodspring)

Taylor, Ian (Esher)

Freeman, Rt Hon Roger

Taylor, John M (Solihull)

Gillan, Cheryl

Taylor, Sir Teddy (Southend, E)

Goodlad, Rt Hon Alastair

Thomason, Roy

Greenway, Harry (Ealing N)

Thompson, Sir Donald (C'er V)

Greenway, John (Ryedale)

Thompson, Patrick (Norwich N)

Griffiths, Peter (Portsmouth, N)

Thurnham, Peter

Harris, David

Townsend, Cyril D (Bexl'yh'th)

Heald, Oliver

Trend, Michael

Hendry, Charles

Waterson, Nigel

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

Wells, Bowen

Hughes, Robert G (Harrow W)

Whittingdale, John

Hunt, Rt Hon David (Wirral W)

Widdecombe, Ann

Jack, Michael

Willetts, David

Jones, Robert B (W Hertfdshr)

Wilshire, David

King, Rt Hon Tom

Wolfson, Mark

Kirkhope, Timothy

Young, Rt Hon Sir George

Knapman, Roger

Tellers for the Ayes:

Knight, Mis Angela (Erewash)

Mr. Timothy Wood and Mr. Michael Bates.

Knight, Rt Hon Greg (Derby N)

NOES

Adams, Mrs Irene

Hood, Jimmy

Barnes, Harry

Illsley, Eric

Beith, Rt Hon A J

Jones, Nigel (Cheltenham)

Campbell, Menzies (Fife NE)

Kennedy, Charles (Ross, C&S)

Clarke, Eric (Midlothian)

Kirkwood, Archy

Corbyn, Jeremy

Lewis, Terry

Dixon, Don

Loyden, Eddie

Donohoe, Brian H

Lynne, Ms Liz

Etherington, Bill

McAllion, John

Hanson, David

McKelvey, William

1571

Mackinlay, Andrew

Timms, Stephen

Mahon, Alice

Tyler, Paul

Marshall, Jim (Leicester, S)

Welsh, Andrew

Michie, Bill (Sheffield Heeley)

Wray, Jimmy

Simpson, Alan

Tellers for the Noes:

Skinner, Dennis

Mr. Don Foster and Mr. Barry Sheerman.

Spellar, John

Question accordingly agreed to.
Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.),

VALUE ADDED TAX
That the Value Added Tax (Input Tax) (Amendment) (No. 3) Order 1995 (S.I., 1995, No. 1666), dated 29th June 1995, a copy of which was laid before this House on 30th June, be approved.—[Mr. Wells.]
Question agreed to.
Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.),
That the Value Added Tax (Supply of Services) (Amendment) Order 1995 (S.I., 1995, No. 1668), dated 29th June 1995, a copy of which was laid before this House on 30th June, be approved.—[Mr. Wells.]
Question agreed to.

SCOTTISH AFFAIRS
Ordered,
That Mr. Raymond S. Robertson be discharged from the Scottish Affairs Committee and Mr. Bill Walker be added to the Committee.—[Mr. MacKay, on behalf of the Committee of Selection.]

ACCOMMODATION AND WORKS
Ordered,
That Sir David Lightbown be discharged from the Accommodation and Works Committee and Mr. Timothy Kirkhope be added to the Committee.—[Mr. MacKay, on behalf of the Committee of Selection.]

ADMINISTRATION
Ordered,
That Sir Sydney Chapman be discharged from the Administration Committee and Mr. Timothy Wood be added to the Committee.—[Mr. MacKay, on behalf of the Committee of Selection.]

Paris Club (Naples Terms)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wells.]
11.31 pm
Mr. Jeremy Corbyn: I am pleased to get this Adjournment debate on the subject of the Naples terms of membership of the Paris Club. That important subject concerns the debt of the poorest nations in the world to the richest, and their ability to get any write-off of that debt.
By way of background, I shall open by quoting from an excellent document that was recently produced, "The Oxfam Poverty Report", which sets in context the discussion that we are about to have:
"The richest fifth of the world's population, living in the industrially advanced countries, have average incomes thirty times higher than the poorest fifth.
The poorest 50 countries, mostly in Africa, have seen their incomes decline to the point where they now account for less than 2 per cent of global income. These countries are home to one-fifth of the world's people.
One in four of the world's people exists in a state of absolute want, with millions more living close to this perilous state.
Poverty-related diseases claim the lives of 35,000 children every day
Half of the world's population is systematically discriminated against from the cradle to the grave for the 'crime' of having a female chromosome.
Half-a-million women die each year from causes related to pregnancy and inadequate health care.
130 million children are denied the right to primary education …
Approximately 1.3 billion people have no clean water or sanitation."
Many of the countries where those people live are desperately in debt. They are forced to pay huge amounts of their export earnings straight back to the banking systems of western Europe and north America to meet that debt crisis. To understand that, we have to understand how the debt came about.
"The Oxfam Poverty Report", which puts the case so well, states:
"During the 1970s, international capital markets transferred around $20 billion a year to developing countries".
It also states that, after the oil price rise in the 1970s
"Northern governments responded…with monetarist policies which forced up interest rates‖Between 1983 and 1989, creditors received $242 billion more from these countries than they provided in new loans."
In that period, the poorest countries started to have to pay more and more of their income towards the banking systems of the north, because they were having to pay high interest rates on loans to finance industrial and agricultural development. They had seen the income from commodities fall as a result of the policies of the northern countries. By the end of 1992, the poor countries owed $269 billion in debts to the countries that make up the Paris Club. That in turn is only a small proportion of the total outstanding debts of poor countries, which, according to the World bank, reached $1,812 billion by the end of 1993—and that figure is still rising.
In order to qualify for entry to the Paris Club, any poor country that wants to have any of its debt written off has to accept the terms and conditions laid down on its economic development by the International Monetary

1573
Fund. The IMF, which is a heavily western-dominated organisation, imposes the strictest conditions imaginable on any poor country.
In effect, those countries are asked to surrender their economic sovereignty and adopt structure adjustment programmes based on the widely discredited policies of Thatcher and Reagan throughout the 1980s. Those are policies that no respected academic could possibly defend in any way. They resulted in the IMF investing $30 billion in the past 10 years on structure adjustment programmes.
Those programmes have not helped the situation in most countries. They have forced countries to open up markets to cheap goods coming in from abroad, thus causing local unemployment. They have forced them to cut public expenditure, thus hitting health, education and social development programmes—resulting in hunger, unemployment, and, in some cases, civil war.
Any country that wishes even to be considered for entry into the Paris Club terms for writing off its debt has to do what the IMF wants. For example, Zambia is currently asking for a write-off of part of its debt through the Paris Club, and is being told that it must speed up the privatisation of its copper mines. Those mines are the basis of the Zambian economy.
Nationalisation followed independence because the population saw copper as the basis of their prosperity in the future. Copper prices have fallen as a result of the behaviour of the west, and, as those copper prices have fallen, greater and greater debt has developed in Zambia, and the country has now been told that it must sell off those copper mines at knockdown prices to international copper cartels.
Nicaragua also wants to enter the Paris Club to have its debt written off, and has been told that it must privatise its telecommunications industry—again at knockdown prices—to one or other of the major players in the world telecommunications market. The court of star chamber even decides which countries are considered for debt write-off. Britain is a member of the forum, and negotiates the repayments of part of the debts.
In preparation for tonight's debate and in my discussions, I have been indebted to the work done by the Debt Crisis Network—an organisation representing a large number of non-governmental organisations, Church groups and voluntary organisations—which has tried to adopt a different approach to the problems of the world's debt.
The Debt Crisis Network shows that 66 per cent. of the debt owed to the UK is owed by poor countries in Africa. That is the only continent with which Britain has a trading surplus at present, but, through the IMF conditions imposed on one African country after another, we are insisting that the living standards of many people are currently falling in Africa.
Last year, I was able to visit Uganda—an African country which is attempting to develop its way out of debt and poverty, and which finds itself in an almost impossible bind. It has been told that it must privatise large sectors of industry and sell land to anyone who wants to buy it. As a result of those policies, it is having to charge for primary education for the first time since independence. Meanwhile, its health service cannot cope with the AIDS crisis that is sweeping across that part of Africa.
1574
Tonight I raise the question not just of the situation in Uganda and countries like it, but also of the reasons for the problems they face. Our exporters and those from Organisation of Economic Co-operation and Development countries have become very rich on the basis of the structural adjustment programmes in African countries. As President Nyerere, the former and very respected President of Tanzania, has suggested, African children are having to starve in order to pay those debts.
There is an equally sinister market in international arms—it could be called "gun-runners' gold". Export of arms credits rose by 86 per cent. between 1991–92 and 1993–94, while export credits for all civil businesses rose by just 14 per cent. For example, Kenya has received £151 million-worth of military credit since 1980, despite well-recorded human rights abuses that have often been referred to in the House, including the imprisonment of people who have stood against the regime and spoken up for justice in that country.
The west appears to be saying that the poorest African countries must cut public expenditure on social programmes and open up their markets, while at the same time they are offered enormous credits to buy arms from the west that may be used in civil wars, or used to control people who protest about the conditions in which they live.
Mr. Bill Michie: It is immoral.
Mr. Corbyn: As my hon. Friend says, the situation is absolutely immoral. Britain is not among the top four creditors in the Paris Club—France, Japan, the United States and Germany are larger—but Britain is obviously important. When the Prime Minister was Chancellor of the Exchequer, he took a lead in such matters by calling for a renegotiation of debt, and the current Chancellor did the same thing at the Naples summit.
However, my questions revolve around how the negotiations are being conducted at present, as well as their long-term aspects. It is claimed that there will be an enormous reduction in the debt burden of the poorest countries, but that debt burden has not been reduced very much so far.
Unless we address the question of the sale of commodities from the poorest countries in the world, no amount of debt write-off will solve the problem. If we wrote off all their debt tomorrow but did nothing about the existing unfair trade arrangements between the United States, Europe and Japan and the poorest countries in the world, the same debt crisis would emerge a few years later. We must take a two-handed approach to the problem.
For example, it is claimed that, under the Naples terms, Uganda's debt has been reduced by 67 per cent. However, it has been pointed out that Uganda's debt was reduced by only 20 per cent. in real terms—despite the claims in the press releases issued by the Overseas Development Administration.
This Friday, there will be a meeting of the World bank consultative group on Uganda and I understand that debt will be on the agenda of that gathering. I hope that, in her response, the Economic Secretary will assure us—despite all the advice that she appears to be receiving from her colleague, the Government Whip, at the moment—that there will be a much larger write-off of Ugandan debt, and a serious examination of the social consequences of

1575
the conditions that have been imposed upon Uganda, which is only one example of the way in which the poorest countries in the world are being treated.
I shall give another example. Nicaragua's total Paris Club debt is £1.6 billion, which is only about 14 per cent. of that country's total debt of £11.6 billion. We have all been led to believe that Nicaragua will receive more than 67 per cent. debt relief—indeed, there were hints that Nicaragua would receive Paris Club debt relief of up to 80 per cent. In fact, it was offered relief amounting to about 36 per cent. of that country's debt. Another con seems to have been perpetrated, this time on the people of Nicaragua.
I return to the example of Zambia, a country of only eight million people and a gross national product of £2.9 billion, which carries a debt burden of £6.79 billion. In other words, the total GNP is less than a third of the total debt that that country carries.
It is inconceivable that Zambia could ever be expected to pay off that debt. She has been paying the rich countries of the north more in debt repayments than she has been receiving in new loans. So she is getting deeper and deeper into debt just trying to service her existing debts. This is a country suffering from the AIDS epidemic, like much of central Africa, and from a substantial fall in the prices of basic commodities. The people who have to pay are those in the poorest countries.
Of the total outstanding debt, £1.7 billion is owed to the World bank and the IMF, who have preferred creditor status and must be repaid promptly. So Zambia receives between £900,000 and £1 billion in aid each year—$110 a head assistance—and has to repay most of it straight away to the World bank. So in effect, many of the aid programmes launched by this country, the EU and others, end up supporting structural adjustment programmes which exist to repay the debts incurred in the first place.
I want to put four questions to the Minister, leaving her with sufficient time to reply. First, how much of British overseas development aid is used by poor countries for debt repayment, whether to the rich countries of the Paris Club or to those powerful, unaccountable institutions, the World bank and the IMF? I also understand that the British Government are offering budget support and untied balance of payments support to poor countries as part of debt repayment. So the British Government appear to be using the aid budget to ensure that these debts are repaid.
During the recent debate on overseas aid, my hon. Friend the Member for Eccles (Miss Lestor) made an important speech, in which she noted that the debt outstanding to the World bank is £3.9 billion. Although that is crippling for the countries concerned, it is not actually large by World bank standards. That institution has set aside £3.3 billion in the current year for loan loss provision, and £14.5 billion for reserves.
My second question, therefore, is: why cannot these funds be used to extinguish the mountain of debt, instead of diverting British aid money to the coffers of the World bank and the IMF?
The next question concerns the IMF gold. The Chancellor has made much of his belief that there should be a sale of that gold to pay off many of these debts. What has happened to that proposal? When can we expect to see a sale of the gold held by the IMF?
1576
My third question is this. If, after the Naples terms have been negotiated with poor countries, there is only a small amount of Paris Club debt outstanding, have Ministers considered getting rid of the debt altogether? Unless we write it off, the situation will go from bad to worse.
My final question is: has the Treasury ever made use of the facility contained in the Paris Club agreement for conversion of debt into local currencies for local development projects? I understand that there is an option in the agreement allowing the conversion of up to £20 million of debt, to help extinguish it altogether.
We live in a world racked by ever-increasing poverty in the world's poorest countries. The rich west is telling the poorest countries, "The debt is your fault; the responsibility for it lies entirely with you; we will give you aid to assist development only provided you accept the principle of paying off all this debt."
The debt has been incurred not through any fault of the countries concerned, but because of a world trading system that is fundamentally stacked against the interests of the poorest people in the world. There is no flow of wealth from rich to poor in the latter part of the 20th century. There is a massive flow of wealth from the poorest to the richest. The same is happening in our society and in other industrialised countries. The same is happening, on a massive scale, in the poorest countries—and more specifically, from the poorest countries to the banking systems and trading operations of the western and northern countries of the planet.
We cannot go on witnessing the poverty, deprivation and misery in the world. As a start, we should write off large amounts, if not the total, of these debts. Secondly, we should decide not to impose an economic model that we know to be unfair and unjust on those countries. Instead, we should support a world trading system that gives farmers in Latin America and south Asia reasonable prices for the goods they produce, so that those countries can begin to develop their economic and social infrastructures as we would like them to. We cannot go on allowing the world to be divided in this way.
I hope that, in this short opportunity that we have today, the Minister will at least explain what is going on within the Paris Club, and what will be done to alleviate the suffering of the very poorest people in the poorest sub-Saharan African countries.
11.49 pm
The Economic Secretary to the Treasury (Mrs. Angela Knight): I start by thanking the hon. Member for Islington, North (Mr. Corbyn) for raising this very important issue. He spoke with some passion about a subject which undoubtedly concerns many people.
The hon. Gentleman will be aware that the Government have long been concerned about the problems faced by the poor countries of the world, which, as he outlined, shoulder enormous debt burdens. Struggling to pay debts that they cannot—and will never be able to—afford just frustrates sensible economic reform. It keeps countries in endless poverty, some of the human consequences the hon. Gentleman outlined when he mentioned the Oxfam report.
It is necessary to chart the course of where we have been and where we are going in helping with the problem. The Overseas Development Administration has written off more than £1.2 billion of old aid loans owed to it by

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the poorest countries. That has certainly been of some help. We have also taken a leading role—the leading role—internationally in seeking solutions to the problems of indebtedness of the very poor. The hon. Gentleman mentioned some of that tonight. It was Lord Lawson who first took steps in that direction. They have been developed in what have become known as the Trinidad and London terms, which have helped substantially in this area.
The London terms have helped 22 countries. They have benefited from debt reduction under those terms in the region of £2.75 billion. I am sure that the hon. Gentleman will agree that that is a substantial assistance that has already been given. But the hon. Gentleman is correct to say that that is not sufficient. We feel strongly that we must do more for the world's neediest countries, and must continue to press for further action.
We have long argued that creditors should write off part of their stock of debt, instead of simply making payments due over an agreed period, even if that period is extended. Unless the debt is reduced, they are simply left with a debt overhang, which does not help them in their attempts to restore their economies.
That brings me to the Naples terms, which were developed mainly as a result of lobbying by the UK of the G7 summit in Naples in 1994. An agreement has been reached to help poor countries' debts in various ways. That has been substantially used, and I hope will be used more.
The Government have pressed to make available a maximum reduction of 67 per cent. Sadly, that has not always been the case in other countries' agreements, but that is the direction in which we are moving.
If we look at what the implementation of the Naples terms has achieved, we find that 10 countries have received concessional reschedulings with debt reductions of that 67 per cent. Bolivia, Cambodia, Chad, Guinea Bissau, Haiti, Mauretania, Nicaragua, Senegal, Togo and Uganda have all been helped. Uganda has been the only country to receive a stock of debt reduction.
I understand the points made by the hon. Gentleman about Uganda, and I shall come to that later. It is true that, so far, whereas the Naples terms are being effective, the debt problems of severely indebted low-income countries remain. The reason for this needs to be addressed. The reductions offered to date have not always been as generous as we had hoped—or indeed, as we believe necessary.
Sometimes, other creditors have been reluctant to increase to that 67 per cent. the rate of relief on debts which have already been reduced, especially debt reduced by 50 per cent. under the London terms. Some creditors have focused on the short-term projections of financing gaps. We think this does not sufficiently allow for adverse shocks which could at some point increase these gaps, such as a fall in the price of a major export commodity. Again, that was a point made by the hon. Gentleman. We are doing what we can to urge other members of the Paris Club to see the matter as we see it, and to help to reduce debt as much as possible.
Uganda has been mentioned several times. Stock-of-debt operations have not been as frequent or as generous as we should have liked; so far, Uganda has received a stock-of-debt treatment, but not all its eligible debts were reduced by as much as possible. Debt
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reduction for Uganda amounted to $97 million, just over 20 per cent. of its total Paris Club debt. The main reason is that the Paris Club does not normally reschedule or reduce debt contracted after the date of a country's first Paris Club agreement, which allows export credit agencies to provide new finance with a greater certainty of repayment. Uganda has a high proportion of post-cut-off-date debt.
The United Kingdom argued that Uganda should be granted exceptional treatment on its post-cut-off-date debt, but we did not succeed in reaching an agreement with the other creditors, two of which were owed more than the United Kingdom.
In addition, debt that had previously been reduced by 50 per cent. under Uganda's London terms agreement was excluded from further reductions. Again, the United Kingdom argued in favour of increasing to 67 per cent. the reduction already applied to that debt, but again there was no consensus among other creditors. The United Kingdom is pressing hard to give Uganda the greatest possible debt relief, but, sadly, the other creditors do not feel that they can do the same.
There is also the question of multilateral debt in Uganda and other countries. The total debt reduction for Uganda has been quite good so far, but we shall continue to press for its improvement. We also think that Bolivia, Guyana and Nicaragua will be good candidates for stock-of-debt reduction, and we hope that other creditors will agree.
I appreciate that implementation of the Naples terms is taking place rather slowly, and that concerns us greatly. At the recent summit in Halifax, my right hon. Friend the Prime Minister persuaded his G7 colleagues of the need for decisive action. At his prompting, the G7 urged the
"full and constructive implementation of Naples terms".
That is a good move forward; we shall work to ensure that it is followed through, and that the potential of Naples is realised. We should then secure a win-win result: the poor countries would gain substantially—debtors have obvious gains from debt reduction—but creditors would also gain. By reducing their claims to realistic levels, creditors would increase the likelihood of being repaid the balance. We are making that point strongly to other members of the Paris Club.
The hon. Gentleman mentioned his concerns about IMF programmes and debt relief. Debt relief alone cannot solve the problems faced by the poorest countries; they must put their own economies right so that they can trade and, ultimately, stand on their own two feet. They need wise economic development.
The structural adjustment programmes mentioned by the hon. Gentleman have a strong part to play. I accept that such programmes will often require the adoption of difficult policies by the countries concerned, but the Government consider it important for lending by international financial institutions to be accompanied by appropriate conditions, because growth and the reduction of poverty ultimately depend on a country's economic situation and on its following sensible economic policies.
The IMF and the World bank help members to assess the impact that policy reforms are likely to have on different groups such as the poorest. Increasingly, they are encouraging Governments to treat social spending as a priority in their budgets, in recognition of the importance of investing in health and education for sustainable

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development. In some cases, they also help members—through technical assistance missions, for example—to integrate their social safety nets in their reform programmes. However, if they do not get their economies right, there will be no long-term future for them. They must have those economic reforms.
On another series of points that the hon. Gentleman made in relation to the multilateral debt problem, he mentioned the International Monetary Fund and the World bank. We have proposed that the IMF should convert a small part of its gold reserves into income-earning assets. The interest earned could then be used to provide a subsidy for large concessional loans, and, where appropriate, for loans on more concessional terms, to the IMF's poorest indebted members that have shown a sustained commitment to economic reform. That is a good way of moving forward with the IMF. It would improve countries' ability to cope with repayments, and the underlying assets would form part of the fund's reserves.
Where have we got with that? So far, some of our partners are to be convinced that our preferred solution of selling a small portion of the IMF's gold and using investment income in that manner is the way forward, but the G7 has agreed to explore the option of "pledging" IMF gold. That would release other IMF resources to finance larger and more affordable concessional lending. That is welcome progress, and again it is at least two steps in the right direction. We will continue to press for
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agreement to outright gold sales in the way that was outlined by my right hon. and learned Friend the Chancellor of the Exchequer.
We have been pressing the World bank to consider how the facilities of its concessional loan arm could be adapted to give greater assistance to severely indebted, low-income countries. Like the hon. Gentleman, we believe that more movements can be made in that direction, so that the World bank can give better help to some of the poorest countries by reconsidering the way in which it makes its loan. I can assure him, therefore, that we are continuing to do our utmost to enable the alleviation of the crippling effect of large debt burdens on the poorest countries of the world.
I thank the hon. Gentleman again for drawing the House's attention to this matter. As he knows, it is a fairly complex issue. He also knows that some of these countries' problems cannot be resolved overnight, by one step only, or just by considering debt alone. We must remember that debt relief cannot deal with all the problems faced by developing countries, but it can release resources that can be used for development processes. That is the direction in which we are looking. That is why we are pressing our fellow members of Paris Club to reconsider both the existing terms and further imaginative ways of helping these countries.
The hon. Gentleman briefly mentioned Nicaragua.
The motion having been made after Ten o'clock on Tuesday evening, and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at one minute past Twelve midnight.