Commons Sitting of 21 November 1996

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
  AGRICULTURE, FISHERIES AND FOOD

    Milk Quota
    Mr. Nigel Evans: To ask the Minister of Agriculture, Fisheries and Food what representations he has received concerning the level of the milk quota in the United Kingdom. [3719]
    The Minister of Agriculture, Fisheries and Food (Mr. Douglas Hogg): The Commission will present the Council with an options paper on the future of the dairy industry early next year. I shall continue to resist any arbitrary cuts in the United Kingdom's allocation.
    Mr. Evans: I thank my right hon. and learned Friend for that answer and for visiting my constituency recently and talking directly to several farmers who have been hit by the bovine spongiform encephalopathy crisis. He heard the concerns of farmers in my constituency, especially Mr. Paul Kenny who has a farm in Slaidburn and who spoke about the milk quota problem. Our milk quota is not sufficient to meet the amount that we should produce for home consumption. That problem has been exacerbated by the BSE crisis because many cattle that would not normally be in the fields are being kept out and producing milk. I fear that we will hit our quota sooner rather than later, but may face a shortage of milk thanks to the quota problem. Can he reassure farmers in Ribble Valley that he is working hard to ensure that we get an increased milk quota and that he is doing all that he can to ameliorate the current crisis?
    Mr. Hogg: I enjoyed my visit to my hon. Friend's constituency and I remember Mr. Kenny and the point that he made. In the long term, we would like the system of quotas to be done away with. In the short term, the position is more encouraging than some people have imagined in the sense that milk production is now 0.5 per cent. below the quota profile. That is an encouraging state of affairs.
    Mr. Stevenson: Is not the reality that the Government failed the country in 1984 when they agreed to milk quotas way below our requirements? Is not the solution to that problem the abolition of milk quotas? Has the Minister discussed with the new members of the European Community—Sweden, Finland and Austria—their views of the future of milk quotas?
    Mr. Hogg: There are several concepts of what we should have when the present system of milk quotas
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    expires in 2000. The United Kingdom would much prefer to do away with quotas and price support of the present sort, although there would have to be a fairly extended transitional period. We must await the options paper, which we will get early next year. It is extraordinary that a Labour Member should make a point about a bad baseline, however, because we got less than we would have liked as a direct consequence of the agri-monetary policy pursued by the Labour party in the 1970s, which prevented us from having a sufficient output to justify a larger basic quota.
    Mr. Garnier: May I take it that my right hon. and learned Friend is aware of the dilemma faced by dairy farmers in my constituency and elsewhere? With the uncertainty over the accelerated cull, they do not know whether to dry off their cows or continue to milk them throughout the winter and thus go over quota. That causes difficulties with forward planning. Will he take that into account in his discussions with his European counterparts?
    Mr. Hogg: My hon. and learned Friend makes a sound point. It is highly desirable that dairy producers in his constituency should know the situation as exactly, and as soon, as possible.
    Mrs. Golding: Is the Minister aware that milk quotas, with his deregulation policies, have pushed up prices, destroyed jobs and caused problems with doorstep delivery? Will he make more effort to encourage children to drink milk rather than make policies that store up health problems for later life, such as osteoporosis?
    Mr. Hogg: I do not want to be unkind to the hon. Lady, but the first part of her question was total nonsense. The process of deregulation has actually been a great success.

    BSE (Pet Food)
    Mr. Heppell: To ask the Minister of Agriculture, Fisheries and Food what measures he has taken to ensure that BSE-infected cattle are not used by pet food manufacturers. [3720]
    Mr. Douglas Hogg: Since 1988, all cattle suspected of having BSE must, by law, be notified to the Ministry; those affected are then slaughtered and the carcase incinerated.
    Mr. Heppell: Does the Minister have any contingency plans if any cross-species infection is identified, so that we do not have the same sort of inept muddle that we have had with mad cow disease if we identify mad dog disease?
    Mr. Hogg: That is not a well-directed question.
    Mr. Stewart: Does my right hon. and learned Friend agree that the industry has always been in the lead on safety matters? For example, the member companies of the Pet Food Manufacturers Association had a voluntary ban on the use of specified bovine offal six months before the House passed legislation on human use. Will he reassure the House that he will keep in the closest touch

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    with the industry at the highest level as well as at official level, so that the industry is fully apprised of European developments?
    Mr. Hogg: Yes, indeed; but the controls that we have in abattoirs, rendering plants and knackeries are the toughest in Europe and address all the points about which my hon. Friend is concerned and which underpin his question.
    Mr. Tyler: In connection with all the measures for the eradication of BSE to which the Minister has referred, does he accept that there is continuing concern about the mismanagement of the slaughter programme? Has he read the article in a recent edition of Professional Engineering, which refers to the fact that, although the welcome increase in the slaughter programme to around 55,000 a week is dramatic, only about 1,000 carcases are being safely disposed of? The report states—I hope that he will confirm this—that the Ministry is still "frantically searching" for a safe solution to that problem. Does the right hon. and learned Gentleman accept that there is still widespread concern at the Government's failure to take a grip on the cull?
    Mr. Hogg: I really do not think that that criticism is especially well founded. On the over-30-month scheme, we now have the slaughter rate up to around 60,000— the total was slightly more than 60,000 last week—and, given that rate, I am confident that we can clear the backlog by the end of the year, as we said some time ago.
    Mr. Robert Hughes: Which year?
    Mr. Hogg: At the end of this year. That is an absurd intervention. The hon. Gentleman is simply causing confusion.

    Set-aside (Bird Life)
    Mr. Spring: To ask the Minister of Agriculture, Fisheries and Food what steps he has taken to protect bird life on set-aside land. [3722]
    The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Tony Baldry): The management rules for set-aside are designed to protect wildlife and the environment. Further changes are being introduced in 1997 to restrict the cutting, and prohibit the cultivation, of set-aside during the main nesting season to protect birds such as lapwing and skylark.
    Mr. Spring: I welcome the new changes in the management of set-aside as it affects bird life. Does my hon. Friend agree that the issue of bird life is one of considerable interest to those of us who are lucky enough to live in rural areas? Is he aware, for example, that the rare stone curlew comes to nest at Elveden in my constituency, and that the Royal Society for the Protection of Birds, with lottery funding, is recreating the natural habitat of the fens at Lakenheath as it existed prior to the draining of the fens several hundred years ago?
    Mr. Baldry: The Government and landowners do an enormous amount, both on set-aside and non-set-aside land, to promote bird life. We have environmentally sensitive areas and the countryside stewardship scheme,
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    and landowners co-operate with the farming and wildlife advisory group. Those are excellent initiatives. Indeed, encouraged by the RSPB, they are all worthwhile initiatives to promote bird life.
    Mr. Gordon Prentice: The Minister mentioned the agri-environment regulations, but can I direct his attention to the organic aid scheme? Birds thrive in an organic environment and, although I applaud the Government's action on the organic aid scheme, why is no help given to farmers who already farm organically? Is not that a change that should be made?
    Mr. Baldry: Farmers who farm organically will find increasingly that they will be rewarded in the marketplace. They should not require reward from the Government. If they believe that there is a demand for organic farming, that reward will come to them in the marketplace subsequently.

    Intervention Buying
    Mr. Trickett: To ask the Minister of Agriculture, Fisheries and Food what estimate he has made of expenditure on the intervention buying of agricultural commodities in the United Kingdom in 1996–97. [3723]
    Mr. Douglas Hogg: Estimated expenditure on the intervention buying of agricultural commodities in the United Kingdom in 1996–97 is £320 million.
    Mr. Trickett: Can the Minister confirm that 413,000 tonnes of beef now stands in a mountain in intervention? Does he accept that that is a clear measure of the Government's failure to deal with the BSE crisis adequately? Does he accept that the only way to restore consumer confidence is to establish an absolutely independent, customer-oriented food standards agency, which might help to restore consumer confidence?
    Mr. Hogg: In the financial year 1996–97, purchases of beef are expected to amount to about 100,000 tonnes. We have had to intervene in the market as a consequence of the collapse in consumer confidence that has occurred as a result of what is commonly referred to as the BSE crisis. It is a consequence of the lack of market confidence.
    Mr. Salmond: Intervention buying is an important way to stabilise agricultural markets, so what action are the Government taking to stabilise the European market in farmed salmon? Is the Chancellor of the Exchequer blocking progress to stabilise that market? Could it be that an industry that contributes 6,000 jobs and £250 million to the Scottish economy is not important enough to deserve effective action from the Government?
    Mr. Hogg: That is a question of such complexity that I propose to respond to the hon. Gentleman in writing.
    Dr. Strang: Does the Minister agree that his vacillation over the Florence agreement is undermining efforts to restore beef markets throughout Europe? The right hon. and learned Gentleman makes great play of the fact that the UK has met four of the five Florence obligations, but does he realise that three of those four conditions relate to human and animal health and should have been met

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    years ago, and that the chaos in the Government's over-30-month slaughter scheme led to the fourth condition—that the Government get their act together? Regarding the fifth condition, for which, apparently, the Minister has not yet presented proposals, will he tell the House today whether he will implement a selective slaughter programme—yes or no?
    Mr. Hogg: The premise that underpins the hon. Gentleman's question is the lack of confidence in European markets. There is indeed a lack of confidence in European markets. There has been a collapse in the sale price of beef in European markets, and there is much anxiety among the farming community. That has certainly had an effect on members of the European Union, making them less willing or able—two ways of describing the same thing—than they previously were to proceed rapidly and substantially to lift the ban.
    An accelerated cull has absolutely nothing to do with human safety and is not justified on those terms.

    Set-aside (Charity Events)
    Sir Irvine Patnick: To ask the Minister of Agriculture, Fisheries and Food what progress he has made in respect of changing the EU rules which prohibit charity events on set-aside land. [3724]
    Mr. Baldry: I am pleased to be able to say that my right hon. and learned Friend the Minister secured an undertaking from the European Commission in July that the use of set-aside land for charitable events would be permitted in future. The Government welcome that as a sensible change to the set-aside rules which meets public concerns.
    Sir Irvine Patnick: Is my hon. Friend aware that the prohibition is one more reason why the public in the United Kingdom are beginning to dislike the European Union? This is nonsenseland. Can my hon. Friend assure me that he will progress the revision of the common agricultural policy as soon as possible?
    Mr. Baldry: My hon. Friend is absolutely right to say that the type of approach that the Commission took at the end of 1995, when it wrote to us ruling out the use of set-aside land for charitable and local fund-raising events, brings the Commission into disrepute; that is why we sought to persuade the Commission to relax the rules for such events. We were successful, and whenever necessary we seek to ensure that the Community proceeds on the basis of commonsense policies.
    Mr. Morley: I have been listening carefully to the Minister's reply, but the House has not yet heard the whole story. As I understand it from the Commission, the Government did indeed approach the Commission for clarification, but concentrated in their interpretation on the issue of the lucrative use of set-aside land—including for charitable purposes. The Commission maintains that the Government's own interpretation is what stopped the charitable use of set-aside land for at least a year before the issue was clarified. The rules most certainly have not been changed—the Minister did not say that they have—but they have been clarified.
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    The problem is that the Ministry often interprets European Union rules to suit itself—and sometimes wrongly—and then blames the EU, when the blame should rest with MAFF itself.
    Mr. Baldry: That is complete hogwash. The simple facts are as follows: at the end of 1995, the Commission wrote to us ruling out the use of set-aside land for charitable and local fund-raising events, and made it perfectly clear that it was tightening up on the rules. The initiative came from the Commission, not from us—
    Mr. Morley: Not on the interpretation of lucrative use.
    Mr. Baldry: I know that it is difficult for anyone in the Labour party to understand the idea of "lucrative". When charities organise fund-raising events, they hope to raise money from them. Such activities are, therefore, lucrative. The Commission made it very clear that it was tightening up the rules. We had to take the initiative to get the Commission to change those rules back, and that is what we have done.

    Meat Retailing Sector
    Mr. Sheerman: To ask the Minister of Agriculture, Fisheries and Food if he will establish an independent inquiry into the pricing practices of the meat retailing sector. [3725]
    The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Angela Browning): We do not see the need to hold an inquiry into the meat retailing sector at the moment.
    Mr. Sheerman: Is the Minister aware that beef farmers in this country, who get no help in the present difficult circumstances—
    Mrs. Browning indicated dissent.
    Mr. Sheerman: Most beef farmers raise their beef and take their cattle to market, where they get 20 per cent. less for them than they did before March. That has made it not worth feeding the animals over a long period. They want to know—it has not yet been explained to them properly—why a 20 per cent. cut in the price they get at market works through to a reduction of only 1 per cent. in the price to the consumer and housewife—and butchers and supermarkets. Those facts have been checked with the Minister and with the House of Commons Library. Farmers and consumers are not satisfied that they are not being robbed by someone along the food chain.
    Mrs. Browning: It is quite fallacious to say that the Ministry has not supported the beef farmer. We have done so with two tranches of money—£29 million already distributed at more than £60 per head of cattle that have gone into the food chain; and another tranche of £29 million due to be paid shortly to support farmers—
    Mr. Sheerman indicated dissent.
    Mrs. Browning: It is no good the hon. Gentleman shaking his head: it is a matter of record. The hon. Gentleman may not like the truth, but here it is. I do not know how often he does his shopping: I hope that he, like me, goes to the supermarket and the butcher every week. If he does, he cannot fail to have noticed that, since 20 March—[HON. MEMBERS: "Get on with it."] I am getting on with it. It is pathetic that when this important market and the issue of consumer confidence in this product are discussed in the House, Opposition boys and girls are so quick to run down this vital industry. [Interruption.] The supermarkets have supported British beef; they said from day one that they would sell it, and they have. I offer the hon. Gentleman one example—[Interruption.]
    Madam Speaker: Order. The hon. Lady has a right to answer without being barracked.
    Mrs. Browning: Let me give the hon. Gentleman one fact—there are many more. In November 1995, Tesco was selling British mince at 139p per kilogram. This week, mince is on sale in Tesco, as it is in many other supermarkets, at 94p per kilogram. Such a display of confidence will get people back to British meat. That is what the supermarkets are doing.
    Sir Donald Thompson: That was telling them —I thank my hon. Friend. I do not believe that she has had any inquiry from butchers for financial support, however deserving they may be. Does she agree that the high street butcher can tell the customer exactly where the meat comes from, how to cook it and what price to pay for it?
    Mrs. Browning: Indeed. My hon. Friend mentions an important sector of the meat retailing trade. The independent butchery trade is responsible for the retailing of 40 per cent. of British meat. We have been supportive of, for example, campaigns run by the Meat and Livestock Commission, especially to promote important sales of forequarter cuts such as braising beef and mince. I was pleased to launch the 8,000th independent butcher selling MLC-accredited mince. It has been an extremely successful campaign and it has done a great deal to restore British confidence.
    Mr. Davidson: Does the Minister accept that there is a relationship between the amount of beef consumed and the price? Does she agree that one way to clear the stocks of intervention beef quickly is to give it away to charitable organisations so that they can distribute it to the needy in areas such as mine? Will she extend that scheme beyond beef to butter and, if she wishes to be popular, to wine and cheese?
    Mrs. Browning: I can inform the House that 64,000 tonnes of intervention beef has been stewed and canned and is being distributed as the hon. Gentleman suggests.

    EC Fruit and Vegetable Regime
    Mr. Lidington: To ask the Minister of Agriculture, Fisheries and Food if he will make a statement about the reform of the EC fruit and vegetable regime. [3726]
    The Minister for Rural Affairs (Mr. Tim Boswell): Now that the Council regulation has been agreed, we are working with our growers to ensure that the detailed implementing rules reflect their needs.
    Mr. Lidington: I congratulate my hon. Friend on the reforms that he and his European colleagues have secured to the fruit and vegetable regime. Will he confirm that only through a thorough overhaul of the common agricultural policy will it be possible to eliminate the waste and corruption that is still endemic in the present system of subsidies? Will he also strive for the repatriation of some elements of agricultural policy to Britain so that, for example, the minimum size of fruit that can be sold in our shops can once again be a matter for the consumer, not for politicians or bureaucrats?
    Mr. Boswell: I agree with much of what my hon. Friend says. Credit for negotiating the fruit and vegetable regime should go to our right hon. and learned Friend. My hon. Friend is right to say that our view of the common agricultural policy does not stop at the limited review and reform of the fruit and vegetable regime. We want a much more market-related and competitive CAP. There have been regulations on fruit sizes in the United Kingdom for many years—predating the CAP. No significant changes are being enacted under the CAP or the fruit and vegetable regime, save in respect of one or two of the minimum sizes of traditionally larger apples. I have read some press comment, not all of which is well conceived, but my hon. Friend can rest assured that the Cox's Orange Pippin, and the small Cox's Orange Pippin, are safe in our hands.
    Mr. Home Robertson: Why are the Government going to such lengths to turn Europe into a continent of vegetarians? Since the Prime Minister told the House four months ago that the beef export market could be reopened if the British Government fulfilled the Florence criteria and carried out the selective cull of cattle at risk from BSE, why is the Ministry refusing even to undertake preliminary work to identify the cattle that would need to be culled in order to fulfil those criteria?
    Mr. Boswell: My right hon. and learned Friend has already responded fully and sufficiently to the issue of the selective cull. The initiative for depriving continental colleagues of the opportunity to eat British beef came at their behest, not ours. We regard the ban on selling excellent British beef in Europe as misconceived and legally inappropriate. We shall press at all times for its removal.
    Mr. Peter Atkinson: Can my hon. Friend inform the House whether any progress has been made in Brussels on establishing a potato regime?
    Mr. Boswell: We support the introduction of a modest potato regime along the lines of the fruit and vegetable regime, but with no recourse to intervention. It should protect and expand the market, but not involve waste or expense. We adhere fairly closely to the Commission position and we are pleased that several member states came into line with that position at the recent Council meeting. However, we have by no means secured the consensus that will lead to a common regime—although that remains a highly desirable objective.

    Intensive Farming (Disincentives)
    Mr. Flynn: To ask the Minister of Agriculture, Fisheries and Food what plans he has to introduce disincentives in respect of intensive farming. [3727]
    Mr. Boswell: The Department's codes of good agricultural practice provide guidance to all farmers on protecting the environment. Environmental incentives are available through our agri-environment schemes, which in many cases promote extensive farming. In addition, extensification premiums are paid under the suckler cow and beef special premium schemes.
    Mr. Flynn: Does the Minister recall that one of the principal mistakes of over-intensive agriculture emerged in the realisation in 1988 that ruminant protein was almost certainly the main cause of BSE and that it was banned from cattle food? Is it not unbelievable that the Government confessed only recently that the date on which we can be certain that BSE contaminants were no longer in animal feed was 1 August—not 1988 but 1996? Will the Government apologise to the nation for their criminal delay, which has escalated the BSE tragedy?
    Mr. Boswell: I sometimes think that the hon. Gentleman should award himself the prize for the worst link between a supplementary and a main question. His original question referred to the extensification of agricultural production. If the hon. Gentleman looks at virtually any textbook from 100 years ago on what ruminants may be fed, he will find meat meal mentioned.
    The hon. Gentleman knows that the issues have been rehearsed very well and that the Government have consistently followed the scientific advice that they received in implementing the ban on ruminant protein. He knows also that the ban and the measures taken in 1989 and 1990 have resulted in a progressive elimination of BSE in this country. An independent study has shown that the epidemic will end by about 2001. Recent measures reinforce, rather than lessen, the impact of the original measures that were taken appropriately in light of knowledge at that time.
    Mrs. Ann Winterton: Does my hon. Friend agree that the best incentive for our farming community to extensify production is for the United Kingdom consumer to pay a fair price for a good product?
    Mr. Boswell: I could not agree more with my hon. Friend. British beef is excellent, it is well produced and it deserves to be consumed.

    BSE (Isle of Wight)
    Mr. Barry Field: To ask the Minister of Agriculture, Fisheries and Food if he will ensure that cattle from the Isle of Wight are allocated a regular slot in an abattoir under the BSE slaughter programme. [3728]
    Mr. Baldry: I expect abattoirs at Bath, Bridport and Langport, which have regularly taken over-30-month cattle from the Isle of Wight, to continue to do so.
    Mr. Field: I thank my hon. Friend and his staff for the help that they have given the island farmers, but there is
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    a problem with very short notice—often late on a Friday—of an allocated slot at 8 am on a Monday. Owing to problems with ferry bookings, that creates difficulties—of which I know my hon. Friend is aware. We need a regular weekly slot for about 25 head of cattle; we could then deal with the balance in the usual manner. I hope that my hon. Friend will use his considerable ministerial influence to assist me in obtaining that concession from the Intervention Board.
    Mr. Baldry: I note my hon. Friend's specific point about the logistics of transporting cattle from the Isle of Wight. When we introduced the registration scheme, 438 cattle were registered as part of the backlog on the island. Of those, at least 170 have been slaughtered. I expect the remaining 260 or so to be slaughtered in the next two or three weeks. It is therefore a short-term problem and, when the OTMS continues, I do not expect any difficulties in ensuring that island farmers get a weekly slot as and when they need it.

    Quarantine Regulations
    Mr. Tony Banks: To ask the Minister of Agriculture, Fisheries and Food what plans he has to vary current quarantine regulations. [3729]
    Mrs. Browning: We are looking again at rabies control policy, taking account of the most recent information. If new moves are decided on, an announcement will be made. I stress that our paramount need is to protect the health of people and animals in this country.
    Mr. Banks: Is the Minister aware that the great weight of public opinion and, increasingly, scientific opinion, is moving against the absurd rabies and quarantine regulations in this country? There has been no recorded outbreak of rabies coming from a pet animal anywhere in Europe, ever, yet thousands of animals and pets die in quarantine each year because of all the diseases that they pick up while there from other animals, and the appalling conditions that prevail in many quarantine kennels. Is it true, as was reported in The Sunday Telegraph, that the Prime Minister has asked the Minister to produce a report on the regulations by the end of this month? Is that true, and will he have that report?
    Mrs. Browning: I certainly will not comment on reports in the newspapers that are a private matter between the Prime Minister and a Minister. I have made it clear to the House—I shall repeat it for the hon. Gentleman if he did not hear me the first time—that we are looking again at rabies control policy, taking account of the most recent information, which will, of course, include recent scientific information.
    Sir Jerry Wiggin: My hon. Friend will be aware that her Department has spent considerable sums over the past few years—or rather more than the past few years—in promoting a fear of rabies in the British population. Will she now consider spending a similar sum in bringing up to date the scientific advice, on not only the veterinary side but the health side, so that the British public can view the matter in a rather different light from mediaeval witchcraft?
    Mrs. Browning: My hon. Friend was Chairman of the Agriculture Select Committee, which produced a very

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    useful document, and we promised to keep the policy under review. I assure him, as I have the hon. Member for Newham, North-West (Mr. Banks), that all the latest scientific evidence on this subject—some of it is quite recent—will be taken into account as part of the review.
    Mr. Pickthall: Has the Minister read the report by the Agriculture Select Committee? If so, she will have noticed that the previous Minister of Agriculture, Fisheries and Food ruled out any change in quarantine regulations before the Select Committee had made its recommendations and reached a conclusion. Is it not time that the Ministry revisited that report? Will she bear it in mind that many of us on that Committee approached the study convinced that quarantine had to remain, but we were convinced of the opposite after we had examined all the evidence?
    Mrs. Browning: I am sure that the hon. Gentleman will remember that the Select Committee report generated quite a long debate on the Floor of the House in which he and I took part. I can assure him that we shall study the report as part of the review.
    Mr. Key: I warmly welcome the cautious but determined way in which the Government are reconsidering this issue. Does my hon. Friend agree that nobody—including me—who advocates change to our quarantine rules is advocating relaxing or slackening the rules? It is quite the reverse. We wish to see a tightening of the regulations, using the latest scientific and technological equipment to eradicate the need for smuggling, which is probably the greatest threat.
    Mrs. Browning: I am familiar with my hon. Friend's views. He has made them available to the Ministry on more than one occasion. We hear quite a few reports of smuggling, but the fact that a few people break a rule is not necessarily a reason to abolish that rule.
    Mrs. Dunwoody: Will the Minister bear it in mind that anyone who is concerned about human beings does not want a single person in the United Kingdom to die from rabies? The decisions that she takes will have an immediate and important effect, and I know that she will bear that in mind.
    Mrs. Browning: I am conscious of the very important point that the hon. Lady mentioned. Indeed, I would go further and say that any proposal that is to be seriously considered must also take into account the fact that, in countries on mainland Europe that have been free of rabies for many years, people bitten or scratched by an animal still must have preventive treatment. For example, 10,000 people in France had to undergo injections as a result of being scratched or bitten by a dog. In the UK, that is not a treatment that people have to endure.

    Fishing Industry
    Mr. Waterson: To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on his policy in respect of (a) compulsory decommissioning of fishing vessels and (b) quota hopping. [3730]
    Mr. Baldry: The Government have made it clear that they are determined to find a lasting solution to the problem of quota hoppers. We have tabled a proposal in the intergovernmental conference. We have made it clear that we will not accept any compulsory decommissioning objectives for United Kingdom fishermen while the quota hopper issue remains unresolved.
    Mr. Waterson: When I am next in the fishermen's club in Eastbourne, may I give my constituents the Minister's assurance that we will not accept up to a further 40 per cent. reduction in our fishing fleet, that we will not allow 20 per cent. of our fleet to remain in foreign ownership and that, for the British Government, nothing less than a treaty change will do?
    Mr. Baldry: Yes. Fishing is one of the only policy areas in the European Union that applies national quotas. It is a perfectly straightforward proposition that UK fish should be for UK fishermen.
    Mr. Trimble: I welcome the Minister's robust stand on quota hopping. Will he be just as robust on the unrealistic proposals for reductions in quotas that are coming from Brussels, which fly in the face of reality—particularly in the Irish sea? Brussels is trying to impose on fishermen regulations on the size of catch that do not take account of the species that inhabit those waters.
    Mr. Baldry: As the hon. Gentleman knows, the UK fishing industry, of which the Northern Ireland industry is an important part, made sensible proposals on technical conservation, which were all but ignored by the Commission. The Commission produced some complex and disadvantageous proposals, which, I am glad to say, we were able to kick into touch and will not be debated at tomorrow's Fisheries Council meeting. The Commission has been told to go back and get its tackle in order before coming forward with further proposals on technical conservation.
    Mr. Harris: Does my hon. Friend accept that developments on quota hopping and boats in foreign ownership become more bizarre each day? Has he seen today's Daily Mail, which contains an account of a sea rescue involving a Nimrod and two helicopters from my constituency that lifted a Spanish fisherman to Cornwall? It seems that the man was not ill after all. That is apparently only one of a number of such incidents. Has my hon. Friend got to the bottom of the mystery of the Spanish fishermen who turn up in benefit offices in Cornwall and register for national insurance numbers? What on earth is going on?
    Mr. Baldry: There can be no justification for large numbers of Spanish-skippered, Spanish-owned, Spanish-crewed vessels in south-western waters masquerading as UK vessels and seeking to catch fish from our quota. That is crazy and it must come to an end. We are determined that it should end as speedily as possible. The only reasonable inference I can draw from the fact that Spaniards land from quota hoppers and take taxis to local unemployment benefit offices in my hon. Friend's constituency is that in some bizarre way they are

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    seeking to justify an economic link. It is the craziest of all economic links if the only link that they can justify is that of claiming unemployment benefit.
    Dr. Godman: Does the Minister agree that vessels engaged in industrial fishing should be compulsorily decommissioned as soon as possible? He cannot deny that industrial fishing vessels have inflicted damage on commercially valuable stocks. When will the Council of Ministers ban industrial fishing?
    Mr. Baldry: Quite apart from my concern that we should tackle the problem of quota hopping, I am worried about the Commission's proposals on decommissioning, because they make hardly any reference to industrial fishing. It is daft that proposals that are intended to deal with conservation measures do not deal with industrial fishing. If we are to reduce fish mortality, we must tackle the effects of industrial fishing, particularly on some of our stocks in the North sea.
    Mr. Legg: To ask the Minister of Agriculture, Fisheries and Food how much money has been spent on decommissioning fishing vessels over the last three years. [3731]
    Mr. Baldry: This year's scheme is still in progress, but it should add about £12 million to the £26.2 million spent in the previous three years.
    Mr. Legg: Does my hon. Friend agree that this seems to be a cynical attempt to scupper our fishing fleet`? Does he agree that the problem seems to be not too many boats chasing too few fish, but too many Spanish boats chasing our fish? May I urge him to take a leaf out of Sir Francis Drake's book when it comes to dealing with armadas, and to press the issue at the intergovernmental conference until it is settled to the satisfaction of our fishermen?
    Mr. Baldry: I could not have made it plainer to the House that we are not prepared—the United Kingdom fishing industry is not prepared, and I do not think that any sensible person is prepared—to accept any compulsory further reductions in the UK fishing fleet until the whole issue of quota hoppers is resolved. Some 20 per cent. of our beam trawler fleet is now, in effect, foreign owned. The situation is crazy; it must be stopped, and we are determined that it will be.

  PRIME MINISTER

    Engagements
    Mrs. Peacock: To ask the Prime Minister if he will list his official engagements for Thursday 21 November. [3749]
    The Prime Minister(Mr. John Major): This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mrs. Peacock: Is my right hon. Friend aware of the report in today's issue of The Independent which states
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    that, yesterday, three members of the IRA's Army council were brought to the House of Commons by Labour Members? Is he aware that one of them was allowed to wander around for 20 minutes unaccompanied? Will he please instigate an immediate investigation?
    The Prime Minister: I understand that my right hon. Friend the Leader of the House has written to Madam Speaker about the incident. My understanding is that those representatives of Sinn Fein were invited to the House to meet a number of hon. Members, that no prior notification about the meeting was given and that the representatives were, from time to time, left unattended. I do not know what the outcome of the inquiry will be, but I think that it is stunning naivety on the part of any hon. Member not to realise the connection between Sinn Fein and the IRA.
    Mr. Blair: In view of the extraordinary importance of the European reports on a single currency—matters that may be decided by Ministers in December—does the Prime Minister not agree, on reflection, that it would be monstrous to deny hon. Members a chance to debate the reports in full on the Floor of the House, especially as that was the unanimous view of the Select Committee on European Legislation? Does he not agree that a general debate on European matters prior to the Dublin summit is no adequate substitute?
    The Prime Minister: I do not think that the right hon. Gentleman is right about the last point. There was detailed scrutiny in the Standing Committee, and in due course we shall table the appropriate motion. No final decisions are made at the meeting of Finance Ministers; that will be a matter, if appropriate, for the European summit in Dublin. As the right hon. Gentleman well knows, and as my right hon. Friend the Lord President has made clear, the House invariably has an opportunity to have a full debate before such a summit, and there will be a full debate—in which this matter will be relevant—before the Dublin European summit.
    Mr. Blair: Those explanations were specifically and unanimously rejected by the Select Committee. May I point out that the Chancellor of the Exchequer has actually written that decisions may be made over the next few weeks? In any event, surely we would be failing in our duty if we did not debate these matters properly in the House. Would the Prime Minister not be a good deal more honest if he simply stood at the Dispatch Box and said that he was afraid to let the Chancellor of the Exchequer stand and debate the issues? That speaks volumes about the disarray of his Government.
    The Prime Minister: Anyone who thinks that my right hon. and learned Friend the Chancellor is not willing, able and confident to debate with the right hon. Gentleman, or anyone, on any subject at any time simply does not know my right hon. and learned Friend. I repeat the point that I made to the right hon. Gentleman a moment ago: no decisions will be made at the Economic and Finance Council meeting. The matter will come forward to the Heads of Government meeting in Dublin. If decisions are to be taken, they will be taken there, and not even that is certain. In any event, this issue and other issues will be the subject of a full debate before Dublin.
    Mr. Blair: What the right hon. Gentleman is saying is in contradiction to the letter from the Chancellor to the

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    Chairman of the Select Committee on European Legislation, but if the Chancellor is indeed happy and prepared to debate these issues, let us have the debate. There can be no possible reason for not debating these questions. How can the Prime Minister be trusted with Britain's future in Europe when the internal party management of the Conservative party—because that is what it is about—always takes precedence over the interests of Britain or even, as here, British democracy? If he is not afraid of the debate, let him call one.
    The Prime Minister: This is the right hon. Gentleman who once wanted to leave the European Union. This is the right hon. Gentleman who said, "I will never be isolated in Europe." If he is never prepared to be isolated in Europe, he could not possibly defend the British interest in Europe. We are prepared to be isolated where necessary. We do defend the British interest. It will be debated in the House and I will defend the British interest at Dublin.
    Mr. Heathcoat-Amory: Yesterday in European Standing Committee B, which I attended, there was no proper scrutiny of these important regulations, which affect the powers of the House. We were discussing the so-called stability pact, whereby important decisions about the British economy would be transferred from Britain to Frankfurt and Brussels. As my right hon. Friend himself has not made up his mind about whether Britain should join the single European currency, why should the House agree now to these regulations?
    The Prime Minister: These regulations, were they to be approved in due course, would apply only to those countries that enter into a single currency—[HON. MEMBERS: "No."] Yes. It is no good saying, " No." That is the fact of the matter. Whether Britain enters a single currency will certainly be determined in the House and it would then be determined in a full referendum of this country.
    Mr. Ashdown: The Prime Minister is simply running away on this issue and the whole country knows it.
    The Audit Commission said today that we are now less effective on tackling youth crime than we were 10 years ago, that, of the 7 million youth crimes committed in Britain every year, only about one in 10 reach court and that the Government's programmes are ineffective, inefficient and wasteful. Given the fact that the Government have been in power for 17 years, whom do they blame for that?
    The Prime Minister: The right hon. Gentleman would do well to read the Audit Commission report in full. He will find that it endorses our strategy for intervening early with young people who might offend. I look forward to his support for the Green Paper, which he knows is coming forward. I hope that he will consider it. I hope
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    that he will support it and I hope that he will, for once, have some proactive and worthwhile ideas to contribute to the debate.
    Dame Jill Knight: Since today's press shows that Labour's answer to the question, "When is a pledge not a pledge?" is "When it is a commitment," will my right hon. Friend assure the House—(Interruption.)
    Madam Speaker: Order. The hon. Lady will be heard. I want to hear her question. She is usually in order and I bet that she is going to be in order now.
    Dame Jill Knight: Will my right hon. Friend give the House and its Members the pledge that he will continue to speak clearly and without ambiguity as to his plans for this country?
    The Prime Minister: I find it extraordinary that 89 spending promises suddenly disappear, apparently overnight. The Opposition claim that what we said yesterday was untrue—I think "lies" was the word that they used—but, as we were quoting what they said, I wonder who the deceivers really were.
    Mr. Tony Banks: To ask the Prime Minister if he will list his official engagements for Thursday 21 November. [3750]
    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.
    Mr. Banks: Does the Prime Minister recall his promise—indeed, his pledge—to construct a classless society in this country? If he really meant that, why is he so set against the proposal from my right hon. Friend the Leader of the Opposition to scrap the right of hereditary dukes, marquesses, earls, viscounts and lords to speak and vote in the House of Lords? Could it just be that the boy from Brixton, whom I remember, has got a feeling to make himself into a nob after he leaves here? Does he really want to be remembered as the nob from Brixton?
    The Prime Minister: I hope that the future Lord Banks will reconsider what he has said about that matter. My remarks about a classless society were about equality of opportunity, and not about the grey uniformity that the hon. Gentleman would wish to see in this country.
    Mr. Lidington: To ask the Prime Minister if he will list his official engagements for Thursday 21 November. [3751]
    The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.
    Mr. Lidington: May I ask my right hon. Friend to order an urgent Government study into the recent report from Goldman Sachs which suggested that every household in Aylesbury would pay an additional £70 a year for its electricity alone if a windfall tax on the utilities were introduced? Those households would also face higher charges for gas and water and for the use of the telephone. Can my right hon. Friend confirm that such

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    a tax would hit hardest at pensioners and people on low incomes—all those whom the Labour party pretends that it cares about?
    The Prime Minister: It may be that we will find, yet again, that the windfall tax is another promise that is not. Perhaps we will find that out this afternoon.
    What we do not know about the windfall tax is substantially more than what we know about it. We do not know who will pay it; what rate it would be levied at; and whom it would impact upon. We do not know why some utility chairmen think that they would not have to pay it. We do not know how much it would provide for the promises, mounting up to £30 billion, that the Labour party has made. I hope that we will get some of those answers this afternoon, but I doubt it.
    Mr. McAllion: To ask the Prime Minister if he will list his official engagements for Thursday 21 November. [3752]
    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.
    Mr. McAllion: Although I regret the Prime Minister's decision to duck a debate on the single currency, I warmly welcome his courageous decision to sponsor this afternoon's debate on the privatised utilities and the Tory party's links with the bosses of those companies that have made obscene profits on the backs of the rest of us. Can he confirm that many of those companies have made large donations to the Tory party and have provided top jobs for ex-Tory Ministers? This afternoon's debate will allow the House to expose the Tories for what they really are—the political wing of the privatised utilities.
    The Prime Minister: I thought for a moment that the hon. Gentleman was going to raise the question of the Leader of the Opposition's secret fund. I wonder whether we will hear which business men fund it; we certainly have not heard that yet. We were told by the Opposition spokesman that the fund has been set up as a blind trust to ensure that there is no linkage between donations and political influence. There were no names given, and nothing about the openness that the Opposition promised us some time ago. Because of a newspaper examination, all we have is the fact that the fund exists, and I hear that the deputy Leader of the Opposition has a research fund as well.
    One minute, the Opposition attack share options; the next, they accept money from the millionaires who benefited from them. They attack successful business men and then host fund-raising dinners for those
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    successful business men. They then call for openness in funding, but have a secret fund themselves. I wonder what the parliamentary word is for that behaviour.
    Mr. John Marshall: To ask the Prime Minister if he will list his official engagements for Thursday 21 November. [3753]
    The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.
    Mr. Marshall: Is my right hon. Friend aware that Barnet council recently voted to have its refuse collection done by the direct labour department despite the fact that an outside tender would have saved £500,000 over the length of the contract? Does he agree that that shows that Labour and Liberal councillors are more interested in jobs for the boys than in value for money for the ratepayers? Will my right hon. Friend assure me that my right hon. Friend the Secretary of State for the Environment will take action to see that Barnet ratepayers are protected against dogmatic socialist policy?
    The Prime Minister: I am sure that my right hon. Friend will have heard what my hon. Friend had to say. It is no secret that the Labour party is hostile to competitive tendering, even though it saves money for the council tax payer—a fact which is an irrelevance to Labour. As the deputy leader of the Labour party once said,
    "Society should tolerate relative inefficiency in labour intensive sectors".
    In other words: jobs for the boys, not savings for the council tax payer.
    Mr. Hain: To ask the Prime Minister if he will list his official engagements for Thursday 21 November. [3754]
    The Prime Minister: I refer the hon. Gentleman to the reply I gave some moments ago.
    Mr. Hain: How much will the Prime Minister's proposal to abolish capital gains tax and inheritance tax cost the average taxpayer? Will he tell us whether that is a pledge, a policy, an aim, an aspiration—or merely another Tory tax lie?
    The Prime Minister: As I have frequently told the House, we are pledged to abolish, as affordable, capital gains tax. I shall tell the hon. Gentleman why. Such action will create jobs and stimulate employment, which is what I am determined to achieve in this country. The hon. Gentleman might like to create unemployment with extra social costs, but I wish to price people back into jobs by generating investment.

Business of the House
3.30 pm
Mrs. Ann Taylor: May I ask the Leader of the House for details of future business?
The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): The business for next week will be as follows:
MONDAY 25 NovEMBER—Second Reading of the Social Security Administration (Fraud) Bill.
Consideration of supplemental allocation of time motion relating to the Firearms (Amendment) Bill.
TUESDAY 26 NOVEMBER—My right hon. and learned Friend the Chancellor of the Exchequer will open his Budget statement.
WEDNESDAY 27 NOVEMBER—Until 2 pm, there will be debates on the motion for the Adjournment of the House.
Continuation of the Budget debate.
THURSDAY 28 NovEmBER—Continuation of the Budget debate.
FRIDAY 29 NOVEMBER—Debate on tourism on a motion for the Adjournment of the House.
The House will also wish to know that on Wednesday 27 November there will be a debate on water for human consumption in European Standing Committee A, and a debate on the former Yugoslavia in European Standing Committee B. Details of the relevant documents will be given in the Official Report.
The business for the following week will be as follows:
MONDAY 2 DECEMBER—Continuation of the Budget debate.
TUESDAY 3 DECEMBER—Conclusion of the debate on the Budget statement.
WEDNESDAY 4 DECEMBER—Until 2 pm, there will be debates on the motion for the Adjournment of the House.
Government business will be taken.
THURSDAY 5 DECEMBER—Government business will be taken.
FRIDAY 6 DECEMBER—Debate on a motion for the Adjournment of the House.
The House will also wish to know that it will be proposed that on Wednesday 4 December there will be a debate on air carrier liability in European Standing Committee A, and a debate on protection against third country legislation in European Standing Committee B. Details of the relevant documents will be given in the Official Report.
I should also tell the House that I have in mind two changes to the arrangement of statements during the Budget debate, which I hope that the House will think are sensible. The English local government finance statement will now be made on the second day—Wednesday 27 November—which will give local authorities a little more time to take their budget decisions. The social security statement, which hitherto has taken place on that day, will be replaced by a social security debate on the third day—Thursday 28 November—thus giving the House a proper opportunity to debate the social security aspects of the unified Budget settlement.
[Wednesday 27 November:
European Standing Committee A—Relevant European Community Document: 7208/95, Water for Human Consumption. Relevant European Legislation Committee Reports: HC 70-xxii (1994–95), HC 51-v, HC51-xxii and HC 51-xxix (1995–96).
European Standing Committee B-Relevant European Community Documents: (i) 7312/96, Former Yugoslavia: Aid for Reconstruction and Rehabilitation; (ii) 10602/96, Future Contractual Relations with Certain Countries in South Eastern Europe. Relevant European Legislation Committee Reports: (i) HC 51-xxiii, HC 51-xxvi and HC 51-xxix (1995–96); (ii) HC 36-ii (1996–97).
Wednesday 4 December:
European Standing Committee A—Relevant European Community Document: 5231/96, Air Carrier Liability. Relevant European Legislation Committee Report: HC 36-ii (1996–97).
European Standing Committee B—Relevant European Community Document: 9573/96, Protection against Third Country Legislation. Relevant European Legislation Committee Report: HC 51-xxix (1995–96).]
Mrs. Taylor: I thank the Leader of the House for that information. Will he ensure, following the statement in answer to the private notice question on the channel tunnel on Tuesday, that the matters that were mentioned will be followed up? Will he also ensure that there will be an opportunity for the House to debate the issue of channel tunnel safety? I am sure that he agrees that that is an important issue. We must not be alarmist, but it is important that the House should be kept informed. When the results of the public inquiries are announced, the House should have an opportunity to debate that important subject.
Secondly, will the Leader of the House arrange a debate in the near future on the Audit Commission report entitled "Misspent Youth", which was published today? The report is a devastating commentary on the failure of the youth justice system and the Government's record on youth crime, not least because it says that, although crime has doubled since the Conservatives came to office, overall, less is done now than was done a decade ago to address offending by young people. It also criticises the lack of cross-departmental co-operation to tackle those problems. Surely we should be told what action the Government intend to take. Will the Leader of the House give us an assurance that the Government will not simply bury the report and forget it? Our constituents will certainly not forget the problems that they face as a result of youth crime.
Finally, and perhaps most importantly, given the events yesterday and the comments made at Prime Minister's questions today, when it was clear that the Prime Minister did not understand the significance of the documents put before European Standing Committee B yesterday—the former Paymaster General, the right hon. Member for Wells (Mr. Heathcoat-Amory) confirmed that there was not proper scrutiny in that Committee—will the Leader of the House reconsider the points that have been raised about those documents? Will he acknowledge that there are two aspects to the problem: first the importance of the documents, despite what the Prime Minister says; and, secondly, as Madam Speaker said yesterday, the fact that the issue involves maintaining the integrity of the

1105
procedures of the House? The Leader of the House has expressed concern on many occasions about the rights of hon. Members and the reputation of the House. Will he therefore think again, and think carefully, before rejecting the idea of a full debate on the Floor of the House? The documents are important, as is the reputation of the House. The Government cannot sweep the issue away. If there is not a full debate on the Floor of the House, not only the integrity of our procedures will be at stake, but the authority of the House.
Mr. Newton: The hon. Lady has raised three issues. I am grateful for the way in which she put her point on the channel tunnel. She acknowledged that the appropriate time to consider a debate will be when we have the results of the three inquiries that are taking place. I need hardly say that I shall keep the issue very much in mind.
I suppose that I ought to observe mildly that I find some of the hon. Lady's remarks on the Audit Commission report somewhat curious, given that Labour has voted against almost all the measures that we have taken to tackle the problem of crime. Leaving that aside for the moment, while we clearly do not agree with everything in the report, it appears to endorse our strategy of intervening early with young people who might offend. I shall bring the hon. Lady's remarks to the attention of my right hon. and learned Friend the Home Secretary, because we shall be publishing a Green Paper shortly. I am sure that he will take her remarks into account.
The hon. Lady will not be surprised to know that I am not in a position to add significantly to what my right hon. Friend the Prime Minister said a few moments ago about the documents debated yesterday in European Standing Committee B. However, the notion that my right hon. Friend does not understand those matters does not correspond with reality.
No one is disputing the importance of the documents. I emphasised last week that the Standing Committee provides an opportunity for effective scrutiny. I also drew attention to the fact that there will be an opportunity—as my right hon. Friend the Prime Minister has said—for debate before the Dublin Council to which the ECOFIN will be reporting. As for maintaining the integrity of the House's procedures, what has been proposed and is taking place is entirely within the Standing Orders of the House.
Sir John Stanley: As someone who supports the Government's position on a single currency, and therefore has no axe to grind on the issue whatever, may I ask my right hon. Friend to give serious further consideration to the issue of a debate on the documents being considered by the Select Committee on European Legislation? Is he not aware that under resolution of this House and by its Standing Orders, that Committee has a clear responsibility and duty to advise the House when specific documents should be debated by the House as a whole? It is highly undesirable—and a potentially dangerous precedent—for the Government to sweep aside a unanimous recommendation from that Committee.
Mr. Newton: Obviously, whether they come from my right hon. Friend or any other hon. Member, I always look carefully at such concerns. But since the changes to the procedures of the House—which were designed to reduce the amount of business taken on the Floor—it has been
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necessary for judgments to be made on particular recommendations. That has happened before, and this is not a unique occasion. I continue to believe that the debate in Committee, taken together with the opportunity for general debate before Dublin, was the right course.
Mr. A. J. Beith: Who does the Leader of the House think he is pleasing by keeping this matter off the Floor of the House? He has infuriated a large part of his own party, he will get no thanks from those of us who believe in the merits of a single currency but want to see the issues debated on the Floor of the House, and he did not save the Government from defeat in the Committee. That having happened, surely he must recognise the need for a debate on the Floor.
While we are discussing single market issues, can I draw the Leader of the House's attention to the fact that 700 UK vehicles containing food produce are being blockaded in France by French lorry drivers, with no apparent effective action being taken by the French police? Will he make sure that representations are made on this issue at the highest level? If not, we will have to return to that matter also next week.
Mr. Newton: I will ensure that the latter remarks of the right hon. Gentleman are drawn immediately to the attention of my right hon. and hon. Friends in the Foreign and Commonwealth Office and the Department of Transport who, no doubt, will be concerned with that matter. On the first part of his remarks, I cannot add to what I and my right hon. Friend the Prime Minister have already said.
Sir Anthony Grant: My right hon. Friend will have noted that, belatedly, the Opposition have joined the referendum bandwagon on European currency. But has he noticed that, according to a recent report, they want a referendum not on that issue alone, but on every subject under the sun? May we have an opportunity to consider the future of referendums and their use? If we go down the line suggested by the Opposition—new Labour, new policy—we all might as well go home and leave everything to be decided by opinion polls.
Mr. Newton: My hon. Friend makes an important point which is largely for those hon. Members at whom I am looking across the Chamber. They, no doubt, will respond in their own way to my hon. Friend's very effective point.
Mr. George Stevenson: May I reinforce the calls for a debate on the Floor of the House on the European regulations? I do not intend to repeat the arguments about the fact that the Select Committee was unanimous in its decision and that hardly any debate took place on the matter. I underline the fact that the Prime Minister reacted to an earlier question by saying that there was nothing in these regulations that applies to the United Kingdom. I refer the Leader of the House to the stability pact regulation, article 13, which refers to arrangements being made for sanctions and penalties on any member state that is not a part of economic and monetary union. In the circumstances, is it not imperative that we have a debate on the Floor of the House on the three vital regulations?
Mr. Newton: It is certainly important that those documents should be scrutinised and that is what we

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sought to arrange through the debate in European Standing Committee B. It appears that at least some of those present chose to raise points of order rather than to concentrate on the issues in the documents. I am not complaining about that, but equally I do not think that I can be held responsible for it. As to the question of the stability pact, whether we take part in the single currency or not, it is in this country's interest to ensure that if it goes ahead it is sustainable and does not damage our main export market.
Mr. Harry Greenway: May we have a debate on local government finance so that I may bring to the House's attention the cuts of £30,000 a year in adult education provision by the Labour council in Ealing? The cuts will take access to adult education away from hundreds, if not thousands, of people in Ealing, even though the Labour party professes to believe in such access. If we have a debate, I will be able to bring that disgraceful behaviour by Ealing Labour council before the House.
Mr. Newton: My hon. Friend will have heard me make the point that there will be a statement on local government finance on the day following the Budget. He may wish to raise his point with my right hon. Friend the Secretary of State for the Environment.
Mr. Nigel Spearing: Since European Standing Committee B has reported to the House that it came to no resolution, is it not now the procedure, as used before, for the Leader of the House under Standing Order No. 102 to put down a motion on those three documents which must be decided forthwith? If he did that, would not he be going against the unanimous view of the Committee, under Standing Order No. 23, because the requirement for scrutiny would not have been discharged? If, however, the documents were to be debated under a motion covering a much wider range of issues, as the Prime Minister suggested this afternoon, a diverse debate would take place on no specific motion or resolution. In either case, would the requirement for scrutiny have been discharged? I suggest to the Leader of the House that it would not, and that is why we must have a debate on the Floor of the House.
Mr. Newton: If the hon. Gentleman had been listening closely to my right hon. Friend the Prime Minister, he would have heard him indicate that the necessary motion will be tabled in the normal way.
Mr. Michael Carttiss: Does not my right hon. Friend the Leader of the House recognise that our hon. Friend the Member for South-West Cambridgeshire (Sir A. Grant) has already made the valid point that we might as well all go home if we cannot discuss issues that will be fundamental? May I also ask my right hon. Friend why the Government are afraid to have the debate on the Floor of the House when the Opposition have got as much to answer for as we have?
Mr. Newton: While I agree that the matter is important, I have already made it clear that we have
1108
provided opportunity for debate in what we thought was the most appropriate way and that there will be further opportunity before the Dublin summit.
Mr. David Clelland: Will the Leader of the House make time for an early debate on the future of Hadrian's wall? Is he aware that the hon. Member for Welwyn Hatfield (Mr. Evans) yesterday raised the prospect of the wall being policed to keep out the Scots? Is the Leader of the House further aware that when people in the north get to hear about that, there is a grave danger that they will descend on the wall in their thousands and remove it, stone by stone, several hundred miles to the south so that they, and their good neighbours the Scots, might be on the opposite side to the hon. Member for Welwyn Hatfield? Indeed, members of the public from all over Britain would gladly and enthusiastically rebuild the wall in a circle around the hon. Gentleman and his like.
Mr. Newton: I am slightly at a loss for words for once, but I suggest to the hon. Gentleman that his point could be in order in the debate on tourism.
Mr. Tony Marlow: On the subject of the stability pact, which was not, before the Leader of the Opposition blundered in this afternoon, a party political issue, but an issue between Parliament and the Executive, will my right hon. Friend give an undertaking that the Chancellor of the Exchequer will not agree to anything at the ECOFIN Council in Dublin? By not having a debate before the Council meets, the Government are riding roughshod over Parliament and they are being contemptuous of democracy. In that case, why should they deserve support and why should anybody hold their Whip?
Mr. Newton: I appreciate the strength of my hon. Friend's feelings, and I was grateful for his courtesy in coming to see me the other night, as I hope he will not mind my mentioning, in order to underline his point. I recognise that, but the fact is that we have provided opportunity for debate, and I have now said several times that there will be further opportunity before the Dublin Council.
Mr. Llew Smith: Will the Leader of the House consider arranging a debate on the rules governing eligibility for incapacity benefit? I ask that because of the number of complaints that I receive from people in my constituency, which is one of the poorest in the country. I am thinking in particular of the case of David Holmes, who for more than a decade suffered from a severe heart complaint and received incapacity benefit and mobility allowance. As others were, he was called up for examination to see whether he could continue to receive those benefits, and after the examination he was declared fit for work. That put tremendous pressure on him, as he recorded in a letter sent to the Department of Social Security. A few days later David died—from a massive heart attack, it was believed. Is it not now time to examine the rules governing the benefit?
Mr. Newton: The hon. Gentleman will appreciate that, even were I in a position to do so, it would be wrong for me to attempt to comment on the details of that particular case—although, naturally, I hear of the outcome with

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great sympathy for the family and all those involved. I shall of course, as is right, bring the hon. Gentleman's remarks to the attention of my right hon. Friend the Secretary of State for Social Security, and I am sure that he will consider them carefully.
Mr. Rupert Allason: Is my right hon. Friend aware that almost all the police agencies in the country, the Security Service, and even Customs and Excise, are united in the belief that there is one measure that the Government could adopt which would assist in the fight against crime? That would be to allow telephone intercepts to be used in evidence in court. Is my right hon. Friend aware of the curious ambiguity that allows intercepted conversations recorded in America, but not recordings made in this country, to be used in the courts in this country? Does he accept that there may be an opportunity to amend the Crime (Sentences) Bill to allow those intercepts to be used in criminal prosecutions?
Mr. Newton: I cannot offer my hon. Friend an immediate judgment; in any case it would not be for me to decide whether an amendment to the Crime (Sentences) Bill would be in order. However, I shall ensure that his thoughts on the matter are drawn to the attention of my right hon. and learned Friend the Home Secretary.
Rev. Martin Smyth: Will the Leader of House encourage the Secretary of State for Scotland to make a statement next week about his delays in implementing the report concerning the interconnector between Scotland and Northern Ireland? This is the second time within less than two weeks that the actions of the person who claims to stand for the Union have militated against the best interests of the people of Northern Ireland, and in this case also against the interests of the miners of Scotland, who could be producing the power.
Mr. Newton: I am sure that my right hon. Friend the Secretary of State for Scotland will study the hon. Gentleman's words with care.
Mr. David Heathcoat-Amory: As Leader of the House, my right hon. Friend will agree with the general proposition that matters touching on the constitutional powers of the House should always be debated on the Floor of the House; it was a mistake to take the matter in question in a specialist Committee with limited membership and time. May I press him a little further beyond what he has already said and remind him that we are talking about draft European regulations, and that once such regulations are agreed in the Council of Ministers, they are directly binding in their entirety on the citizens of each member state, without any further reference to the House of Commons? I therefore ask him not to draft a motion simply inviting the House to take note, but to use a substantive motion asking us to approve, and to say whether we agree to the transfer of our powers as suggested in the regulations.
Mr. Newton: On the first part of what my right hon. Friend said, I need to underline, as the Prime Minister did, the fact that the fundamental protection for the rights of the House is the opt-out itself, as negotiated at Maastricht, together with the fact that the House and the country will
1110
have a proper opportunity to consider whether it is in this country's interest to join a single currency when that decision needs to be taken. On the remainder of my right hon. Friend's remarks, I do not think that I can add to what I said earlier.
Mr. Denzil Davies: Is the Leader of the House aware that the proposals for a stability pact mean a change in the operation of the Maastricht treaty as it applies to excessive deficits? The Maastricht treaty was debated on the Floor, approved and ratified by Her Majesty's Government. Should not a change in its operation also be debated on the Floor?
Mr. Newton: I do not accept the right hon. Gentleman's interpretation. It is certainly the case that the Maastricht treaty sets out the basis of the stability pact, but it also makes it clear that no fines or other sanctions could apply to Britain unless we were in the single currency.
Mr. Barry Field: Has my right hon. Friend seen the article in The Times today about the remarkable improvement of British beaches as a result of the privatisation of the water companies? May we have a debate on the Environment Agency? An anomaly has arisen on the Isle of Wight whereby Ventnor achieved the standard but does not have a sewage scheme, while Ryde failed to but does have one. The Environment Agency does not know why.
Mr. Newton: I cannot comment on the precise position in the Isle of Wight, but the bathing water quality results for 1996 certainly show a further increase in the number of bathing waters that meet the key standards of the directive, which is good news for all concerned.
Mrs. Gwyneth Dunwoody: The Leader of the House will understand now, if he did not before, that the House of Commons is strongly committed to the need for open discussion of sensitive political issues on the Floor. I hope that he will therefore be prepared to ask the Secretary of State for Transport to explain to the House next week article 33 of the intergovernmental convention with the French on the channel tunnel, which ensures that total confidentiality of information will not apply in any investigation of what happened in the channel tunnel during the fire.
Mr. Newton: My right hon. Friend the Secretary of State for Transport is, as the hon. Lady will have registered, due to answer questions next Monday. I will bring that possible question to his attention.
Mr. John Townend: May I implore my right hon. Friend to think again about a debate on the stability pact? It is a constitutional issue that has not had adequate scrutiny. Does he appreciate the size of the bundle of documents involved? Many of the proposals can be changed by qualified majority voting and will, or could be made to, apply to Britain whether or not we are members of the single currency. Does he understand how sensitive we are after Britain was double-crossed over the social chapter opt-out? It is vital that the matter should be scrutinised on the Floor. It is not sensible for the Government to take on the whole Chamber.
Mr. Newton: I of course note what my hon. Friend said and, as with my hon. Friend the Member for

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Northampton, North (Mr. Marlow), the strength of feeling. It must by now be apparent that, with what my right hon. Friend the Prime Minister said earlier and what I have sought to say in the past few minutes, there is little more that I can add.
Mr. David Winnick: I refer the Leader of the House to early-day motion 209.
[That this House congratulates Karamjit Singh Chahal on his release after more than six years from Bedford Prison following the landmark judgment concerning his case by the European Court of Human Rights; is delighted Mr. Chahal was freed, enabling him to rejoin his wife and two British-born children in Luton; believes Raghbir Singh, detained in Birmingham on national security grounds, should now be released; urges Her Majesty's Government to scrap the Advisory Committee on National Security—the so-called 'three wise men'—which is an outdated and unjust procedure, as was recognised by the ECHR; further urges Her Majesty's Government to ensure that in any future cases concerning national security the accused and the courts are given adequate factual information about alleged national security breaches; and believes the Labour Party must commit itself to introducing such legal reforms if Her Majesty's Government fails to act.]
I tried to discover whether my constituent, Raghbir Singh, would be released from prison after being held for 18 months with no charges. Will the right hon. Gentleman find out the latest position, which I have been unable to obtain from the Home Secretary's private office? If Raghbir Singh is to remain in prison, despite last week's ruling by the European Court of Human Rights in an identical case where a person was held for five years without charges, will the Home Secretary make a statement to the House to justify his being held in prison without charges?
Mr. Newton: I will bring the hon. Gentleman's concern to the attention of my right hon. and learned Friend the Home Secretary.
Mr. Iain Duncan Smith: My right hon. Friend will know that I have raised this issue for three weeks running and it will not surprise him to learn that I am going to raise it again: a debate on the Floor on the proceedings that took place in European Standing Committee B yesterday. These matters do not solely concern countries that will be in the single currency; there are huge matters that concern those who will be outside it. Further recommendations on the restriction of the powers of national Parliaments are among the matters that will be passed by the ECOFIN Council. Will he please, please listen to what we are saying and give us some time on the Floor?
Mr. Newton: I am not surprised, and I do not resent my hon. Friend, with his well-known and long-standing interest in these matters, raising the matter again in this way. It is precisely because arrangements of that kind do have effects, even on non-members, that it is important that we should play a part in the discussions.
Mr. Dennis Skinner: Will the Leader of the House confirm that it would be a very shabby decision by the Government to put down a "forthwith" motion about a matter that had gone to a Committee but that had not been agreed by that Committee, in the knowledge that they would be able to sneak it through in the Table Office, at a time that was inconvenient to others, even a non-sitting day? Will he also confirm that it is possible, if we catch him laying that motion in time, that we could table an amendment to it and that, even though it could not be debated on the Floor of the House, we would be able to divide on that amendment; or that, failing to put an amendment down, we could divide on the motion?
As Leader of the House, will the right hon. Gentleman be generous enough and decent enough to ensure that, if he puts down that motion in that fashion and refuses a proper debate on a subject that undoubtedly affects a majority of hon. Members on both sides of the House, people are told in advance so that we can have a legitimate vote—even though we would like a debate—and so that we can send it back whence it came?
Mr. Newton: I said earlier, as did my right hon. Friend the Prime Minister, that the necessary motion would be tabled and moved in due course.
Mr. David Shaw: My right hon. Friend will be aware that many of my constituents are involved in the road haulage industry, carrying British exports through the port of Dover and on into Europe. Many of my constituents' companies are faced with enormous difficulties as a result of the outrageous dispute in the French road haulage industry, which is blocking the roads. Can we have an urgent statement, and can that statement be given after a Foreign Office Minister has been sent to the Ministry of Justice in Paris—preferably either by air or by ferry from Dover, rather than via the channel tunnel, which is currently experiencing difficulties? Can we make sure that that British Foreign Minister gives the Ministry in Paris the firm impression that we really mean business and that the police in France must enforce the law and ensure that British lorries can carry British goods into Europe?
Mr. Newton: I made some reference to that matter earlier on, when it was raised by the right hon. Member for Berwick-upon-Tweed (Mr. Beith). All that I can add at this stage is that both my right hon. Friend the Secretary of State for Transport and my right hon. and learned Friend the Foreign Secretary are due to answer questions next week.
Mr. Harry Barnes: Is the Leader of the House aware that his reply to my hon. Friend the Member for Bolsover (Mr. Skinner) was quite shameful? He will not even promise the House that sufficient notice will be given of a motion being tabled to give us an opportunity to respond. In those circumstances, why should those of us who have been members, since their start, of the Select Committee on European Legislation or European Standing Committees continue to plod away, time after time, at rather unglamorous activities? Those bodies should discuss matters of the sort that are down to be considered next week, not a measure that is of such significance that the members of the Select Committee are united in asking for it to be dealt with in

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the Chamber. We should have what my hon. Friend the Member for Bolsover asked for; it is the least that the Leader of the House should offer at this time.
Mr. Newton: I note that request, as I noted the request from the hon. Member for Bolsover (Mr. Skinner). I have to say that I do not think that the answer I gave the hon. Gentleman was in any way shameful.
Mr. John Wilkinson: May I say to my right hon. Friend that the matters on the stability pact that were very briefly discussed in Committee yesterday were not mere technicalities?
May I say to my right hon. Friend that it saddens me to see him, as a custodian of the responsibilities of this place, risk his reputation and risk also an allegation that he has been a willing participant in a disreputable subterfuge? Can he now assure the House that, in the two days of Government business next week, he will allow a proper opportunity for the House to debate the merits or otherwise of a stability pact before the Chancellor goes to Dublin, potentially to stitch us up into something from which we cannot withdraw?
I say to my right hon. Friend that I now comprehend the rage that filled the breasts of the parliamentarians in the civil war in this country and of the colonists in the American revolutionary war; the issue at stake on both occasions was an abuse of Executive power.
Mr. Newton: I would obviously much regret it, and with some feeling, were my hon. Friend to feel as he suggested in some of his comments, but I have made it clear that we do anticipate further opportunity for debate before the Dublin Council.
Mrs. Maria Fyfe: Has the Leader of the House noticed that one of our more enthusiastic Europeans, Mr. Sean Connery, who spends more time in Spain as a tax exile than he does at home, is returning to these shores to make a party political broadcast for the Scottish National party? Does he agree that some time should be devoted in the Chamber to considering the rules under which people can be tax exiles, whether it is appropriate for someone to avoid paying taxes in this country but to influence the votes of his fellow citizens, and approximately how much money is lost to the Exchequer by the system of permitting people to avoid tax by living abroad?
Mr. Newton: It would appear to me that, with the imminence of five days' debate on the Budget, the hon. Lady should have an opportunity to raise that point.
Mr. Jacques Arnold: May we have a debate next week on competitive tendering? During the debate, tenderers in our constituencies could be fully advised of the booking arrangements for them to have lunches with the chairmen of the committees that take decisions; I am sure that the Liberal spokesman in that debate would oblige the House.
Mr. Newton: There is a Liberal spokesman in his place. I do not know whether he will oblige the House, but I am sure that he listened carefully to what my hon. Friend said.
Mr. Ted Rowlands: Will the Leader of the House clarify what kind of motion he intends to table to enable us to debate the stability pact papers? Is he saying that, during another debate, he nevertheless will table a motion either to take note of or to approve the documents concerned?
Mr. Newton: What I have indicated, I believe both last week and this, is that I anticipate the type of general debate before the Dublin Council that we have had on previous occasions.
Mr. John Marshall: Will my right hon. Friend arrange a debate on the use of the English language? Is he aware that individuals tour the country, saying that services are underfunded, expecting their audiences to assume that that is a spending pledge, and then complaining like billy-o when someone tries to quantify the extent of that extra spending?
Mr. Newton: My hon. Friend makes a telling point. There may well be opportunities for him to speak during the debate on the Budget, which also covers public expenditure.
Mr. David Wilshire: I realise that being repetitive makes one unpopular; similarly, disagreeing with one's own Government makes one feel even more unpopular. But may I say as gently as I possibly can that I believe that my right hon. Friend is profoundly wrong not to allow the House to debate fully and to vote on the matters that were not scrutinised yesterday?
Mr. Newton: I do not in any way resent the repetition by my hon. Friend. Unless I am to repeat the same things over and over again, however, I do not think that I can add to what I said earlier.
Mr. Eric Clarke: May I support the plea of the hon. Member for Belfast, South (Rev. Martin Smyth) to bring the Secretary of State for Scotland to this place to tell the House why he has overturned the decision of the recorder on that specific aspect of the interconnector between Ireland and Scotland? There has been a six-month inquiry. I learned today from a press release which I happened to get from Dover house—because I asked for it—that the recommendation is that the decision of the recorder on this important link between Northern Ireland and Scotland be overturned.
Mr. Newton: The hon. Gentleman will already have heard me undertake to bring that concern, expressed earlier but now underlined by him, to the attention of my right hon. Friend.
Mr. John Gunnell: Will the Leader of the House—some time before next Easter while he is still Leader of the House—arrange for a statement by the Government, or preferably a debate in Government time, in which they can make clear their views on the community's role in respect of an opencast mining proposal which is so large that four constituencies are directly affected? On such an important matter, the community's say should be clear; it is not clear in the

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minerals planning guidance. We need an opportunity to debate what powers the community has to ensure that such a proposal does not go forward.
Mr. Newton: The hon. Gentleman will be well aware that questions concerning the minerals planning guidance are primarily for the Secretary of State for the Environment, to whose attention I shall ensure that his remarks are brought.

Madam Speaker's Statement
4.11 pm
Madam Speaker: I have a short statement to make. On Monday, the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) raised with me the question of communication between Members and civil servants in the officials' Box. She referred to incidents that occurred on Friday, when it appeared that Back-Bench Members were being directly briefed by officials. My deputy in the Chair at the time last Friday dealt properly with the points of order raised with her.
It may be helpful if I make clear to the House the conventions that apply in this case. The officials' Box is intended for civil servants and political advisers with civil service status whose attendance is deemed essential by the Minister responsible. Their attendance is by my permission, and a list of names is required to be submitted to my office in advance. Their function is to provide information and briefing to Ministers as required.
It follows that in general the only Members who should approach the Box are the Minister concerned, the parliamentary private secretary or, in the absence of the latter, another Member operating with the Minister's authority. There may be other occasions when it makes sense for a Member on either side of the House to approach the Box—for example, to check an apparently inaccurate fact or a reference in a Government document under discussion—but I would expect such occasions to be very rare indeed.
I do not regard it as acceptable for Members to engage in social discussions with officials in the Box, since this could be open to misinterpretation and cause irritation to other Members.
There is one other point that I should like to underline. Officials in the Box are required to conduct themselves discreetly at all times. In particular, they should not show any partiality in the course of a debate. I am glad to say that this is an issue which has been raised with the Chair on very few occasions—although there should never be cause for it to be drawn to my attention again.

Points of Order
4.12 pm
Mr. Michael Clapham: On a point of order, Madam Speaker. Has the Secretary of State for Social Security given you notice that he intends to come before the House to make a statement on his proposals on chronic bronchitis and emphysema? He has today answered a written question in which he proposes to implement in full the recommendations of the Industrial Injuries Advisory Council as from next April and without retrospection.
I have checked with the company that now manages the mineworkers pension scheme, which informs me that an average of 700 elderly miners die each month. That means that, in the 14 months between the end of the review and implementation of the recommendations next April, roughly 10,000 miners will have died. I am not saying that all of them would have had a claim, but a good number of them would have. It is very important that the Secretary of State should come to the House to make a statement so that we can question him on these matters.
Madam Speaker: I have not been informed that the Secretary of State is seeking to make a statement on that matter. Had that been the case today, we would have known it already, because it would have appeared on the Annunciator.
Mr. Tony Marlow: On a point of order, Madam Speaker. You will know that it is the unanimous view of the Select Committee on European Legislation that scrutiny should not be given to the package of financial measures unless and until there is a debate on the Floor of the House. You will know that it is possible for the Government to table a "forthwith" motion, and that that could be done late in the evening when no Member was available to table an amendment. In that case, it would be possible for some Members to seek to put a manuscript amendment before the House the following day. Given that the powers of the House are at stake—democracy is at stake—if a manuscript amendment were tabled in such circumstances, can you give an assurance that you would look favourably upon it?
Madam Speaker: It is hypothetical at this time, but I would look very carefully at any manuscript amendment that came my way.
Mr. Thomas Graham: On a point of order, Madam Speaker. Yesterday at Question Time I asked the Secretary of State for Scotland a question. He replied that the social work department of Glasgow district council was unsure how many social workers it employs. That is an inaccurate statement. I have evidence from the Glasgow social work department that it knows how many staff and social workers it employs. Furthermore, the Scottish Office was informed of those numbers some time ago. The Secretary of State should have checked with his Department so that
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he could give the House accurate information. I ask that he should come before the House and clear up that misunderstanding.
Madam Speaker: The hon. Gentleman might like to consider an Adjournment debate, which would allow him to air the problems of his local authority and give the correct figures.
Mr. George Stevenson: On a point of order, Madam Speaker. I refer to Standing Order No. 102(9), which states:
"If any motion is made in the House in relation to any European Community document".
I raise this point of order in the context of European Standing Committee B. Clearly, Standing Order No. 102(9) is inconclusive, as the wording is "If any motion", not "Any motion must be". Will you ensure that there must be a report back, and that time is allowed for Back Benchers or other Members to table amendments to the motion?
Madam Speaker: I refer the hon. Gentleman and the House to the statement that I made yesterday.
Rev. Martin Smyth: On a point of order, Madam Speaker. You will know that from time to time hon. Members have been concerned about the fact that, with regard to the agencies that the Government have set up, statements have been made without parliamentary debate or questioning of Ministers. Yesterday evening a journalist gave guidance to my hon. Friend the Member for Upper Bann (Mr. Trimble) that there would be a statement today on prisons. On inquiring, my hon. Friend discovered that there would be no ministerial statement, but a press release from the director of prisons dealing with release and other aspects with which I would have some sympathy. By allowing such statements to be made outside the House by those who are not directly answerable to the House, we have gone too far: there is no opportunity for proper scrutiny. I hope that that will be borne in mind in future.
Madam Speaker: I am sure that those on the Treasury Bench will have heard what the hon. Gentleman said about press releases in advance of statements in the House.
Mr. Nigel Spearing: On a point of order, Madam Speaker. You have heard several Members mention, and the Leader of the House say two or three times, that the Prime Minister said that a "forthwith" motion would be tabled. I checked with one or two of my hon. Friends, who say that they did not hear that, but we must assume that such a motion may be tabled. The Leader of the House—who has, unfortunately, departed—refused to assure you and the House that such a motion would be tabled in such a way as to allow considered amendments to be tabled for your possible selection. Will you give an assurance that if any hon. Member moved the Adjournment of the House prior to such a motion being taken forthwith, you would look upon it favourably?
Madam Speaker: I can give no commitments to the hon. Gentleman, but I have noted his comments.
Mr. Paul Flynn: On a point of order, Madam Speaker. Will you give your support to a rough

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sleepers initiative for the benefit of hon. Members? You may be aware that last night five hon. Members slept rough in the room opposite the Public Bill Office in order to secure ten-minute Bill time. Conditions were most uncomfortable, but we had the opportunity for in-depth discussion and we agreed that the procedure should be abandoned in favour of selecting hon. Members perhaps in the same way as they are selected for oral questions. We believe that the present procedure is archaic and inefficient. It wastes time, it is unfair to female Members of Parliament and it has no place in a modern Parliament.
Mrs. Elizabeth Peacock: Further to that point of order, Madam Speaker. I support the hon. Gentleman in his request for a much better system. Last night and in the early hours of this morning, I flatly refused to sleep in a small conference room on the Committee Corridor with three gentlemen. [Interruption.] I would not consider sleeping with Conservative Members of Parliament and I certainly would not sleep with Labour Members.
Madam Speaker: I have noted the concerns expressed by the hon. Member for Newport, West (Mr. Flynn), who raised the original point of order. I understand that a relevant report from the Procedure Committee of the last Parliament remains on the table. The hon. Gentleman may wish to ask that Committee to consider the matter again.
Mr. Tony Banks: On a point of order, Madam Speaker. You will be aware that last night there was a massive power failure on the London underground which trapped many thousands of Londoners in tunnels for more than an hour. I had hoped for a ministerial statement on the subject, but obviously one was not requested.
Without claiming special treatment for Members of Parliament, those hon. Members who do not drive around in chauffeured limos with police outriders would like to be informed of any problems on the underground before we attempted to travel on it. Madam Speaker, could you request London Underground authorities to inform you if such an event occurs again so that hon. Members and their staff may be warned before they try to use the underground system?
Madam Speaker: I do not think that there is anything special about hon. Members and their staff: they are treated like any other Londoners as far as I am concerned.
Mr. Banks: Yes, badly.
Madam Speaker: You should live above the shop, as I do.

Windfall Tax
4.22 pm
The Deputy Prime Minister (Mr. Michael Heseltine): I beg to move,
That this House deplores the dangers and injustices inherent in the concept of a windfall tax on the privatised utilities and condemns a tax that would hit consumers, shareholders and pensioners while damaging the credibility of the United Kingdom as a stable regime for inward investment.
It is now more than four years since the old Labour shadow Chancellor announced Labour's big idea of a windfall tax. Its very name implied that somehow money was there for the taking, that no one would feel the impact, and that fat cats would be punished appropriately. It implied that somehow Labour had found a pot of fool's gold with which to pay for its ever-lengthening list of unquantified spending commitments. It was a tax for the moment: a headline grabber; a soundbite tax.
Four years later, old Labour is gone and the old Labour shadow Chancellor has become the new Labour shadow Chancellor. However, the windfall relic has survived that cultural revolution—the windfall tax lives on.
Four years later, not even the most basic calculation or clarification has been advanced as to what the Labour party proposes. Every day, often in newspapers that are normally sympathetic to the Labour party, the chorus of condemnation grows. I quote from The Independent business section earlier this month:
"this is a tax hard to justify and hard to implement … Labour's tax lawyers and financial advisers are still, years after the proposal was mooted, wrestling with the legal difficulties of defining those the party wants to penalise."
No Conservative Member could have put it more clearly.
Today, we are providing an opportunity for the Labour party to come clean, to answer the questions, to spell out the costs, and, above all, to let the British people know what the windfall tax will cost every one of them.
Mr. Andrew Rowe: Does my right hon. Friend believe that the windfall tax is a pledge or a commitment, in the phraseology used so often by the shadow Chancellor?
The Deputy Prime Minister: It is neither a pledge nor commitment; just a downright threat, I would have thought.
If one is to create the concept of a tax, people are entitled to ask who will have to pay; how much they will pay; where the lines will be drawn; how the victims will be defined; how the legal challenges will be avoided; how to stand up to the already audible cries of protest from international investors. It is interesting: in the most successful part of the rejuvenation of our economy in the constituencies of the Labour party are inward investors, who come to this country because it is the enterprise centre of Europe. Yet what do we hear? The moment attention is drawn to these people, the Labour party goes back to its old tricks of sneering at anything that smacks of an enterprise economy.
The Labour party is so subliminally ashamed of the concept that it has invented a tax that it is now trying to call it a levy—old taxes, new levies. It amounts to an unprecedented attack on our privatised industries. Is it an

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attack on all of them, or just some of them? If it is only some of them, which ones? If we are looking at only some of them, how will that be defined when drafting legislation? Which sectors of British industry have been singled out as the old-style milch cow for new-style Labour taxes?
The Labour party has yet to explain which companies it defines as utilities, let alone which utilities are covered. Indeed, we have it clearly on the record. At the Labour party conference, the Leader of the Opposition said that there would be a one-off windfall levy on the excess profits of the privatised monopoly utilities.
Sir Irvine Patnick: My right hon. Friend will have received a letter, as will the Leader of the Opposition, from Yorkshire Electricity, pointing out that, before privatisation, it paid £41 million in tax, and that it now pays £90 million in tax. It has pointed out that its prices have been reduced in real terms by 25 per cent. It has also pointed out the effect of a windfall tax on jobs, investment and prices.
Does my right hon. Friend agree, having read the letter, that, in the end, it is the people who use electricity who will pay; that it is the investors who look forward who will pay? In other words, the Labour party is penalising people for its own ends, and it knows not why.
The Deputy Prime Minister: My hon. Friend is absolutely right. I happen to have the letter to hand. It is interesting that the Labour party laughs at the effects that will flow to the constituents in Yorkshire, which are clearly set out in the letter from Yorkshire Electricity. What will the tax do? It will
"undermine our ability to sustain the current level of investment … affect jobs … increase prices to customers in the longer term … reduce dividend income for our shareholders, over 100,000 of whom live in our region and are also customers",
and
"reduce pensioners' income as many of our large shareholders are pension funds."
That is what the windfall tax will do in Yorkshire, to the people who are expected to vote for the Labour party, which will introduce the tax, which will penalise the constituents on whose votes it depends.
Sir Donald Thompson: When my right hon. Friend sees today's Yorkshire Post, he will see that the right hon. Member for Kingston upon Hull, East (Mr. Prescott), the deputy leader of the Labour party, sneered at journalists who were gathered in Yorkshire, and told them to talk to business men. Labour authorities were being accused of penalising pensioners in the same way as the windfall tax would penalise them. All that the right hon. Gentleman could say was, "Go and talk to the business men."
The Deputy Prime Minister: The right hon. Gentleman would be better advised to talk to pensioners and employees. [Interruption.] Yes, to the pensioners who own shares in the companies on which the Labour party intends to impose a windfall tax. Those are the people to whom he should talk.
Mr. Dennis Skinner: It is nothing short of sheer hypocrisy for the Government, and the right hon.
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Gentleman in particular, to attack the Labour party on its proposals for a windfall tax on public utilities—for which Conservative Members act in a consultative capacity, and which give money to the Tory party for its election funds—when that same Government, of which the right hon. Gentleman was a member, some years ago decided to impose a windfall tax on the banks. What is the difference between a windfall tax on banks and a windfall tax on the fat cats who are close to Tory Members?
The Deputy Prime Minister: Why does not the hon. Gentleman ask trade unions, which invested funds in the utilities? For taking the trouble to support the election of a Labour Government—if that were ever to happen—trade unions would have a windfall tax imposed on them.
The answer to the hon. Gentleman's question is simple: the tax on the banks in 1981 reflected the fact that large numbers of British depositors attracted no interest on their deposits. That enabled banks to make a one-off large capital gain, which was legitimate. That has nothing to do with the free market operation of selling shares in companies that were floated at a price that the market commanded-they are two totally different circumstances.
To understand the dilemma that faces anyone seriously trying to do business with the Labour party, let us take the dilemma of the chief executive of PowerGen, Mr. Ed Wallis. He made a simple mistake, because he took new Labour at its new face value. He was asked a straight question by a Select Committee of the House, and, being a straight guy, he gave a straight answer. He told the Select Committee that his company, PowerGen, not being a monopoly, would escape the tax. No one can blame him for saying that, because he had the full authority of no less a figure than Alastair Campbell to give him confidence.
In a letter written to The Independent on 5 November, Alastair Campbell confirmed that the tax would hit only monopolies. No sooner had Mr. Campbell offered that helpful confirmation than up popped someone else, rather more modestly referred to in The Daily Telegraph as merely a spokesperson for the shadow Chancellor. He set out the shadow Chancellor's view, which was totally different from the view that was previously believed and trusted in by Mr. Wallis. The spokesman said that, in principle, all privatised utilities will be considered, and that the Labour party will not want to discriminate unfairly.
I am sure that it will be a relief to all those who work in the privatised utilities to know that Labour is not aiming to discriminate unfairly. There will be no unfair discrimination: that is clear. In its place will be fair discrimination. What is fair discrimination, and when will the Leader of the Opposition and his shadow Chancellor reach agreement on a definition of who will pay the tax?
Mr. Robert Atkins: Does my right hon. Friend recall that the right hon. Member for Derby, South (Mrs. Beckett) was reported to have said on the wireless that she would be prepared to include in a windfall tax the British Airports Authority and British Airways? Does he think that that inclusion could be extended to successful, semi-monopoly companies such as British Aerospace, which he and I know well? What would be the implications for those three companies of this iniquitous windfall tax?
The Deputy Prime Minister: My right hon. Friend asks an inevitable question. A refusal to define the tax base means that anyone who is interested in his or her tax liabilities will be unable to establish the risks of a Labour Government. It is, of course, precisely because the Labour party does not want anyone to be able to define the precise risks that its members will not answer the basic questions.
What this is really all about is a Labour attack on the successful privatised companies. What, in truth, do monopolies mean in a world in which competition is increasingly spreading all the time? Labour Members are incapable of answering that question.
I am talking not just about British Telecom, which patently faces world competition today, or about the domestic gas market, in which we have opened up competition and in which prices are adjusting downwards in those circumstances. There has been a massive reduction in electricity prices as a result of privatisation. Even in the water industry, we are now consulting about the possibility of greater competition. The fact is that, when Labour Members talk about monopolies, they completely fail to appreciate the revolution in competitive practice that is sweeping the country, and, indeed, the global market.
Mr. D. N. Campbell-Savours: Will the Deputy Prime Minister confirm that, last year, Treasury officials considered recommending that the Government introduce a windfall tax, and that some Ministers were in favour of it, including Cabinet Ministers? Is that not the truth?
The Deputy Prime Minister: We have never proposed to introduce a windfall tax related in any way to the Labour party's proposals. There is not a shred of evidence that members of this Government have supported such a proposal, and the Labour party knows it.
Mr. Campbell-Savours: Is it true that the Chairman of the 1922 Committee—a Conservative Committee—expressed support for a windfall tax? Can the Deputy Prime Minister stand at that Dispatch Box and absolutely deny that any member of the British Cabinet has expressed support for a windfall tax in the past two years? Let us have a denial from the Dispatch Box.
The Deputy Prime Minister: This is rich. We cannot get an answer from the Labour party about who will pay, how much they will pay or which companies will pay, and the hon. Gentleman thinks that he can divert attention from the bankruptcy of Labour's ideas by asking questions to which he knows the answers as well as I do. There are no proposals for a windfall tax in the Conservative party, there never have been, and as far as the present Government are concerned, there never will be. Let us be quite clear about that.
Business people, to their cost, have a tendency to take new Labour's words at face value. "Blind trust", I think, is the term for it. That is a very dangerous thing to do with new Labour. New Labour's policies are not about specific proposals; they are about winks, nods, sideways glances, hints and suggestions. They are about anything other than the facts and the details. The fact is that, the
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more questions are asked, the more the realisation grows—as my right hon. Friend the Member for South Ribble (Mr. Atkins) pointed out—that behind the windfall tax there is a bill: a real bill, for real people to pay.
The owners of our privatised companies today comprise millions of individuals who had the faith to buy those companies with their own savings in a free market. Ten million shareholders have pensions and insurance policies based on extensive investment in the utilities—British pensioners, whose pension values are now threatened by Labour's determination to tax them retrospectively, as an act of vicious political spite.
Mr. Malcolm Bruce: On a day when the Government are unable or unwilling to find time to debate the implications of European monetary union, the Government have time to attack Opposition policies and yesterday civil servants were involved in costing Opposition promises. Who has time to run the country?
The Deputy Prime Minister: As we have the most successful economy in western Europe, it is pretty obvious that it is the Government who have the time to run the country.
Mr. Bruce Grocott: On business confidence in political parties, will the Deputy Prime Minister join me in congratulating the directors of the Haymarket Group, who made the shrewd decision in 1994 to make no donation to the Conservative party?
The Deputy Prime Minister: I have nothing to do with the management of the company, but it made up for that in 1995.
Mr. Graham Riddick: Is my right hon. Friend aware that, in that fascinating and candid letter from Mr. Chatwin, chief executive of Yorkshire Electricity Group, he says:
"that threat of a Windfall Tax is depressing our share price which makes us far more vulnerable to take-over".
Does not Labour's stakeholder tax make it more likely that successful British companies will fall into foreign hands?
The Deputy Prime Minister: It is a classic situation. The Labour party did everything in its power to undercut the value of nationalised industries at the time of their flotation. Every political smear was used to keep prices down. Now we have made a success of them, it is undermining their success in the marketplace. As my hon. Friend says, that means that, if there were to be a takeover bid, the acquisition price would be lower. The Labour party has played politics with vital British assets.
If we are to make this economy the most successful in Europe, as we want to, we must attract inward investment into Britain. I wonder whether the Labour party has thought through exactly what it is doing. What will happen when overseas companies, having acquired British companies, are threatened retrospectively with a tax? What does Labour think will happen in the rest of the world when British companies seek to develop there? Does it think that such a tax, retrospectively and arbitrarily imposed on overseas companies in Britain,

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would be quietly accepted by overseas Governments? Of course it would not. There would be retaliation and pressures. The Labour party lives in a naive world if it thinks that British interests would not be damaged by the tax that it is contemplating.
Sir Jim Spicer: Directly on the question not of inward investment into Britain, but of British investment overseas, my right hon. Friend will know better than most hon. Members the expertise that many of our privatised companies have built up. They go out, do the consultancy work and spearhead jobs for other British companies overseas. Does he think that those consultancies, which do not bring in a vast amount of money but help enormously in the export sector, will continue at the same scale if we go down this road?
The Deputy Prime Minister: The windfall tax will have wide ramifications, because it will prejudice the good name of Britain as a home for inward investment. That will affect British companies' reputation, which is a priceless asset, in both manufacturing and service industries throughout the world. The Labour party cannot live with the fact that, having fought to prevent privatisation all through the 1980s and still today in the 1990s, there is not a country left in the world that subscribes to its attitudes to ownership of industry. We have utterly won the intellectual argument, and virtually every country is privatising its industries.
The Labour party cannot live with the success that we forced through the House, despite its opposition, to the immense benefit of Britain's public. It simply cannot contemplate the thought that a nationalised industry has, for example, reduced its prices, improved its service or expanded into overseas markets, but that is what has happened, to the immense benefit of our economy. What, therefore, does Labour want to do? It wants to punish the companies that made it possible.
Labour cannot live with the thought that British Telecom has reduced prices by around 40 per cent. in real terms since privatisation, that it has brought huge improvements to its customers and that it is now a major internationally competitive company. Labour cannot stand the thought that British Gas has penetrated markets in more than 20 countries, bringing enormous new opportunities and jobs for Britain, or that water companies are investing more than £3 billion a year since privatisation, improving water quality and the infrastructure. The figures before privatisation, under the last Labour Government, were roughly half of what is now being spent by the privatised companies, which plan to invest a further £24 billion between now and the year 2005.
I was in the House, as some of my right hon. and hon. Friends were, in the 1970s when the Labour party slaughtered the water industry's investment programmes. We are still suffering the consequences of the fact that, when the International Monetary Fund came here and took over the running of our economy, at the top of the list of the cuts were the nationalised water industries. Labour cannot forgive the fact that we have restored that investment and doubled it.
What it comes to is that the Labour party wants to punish success. That affects everyone with a telephone, a gas bill, an electricity bill and a water bill. This is not a levy on utilities, but a tax on everyone who lives in Britain.
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One might reasonably ask, therefore: how much is Labour going to seek to raise by way of a windfall tax and how many years in a row does it intend to do it? The concept of a windfall tax was that it could be levied just once, in one year, but the one-year-alone policy has now conveniently disappeared from view. It was The Guardian today that explained it. It says that the shadow Chancellor
"twice pledged in his conference speech"
to abolish the 16-hour rule. We put the cost of that at £875 million—(Interruption.] Just like Labour Members now, the shadow Chancellor protested vigorously, but let me quote from The Guardian:
"Abolishing the 16-hour rule is part of Labour's plan to up-skill the workforce, and is likely to happen swiftly. The windfall tax is supposed to pay for it—but there is only one windfall, and a permanent increase in spending. Direct hit by the Government."
That is not from a Tory newspaper. That is the basis of the mounting criticism that is being levied across the spectrum at Labour's windfall tax.
There is therefore a simple choice, and the Labour party should come clean. Either this is a total confidence trick, with the Labour party making on-going commitments that will not be funded by a one-off tax—and therefore the commitments will not be met—or this is not a one-off tax, because, once Labour has tasted blood, why should it not go on gnawing relentlessly away? Either way, we should be told. Is it a one-off windfall tax or will it be an annual levy to pay for Labour's commitments?
Of course the Labour party has not answered the questions and I have little expectation that it will try, but the House has been helped by Goldman Sachs International Ltd. It has told us what it thinks a windfall tax is going to amount to. It could be up to £5 billion, it says, although other people suggest higher figures. I expect that, somehow or other, in all those forays to the City, with a nod here and a wink there, those clever bankers have worked it out. That of course is extremely convenient for the Labour party, because it will not give the figures. If the Opposition won the election, however, they would then be able to say, "Of course everyone knew what our windfall tax would do. It was all there in the newspapers about the £5 billion. Didn't you read what the City commentators told us? We never issued a denial at the time, so it was obvious that we were going to raise those sums of money."
The Opposition have never answered any questions, but they will not deny the sums that people are bandying around. It is right that the Opposition should come clean on this matter. They should tell us what the facts are. If they do not, they cannot blame us for making our own assumptions and calculations.
Underlying the issue is the fundamental fallacy of the concept of a windfall tax. In Labour's dream world, the idea is that somehow one can pluck money out of the air, and somehow there is a pot of molten gold to be poured down into the national economy, all without any consequences. Nothing could be more typical of the naive and self-serving approach of the Labour party. Nothing could show more clearly that the windfall tax would be a new tax imposed on business by people who know nothing about business, but of course know a great deal about taxes.
Has the right hon. Member for Dunfermline, East (Mr. Brown) told people in all seriousness that the tax would not have any knock-on effects on businesses,

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shareholders, investment, jobs, inward investment and confidence? Is he telling us that one can take £5 billion from a limited number of companies with no consequences?
The fact is that windfall taxes, like any other, must come from somewhere—in this case from British companies. They would be forced to pay higher taxes, and they would have a limited number of means of dealing with that. One of them is to raise prices. That is in no way surprising to the shadow Chancellor, because he admitted as much recently, when he said that prices would not be allowed to rise. If those prices are not to be allowed to rise, how would he stop them? Would he give a direction to the regulators to make sure that those prices did not rise? Are we going to have a prices policy for the utilities controlled by politicians in Whitehall? Is that what will happen?
The shadow Chancellor has already said that he would be prepared to stop prices rising as a result of a windfall tax, but another alternative is open to those companies—to cut their investment programmes. That, of course, would have an effect on jobs, rising standards and the competitiveness of our companies. We would then be back exactly where we were in the 1970s when the Labour party was in power. As we know, whenever the Opposition are in power, unemployment rises, and we are faced with that prospect yet again. That, together with the inflationary record of the Labour party, is an old, familiar and depressing story.
Sir Cranley Onslow: Is my right hon. Friend aware that evidence given to the Select Committee on Trade and Industry this week suggests that London Electricity would cut its investment programme if it faced a windfall tax?
The Deputy Prime Minister: I am extremely aware of exactly the dangers that my right hon. Friend has pointed out. The fact is that either prices would go up or investment would be cut as a result of the imposition of the windfall tax. There is no loose cash sitting about with no purpose in the pockets of British companies. A windfall tax would affect prices or jobs, or both. That is its only consequence.
I know perfectly well that it is the determination of the Labour party to give the impression that it is a painless tax, but to answer no questions about it. I am certainly not the first person to ask those questions. In July this year, the Leader of the Opposition was interviewed on "The Financial World Tonight" and he was asked, for example, whether British Telecom and British Gas would pay the new tax. He said:
"we are not going to start specifying particular sums of money from particular utilities."
That did not get us very far, so the interviewer tried again:
"Is it all of the utilities that would come under a windfall tax?"
The Labour leader replied:
"Well, as I say, Gordon has said that we are not going to start specifying at this point in time that there are particular utilities who are going to pay particular sums of money or whatever".
The interviewer was singularly unimpressed, and tried a third time, by asking:
"Why won't you give them that detail?
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"The right hon. Gentleman replied:
"Well, with all due respect, we are giving that detail. I mean, we have simply said that in relation to specific utility companies we're not going to say specifically how much money companies are going to pay …at this moment".
That from the party which claims it is fit to govern the country. The Opposition have had four years to plan their policy and to show they know what they are talking about, and still there are no answers to the basic questions.
It is no surprise that concern about and criticism of the windfall tax has percolated through to the upper reaches of the Labour party. Alert as ever, the deputy leader of the Labour party has got wind of it first, so he has come up with a wheeze. We are told by the financial Times that he has held a series of meetings with the utilities executives to discuss their involvement in local job creation and regeneration projects, funded by the tax on their excess profits. One might say that that is a worthy vision.
Off the right hon. Gentleman goes to the shadow Chancellor to set out his proposals. He says, "Look, shadow Chancellor, we've got a bit of a dog's breakfast here, left over from the old heady days when you and I were still recovering from peddling the myth that Neil and Roy were the dream ticket. Well, we've all come a long way since that, and I suggest that we hypothecate"—I do not think that the right hon. Gentleman would have used that word—"and use some of the windfall revenue for worthy schemes."
The shadow Chancellor was, to put it bluntly, unamused. In fact, he took off into outer orbit. He has already spent the money about 35 times over, but there was his right hon. Friend threatening to give the whole bloomin' lot away before he even gets his hands on it.
We should at least give the deputy leader of the Labour party his due. He cannot answer any of the questions, but, my word, he can certainly spot a question coming his way when he has had four years to think about it.
I must tell the Opposition that they cannot go on running from the questions. They must set out the basic principles on which the tax would be based. Tell us which companies would be affected and what criteria would be used. Tell us how big the bill will be for pensioners, customers and shareholders. Is it £5 billion, £6 billion, £7 billion or £10 billion? But then, on second thoughts, why bother? There will not be a windfall tax under the next Government, because the next Government will be a Conservative one.
4.57 pm
Mr. John Prescott: I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
"notes the plight of unemployed young people and the long-term unemployed and welcomes the Labour Party's initiatives to deal with these problems, to be financed by a windfall levy on the excess profits of the privatised utilities."
The Deputy Prime Minister sought to prove that consumers, shareholders and pensioners will suffer from Labour's windfall levy. That is the Government's case. We did not hear one word from him about the excess profits that have been made by the privatised utilities. There is no doubt that they have made such profits; even the regulators have recognised that and taken action. I thought that the right hon. Gentleman's speech was rather

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tired. It contained an awful lot of tired questions and was not even helped by the humour in a couple of set questions with set answers.
The Deputy Prime Minister made much play of the question whether we are proposing a levy or a tax, and no doubt we will hear an awful lot more about that. Perhaps those words do not come easily to him.
The Exchequer Secretary to the Treasury (Mr. Phillip Oppenheim): What is the difference between them?
Mr. Prescott: That question was first asked by the first Government to levy a windfall tax, a Tory Government. The then Chancellor of the Exchequer said:
"I should require the banks to make a special fiscal contribution."—[Official Report, 10 March 1981; Vol. 1000, c. 773.]
What is the difference between a tax, a levy and a "special fiscal contribution"?
Mr. David Shaw: Will the right hon. Gentleman give way?
Mr. Prescott: I shall give way, in time. I always give way to fools such as the hon. Gentleman.
There has been an awful lot of rhetoric. We want to direct the attention of the House and the country to the fact that excess profits have been made. Let us not argue about the terms. There have been excess profits, and we intend to recover them, to put our people back to work. That is the difference between us and the Tories, and that is the point that we want to make.
The hon. Member for Sheffield, Hallam (Sir I. Patnick) quoted a letter from Yorkshire Electricity. He did riot tell us about the letter from Yorkshire Water, but I shall leave that issue aside for now. The person at Yorkshire Electricity who wrote to the hon. Gentleman is one of the people who have benefited greatly from privatisation. Since privatisation, annual boardroom pay has increased by 565 per cent., and board members have £2.7 million in share options outstanding. I would write a letter to the hon. Gentleman if I thought that those privileges were under attack.
Sir Irvine Patnick: The right hon. Gentleman has a copy of that letter£unless he has not had time to read it.
Mr. Prescott: I have a copy of the letter. I want to deal with the arguments made by the Deputy Prime Minister about the effects of a windfall tax on consumer prices, investments and pensions—which is the Government's case—but I wanted, first, to make those remarks, to deal with the points made by the Deputy Prime Minister in his speech.
Despite the protestations of the Deputy Prime Minister, the privatised utilities were sold off cheaply, weakly regulated and allowed to make excess profits. Labour plans to raise a levy to help put the unemployed of Britain back to work, because we believe that that is social justice.
The British people have paid a high price for privatisation. As I said, the privatised utilities were sold off cheaply and regulated weakly. That was done deliberately, to allow the City to make a financial killing,
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which it did. Moreover, often the utilities were provided with financial sweeteners, such as the £14 billion of written-off debt and tax allowances that were given to the water companies alone. Water companies' profits have rocketed, water bills have increased by 83 per cent., boardroom pay has soared, and there have been record share options and other perks. The British public are picking up the bill for privatisation, and we think that that is wrong.
Mr. Rod Richards: The right hon. Gentleman has told us that the windfall levy would be used to put people back to work. Will he tell the House whether Labour's plan would also include capital projects?
Mr. Prescott: I am sorry; I did not hear the last part of the hon. Gentleman's question.
Mr. Richards: I asked whether the Labour party's plan would include capital projects. If so, perhaps the right hon. Gentleman will outline some of them for us.
Mr. Prescott: I shall deal with how we will use the money when I come to that part of my speech.
Mr. Shaw rose—
Mr. Prescott: I shall give way to the hon. Gentleman, who seems to think that I will not deal with it.
Mr. Shaw: Will the right hon. Gentleman tell the 3 million small business owners in this country and the 2 million other employers what is the Labour party definition of "excess profit?" Under Labour's definition, how many extra pounds in tax will small business people have to pay?
Mr. Prescott: That is a proper question, and I shall deal with it at the appropriate time. The hon. Gentleman has told us his opinion on such matters, but I remind him that he led the campaign to stop taxation of share options. Should the Chancellor, in his Budget—he will not tell us anything about it today—introduce a capital gains tax, people with share options will enjoy an even greater windfall than they have so far. I do not know whether the hon. Member for Dover (Mr. Shaw) would support that.
Today, we have seen the Deputy Prime Minister weeping crocodile tears for taxpayers, pensioners and consumers. This Government profess to have concern for the taxpayer, but are they not the Government who imposed 22 new taxes on the taxpayer? They profess to have concern for the pensioner, but are they not the Government who broke the link between pensions and earnings to fund tax cuts for the better-off? They also profess to have concern for the consumer, but are they not the same Government who slapped value added tax on to domestic fuel consumers, and penalised consumers—especially many pensioners—who cannot afford the heating bills imposed by the Government?
The Deputy Prime Minister must know that that value added tax increased fuel bills by £3 billion in three years. Are they not the same Government, and the same Deputy Prime Minister, who imposed the fossil fuel levy, which

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further increased fuel bills by £6 billion in the past five years—with more increases to come? How dare they talk about the burden on the public.
We have heard a great deal from the Deputy Prime Minister about shareholders and pension funds, of which he knows a great deal because of his business background. Was he thinking about shareholders when he encouraged firms to delay paying debts, which is the main cause of bankruptcy for small firms in enterprise Britain?
I recall when the Deputy Prime Minister sat on the Treasury Bench as a Tory Transport Minister, in 1970, when I was first elected as a Member of Parliament. I recall the debate that we had on the Mersey docks and harbour board, and I am sure that he, too, remembers it well. We were dealing with a statutory trust, which had statutory trustees. All the pensioners who invested in the trust thought that they had Government bonds, which were as safe as the Government. The Deputy Prime Minister, who was then a Minister, belonged to a Government who slashed the price of those bonds and the value of that trust's assets by one third. That action affected pensioners, and I protested about it to a Government who were supposedly concerned about pensioners and shareholders, but who imposed that tax on those pensioners and that trust fund.
I shall give the Deputy Prime Minister another example. He has been a Member of Parliament for a long time, and I cannot simply sit here and listen to him tell us how much he feels for shareholders and pensioners. Does he remember the nationalisation of the shipbuilding industry, when he was an Opposition transport spokesman, protesting about our formula for compensation? No doubt he will remember that. He said that the Labour Government's terms for compensation to shareholders were unfair. Day after day, he protested about those terms in the House. But after he became the Minister with responsibility for dealing with compensation claims, he rejected that stand and endorsed Labour's settlement for shareholders. It was simple hypocrisy.
The Deputy Prime Minister: The very reason why we could not restore the legitimate rights of the shareholders was that there had been so many transfers of ownership after nationalisation and before we came to power. It is precisely the same story here. There is absolutely no justice in penalising people who have bought shares at today's value because of mythical accusations of what happened yesterday.
Mr. Prescott: It sounds like another broken promise to me. The Conservatives promised one thing in opposition, and they delivered something else when they were in government. But the right hon. Gentleman should not take my word on it; shortly after the event, the editorial in The Times—I do not think that it is a Labour newspaper—judged that
"their treatment leaves a stain on this government, as on its predecessors, and on the reputation of those ministers (Mr. King, Mr. Heseltine) who made so much political noise and so many implicit promises at the time but who, when they enjoyed power, found it expedient to do nothing."
That was not the Labour party; it was the editorial in The Times.
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Let us come more up to date—to Tuesday 7 March 1995. The right hon. Gentleman claims to be concerned about shareholders. What about the £4 billion wiped off the market value of electricity companies in one day because the regulator, appointed by the Government, got his sums wrong on the formula?
I was particularly surprised that the right hon. Gentleman dared to mention pension funds, when he belongs to a Government who spent most of their time raiding the pension funds of most of the industries that they privatised. Hon. Members do not have to take my word for that—the Government were condemned by the pensions ombudsman for it. He took the view that a £200 million surplus had been taken out of the National Bus Company pension fund. He arrived at the judgment that the removal of the surplus was a breach of trust. The Conservatives raided the pension funds, but they have the audacity to come here and talk about a windfall levy on pension funds.
A common thread runs through all those incidents—the Deputy Prime Minister was in the Government on each occasion, usually pretty close to the source of the crime, intervening before breakfast, intervening before dinner and intervening before tea. Never did he act in the interests of the consumer, the pensioner, the taxpayer or the public. That is hypocrisy.
The Chancellor of the Exchequer (Mr. Kenneth Clarke): May I take the deputy leader of the Labour party away from his memoirs and bring him back to the windfall tax? Can he explain why he is not able to say whether the tax will apply to British Telecom?
Mr. Prescott: It is very interesting for the Chancellor to break his purdah and come to the Dispatch Box to ask that. I have some questions for him. Will he abolish capital gains tax? Will he reduce income tax?
Hon. Members: Answer.
Mr. Clarke: I shall answer all questions about my Budget next Tuesday. Will it take the right hon. Gentleman until next Tuesday to answer my question? Why is his party unable to say whether the tax will apply to British Telecom? He has had four years to think of that detail, as he describes it.
Mr. Prescott: I shall give the same answer. We shall give all the details in the first Budget of a Labour Government.
Let me say something else in response. All the Deputy Prime Minister's questions about to whom the levy will apply, what the levy will be and how we will do it are proper questions, no doubt about it, but when the bankers' levy or—what was it?—fiscal contribution was announced in the Budget, Conservative Members were whipped through the Lobbies without being told any of those details. They were told that the details would be in the legislation when it came before the House. The measure did not apply to every bank, as the Chancellor knows. People were asking which bodies would pay and which would not. The then Chancellor replied, "We will tell you when we bring the Bill to Committee."
The Prime Minister said today that he wanted answers to those questions. He was a junior Whip in 1981, driving Conservative Members through the Lobbies with no

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answers to those same questions. It is a bit much for the Chancellor to ask us that. I shall trade some secrets with him behind the Chair if he will tell me what he will do in his Budget. No doubt he will not tell us, but who knows?
Let us stay with the realities. The windfall levy is not an original idea, I confess. It is not even particularly a Labour idea. It is a Tory idea. They did it to the banks. In 1981, the Conservative Government applied a windfall tax on the clearing banks that had made excess profits. In his 1981 Budget speech, the then Chancellor Geoffrey Howe made his position clear:
"Indeed, bank profits in recent years have increased sharply, both absolutely and by contrast with the experiences of most other businesses …
Certainly the contrast with the sharply reduced profits of industrial companies is, if anything, more striking. In present difficult circumstances, I cannot avoid the conclusion that I should require the banks to make a special fiscal contribution."—[0fficial Report, 10 March 1981; Vol. 1000, c. 772-73.]
Just put the words "public utilities" in that quotation and the justification for the windfall levy has been made by the former Chancellor.
We have given four years' notice of the principle of the tax. The Conservatives gave no notice in their election manifesto. Unlike the Tories, we have given industry plenty of warning. Even the shareholders and the pension funds have known since 1992 of the possibility of the windfall tax and its implementation. They have no doubt taken it into account when judging their earnings.
Mr. Rupert Allason: Will the right hon. Gentleman give way?
Mr. Prescott: No. I give way only to full-time Members.
The shadow Chancellor has made our point clearly. I do not know where the chairman of the Conservative party—the other half of the double act with the Deputy Prime Minister—is today, but on Monday he produced a document to try to whip up fear about the windfall levy. It was based on the remarkable assumption that the whole cost of the levy would be passed on to the customers. That was his assumption for the effects on jobs and prices; in other words, he assumed that there were no excess profits in the privatised utilities. I know of nobody who has come to that conclusion, except the chairman of propaganda, the right hon. Member for Peterborough (Dr. Mawhinney), if I can say that about him—sorry.
There is a mass of evidence to show that excess profits exist—not that evidence and facts have ever made much impression on the chairman of the Tory party. The evidence is clear for all to see. The excess profits fuelled the fat cat salaries and share options to which we have referred. Directors of electricity companies have received £5.5 million a year—an 800 per cent. increase since privatisation. Payments to water company directors have gone up from £1.3 million to £6.4 million a year—a 500 per cent. increase. The Deputy Prime Minister would be happy for the Chancellor to abolish capital gains tax in the Budget. I do not know whether the Chancellor has told him if he will do it. They have probably had their Budget chats. If capital gains tax is abolished, those directors will pocket a £30 million tax windfall by cashing in on their share options. That is wrong and we intend to look at that windfall.
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We have heard an awful lot about share prices.
Mr. Tim Smith rose—
Mr. Prescott: I want to address some of the economic points, which are legitimate issues.
Northumbrian Water was sold for £157 million; a month later, its share value was £207 million—up by 30 per cent. The electricity company Seeboard was sold for £246 million; it is now worth £1.2 billion. Case after case shows that taxpayers were short-changed—indeed, I believe that they were robbed.
Hon. Members may say that the large sums of money that have been made go into investment, but the regulator has expressed concern about under-investment in those industries. Hon. Members should read the regulators' reports. The regulators have agreed price rises on the basis of false investment forecasts from the companies. The gas regulator said that British Gas had underspent by one third on its capital expenditure allowance. In other words, the companies were allowed to charge customers for capital expenditure that never took place. The water regulator found that not only did the water companies fail to honour investment promises, but they were given massive tax relief to encourage them to do so. Capital expenditure by the gas, electricity and water industries has fallen by nearly one fifth in real terms since 1995. Those are statements of the industry.
What about the tax take from those companies? I hear an awful lot said about that. Compared to the normal rate of corporation tax paid by other industrial companies, the privatised utilities have underpaid on tax, despite massive and obscene profits. Some water companies paid no corporation tax at all, while others paid less than 7 per cent—those figures compare with the typical 30 per cent. paid by industrial companies. Altogether, the energy and water companies alone have gained a tax windfall in this way of £4 billion since privatisation. [HON. MEMBERS: "Old Labour."] Is it "old Labour" to point out that it is wrong that excessive profits are being paid for by our people in jobs, prosperity and prices?
The takeover frenzy for companies—with firms from America and France queuing up to spend £12 billion on the electricity distribution companies alone—belies the Government's claim in the motion about inward investment. The chief executive of the American company bidding for Northern Electric said that he had taken account of Labour's plans for a windfall tax. Apparently, it is still profitable to invest in this country—even for those responsible for inward investment, as they have taken the effect of a windfall tax into account. The Deputy Prime Minister should listen to an investor who has not been put off by the tax.
Mr. Keith Mans: If the chief executive of the American firm has taken account of a windfall tax, does that not mean that he will be paying less for a national asset than he would without such a tax?
Mr. Prescott: The figures that I have given show that the firms are not paying a lot less, and they have certainly taken into account a windfall tax. The Deputy Prime Minister said that a windfall tax would deter inward investment, but apparently the Americans and French firms have taken into account what my right hon. Friend

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the shadow Chancellor has been saying for four years. There is every possibility that a Labour Government are around the corner, but those firms are still investing and buying into the utilities. They are putting their money where their mouth is, and we should listen to them.
There is plenty of evidence of excessive profits, but can the utilities still afford to pay the tax? I have heard quotations from various analysts—some of whom, including Goldman Sachs, have been mentioned by the Deputy Prime Minister. I refer him to the expert team from Warburg, a bank that has advised the Government on almost every one of their privatisations. Warburg has looked at the windfall tax and considered the various estimates, and makes it clear:
"The ability of most of the companies to cope with a Windfall Tax is once again demonstrated …a £5 billion overall levy is already broadly discounted."
That is the judgment of Warburg, and Goldman Sachs has also made assumptions on the matter, but we will not make a judgment until my right hon. Friend the shadow Chancellor has talked to the regulator and the industry.
Some of the opinions quoted by the Deputy Prime Minister show that companies have discounted the windfall tax. They have not flooded out of the country and their shares have not collapsed. This is the key—a one-off specialised payment will not affect the long-term trend of shares, profits and investment. I am referring to the opinions of investment houses—including Warburg—to which the Government have paid millions for their advice on privatisation.
The Deputy Prime Minister: I have here Warburg's assessment of a windfall tax, and this is what it says: "unjust and arbitrary". It is right.
Mr. Prescott: Every tax is basically arbitrary. [Interruption.] That is a simple point, and I do not know why it is causing such consternation. As for "unjust", that is a judgment, and there are clearly differences between us about the justice of the tax. We will use those excessive profits to put people back to work—the Conservatives will put those profits in their own pockets. After a detailed study of pre-tax profits, debt, dividends and forecast share prices, Warburg concluded that the ability of most companies to cope with a windfall levy "is once again demonstrated".
I also call in aid the Institute of Directors, from which Labour receives little help or advice. However, an article in The Guardian quotes the IOD as saying:
"We acknowledge that some of the utilities do have spare cash at the moment, and that the economic impact of the tax might be insignificant".
I presume that the Deputy Prime Minister is a member of the Institute of Directors—it is right up his street. Is he a member?
The Deputy Prime Minister indicated dissent.
Mr. Prescott: No. Does he agree or disagree with the IOD's opinion?
The Deputy Prime Minister: I have here a letter from the IOD with which I agree. The tax will be "hard to
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compute", is "not the best way" to raise revenue, and "customers will suffer". How many more bits of evidence do I have to produce? No one likes this tax.
Mr. Prescott: I do not doubt that a lot of people do not like tax. People in this country have every reason not to like tax as a result of the tax burden after 18 years of Conservative government.
The IOD acknowledged that there was spare cash in the utilities, but the Deputy Prime Minister said not a word about that in his speech. He did not say that the economic impact of the tax "might be insignificant", and his whole speech was about how significant and dire it was going to be for the utilities. It was a load of nonsense. The companies have the capacity to pay up without increasing prices or significantly affecting the long-term dividend and share values.
We plan to introduce a levy in the next Labour Government's first Budget. After that, we will receive representations from interested parties—by God, there are many in the Conservative party—and consult the regulators about the levy. First, it will be a one-off levy, and not an on-going tax like VAT on fuel. Secondly, the levy will be applied to privatised utilities that have gained excess profits. In principle, all privatised utilities will be considered as candidates for the levy without fear or favour. There will be no way out by lobbying or by avoidance schemes—or even by joining the team that the Deputy Prime Minister has reportedly set up. Thirdly, we will ensure that the levy is taken from excess profits, and not higher prices. That is what the regulators are there for, and they have made it clear that they will not allow the cost to be passed on to prices. Those regulators were appointed by the Government in previous legislation.
Fourthly, the proceeds will be put to a good use. What is, in our judgment, a "good use"? In 1981, the Government introduced a programme of fiscal contributions from banks. We have made it clear that the excess profits will be used to get people back to work. The Government took the view in 1981 that they were going to transfer the resources from the banks' excess profits into industry. I do not know where that money has gone and, at the moment, it does not matter. We are saying that we will direct those resources towards investment in our unemployed people.
The proceeds from the levy have been earmarked for two particular measures, and we promise that they will be put to no other purpose during the next Parliament. Our youth unemployment is almost double the level in Germany. Currently, some 265,000 young people have been unemployed for six months. Our pledge to every young person unemployed for more than six months is that we will offer him four options: a job with training, voluntary sector work with training, full-time study or the chance to join one of the environmental task forces. All those options have been spelt out in detail by the shadow Secretary of State for Education and Employment.
A quarter of a million young people will be offered new opportunities to gain jobs and skills and we will offer financial incentives to employers to take on the long-term unemployed. That is important for the whole country. The present situation, where one in five non-pensioner families have no wage earner in the household, cannot continue. It is a disgrace. We are seeing a two-nation Britain and a wasted generation of young people, and a Labour Government will set about the task of putting that right.

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It seems that some utility companies have taken to lobbying to seek exemption from the levy. I have a better proposition to make to them, since the Deputy Prime Minister referred to reports in the papers about what they could do. The Government and a future Labour Government will appeal to all companies and industry to help people to get back to work, and that proposal is often made at the Dispatch Box by Ministers. We will say to companies, "Think of ideas and help us to train our people. Provide the people with jobs and we will help you with organisation and financial incentives." That is at the core of our policy to get 250,000 people back to work.
From their constituency experience, many hon. Members will remember that the gas, electricity, water and railway industries all used to have very good training centres that contributed not only to training for those industries but to training provision in their areas. They trained more people than they required, but one of the first consequences of privatisation was that all the training bodies were scrapped—(Interruption.] I suggest that Tory Members go and look at the situation. What happened was that accountants became members of the board and pointed out that training was no longer a statutory requirement because the right hon. Member for Henley (Mr. Heseltine) and the Government had scrapped all the regulations and the utilities no longer had an obligation to train people.
It is time that those big companies thought seriously about how they can help to train our people, provide jobs and rebuild regional economies, but that is not tied to the levy. The levy will be paid directly to the Chancellor. The Labour Government will want to work in partnership with industry to see how we can provide good-quality training and not the skivvy training under the youth training scheme that the Government have provided.
The Deputy Prime Minister: The right hon. Gentleman has made an interesting point. He will raise a one-off windfall tax in one year to pay the cost of employing 250,000 young people. What will happen in the second year?
Mr. Prescott: Perhaps it has not dawned on the Deputy Prime Minister that when people are taken off the dole—which costs £9,000 per person, according to the Government's figures—in the long term, more money is saved by reducing other public expenditure. [Interruption.] No Labour Government have had to live with 3 million unemployed. Unemployment was less than 1 million in 1979. It costs £20 billion to keep 3 million people on the dole, and I wish that we had heard a little more from Conservatives about how to get our people back to work so that we do not waste money keeping them on the dole.
We need to use our resources to get people back to work to meet the community's needs. That is the intelligent way to deal with the matter and my right hon. Friend the Member for Dunfermline, East (Mr. Brown) has constantly made the point about how much it costs to maintain people on the dole. In our proposals for incentives for the long-term unemployed, we have stated how much will be used for the financial incentive to keep people back at work. [Interruption.] I would have thought that the hon. Member for Dover, as an accountant, would know about the changes in losses and profits that will occur if people go back to work instead of staying on the
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dole. The hon. Gentleman will have his own concerns about being out of work, because our proposals will return the Labour candidate in Dover to replace him as the Member of Parliament. [Interruption.] The people are listening, even if Tory Members are not.
The chief executive of United Utilities, Brian Staples, quoted in the magazine "Utility Week", said that his company had better prospects under a Labour Government than under a Conservative Government. That is what he said and he is right.
Mr. Atkins: Will the right hon. Gentleman give way?
Mr. Prescott: No. I have given way far more than the Deputy Prime Minister did.
The utilities would still have to pay the levy to the Treasury, but they could play a great part in local and regional regeneration to benefit our skills base and build our regional economies. In that way, they could play a key part in tackling the whole unemployment cycle.
Independent experts confirm that the levy can be raised from excess profits without passing on the cost to the customer. The windfall levy is fair, transparent and popular and we will put it to good use. The unemployed and the decent people in Britain cannot wait for us to give new hope to our young people and the long-term unemployed. It will not be long before we will get the chance to do it.
Madam Deputy Speaker (Dame Janet Fookes): Before I call any Member to speak, I wish to point out that many Members want to speak and the debate must end at 7 o'clock. I therefore ask that Members make their speeches as short as possible.
5.34 pm
Sir John Cope: That was an irresponsible speech from the deputy leader of the Labour party, because it increased rather than decreased the uncertainty that surrounds the windfall tax. It shows that the Labour party is not fit or ready for the responsibility of government if it behaves like that with the taxation system.
I want to consider the precise terms of the amendment that the right hon. Gentleman moved. The amendment says that there would be
"a windfall levy on the excess profits of the privatised utilities."
"Windfall" is a slightly odd word to use in the context as windfall apples are those which fall prematurely from the tree because of high winds. As a result, they do not count in the production of apples from that tree. Windfall apples are often bruised and worth less than other apples, except to the urchins who climb over the wall and pick them up. So referring to a windfall tax is an inappropriate use of the word.
Mr. Denis MacShane: As an urchin, perhaps I may help the right hon. Gentleman by suggesting that the windfall levy could be called a fiscal

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contribution, which is the same language that his party used for the same tax a little over a decade ago. Would that help him out of his problem?
Sir John Cope: That is not the phrase used in the Labour party's amendment.
Ms Jean Corston: Is the right hon. Gentleman aware of the legal definition of the word "windfall", which is something that accrues to a individual through no effort of his own?
Sir John Cope: I am always prepared to take legal advice from the hon. Lady as I know that she has legal training, but I am using the word in the ordinary way. A windfall benefits not the person who owns the tree, but the urchins who climb over the wall.
The more important definitions, rather than just the name of the tax, are those concerning "excess profits" and "privatised utilities". Those are the important words in the amendment and they are the nub of the debate. Those words summarise the questions that need to be answered and have not been answered after four years, as my right hon. Friend the Deputy Prime Minister pointed out earlier. The two main questions are how the tax will be calculated and which companies will pay it. Until we know that, we cannot work out what the effect will be on the companies, the consumers or anyone else.
On the question of how the tax will be calculated, the deputy leader of the Labour party said early in his speech that he would explain the definition of excess profits, but he never did. We have had profits taxes and excess profits taxes in the past.
Mr. Norman Hogg: Perhaps I can help the right hon. Gentleman, as I often did in the past when he was deputy Chief Whip. He will know that Scottish Power made a hostile bid for a water company in the south of England and has made equally hostile advances to Merseyside and North-Western electricity board. If Scottish Power is so rich that it can engage in such predatory activity, surely it has the money to pay the windfall tax.
Sir John Cope: I acknowledge the co-operation that the hon. Gentleman has shown in the past, but it is no good imposing a tax on a company because it has made a takeover bid. One has somehow to define excess profits so that the Government can say, "You will pay X per cent. of the profit that you have made."
Basically, there are two ways in which that might be done. The first would be to tax the operating profit. Sometimes the deputy Leader of the Opposition appeared to be looking towards the companies' operating profits, and spoke of their making excess profits in that sense. The other way would be to use the share values. The right hon. Gentleman spoke about the companies being sold off cheaply, and other parts of his speech suggested that the excess profits would be calculated on the basis of the way in which share prices had moved.
One thing is clear: whatever the definition is—whether it relates to operating profit or to share values at different points in time—the same definition must apply right
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across the companies on which the levy, tax or whatever one likes to call it, will fall. Apart from any other consideration, the Bill would be hybrid if that were not the case. A single definition must cover all the different companies to which the measure will apply.
We are not clear which companies will fall into the category, but if the right hon. Gentleman considers the possibilities, he will see that it is difficult to use a single definition in a fair way.
Mr. Tim Smith: Did my right hon. Friend see the table published in the Financial Times on 31 October, which showed that if the levy were based on total return until 1 January 1993, British Telecom would have to pay £1,500 million, whereas if it were based on total return until 1 January 1996, it would have to pay nothing? Is it not extremely important that we should be told not only what is meant by excess profits, but the date from which the levy would be calculated?
Sir John Cope: Yes, because without that detail we do not know. The sums are arbitrary.
Mr. Stephen Timms: Will the right hon. Gentleman give way?
Sir John Cope: I shall give way one last time, but I have already given way several times. Other people want to speak, too, and I must obey your instructions, Madam Deputy Speaker, by making my speech short.
Mr. Timms: Was the right hon. Gentleman not a Whip on the Finance Bill when the measure was passed in 1981?
Sir John Cope: I have been all sorts of things, including a Treasury Minister. If the hon. Gentleman is talking about the banks levy, he will remember that the so-called windfall tax, if he likes to use that phrase—I have already expressed some doubts about it—came about not as a result of any operation by the banks but because there had been exceptionally high interest rates for a period. The tax was levied only on income from cash deposit accounts, and the measure was precise and well arranged.
I was asking whether the Opposition intended to impose the tax on operating profits or on share values. It is extremely difficult to find a definition of excess operating profits. What is an excess profit? There are regulators assessing all the companies and making judgments all over the place. Somehow or other they must come up with a legal definition of "excess".
If the Opposition intend to use operating profits, they might just as well increase corporation tax on all companies in a certain class. Indeed, the old profits tax which existed many years ago when I first started to study accountancy had some special rules for nationalised industries and utilities—although those concerned special reliefs rather than a special levy. I suggest that that would be a much simpler way.
At other times, however, the deputy Leader of the Labour party spoke as though the levy would fall on changes in the share values. As my right hon. Friend the Deputy Prime Minister pointed out, the difficulty with that

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idea is that the people who originally bought electricity shares in 1990, for example, are often no longer the shareholders.
In the case of SWEB, one of the companies which covers my area, none of the original shareholders is still there. The Southern Company, which bought SWEB, paid £9.65 each for the shares. The idea that shares are now worth more than that is difficult to measure, and may not be true. The other day when I asked the company, I was told that it would need to borrow money to pay the tax. That would hit its investment plans. Similar considerations apply in every case.
Although there was a rise in the share price of many of the companies after privatisation, that money is not within the companies, and never was. It rests with the shareholders, or rather with those who were shareholders at the time. Any levy imposed on the company itself will not get at the profit made by shareholders in the early stages. It never would have done, and never can do.
In almost all the companies, some existing shareholders show a loss on their investment. I looked at the share prices this morning, and different companies always have highs and lows. The high point for Anglian Water this year was 631p, but its shares stood at 567½p yesterday. Much the same could be said of the electricity companies. There are many shareholders whose shares show a loss at this point in time, although clearly they hope to show a profit in due course. The money never was in the companies, and certainly it is not there now, yet those people will be indirectly penalised. Those are some of the disadvantages of trying to raise the levy on the basis of changes in share values.
Another important set of questions has been asked, but not answered, today. On which companies will the levy fall? The right hon. Member for Kingston upon Hull, East (Mr. Prescott) largely followed the wording of the Opposition amendment, which says that the levy would be based on
"the excess profits of the privatised utilities".
But the Leader of the Opposition said to the Confederation of British Industry that the target would be the privatised monopoly utilities. That is a different phrase, and covers a different set of companies.
Mr. Tim Smith: Far fewer.
Sir John Cope: Yes, far fewer. Certainly many companies are mentioned in that context which are in no way monopolies. British Gas, for example, may be included, yet in my part of the country there is competition with British Gas, to say nothing of British Telecom and the rest. BT has faced competition right from the start, with Mercury and so on, and now there is even greater competition. BT operates in the big world market. It is not a privatised monopoly utility at all, and neither is British Gas. The British Airports Authority is not one either. I am not even sure whether BAA is a utility. The word "utility" is not very precise.
Mr. Allason: And British Airways?
Sir John Cope: I cannot see how one could say that that was a utility. It is certainly not a monopoly. The only word that fits is "privatised".
Mr. Tim Smith: And successful.
Sir John Cope: Of course—my hon. Friend is right.
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As was pointed out in an earlier intervention, the right hon. Member for Derby, South (Mrs. Beckett) has said that the Labour party has not ruled out any of the privatised companies. Those include British Aerospace and Rolls-Royce, which employs some of my constituents, as well as some of the right hon. Lady's. I cannot see how on earth the definition could be extended to cover those companies. They are obviously not utilities. Using the definition in the amendment rather than that used by the right hon. Member for Derby, South, Rolls-Royce and British Aerospace escape—but so far as I can see, so do British Telecom, BAA, British Airways and the others.
What about Bristol Water, which supplies water to many of my constituents? It has never been nationalised; it has always been a private water company—and there are others. When it is loosely stated that there will be a tax on all utilities—that is what the right hon. Member for Kingston upon Hull, East said—we must think about Bristol Water. Are such companies entitled to rely on the wording of the amendment, which refers to "privatised utilities"? Does the deputy leader of the Labour party's emphasis at the end of his speech on "privatised utilities" mean that Bristol Water is out of it? I hope that we shall hear definitely whether such water companies are out of all this, as they should be. They do not come under any of the definitions that the deputy Leader of the Opposition gave. We need much greater clarity about the companies that will be involved, should the levy ever come about, or we shall not be able to tell what will be its effects.
There is no doubt that the main effect will fall on consumers, whatever the right hon. Member for Kingston upon Hull, East says. He said that it would not fall directly on consumers because Labour would not allow prices to be adjusted. That means that it will hit the companies' investment—and failure to invest ultimately hits consumers just as much as putting prices up.
Many companies are investing huge amounts. SWEB is investing £60 million this year to improve the distribution system, its service to customers, and so on. Yet City analysts, doing their best to find out what all this means, tell it that it might have to pay between £20 million and £80 million, the spectrum is that broad, to meet the levy. SWEB and Midland Electricity, which also serves my constituents, give excellent service—a better and cheaper service than when they were nationalised.
It is difficult to make out from what the right hon. Member for Kingston upon Hull, East said today or from previous statements by leading Labour spokesmen, some of which are contradictory, whether the leaders of the Labour party know the answers to my questions and will not tell us or whether they do not know the answers because they not worked them out yet. It must be one or the other; either way, it is damaging. The basic questions remain: which companies will pay? How will the tax be levied? What effect will it have?
The mere announcement of the tax four years ago, and the constant repetition of it since, has inhibited investment. Companies, shareholders, regulators and consumers do not know where they stand. Whatever the answers are, and however it is set out, the tax would be very damaging—so I am glad that it will not happen because there will not be a Labour Government.
5.52 pm
Mr. Ken Purchase: The right hon. Member for Northavon (Sir J. Cope) spent an incredible time and no little energy in discussing, almost with himself, definitions. That is the least of the problems. The principle of the tax is established with Labour, as it was formerly with the Conservative Government in which he was a Minister, when the windfall tax on the banks went through. Is he saying that every i was dotted and every t crossed before the 1979 general election, when the Conservatives were planning to be a Government? Did they know exactly how, on whom, and when the windfall tax would operate? That is nonsense and is no more true than it is today.
Labour's Front-Bench spokesmen already have in their grasp almost precisely the definition for which the right hon. Member for Northavon is searching. Rightly and properly, they will wait to take the appropriate advice when it becomes necessary. Let me remind Conservative Members that they paid out an absolute fortune to find out how to privatise the former nationalised industries. That was because they did not know how to do it. They had to take advice. How much did they spend on denationalising Railtrack—was it £6 million, £7 million or £8 million? Whatever it was, they had to take appropriate advice. Surely they do not believe that it is beyond our wit to do the same by a due process of consultation with industry, commerce and the City and with those who would be affected by a windfall tax, to determine a definition that will stand up to rigorous scrutiny and on which we can depend to bring in this much needed cash.
Several hon. Members rose—
Mr. Purchase: I shall not give way. Time is too short and other hon. Members want to speak. I wish you to know that I will not be interrupted, Madam Deputy Speaker.
For Conservative Members to talk about the management of the economy is a disgrace. Was it not they who on black Wednesday blew £10 billion—we cannot be sure that we will ever know the proper total—on the hopeless cause of trying to defend the pound when the Chancellor of the Exchequer had already stated that he would pay any price to defend it? Was it not obvious that the City would take the bait and rip the Government apart? It was the Government who got into such a fix over the despicable poll tax that they had to add 2 per cent. to the general rate of VAT to recover their position. They have never been able to take it off.
I want to move directly to how the mess—and it is a mess, as I shall demonstrate—has come about. Regulation has troubled us since the beginning of the denationalisation programme. How do we regulate a monopoly? It is impossible to ape all the machinations and variations that typify a market in which there are any number of sellers and buyers. We do not always have that situation. In the case of what we call the pipes, the wires and the tracks, there is only one supplier. I will deal with TransCo in some detail later.
It is impossible, however bright the regulator may be, to create a market where none exists. That is the first lesson. We are discussing an inexact science. That has led to the difficulties that we daily have to deal with and is the basis
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of the assumptions that Labour's Front-Bench spokesmen make about the need to redress the wrongs that have been caused. It is a matter not only of taxation but of a new remit for the regulator and of a new approach to regulation that we will ultimately have to develop and implement in the interest of avoiding further excessive profits being made at the expense of the British taxpayer.
We must recognise that, however badly the regulators have regulated, personal squabbles aside—it has not been an enterprise covered in glory—the staff and resources of the regulators are too tiny compared to the resources available to the denationalised monopoly industries. Puny is how I would describe them. The regulators cannot cope. The Trade and Industry Select Committee's proceedings were mentioned earlier, so I feel at liberty to say that every witness to the Committee to date has said that the regulators' staff and resources do not and cannot match those available to British Gas or the electricity industry.
We are told that the Americans have mastered the art of regulation. If they have, where do American companies get the capital and revenue to buy up our utilities? It is because they have been making a bundle in the United States, despite the so-called tighter regulation there.
I have some Library figures that I got 12 months ago. They are not right up to date, but deal with the year 1994–95. I want hon. Members to know what the Library researchers were able to dig up from company annual reports. They found that, in that single year, the pre-tax profits of the denationalised utilities were £9.06 billion. Tax paid was £2.4 billion—27 per cent., instead of the full rate of corporation tax. Of course it is gross to net, we understand that, but that does not alter the fact that those figures represent an aggregate underpayment by the privatised utilities. We then find that dividends paid totalled £3.5 billion, which is 38.5 per cent. when expressed as a fraction of the £9 billion.
Those figures would be extraordinary by themselves, but we have to consider how they arose. The biggest contributor is the fact that, during the years of privatisation, no fewer than 146,776 people were sacked—dispensed with, finished—from those industries. That led to externalised costs for the rest of the community and the taxpayer of an average of £9,000 per person out of a job—for the utilities alone, every single one of the 21 million households in the United Kingdom bears a cost of around £63 per annum. How can the Conservative Government trumpet the great gains from privatisation when the truth is that it has been paid for in human misery and suffering and by every household in the United Kingdom?
The right hon. Member for Northavon asked about water companies and I shall give him some examples. I shall deal specifically not with his water company, but with the top three in terms of pre-tax profits. I start with Thames Water. That company's profits in 1994–95 were £303 million, but tax paid was 7 per cent. or £22 million.
Mr. Tim Smith: That was because of capital investment.
Mr. Purchase: It was not because of the company's capital investment.
Mr. Smith: There is a very simple explanation as to why the water companies paid below average corporation tax: it is because of their high level of capital investment.
Mr. Purchase: That is only part of the answer, as the hon. Gentleman well knows. In a short speech, we cannot

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deal with these matters in the way that he wants and I will not get tied up by doing so. The headline figures are exceedingly important and give a proper flavour of the subject of this debate.
To return to my speech, the North West Water group's pre-tax profits were £284 million, but the company paid tax of just 5 per cent. Severn Trent's profits were £268 million, but only 11 per cent. was paid in tax. The area I represent is covered by Severn Trent and I have figures showing that, since privatisation, the company's profits have totalled £1.836 billion. Of course, there is overrewarding in the boardroom—directors' remuneration this year totals £1,249,000. Snouts in the trough would be a better description than overrewarding.
Competition has been mentioned, particularly in the south-west, which is the local area of the right hon. Member for Northavon. Competition has been introduced, but evidence to the Select Committee shows that the Gas Consumers Council has recorded a 90 per cent. increase in the number of complaints. That figure refers only to the unresolved complaints that have had to be dealt with by the council, not the whole range of complaints that have been made to the gas company.
How did we reach a position in which such enormous profits are made? One of the reasons was the terrible, tragic and crazy undervaluation of assets at the time of privatisation. In almost every instance—perhaps without exception—there was a significant undervaluation of the asset. Actually, one exception comes to mind—the nuclear industry. When it became perfectly clear that the industry could not be sold as a whole because money could not be made from it, the Government divided it up. They took the brand-new nuclear reactor—Sizewell B, which had cost £4 billion to construct and which had only recently been commissioned—and sold it for £2.9 billion. The rest of the nuclear liability was left in the public sector to be picked up by the taxpayer. That was a clear example of money being taken from the public purse to put in private pockets.
Finally, I want to address the question of TransCo, which is a natural monopoly because no one wants to dig into the ground to lay another set of gas pipes. The gas companies will all use the same gas pipes and the competition to which the right hon. Member for Northavon referred is between suppliers. What do the suppliers have to say about TransCo? To some extent, they agree with the regulator that prices are too high. When the regulator brought price capping into play, TransCo complained that 10,000 jobs would be lost. The truth was that it already had somewhere in the region of 9,000 job losses in the pipeline.
Then TransCo shares fell slightly in price and everyone's reaction was, "How terrible. The regulator is ruining the industry." The truth is that, of the 1.8 million shareholders, 1.1 million were small shareholders, having fewer than 500 shares. If the regulator's price capping in respect of TransCo is adhered to, those 1.1 million small shareholders will actually be better off losing £130 on the value of their shares because of the lower gas prices that they will have to pay. That says a lot.
I spoke earlier of the privatised industries externalising their costs through massive unemployment. If we add together the costs of unemployment arising from privatisation and the regulator's proposals in respect of TransCo, we find that the British people would be far
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better off if TransCo had remained nationalised. If the gas suppliers had competed properly to put their gas down the tubes, the nation would have been better off, we would have had the money to put into unemployment, and, generally speaking, people would have seen some value in return for the assets that were stolen from them by the Conservative Government.
6.7 pm
Sir Michael Grylls: If any Conservative Members had doubted the wisdom of having this debate, those doubts must have been swept away by now. Clearly, we have flushed out Labour in respect of the extraordinary windfall tax about which Opposition Members have been talking for the past four years. The resulting headline might be, "New Labour, old attitudes".
I listened carefully to the speech by the hon. Member for Wolverhampton, North-East (Mr. Purchase), but I hope that he will forgive me if, because of the shortness of the time available, I do not follow him down some of the paths he laid out. However, at the beginning of his speech he commented on the regulators and the way in which they had not got going as strongly as they should have, and I think that that is unfair.
Although America had previously had regulators for monopoly industries, the privatisation programme in Britain broke new ground. I am not trying to make a party point, but the country owes a huge debt to the regulators. Some have been better than others and there are many different opinions about their effectiveness, but the regulators have tried hard and I think that they have been successful in getting to grips with the problem of how to regulate—especially in respect of prices—monopoly or near-monopoly industries.
If one wanted any proof of that, it is that, by and large, in all our utilities—with the exception of water companies, which are in a special position—prices have decreased considerably. If a regulator's job is to protect the consumer, the regulators have done their job well. As the hon. Member for Wolverhampton, North-East said, they could always press down prices a bit more, but: I shall not go too far down that road.
What has emerged from the debate is Labour's old wish to interfere. Labour has lost the intellectual battle on nationalisation versus privatisation. It has been a bitter blow. In the 12 years or so since privatisation started, Labour Members have opposed every privatisation because they did not believe in it. In a way, that was reasonable, because they believed in nationalisation, but they have had to face the fact that the privatisations have been highly successful on almost any measure that one cares to produce, whether it be the consumer's interests, investment, or getting politicians out of those industries' hair. It has been a bitter pill for the Labour party to swallow.
So what happens? Labour finds a different route. Labour Members do not propose to renationalise the utilities, but they would like to interfere in them. It would be more intellectually honest for them to tell the House and the country, "Yes, we want to run those businesses. We think that it is wrong that they are run by professional managers. We should like to run those industries if we ever formed a Government. We think that we would run them better"—not many people would agree, but that is what they would say—"so we would nationalise those

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industries and take them over." That would be more honest than trying to interfere through the back door using windfall taxes and so on.
Labour Members also appear to have forgotten—I hope that the hon. Member for Edinburgh, Central (Mr. Darling) will mention this—that the world has moved on since the early days of privatisation, and that companies based in other countries have invested in those businesses and bought the shares. Many of those utility companies are now owned by American or French companies.
Not so very long ago, we had a 13-year battle to get rid of a method of taxation in the United States that everyone agreed was wrong—corporate taxation by the unitary tax method. There was a huge fight, in which both sides of the House were agreed: an entirely non-partisan effort. In the end it was won, to the great advantage of Britain, because British companies in America had been damaged by what hon. Members on both sides of the House agreed was an unfair, unjust, damaging tax.
Now, in 1996, in Britain, we have the prospect—in the unlikely event that Labour forms a Government—of another tax which most commentators outside the Labour party believe to be very unfair. As I believe I was the person who recommended retaliatory action in Britain against a unitary tax, I could not complain if that unlikely event were to happen. I am sorry that we are obliged to go down the fairy-tale route of supposing that there might be a Labour Government but, in all fairness to the public, we should warn them of what might happen if that very unlikely event happens.
If that happens and Labour introduces that lovely windfall tax, we shall not be in a position to complain if the Americans reintroduce a unitary tax, saying, "You have done a bad thing to us so we shall do a bad thing to you." Those 13 years of hard work would be thrown away.
Mr. David Shaw: My hon. Friend will appreciate that we have not yet heard an answer from the Labour party on how "excess profits" are to be defined. Does he feel that all the overseas investors into this country will now say to themselves, "Excess profits will be taxed by any future Labour Government if there is one, so should we invest in the United Kingdom?" Is he not worried that all the small businesses for which he has fought hard over the years now know that their profits are at risk because they might be defined by a future Labour Government as excess profits and obscene profits? Has not Labour today frightened 5 million business people in this country?
Sir Michael Grylls: My hon. Friend makes a powerful point, which will be taken on board very widely by people, because the notion of "excess profits" is entirely subjective.
Let us suppose that one of the excellent small businesses that has been encouraged and helped to start by the benign regime of 17 years of Conservative government—low tax and all that stuff—has got going. Let us suppose that the firm is situated in Dover—an excellent place to be because it has an excellent Member of Parliament—and the firm invents a tremendous new product with fantastic scope and starts making a lot of
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money. The managers might say, "My goodness. There might be a Labour Government, and they might judge that our profit was obscene—whatever `obscene' means." It is an extraordinary route to take.
Madam Deputy Speaker, we have been told—I am sure that you will have heard it as well—that Labour has changed, that it now believes in all the things that the Conservatives believe in. I believe that there has been a change this afternoon. Labour Members were going one way; they have suddenly returned to a crossroads and are going off to the left again. They are saying, "We do not approve of profits" or "We do not approve of obscene profits"—but let us have a definition. They are saying that "profits" is a dirty word.
Mr. Purchase: You approve of obscene profits.
Sir Michael Grylls: The fact remains that the higher the profits, the bigger the corporation tax take, so there is more money for all the things that we all care about, such as education, and all the social services which always need more money. Taxation cannot be raised if there are no profits.
This is very boring stuff, I know. [Interruption.] Well, it is. We thought that Labour had left all that behind, but it has not. The great advantage of having held this debate is that we can warn people what Labour is really all about.
There is no excuse for a windfall tax on the privatised utility industries. The Opposition must know that there is no comparison with the one-off tax that was imposed on the banks, because they had inflated profits for an external reason—interest rates. Profits have been earned by the privatised utility industries because they have been well managed. They have made themselves efficient and made good profits by their own—internal—diligence. I use the word "good", not "obscene". That is different from the case of the banks. The banks did not argue with the tax. They had a one-off increase in their profits because of the very high interest rates, not as a result of their actions.
What will companies do if that unlikely event happens? We have been told that the regulators would not allow them to increase prices. I am not sure whether that will mean another piece of legislation to instruct the regulators not to allow the companies to pass the tax on in prices, but let us assume that Labour sits on the regulators and they say that the companies cannot pass on the tax in higher prices. What do the companies do then? Cut investment?
Mr. David Shaw: Cut jobs.
Sir Michael Grylls: Or cut jobs? The accountants' report on the regional electricity companies—[Interruption.] The Opposition should listen to this; I am just about to conclude. The report says that, in the regional electricity companies, it is thought that they would have to cut about 6,000 jobs. The deputy leader of the Labour party said that all that money would go into job creation. It will not. The tax will destroy jobs.
This is a job destruction tax. I do not like soundbites, but that one should go out across the country. The job cannot be done by the regulators, according to Labour; so the price will be paid either in investment or in a loss of jobs—probably both.

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Today we have flushed out Labour on this subject, and the country should be duly warned. It is not just a question of a few remote companies suffering from the tax. The fact is that the improvements in these important utilities—water, electricity, gas,telecommunications—of the past few years would all be endangered. Investment would slump and there would be job cuts.
I believe that today the House has done a good job by drawing the attention of the country to what Labour's plans would mean. I hope that the electorate will see that this is a thoroughly dangerous and irresponsible tax, which shows up the old Adam in the Labour party.
6.20 pm
Mr. Malcolm Bruce: It is rather strange that we are having this debate at all this afternoon. Not untypically, it was led off by the Deputy Prime Minister, who rushed into the House in his usual fashion, launched his broadside, and then disappeared—doubtless to fight more fires burning throughout the Government, or possibly to deal with the fallout from the bombshell that the Government dropped somewhat imprecisely yesterday.
My earlier intervention revealed that the Government are using Government time to attack policies that they say will never be implemented—because there will be no change of Government—and using civil servants to cost Opposition programmes which they do not expect ever to be implemented, so there is no one left with any time to run the Government. But even that does not matter, because they will not be running the Government for much longer. In view of the foregoing, I suggest that the sooner we have the election, the better. Four months of this behaviour will not be good for the country.
A windfall tax is not the right approach, although it is perfectly legitimate for the Labour party to cost one of its own programmes. The Labour party needs to answer some serious questions about the idea, and soon. The Opposition cannot deny that there is a great deal of uncertainty surrounding who the tax will affect and how. I understand why they are not giving details about the who, the why and the how much; still, the uncertainty persists.
I could not help noticing earlier, sitting where I do, that the more uncertainty about the level of the tax and the number of companies it would affect, the more cheerful the Labour Members who sit below the Gangway in front of me became. They have all left now, but their behaviour suggested that the tax certainly appeals to old Labour—
Mr. Purchase: Are you including me?
Mr. Bruce: I am not being personal—hon. Members can call themselves what they like.
A point of principle is also at stake. This is retrospective taxation, and I believe that to be wrong. Moreover, if there have been excess profits, and if consumers have been ripped off, it is the very people from whom the profits have been made who should get the benefits of any rebate: in other words, the consumers.
It is impossible to raise billions of pounds from the privatised utilities without hurting millions of people. It is all very well to say that the regulators will hold down prices. If they do, something else will have to give—either
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the dividend, which will not concern Labour Members below the Gangway, or investment, which should concern us all, or the chance of a great deal more energy efficiency and the alleviation of fuel poverty by reducing fuel bills. The energy utilities could and should be involved in that.
We should also bear it in mind that there are 5 million shareholders who could be affected by such a tax; plus 17 million members of pension funds. It is just not honest, therefore, to suggest that this is a victimless tax which can be imposed without hurting anyone. That does not make it intellectually dishonest; the Labour party is entitled to its argument, which is that the windfall tax is a way of raising money. It is, but it is naive to suggest that no one will be affected by it.
The Deputy Prime Minister made one telling intervention in the speech by the deputy leader of the Labour party, who made an otherwise good and rumbustious contribution, which I thoroughly enjoyed. With his background, he clearly believes in these arguments with a great deal of conviction, but he did not convincingly answer the question about what will happen in year two after a one-off windfall tax.
There are some doubts in the Labour party as to where all this might lead. David Wighton, writing in today's Financial Times, has produced an article with the headline "Windfall's Big Chill". It says:
"Labour says it was told by its lawyers that, while there should be no fundamental legal problems with the proposed tax, it must take great care not to discriminate against particular companies."
That would mean facing litigation, which in turn could result in a delay that could prejudice Labour's spending commitments.
The article also points out:
"However, the US energy groups which have committed almost £6 billion"—
perfectly legitimately and legally—
"to buying UK regional electricity companies … could face a tax bill of more than £500 million and could argue they did not benefit from the earlier windfall."
Mr. Wighton also states that the water regulator has suggested that a tax on the water utilities could lead to a rise in prices. The giveaway line comes in the last sentence of the article:
"But Labour insiders insist they will resist all attempts to undermine the tax, simply because it would jeopardise the party's only promise on extra public spending."
Therein lies the problem. Yesterday the Labour party responded to the Government's challenge—concerning the 89 promises that would cost £30 billion—by sending every available Labour spokesman to every studio in the country to say that it was all absolutely untrue: Labour has no spending commitments of any kind. There is no difference between the Labour party's programme and the Government's current programme, they claimed. That does make one wonder why anyone should bother to vote for a party that will make no difference.
The problem remains that a windfall tax can yield revenue for one year, but it will not pay for a programme for a whole Parliament. That leaves the Labour party somewhat exposed. It is why I conclude by saying that Opposition and Conservative Members alike might be well advised to read the Liberal Democrats' alternative Budget, published today—
Mr. Purchase: It is fantasy.
Mr. Bruce: Not so. It is in fact a highly focused, costed programme, leading to a fully costed manifesto. Front

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Benchers of the two old parties are attempting to persuade the British people that gravity can be defied—that it is possible to reduce inflation and taxation and increase public spending. The sums of course do not add up; they would require rates of growth without inflation which no Government, Labour or Conservative, have every achieved.
If greater investment is needed in education, as we believe it is, it has to be paid for from honest sources of taxation which can be identified and which people can understand: such as a penny on the standard rate of income tax. A windfall tax would not deliver a credible programme or finance a Government for a full term. It would create so many confusions and uncertainties and hurt so many people that I believe the Labour party will live to regret it.
6.29 pm
Mr. David Shaw: The country needs answers. We have not heard any answers from the Labour party today. We have not heard how excess profits or obscene profits are to be defined, but Labour tells us that people out there are earning them. There are 5 million business owners in Britain, who will be frightened stiff by today's debate. Labour will tax entrepreneurs, those with initiative and those who create jobs.
How on earth do Labour Members expect a windfall tax to create jobs? They say that they will create new training schemes, but when has a tax created jobs through new training schemes? Where in the solar system has there been a tax that created new, permanent jobs, especially in the private sector?
Taxes do not build profits. Taxes do not build products or provide services. Taxes do not create businesses. In my business career, I have been involved in 2,000 jobs being sustained or created. I have never created or sustained any of those jobs through taxation. Jobs are created by investing the profits of a business, not through taxation.
I regret that time does not permit me to debate the matter fully. Labour must provide many answers. I challenge the Opposition spokesman to define "excess profits" to the House.
6.30 pm
Mr. Alistair Darling: I do not know about the rest of the solar system, but I believe that the Government's own training programme, such as it is, is funded out of taxation. Like almost everything else that the hon. Member for Dover (Mr. Shaw) has ever said in the Chamber, his assertion is wide of the mark.
I am glad that we have had this debate, and that the Government have chosen to debate our policies in their time. For a party that keeps telling itself that there is no prospect of a change of Government, the Tories seem to be rather concerned about it.
The hon. Member for North-West Surrey (Sir M. Grylls) said about half a dozen times that he was sure there would be no change of Government, but just in case there was, he should raise various matters. Conservative Members protest too much. They know full well that people have had enough of them. In their desperation they know that their only chance now is to throw mud at us and hope that some of it sticks.
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For the second time in one week, a Tory bombshell has blown up in their own hands. Yesterday they attempted to discredit us by making wild allegations about pledges that have never been made. Each one of the 89 was refuted quickly and shown to be nonsense.
Today we were told to expect great things from the Deputy Prime Minister, but that was yet another damp squib. He failed to rise to the occasion. I read in the Financial Times today that there is a new Tory campaign against the windfall tax which is to be led in part by the Deputy Prime Minister. Anyone who was thinking of joining and paying good money—good money, no doubt, from the profits of the privatised utilities—for that political campaign will have listened to what the Tories said and decided that they had better save their money. Whatever else happens, the Tory party will not be able to do much for them.
It is interesting that the Tories are setting up a campaign against the Labour party. Many people in the boardrooms and privatised utilities will think long and hard about joining a Conservative party political campaign to campaign against anything in the coming general election. Most of them will have enough sense to stay out of it and to leave the Tory party to flounder in its own desperation.
Despite the fact that the Government tell us that there is not enough parliamentary time to legislate on paedophiles or knife control, or for building societies legislation, or even to discuss Europe—one of the most crucial matters facing this Parliament and the next—they find time to discuss our policies in Government time. What an indictment of a Government who have had their day. After 18 years they are so desperate to cling to power that they spend Government time debating the Labour party's policies.
We welcome that opportunity, not just because it allows us to restate the value of the windfall tax, but because it draws attention to another problem facing the Government. The reason why they are not discussing Europe today is that they do not want to reveal the depth of the rift between the Chancellor of the Exchequer and the Euro-sceptics who make up an increasing proportion of the Conservative party.
It is a measure of the Government's desperation that they have chosen to side with the few who sit in the boardrooms of the privatised utilities against the many who have had to pay the 22 tax increases imposed by the Government, despite the fact that at the last election the Tories promised that they would not increase tax or national insurance and that they would not put VAT on gas and electricity. They did all that, yet they have the gall to attack us for our policies.
In the motion, the Tories have the temerity to refer to the "injustices" of our proposal. What do they know about injustice? What about the injustice of the one in five households in Britain where there is no one in work? Our proposal for a windfall tax is designed to fund a programme that will help young people and the long-term unemployed to get back to work. That is justice and, we believe, it makes good economic and social sense. That is why the tax is fully justified.
When we listen to the questions raised by Conservative Members during the debate, we recognise that the Tories are increasingly the political arm of the privatised utilities. It is a seamless garment, which we have seen today. We see it in the Financial Times article referring to a Tory

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Minister, a Tory Lord, a Tory media adviser, a privatised utility and a Tory campaign. Most people believe that any Government who embark on such behaviour have had their day, and the sooner they are out of office, the better for everyone.
Perhaps this is the first time that we have had a sponsored debate in this, the mother of Parliaments. Perhaps, like the weather forecast, the next debate will be sponsored by PowerGen. That is what the Government have reduced us to.
Unlike the Tories, we say what we intend to do and how we propose to fund it. As my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), the deputy leader of the Labour party, made clear in his excellent speech, we will tell the people of Britain what we intend to do. We have said for four years that we intend to impose a windfall levy on the privatised utilities.
The Tories said nothing about their windfall tax on the banks in 1981—not a word.
Mr. Richards: Will the hon. Gentleman give way?
Mr. Darling: In a moment. The tax was sprung on the banks on the day that the then Chancellor introduced the measure. He could not say which banks or how it would work. Conservative Members say that the tax had to be imposed because the banks had made profits through no fault of their own. They should read the report of the Committee stage of that Bill on 12 May 1981, when the then Chief Secretary to the Treasury, now one of the European Commissioners, said that the fiscal requirement was necessary to achieve the public sector borrowing requirement. Is not that surprising? Does not history repeat itself? The Government were in deep debt in 1981 and they are in deep debt in 1996. After 18 years, it is the same story: the Tories put up taxes to pay for the debts that they have run up, because of the way in which they conduct the economy.
Mr. Richards: The right hon. Member for Kingston upon Hull, East (Mr. Prescott) referred several times to "excessive profits". Will the hon. Gentleman define that term for the benefit of hon. Members?
Mr. Darling: I am exceedingly glad that I gave way to the hon. Gentleman, as he brings me neatly to the next part of my speech. The entire Tory thesis is that there have been no excessive profits. That is what they have all said, time and again. However, no one outside the Tory party holds that view. Industry knows that excessive profits have been made. Analysts have made that point. SBC Warburg, which has no connection with the Labour party, said:
"The ability of most companies to cope with the windfall tax is once again demonstrated."
Every time there has been a takeover, commentators and analysts believe that the case has been made. I quote from The Daily Telegraph, which is also not exactly a Labour publication. It said:
"Each time an electricity company is taken over, Labour's proposals for a Windfall Tax on utilities gains a little more respectability."
Analysts and the privatised utilities admit that there have been excessive profits. The regulators have also encountered that problem: the electricity regulator fixed a
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price review only to discover that Northern Electric had found an extra £500 million to defend itself against the Telstar takeover. There is much evidence of excessive profits.
Such profits do not derive from the endeavours of those who run the companies—in many cases, they are the same people who were on the company boards before privatisation. It is interesting that often their first priority—Cedric Brown is a good example—is not to improve investment or to secure the company's future but to increase their salaries and grant themselves share options. The Government never condemned such behaviour.
The Conservatives say that a windfall tax would adversely affect investment. Let us look at what has happened. The Office of Water Services claimed that it required investment of £36 billion for the 1990s. In fact, the water companies have invested only £13.6 billion since privatisation and their current annual investment of £2.2 billion means that they will not meet the regulator's target. The idea that investment will somehow be affected by a windfall tax does not bear close examination.
Mr. Tim Smith: Will the hon. Gentleman explain how excess profits will be defined? Perhaps I can help him: will it be based on the total return above the average for the FT share index since the date of flotation? If so, until what date?
Mr. Darling: The hon. Gentleman may recall that the Chancellor made the same point about an hour ago. When he was asked to reveal his plans for next Tuesday, he said that we would have to wait. Unlike the Conservatives, we have said that we intend to impose the windfall levy and we shall make our position absolutely clear when my right hon. Friend the Minister for Dunfermline, East (Mr. Brown) presents his Budget. As the hon. Gentleman is so concerned about the matter, perhaps he will reflect on the following information. South West Water has said that it can afford the windfall tax. A top director is quoted in last Sunday's The Observer as saying:
"We will be able to grow our dividend by 8 per cent. above inflation, even with a windfall tax".
That is good news for the people of Exeter and Plymouth: we will be able to fund programmes to get the young unemployed back to work and their electricity company will be able to perform its functions perfectly well.
Any objective analysis of the privatised utilities will show that the tax is affordable. Conservative Members must face facts: that is the evidence from the market. If there are so many fears and so much uncertainty, why are overseas investors flocking to buy privatised utilities in this country? They know of the proposal—they must contemplate the possibility of a Labour Government in the next 12 months—and they are falling over themselves to buy the privatised utilities.
A large proportion of inward investment in this country comes from French and American companies which have bought privatised utilities. They do not come to this country because they are philanthropists—they do not simply fancy lighting up the midlands or providing water to the north-east of England. They are here because the companies are cash rich. An analyst told me last week that some companies have so much cash that they could afford to make purchases with their own cash. The figures show that that has nothing to do with efforts within those

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companies: it has to do with the way in which the taxpayer was short-changed by the Tory party in the early 1990s.
If Conservative Members believe that we are wrong, they should have a word with their shop steward, the chairman of the 1992 Committee. Last year he made it abundantly clear that he thought that consumers had had enough—they had had a raw deal—and he did not object to a windfall tax on utilities. Most objective advisers—even some Government Members—know that the windfall levy makes sense. When my right hon. Friend the deputy leader of the Labour party asked the Deputy Prime Minister whether his Cabinet colleagues contemplated such a proposal, he failed to answer—never mind the Opposition not answering questions.
The evidence shows that the utilities can bear the tax. The Institute of Directors—which is no friend of the Labour party—acknowledged that
"the utilities do have spare funds at the moment, and that the economic impact of the tax might therefore be insignificant."
We must bear in mind not only the fact that the tax is justified but where the money will go. Persistently high levels of unemployment have made spending in this country difficult to control and have caused divisions in society.
Unlike the Conservatives, the Labour party believes that it is a duty of Government to give people an opportunity to succeed and to help themselves and their families. One of the best ways of achieving that is by helping people off benefit and into work. That is good socially and economically because people are in work, they earn a wage and they pay taxes—it is a virtuous cycle. We believe that the Government have a role to play in that area, which is why the windfall tax is justified.
On behalf of the Opposition, I profusely thank the Tories: they have done a great service to the people of this country by giving us the opportunity to justify the tax. The people know that they were short-changed by the Tory party when it sold off the utilities and by virtually every Government action since on tax and spending. They do not trust the Conservatives and they do not believe them. The people are looking for a change: they are looking to get back to work and for economic stability to allow this country to grow and be proud. They will get that under a Labour Government.
6.46 pm
The Financial Secretary to the Treasury (Mr. Michael Jack): The chances of that occurring are about as good as seeing pigs fly. I was struck when I looked at the front page of the Financial Times this morning and saw the headline, "Windfall tax: Labour clings to a bad idea". I have heard nothing in the debate that leads me to a different conclusion.
The hon. Member for Edinburgh, Central (Mr. Darling) reminds me of a contestant in the radio game where people must speak for a minute without deviating, hesitating or repeating themselves. The only repetition that he made was his repeated inability to answer any of the telling questions posed by my Back-Bench colleagues. He did not deviate from his unwillingness to tell the House and the country what the tax is about.
The hon. Gentleman asked why the debate was occurring in Government time. If he cares to pay attention, I shall tell him. The Government have a duty to
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warn the people of this country what the Labour party proposes. The problem is that the Labour party is so frightened by its policies that it has not thought out the tax thoroughly and it will not tell people the truth. In this debate, we can shine some light on what is happening in the economy.
The right hon. Member for Kingston upon Hull, East (Mr. Prescott) talked of excess profits, but he did not define them. Labour Members failed to define what a utility is, who will be affected by the tax, who will pay the tax and how it will be set. They are too frightened to tell the British people the truth about the windfall tax. They employed the subtle technique that operates along the lines of, "If we tell them about the means, perhaps that will justify the ends," and they talked a great deal about job creation.
The best antidote to a windfall tax is the Government's record. We have lowered unemployment by about 900,000 since its peak during the recession and we have the fastest growing major economy in western Europe. The Government can be proud of their job creation record. Some 210,000 people are now back in work.
Mr. Terry Lewis: Since when?
Mr. Jack: Since last year. [Laughter.] That is an illustration of what happens when the Government take difficult economic decisions. All Opposition Members can do is laugh. Wait until the British people judge us on our economic record, which, since the last election, has made them £700 a year better off in real terms. Those are the real ways in which to judge the benefit of our economic policies, which are lowering unemployment, particularly for the young people about whom we have heard so much.
The right hon. Member for Kingston upon Hull, East tried to suggest that one justification for the tax was that privatised companies have been privatised too cheaply. He clearly has not had time to read the National Audit Office report, which made it absolutely clear that it was content with the way in which the Government had conducted those sales, and I believe that Her Majesty's Government's record has emerged very creditably on this score. The fact that the value of those companies has gone up is a tribute to the fact that the Conservatives had the courage to let them go, to have the benefit of private enterprise and private management. The same companies have invested and grown.
The right hon. Gentleman should look at the facts. He is very fond of bashing water companies and wandering around in the sewage of this debate. Let him just have a look. Since 1991, water and sewerage companies have made £7.8 billion in profit. But they have invested £15.1 billion, and they plan to go on to 2005 and invest some £24 billion. None of that could have been achieved if they had remained in the nationalised sector.
We were given a tour of all our yesterdays. One of the yesterdays for which the right hon. Gentleman was responsible was cuts in public investment. Does he remember them? Does he remember the cuts in nurses' pay? Does he remember the queues at the hospitals? That was his yesterday. That was the legacy that he bequeathed to this country. It has taken the courage of the Conservative Government and privatisation to make up for that lost time. It is a record of which we can be proud. [Interruption.]

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The right hon. Gentleman chastised us about the fact that we— [Interruption.]
Mr. Deputy Speaker (Mr. Michael Morris): Order. Hon. Members who wish to contribute from the Dispatch Box should try to intervene. Sedentary comments or yelling are not acceptable.
Mr. Prescott: I wonder whether the Minister can tell us what the level of unemployment was in the periods that he is talking about in the 1970s.
Mr. Jack rose— [Interruption.]
Mr. Deputy Speaker: Order. The same applies to the hon. Member for Dover (Mr. Shaw).
Mr. Jack: In answer to the right hon. Gentleman, we now have more people in work than any other major European economy. That is testament to our economic strength.
The right hon. Gentleman chastised us over the question of our tax on the banks' interest. My right hon. Friend the Deputy Prime Minister dealt with that point. The right hon. Gentleman is very fond of sedentary rhetoric, but he clearly did not read, in his tour of all our yesterdays, what the Institute for Fiscal Studies said of the tax in 1981. It said that it
"had the merit of being applied to a well defined set of firms and of being charged on a tax base that was coherently related to the reasons given for introducing the tax."
It was a tax on profits now, not several years later.
I heard somebody talk about retrospection. This is the biggest retrospective smash and grab raid of British industry that has been proposed. It goes against all the basic principles of what is a good tax.
Mr. Darling: The tax must have been retrospective. Indeed, the then Chief Secretary spent several pages in Hansard explaining why it was retrospective.
Mr. Jack: The hon. Gentleman knows that Chancellors, during any financial year, may make advance announcements of what they propose to enact in the next Finance Bill. The hon. Gentleman's proposal is to tax what he deems to be undefined levels of profit and gain in an undefined set of industries that happen to have been privatised many years ago. That, by any definition, is a retrospective tax.
The hon. Member for Gordon (Mr. Bruce), reminded us, quite rightly—
Mr. Darling: The Minister is desperate.
Mr. Jack: I certainly am not desperate. I have enough information to sink the hon. Member for Edinburgh, Central time after time on this tax.
The hon. Member for Gordon reminded us that somebody would have to pay for this tax, and there are no free lunches when it comes to tax. There are no regulators who can simply shut the door to requests from companies to review their pricing position. Mr. Andrew Dilnot, director of the Institute for Fiscal Studies, questioned whether a regulator was in a position to ensure
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that the windfall tax was not passed on to consumers. He said that the regulator could not change the pricing rules that he had previously set and that he could not control them in perpetuity. That means that when companies find the effect on their balance sheets, on their investment, on their pricing, they can come back to the regulator and ask for that to be taken into account.
The right hon. Member for Kingston upon Hull, East treated us to his interpretation of whether the companies could afford to pay the windfall tax. He mentioned the Warburg study. My right hon. Friend the Deputy Prime Minister read out the words of the study, in which it said that windfall taxation was unjust and arbitrary. My right hon. Friend did not have time to point out that the same study made it very clear that it expected some companies to meet the tax simply by borrowing. I point out to the right hon. Gentleman that much scorn has been poured on the head of Mr. Chatwin of Yorkshire Electricity, but he made it clear that his company is not one that is awash with cash, and his company is now offering people the cheapest electricity in the country. His customers have had a 25 per cent. reduction in real terms. His company now pays double the amount of corporation tax. He said that the company would have to raise its borrowings to pay for this tax, and cut back its investment.
I come back to the central issue: why did we call this debate?
[Interruption.] Like all laughing donkeys, right hon. and hon. Members on the Opposition Benches make one simple noise—the noise of embarrassed laughter, because we have flushed out their inability to answer fundamental questions about the windfall tax. I remind them of what the right hon. Member for Derby, South (Mrs. Beckett) said on 16 November, when interviewed on television. She was probed about what type of enterprise would be subject to the tax. She said:
"We don't rule out any of the privatised companies"—
That is a pretty broad field. She then said that Labour would see whether
"a monopoly element would be part of the consideration".
What on earth does a "monopoly element" mean? It is either a monopoly or it is not. Increasingly, throughout the utilities, there is competition—in electricity and gas, and there is massive competition in telecommunications. Opposition Members cannot say what on earth that definition is. Even among themselves they cannot agree the strategy.
The hon. Member for Edinburgh, South (Mr. Griffiths), in replying to a debate on energy policy on 16 July this year, said that the utilities tax
"will last as long as salaries as long as telephone numbers are paid to directors in the boardroom."—[Official Report, 16 July 1996; Vol. 281, c. 1043.]
It is my contention that the hon. Gentleman understood the long-lasting effect of the tax. It is obvious.
I do not think that Opposition Members realise just how badly this tax is playing. In November, a headline in The Independent said:
"There is no fair way for Labour to levy this tax".
On 9 November, a headline in The Guardian said, "Britain's windfall, Labour's dilemma". Again in The Independent a headline reads:
"Labour gets itself in a pickle over utilities tax".
It is not playing well outside. This debate will have flushed out the inadequacies of the Opposition in answering those questions.

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It is a discriminatory, arbitrary and essentially random tax, and it will never be consistently applied. It is retrospective. It attacks company dividends. It attacks pensioners, pension funds and employees. Above all, it attacks this country's record as a low-tax economy for business, which has provided economic growth and has brought falling unemployment. With our record on falling unemployment, there will never be a need for such a tax.
Question put, That the amendment be made:—
The House divided: Ayes 212, Noes 254.

Division No. 17]

[7 pm

AYES

Abbott Ms Diane

Eastham, Ken

Ainger, Nick

Etherington, Bill

Ainsworth, Robert (Cov'try NE)

Fatchett, Derek

Anderson, Ms Janet (Ros'dale)

Field, Frank (Birkenhead)

Armstrong, Ms Hilary

Flynn, Paul

Ashton, Joseph

Foster, Derek

Austin-Walker, John

Fraser, John

Banks, Tony (Newham NW)

Fyfe, Mrs Maria

Barnes, Harry

Galbraith, Sam

Barron, Kevin

Gapes, Mike

Battle, John

Garrett, John

Bayley, Hugh

Gerrard, Neil

Beckett, Mrs Margaret

Gilbert, Dr John

Bell, Stuart

Godman, Dr Norman A

Benn, Tony

Golding, Mrs Llin

Benton, Joe

Graham, Thomas

Bermingham, Gerald

Grant, Bernie (Tottenham)

Berry, Roger

Griffiths, Win (Bridgend)

Blair, Tony

Grocott, Bruce

Boateng, Paul

Gunnell, John

Bray, Dr Jeremy

Hain, Peter

Brown, Gordon (Dunfermline E)

Hall, Mike

Brown, Nicholas (Newcastle E)

Hanson, David

Burden, Richard

Hattersley, Roy

Byers, Stephen

Henderson, Doug

Caborn, Richard

Heppell, John

Callaghan, Jim

Hill, Keith (Streatham)

Campbell, Mrs Anne (C'bridge)

Hinchliffe, David

Campbell, Ronnie (Blyth V)

Hodge, Ms Margaret

Campbell-Savours, D N

Hoey, Miss Kate

Canavan, Dennis

Hogg, Norman (Cumbernauld)

Cann, Jamie

Home Robertson, John

Church, Ms Judith

Hoon, Geoffrey

Clapham, Michael

Howarth, Alan (Stratf'd-on-A)

Clarke, Eric (Midlothian)

Howarth, George (Knowsley N)

Clarke, Tom (Monklands W)

Howells, Dr Kim

Clelland, David

Hoyle, Doug

Coffey, Ms Ann

Hughes, Kevin (Doncaster N)

Connarty, Michael

Hughes, Robert (Ab'd'n N)

Cook, Robin (Livingston)

Hughes, Roy (Newport E)

Corbett, Robin

Hutton, John

Corston, Ms Jean

Ingram, Adam

Cousins, Jim

Jackson, Mrs Helen (Hillsborough)

Cox, Tom

Jamieson, David

Cummings, John

Janner, Greville

Cunliffe, Lawrence

Jenkins, Brian D (SE Staffs)

Cunningham, Jim (Cov'try SE)

Jones, Barry (Alyn & D'side)

Dalyell, Tam

Jones, Jon Owen (Cardiff C)

Darling, Alistair

Jones, Dr L (B'ham Selly Oak)

Davidson, Ian

Jones, Martyn (Clwyd SW)

Davies, Denzil (Llanelli)

Jowell, Ms Tessa

Davis, Terry (B'ham Hodge H)

Kaufman, Gerald

Dewar, Donald

Keen, Alan

Donohoe, Brian H

Kennedy, Mrs Jane (Broadgreen)

Dowd, Jim

Khabra, Piara S

Dunwoody, Mrs Gwyneth

Kilfoyle, Peter

Eagle, Ms Angela

Lestor, Miss Joan (Eccles)

1160

Lewis, Terry

Radice, Giles

Livingstone, Ken

Randall, Stuart

Lloyd, Tony (Stretf'd)

Raynsford, Nick

Loyden, Eddie

Reid, Dr John

McAllion, John

Roche, Mrs Barbara

McAvoy, Thomas

Rooker, Jeff

McCartney, Ian (Makerf'ld)

Rooney, Terry

Macdonald, Calum

Ross, Ernie (Dundee W)

McFall, John

Rowlands, Ted

McKelvey, William

Ruddock, Ms Joan

McMaster, Gordon

Sheerman, Barry

MacShane, Denis

Sheldon, Robert

McWilliam, John

Shore, Peter

Madden, Max

Simpson, Alan

Mandelson, Peter

Skinner, Dennis

Marek, Dr John

Smith, Andrew (Oxford E)

Marshall, David (Shettleston)

Smith, Chris (Islington S)

Marshall, Jim (Leicester S)

Smith, Llew (Blaenau Gwent)

Martin, Michael J (Springburn)

Soley, Clive

Martlew, Eric

Spearing, Nigel

Maxton, John

Spellar, John

Meacher, Michael

Steinberg, Gerry

Meale, Alan

Stevenson, George

Michael, Alun

Stott, Roger

Michie, Bill (Shef'ld Heeley)

Strang, Dr Gavin

Milburn, Alan

Straw, Jack

Miller, Andrew

Sutcliffe, Gerry

Morgan, Rhodri

Taylor, Mrs Ann (Dewsbury)

Morley, Elliot

Timms, Stephen

Morris, Alfred (Wy'nshawe)

Tipping, paddy

Morris, John (Aberavon)

Touhig, Don

Mowlam, Ms Marjorie

Trickett, Jon

Mudie, George

Turner, Dennis

Mullin, Chris

Vaz, Keith

Murphy, Paul

Walker, Sir Harold

Oakes, Gordon

Walley, Ms Joan

O'Brien, Mike (N Warks)

Wardell, Gareth (Gower)

O'Brien, William (Normanton)

Wareing, Robert N

Olner, Bill

Watson, Mike

O'Neill, Martin

Wicks, Malcolm

Parry, Robert

Williams, Alan (Swansea W)

Pearson, Ian

Williams, Alan W (Carmarthen)

Pendry, Tom

Winnick, David

Pickthall, Colin

Wise, Mrs Audrey

Pike, Peter L

Worthington, Tony

Prentice, Mrs B (Lewisham E)

Wright, Dr Tony

Prentice, Gordon (Pendle)

Young, David (Bolton SE)

Prescott, John

Primarolo, Ms Dawn

Tellers for the Ayes:

Purchase, Ken

Mr. Greg Pope and

Quin, Ms Joyce

Mr. Clive Betts.

NOES

Ainsworth, Peter (E Surrey)

Bright, Sir Graham

Alison, Michael (Selby)

Brooke, Peter

Allason, Rupert (Torbay)

Brown, Michael (Brigg Cl'thorpes)

Amess, David

Browning, Mrs Angela

Arbuthnot, James

Bruce, Ian (S Dorset)

Arnold, Jacques (Gravesham)

Burns, Simon

Atkins, Robert

Burt, Alistair

Atkinson, Peter (Hexham)

Butterfill, John

Baker, Nicholas (N Dorset)

Carlisle, John (Luton N)

Batiste, Spencer

Carlisle, Sir Kenneth (Linc'n)

Bellingham, Henry

Carrington, Matthew

Bendall, Vivian

Carttiss, Michael

Beresford, Sir Paul

Cash, William

Biffen, John

Channon, Paul

Bonsor, Sir Nicholas

Chapman, Sir Sydney

Booth, Hartley

Clappison, James

Boswell, Tim

Clark, Dr Michael (Rochf'd)

Bottomley, Peter (Eltham)

Clarke, Kenneth (Rushcliffe)

Bowden, Sir Andrew

Coe, Sebastian

Bowis, John

Colvin, Michael

Boyson, Sir Rhodes

Congdon, David

Brandreth, Gyles

Conway, Derek

Brazier, Julian

Coombs, Anthony (Wyre F)

1161

Coombs, Simon (Swindon)

Jenkin, Bernard (Colchester N)

Cope, Sir John

Jessel, Toby

Couchman, James

Jones, Gwilym (Cardiff N)

Cran, James

Jones, Robert B (W Herts)

Currie, Mrs Edwina

Key, Robert

Curry, David

King, Tom

Davies, Quentin (Stamf'd)

Kirkhope, Timothy

Day, Stephen

Knapman, Roger

Deva, Nirj Joseph

Knight, Mrs Angela (Erewash)

Devlin, Tim

Knox, Sir David

Dover, Den

Kynoch, George

Duncan, Alan

Lait, Mrs Jacqui

Duncan Smith, Iain

Lang, Ian

Dunn, Bob

Lawrence, Sir Ivan

Dykes, Hugh

Legg, Barry

Elletson, Harold

Lennox-Boyd, Sir Mark

Evans, David (Welwyn Hatf'ld)

Lester, Sir Jim (Broxtowe)

Evans, Jonathan (Brecon)

Lidington, David

Evans, Nigel (Ribble V)

Lloyd, Sir Peter (Fareham)

Evans, Roger (Monmouth)

Lord, Michael

Evennett, David

Luff, peter

Faber, David

MacGregor, John

Fabricant, Michael

Mackay, Andrew

Fenner, Dame Peggy

Maclean, David

Field, Barry (Isle of Wight)

McLoughlin, Patrick

Forman, Nigel

McNair-Wilson, Sir Patrick

Forsyth, Michael (Stirling)

Maitland, Lady Olga

Forth, Eric

Major, John

Fowler, Sir Norman

Malone, Gerald

Fox, Dr Liam (Woodspring)

Mans, Keith

Fox, Sir Marcus (Shipley)

Marshall, John (Hendon S)

Freeman, Roger

Marshall, Sir Michael (Arundel)

French, Douglas

Martin, David (Portsmouth S)

Gale, Roger

Mawhinney, Dr Brian

Gardiner, Sir George

Mellor, David

Garel-Jones, Tristan

Merchant, Piers

Garnier, Edward

Mills, Iain

Gill, Christopher

Mitchell, Andrew (Gedling)

Gillen, Mrs Cheryl

Mitchell, Sir David (NW Hants)

Goodlad, Alastair

Moate, Sir Roger

Goodson-Wickes, Dr Charles

Monro, Sir Hector

Gorman, Mrs Teresa

Montgomery, Sir Fergus

Gorst, Sir John

Needham, Richard

Grant, Sir Anthony (SW Cambs)

Nelson, Anthony

Greenway, Harry (Ealing N)

Neubert, Sir Michael

Greenway, John (Ryedale)

Nicholson, David (Taunton)

Griffiths, Peter (Portsmouth N)

Norris, Steve

Grylls, Sir Michael

Onslow, Sir Cranley

Hague, William

Oppenheim, Phillip

Hamilton, Sir Archibald

Page, Richard

Hamilton, Neil (Tatton)

Paice, James

Hampson, Dr Keith

Patnick, Sir Irvine

Hannam, Sir John

Patten, John

Hargreaves, Andrew

pattie, Sir Geoffrey

Harris, David

Pawsey, James

Haselhurst, Sir Alan

Pickles, Eric

Hawkins, Nick

Porter, David

Hawksley, Warren

Portillo, Michael

Hayes, Jerry

Powell, William (Corby)

Heald, Oliver

Rathbone, Tim

Heath, Sir Edward

Redwood, John

Heathcoat-Amory, David

Renton, Tim

Hendry, Charles

Richards, Rod

Heseltine, Michael

Riddick, Graham

Higgins, Sir Terence

Robathan, Andrew

Hill, Sir James (Southampton Test)

Roberts, Sir Wyn

Horam, John

Robinson, Mark (Somerton)

Hordern, Sir Peter

Rowe, Andrew

Howard, Michael

Rumbold, Dame Angela

Howell, David (Guildf'd)

Ryder, Richard

Howell, Sir Ralph (N Norfolk)

Sackville, Tom

Hunt, David (Wirral W)

Shaw, David (Dover)

Hunt, Sir John (Ravensb'ne)

Shaw, Sir Giles (Pudsey)

Hunter, Andrew

Shephard, Mrs Gillian

Jack, Michael

Shepherd, Sir Colin (Heref'd)

Jackson, Robert (Wantage)

Sims, Sir Roger

1162

Skeet, Sir Trevor

Tracey, Richard

Smith, Tim (Beaconsf'ld)

Tredinnick, David

Smyth, Rev Martin (Belfast S)

Trend, Michael

Soames, Nicholas

Trotter, Neville

Speed, Sir Keith

Vaughan, Sir Gerard

Spencer, Sir Derek

Waldegrave, William

Spicer, Sir Jim (W Dorset)

Walden, George

Spicer, Sir Michael (S Worcs)

Walker, Bill (N Tayside)

Spink, Dr Robert

Ward, John

Spring, Richard

Wardle, Charles (Bexhill)

Sproat, Iain

Waterson, Nigel

Squire, Robin (Hornchurch)

Watts, John

Stanley, Sir John

Wells, Bowen

Steen, Anthony

Whitney, Ray

Stephen, Michael

Whittingdale, John

Stern, Michael

Widdecombe, Miss Ann

Stewart, Allan

Wiggin, Sir Jerry

Streeter, Gary

Wilkinson, John

Sweeney, Walter

Willetts, David

Sykes, John

Wilshire, David

Tapsell, Sir Peter

Winterton, Mrs Ann (Congleton)

Taylor, Ian (Esher)

Winterton, Nicholas (Macclesf'ld)

Taylor, Sir Teddy

Wolfson, Mark

Temple-Morris, Peter

Wood, Timothy

Thomason, Roy

Yeo, Tim

Thompson, Sir Donald (Calder V)

Young, Sir George

Thompson, Patrick (Norwich N)

Thornton, Sir Malcolm

Tellers for the Noes:

Townend, John (Bridlington)

Mr. Michael Bates and

Townsend, Cyril D (Bexl'yh'th)

Mr. Richard Ottaway.

Question accordingly negatived.
Main Question put and agreed to.
Resolved,
That this House deplores the dangers and injustices inherent in the concept of a windfall tax on the privatised utilities and condemns a tax that would hit consumers, shareholders and pensioners while damaging the credibility of the United Kingdom as a stable regime for inward investment.

DEREGULATION
Motion made, and Question proposed, pursuant to Standing Order No. 14A (Consideration of draft deregulation orders),
That the draft Deregulation (Bills of Exchange) Order 1996, which was laid before this House on 28th October, be approved.—[Mrs. Lait.]
Question agreed to.

PETITIONS

  Wakefield Nurseries Campaign
  7.13 pm
  Mr. Jon Trickett: I wish to present a petition on behalf of the Wakefield campaign against nursery vouchers, which opposes the introduction of such vouchers in the Wakefield metropolitan district. The scheme will clearly lead to a deterioration in the quality of nursery education in the area. The petition has been endorsed by 30,000 signatures.
  The petitioners therefore request that the House of Commons call an immediate halt to the introduction of the nursery voucher scheme in the Wakefield area.
  To lie upon the Table.

Local Pharmacies
7.14 pm
Miss Kate Hoey: I have the pleasure of presenting a petition on behalf of some 13,000 residents of London, a substantial number of whom are residents of Lambeth, Southwark and Lewisham. It draws to the House's attention the problems that will face local pharmacies if the Government go ahead with some of the changes that have been suggested by the Office of Fair Trading.
The petition
Declares that we the undersigned note that the Office of Fair Trading is considering the future of over the counter medicines and record our concern about the future viability of local pharmacies which are a much valued community asset. The Petitioners therefore request that the House of Commons takes no action which might jeopardise the future of our local chemists.
To lie upon the Table.

British Cycling Federation (Grants)
Motion made, and Question proposed, That this House do now adjourn.—(Mr. Bates.]
7.15 pm
Mr. Jon Trickett: I thank those in authority for allowing me to introduce the debate.
As a member of Otley cycling club, which is affiliated to the British Cycling Federation, I probably ought to declare that I am indirectly a member of the federation.
Watching any skilled athlete engage in any sport is an uplifting experience. For me—as a person who is involved in cycling and has raced cycles for many years—to watch a racing cyclist in harmony with his or her machine is to observe the grace and power of an athlete made effective by a superb bicycle design and the scientific skills of aerodynamic engineers and metallurgists. In recent years, the televisual media have developed the skills and technology to be able to present cycle road racing live to millions of people throughout the world.
Many of us may recall that, when colour television became the norm, snooker and billiards suddenly became accessible to huge audiences. Commercial sponsorship rapidly followed, bringing large sums of money into the sport from the private sector. While cycling has always been able to attract some sponsorship, it is only the advent of technology capable of showing it live on television and to mass audiences that has recently enabled large-scale sponsorship to develop the sport further, and internationally.
It is a striking fact that, whereas elsewhere the sport of cycling is extremely well developed, in the United Kingdom—in spite of British cycling excellence over the years—it has languished in recent times. There have been some signs of revival, associated with particular individuals such as Chris Boardman, Yvonne McGregor and Graeme Obree, as well as the development associated with the velodrome in Manchester, which I am sure we all welcome. Nevertheless, the long-term membership of the primary cycling organisations, such as the Cyclists Touring Club and the BCF, remains static, notwithstanding the massive increase in bicycle sales associated in particular with the mountain bike boom.
There has been much debate in cycling circles about that disappointing performance, and especially about the way in which the sport has been managed by the BCF. I also understand that eyebrows have been raised outside this country, at the highest levels in the cycling world—in the Union Cycliste Internationale, for instance—about the way in which the BCF has managed the sport in this country. That must be worrying, as the UCI is the most important body in cycling.
International companies take a pan-European view of marketing. When they choose to develop sponsorship of a particular sport, they want the commercial potentialities of that sport throughout their target market to be fully developed. They therefore take a dim view of the fact that the United Kingdom market in cycle racing, in particular, is and has been so undeveloped.
Mr. Hein Verbruggen, president of the UCI, has made it known that, while he would like to ensure that major world-ranked races and other events will continue to be held in Great Britain, he is frustrated by the management

1165
of the BCF, which makes it increasingly unlikely that he will have an opportunity to present such events in the United Kingdom. On the Radio 5 programme "On the Line", he said:
"Great Britain is … a completely black spot in the international cycling market".
The programme, which was an excellent example of investigative journalism, conducted by the journalist Mr. Ian Bent, aired many concerns that are the subject of serious audit investigation at the BCF.
It has been suggested to me that at least one major international company, which brought millions of pounds into cycling and which originates within the English-speaking world, has left the sport, disappointed with the poor marketing of cycling, particularly in the UK. Worse still, Britain's multi-stage cycling tour, hitherto known as the Milk race, which again brought much private money into the sport, has ceased even to exist. In my eyes and in those of many of my colleagues whom I have met on bikes on and off the road over the years, the BCF board stands guilty of, at best, a lack of vision and a timorous failure to realise the full potential of this beautiful and undeveloped sport, despite the fact that it receives £500,000 a year of public money, in addition to the annual subscriptions of its private members.
From time to time, graver charges have been made about the manner in which BCF board members have managed the BCF's business affairs. In July, I tabled a question to the Minister responsible for sport revealing publicly, probably for the first time, that serious questions needed to be asked about the relationship between the BCF and private companies with close links with BCF board members. My questions were prompted by the turmoil in the BCF following the election of Mr. Tony Doyle, the former world cycling champion, as BCF president. He was subsequently removed in what can be described only as a coup by board members.
The new president had declared that he wanted to increase the transparency of the BCF board's operations, to make the board more accountable to the membership and to secure the further development of our sport in the UK. For whatever reason, after a short period, Mr. Doyle ceased to be president. A process was begun that may eventually conclude with litigation and substantial legal costs falling on the BCF. I understand that, in November last year and in March this year, Mr. Doyle raised with Mr. Derek Casey his concerns about the way in which the BCF board operated. As you probably know, Mr. Deputy Speaker, Mr. Casey is chief executive of the Sports Council, a primary funder of the BCF.
A number of events appeared to take place subsequent to my questions, which appeared on the Order Paper in July. It appears that at least one of the companies that was supplying goods and services to the BCF and that was associated with a particular board member subsequently changed the terms of its contract.
I wrote to the BCF and to Mr. Doyle asking that they authorise representatives to meet to seek a settlement of their differences out of court, thereby avoiding expensive legal fees falling on the membership. Such a settlement has not yet been achieved.
Consequent on my questions, the Sports Council appears to have begun an internal audit of the BCF's affairs. I have a copy of that audit. The Sports Council should have acted earlier in relation to the matter, given
1166
the fact that it has custody of £500,000 of public funds, which it has continued to pay on a quarterly basis to the BCF, even though the Sports Council was aware of the seriousness of the allegations and the turmoil in the organisation.
The internal audit reveals a grave state of affairs in relation to the manner in which the BCF has been and is being managed. The audit reveals, first, concerns about the financial position of the BCF, British Cycling Promotions Ltd. and the velodrome, which is the jewel in the crown of British cycling. A substantial deficit in the current year is projected. Secondly, the audit reveals inadequately structured management accounts, with what is described as a major weakness in the accounts in relation to forecasting income and expenditure. Thirdly, the audit finds inadequate financial accountability and control.
Fourthly, the audit refers, worryingly, to actual, potential or perceived conflicts of interest involving some board members—some companies are supplying goods and services to the BCF; the principals of those companies have been BCF board members for years. Fifthly, the audit reveals internal conflict in the board. Sixthly, it asserts that board members have become involved in handling operational matters to a detailed extent. Overall, the audit report concludes that the board
"is failing to operate properly and effectively as an Executive Body".
In my many years in public life, this is probably the most damning audit report that I have ever read. Moreover, the published balance sheet shows an artificially low rate of depreciation on fixed assets. I am informed that the provision for stock on the balance sheet allegedly contains many obsolete items that no longer have any inherent value. A falsely optimistic picture of the BCF's health has been described in the balance sheet.
Mr. Deputy Speaker, you might think that, given the scale of public funding that I have described, the damning nature of the audit report, the allegations in the radio programme, questions in the House and the prolonged organisational turmoil in the BCF, the Sports Council might have acted sooner. If you were to come to that conclusion, I would share your view.
I am not happy either with the way in which the Sports Council delivered the results of the audit to BCF members. At the annual general meeting a few weeks ago, where it was known to the Sports Council that many of these matters would be debated and that the board was to be re-elected, the Sports Council's representatives provided copies of the damaging audit report in advance of the annual general meeting to board members, who were clearly culpable.
I understand that the acting BCF chairman of the meeting was aware of the contents of the report, yet chose not to reveal any of its details until the end of the clay, after the board elections and after the debates on related matters. The chairman did not act with full transparency in ordering the agenda in that way. Given the extraordinary nature of the allegations and the fact that the people who had been accused by the audit report had read it in advance, the Sports Council's representatives had a duty, which they shirked, to bring the report to the attention of delegates before the election of the board and before the debates. The Sports Council failed lamentably in the matter.

1167
Subsequent to the annual general meeting, there has been a further session of the BCF's new managing committee. I am surprised, to put it mildly, that the Sports Council did not ensure that it had a representative at the meeting to monitor the BCF's deliberations, with an eye to ensuring that the BCF, at last, complies with the Sports Council's recommendations. I have expressed my view privately to the chief executive of the Sports Council, Mr. Casey, but I remain dissatisfied with his reason for that failure.
I should have expected that the annual general meeting, which was conducted after a year of organisational turmoil, would be a model of propriety, but no. Three matters concern me. First, the chairman allowed board members who had not been re-elected to continue to exercise their votes after they had been removed from office, votes which they held ex officio by virtue only of the fact that they had been directors. Secondly, the governing board of the BCF was not elected according to its constitution; rather, an interim committee was established, which stands outside the BCF's constitution. Thirdly, there is currently no elected president or chairman of the BCF.
Those three matters put the current BCF outside its constitution. Clearly, that must throw considerable doubt on the authority of people who are now nominally in charge of the BCF to receive and spend public money. That matter must be addressed immediately, because the Sports Council is due to pay a further quarterly instalment of about £125,000 to the federation on 15 December. Lawyers share my doubts about the constitutional position of the BCF.
I have been reluctant to air many of these matters in public because of the danger of bringing a sport that I love, and in which I have participated for a long time, into further disrepute. I have felt it necessary to do so because those matters cannot be swept under the carpet any more. My confidence in the Sports Council as a giver of grants and a monitoring institution has been severely dented. Questions must now be asked about the accountability of the Sports Council to the public and Parliament, especially when its so-called annual report has not been published since 1993. It is a bizarre, almost Monty Pythonesque situation when an annual report does not appear yearly, notwithstanding the fact that the Sports Council is happy to spend £47.5 million of taxpayers' money every year. It does so without, apparently, giving an account of itself other than that provided in its published accounts every year.
I understand that a meeting will be held shortly between the Sports Council and the BCF. The Government, through the Minister responsible for sport, should intervene to ensure that the Sports Council secures the following objectives. First, the true, up-to-date financial position of the BCF should be established. Secondly, the BCF should be brought back into line with its constitution, which should also be updated so that the federation ceases to be an unincorporated association, which therefore has no legal existence. Thirdly, a professional chief executive with appropriate experience should be appointed to take on day-to-day management functions, to carry the sport forward. Finally, independent solicitors, approved by the Sports Council, should be brought in to make
1168
recommendations on how to resolve the current long-standing damaging dispute, with the objective of minimising further legal costs.
I am particularly troubled because, if the Sports Council has been dilatory in its dealings on cycling, especially when it is spending £500,000 every year on the sport, I fear that there may be other areas in which that same dilatoriness is apparent. Given that the Sports Council has failed to produce its annual report for the past three years, it is time that the Minister responsible for sport agreed to the request of my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) for a report of some kind, if not an annual report, to be published by the Sports Council forthwith. I seek a guarantee from the Minister that that report can be debated and questions asked so that the Sports Council is made answerable to the House.
I thank the House for the opportunity to raise these matters.
7.32 pm
Mr. Nicholas Winterton: I am grateful to the hon. Member for Hemsworth (Mr. Trickett) for allowing me to contribute briefly to the debate. May I say to the House from the Government side that I believe that, by raising certain matters, the hon. Gentleman has done a service not only to the House and to sport in general but to cycling in particular?
The hon. Gentleman is aware that in recent months I have taken an active interest in the British Cycling Federation, and the jewel in the crown of British cycling, the Manchester velodrome. It cost a great deal of money and is an absolutely superb facility. As the hon. Gentleman is well aware, however, sadly, it has been grotesquely under-used.
The hon. Gentleman's allegations about the administration of the sport by those on the board of the BCF are entirely accurate. I believe that those who have been administering it are guilty of maladministration, neglect and abuse of their position. As the hon. Gentleman has said, there is a flagrant conflict of interest in respect of the companies that are providing services and equipment to the federation and leading, long-serving members of its board.
That matter was drawn to my attention by one of my constituents, Mr. John Kennedy, who has recently taken an active, positive and constructive interest in cycling. He has sought to promote cycling in the United Kingdom and to utilise to a much greater extent that jewel in the crown, the Manchester cycling velodrome. As a result of meetings I had with Mr. Kennedy at his office and home in Macclesfield, I arranged a meeting with the Minister responsible for sport, who is to respond to the debate. The Minister gave generously of his time to me and to my constituent, and the officials present were seized of the problems that face the sport of cycling. Those problems have been articulated and promoted accurately and absolutely down the line by the hon. Member for Hemsworth. He has not sought to decorate or exaggerate those problems; he has expressed accurately the concerns felt by many in that sport.
My hon. Friend the Minister gave me certain undertakings that the concerns that had been expressed and the information that had been provided would be fully investigated. I await his response with great interest. I have no doubt that a large sum of British taxpayers'

1169
money—000,000—channelled, as the hon. Gentleman has said, through the Sports Council to the BCF over a number of years, has been misused, wasted and squandered. Some of the bills that piled up were totally unnecessary and resulted from a conflict of interest and total maladministration of the affairs of the BCF.
I seek an assurance from my hon. Friend the Minister that those who have been responsible for the maladministration, neglect and squandering and waste of public money will no longer be permitted to be part of the BCF and its board. I share the views expressed by the hon. Member for Hemsworth about the way in which the recent annual general meeting was handled. It would have been appropriate for the audit report on what has been happening in the BCF to be presented before the board elections to all those attending the AGM.
I am very interested in cycling. I want the expensive jewel in the crown, the Manchester velodrome, to be properly and fully used. I should like to see it fall down from over-use instead of deteriorating and running down from under-use as has happened recently. A number of competitions could have been held there.
The hon. Member for Hemsworth referred to the international cycling body. My constituent has had regular contact with its president, who has expressed to my constituent and to the hon. Gentleman his deep concern about what has happened and about the fact that that has prejudiced making the United Kingdom the location for major cycling events, especially international ones.
My constituent is interested in fostering the participation of young people who want to cycle. He wants a youth challenge international competition to be organised at the Manchester velodrome. I wish him success, and I shall give him every support and encouragement. When he has sought to work with existing members of the board, however, he has been frustrated from every angle and at every door and corner. That is not how senior representatives of the sport should operate. They should encourage people who are keen to provide sponsorship, administration, organisation and enthusiasm.
The hon. Member for Hemsworth has performed a great service for the sport by raising this issue in such a measured and constructive manner. I think that my comments may have gone a bit further than his. He spoke with great moderation, because of his involvement in the industry and his interest and concern for it.
I appreciate the time that the Minister responsible for sport gave me, and the concern that he and his officials clearly felt about the information that my constituents and I, and the hon. Member for Hemsworth, have presented to his Department over the past months. I hope that his reply to this debate will be helpful. If it is, the hon. Member for Hemsworth and I will have helped to guarantee a good and successful future for cycling in the United Kingdom.
7.40 pm
The Minister of State, Department of National Heritage (Mr. Iain Sproat): I thank the hon. Member for Hemsworth (Mr. Trickett) for raising this important issue today, for the way in which he did it and for bringing to my attention some of his concerns about the sport of cycling, the operation of the British Cycling Federation, and the use of the Manchester velodrome. I know that he has a keen interest in cycling, and I take his concerns very seriously.
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Those concerns were first drawn to my attention last July, when I met my hon. Friend the Member for Macclesfield (Mr. Winterton) and one of his constituents. I pay tribute to the typically energetic way in which he has pursued this matter and to his powerful and well-argued speech in this debate. At the meeting, his constituent made serious allegations of financial impropriety against the British Cycling Federation. He also claimed that, due particularly to the federation's policy, the Manchester velodrome was being under-used.
Also in July, the hon. Member for Hemsworth—as he rightly reminded us—raised with my Department four issues about financial concerns and the federation's use of the Sports Council's grant in aid, and about the future of the Manchester velodrome.
As the House is aware, the Government provide support to individual governing bodies of sport through their sponsorship of the Sports Council, which is an independent body set up by royal charter. It is for the council, within an overall policy framework set by the Government, to dispense the resources at its disposal, according to its own detailed policies and priorities, to ensure that those are applied effectively and efficiently and to ensure that value for money is obtained from the public investment made.
Like other executive non-departmental public bodies, the Great Britain Sports Council, and particularly its chief executive, Mr. Derek Casey, is responsible for ensuring that all public funds in the council's charge are subject to financial propriety and regularity, and that they are applied only to the objects and powers of the Sports Council, as authorised by Parliament. In its use of public funds, the Sports Council must comply with the requirements of Government accounting and other standards of good administrative practice set by the Government.
The hon. Member for Hemsworth quite rightly raised the issue of reports. The Sports Council has not produced reports recently because of the restructuring that is currently under way. The Great Britain Sports Council is about to depart for ever, and the new English sports council and the new United Kingdom sports council will take its place. A new report will be published in January 1997. As he knows, however, annual accounts have already been laid before the House.
In meeting its responsibilities, and to ensure the proper accountability and propriety of the sums expended, the Sports Council awards grants to governing bodies and other sports organisations towards the cost of defined programmes that are relevant to the Sports Council's policy objectives. Conditions are attached to each grant, and may vary according to the nature of the activity supported. Among the standard conditions that apply is the need for the grant recipient to provide a concise—but detailed—annual report and forward plan covering each programme activity. The reports should focus on the extent to which the predetermined developmental and financial targets have been met, and form the basis of a formal annual review undertaken by officers of the Sports Council.
The Sports Council's liaison officers also regularly monitor the progress made by governing bodies in achieving the objectives set out in their forward plans, and have regular meetings with officials of the governing bodies to discuss progress, developments and other

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matters that arise. Liaison officers also have the right to attend meetings of the committees of the governing body. No further payments are made when compliance with the conditions is not met and no satisfactory explanation is forthcoming, and the remainder of the grant on offer is withdrawn.
Mr. Trickett: At my meeting the other day with Mr. Casey, the chief executive of the Sports Council, he said that the reason why Mr. Dermott Collins, the cycling officer of the Sports Council, had not attended the most recent meeting of the BCF's governing committee was that he feared that the Sports Council would begin to act as shadow director of the BCF. Does the Minister agree that such a suggestion is bizarre, for several reasons? First, the Sports Council is providing half a million pounds. Secondly, the Minister himself has said that sports officers have a right to attend the meetings. Given the failure to monitor properly the organisation, would not it be appropriate for the Minister to speak to the chief executive of the Sports Council and to ensure that the grant is used properly by the BCF?
At the same meeting, Mr. Casey said that he would not pay the next grant, which is due on 15 December, unless changes are made. Is the Minister aware of any action being taken by the Sports Council to bring matters into order?
Mr. Sproat: I hear what the hon. Gentleman says. They are serious matters, and I will draw to Mr. Casey's attention not only the comments made by the hon. Gentleman in his speech but those in his intervention. I will undertake to ensure that a proper reply is sent to the hon. Gentleman.
As I have advised the House and the hon. Member for Hemsworth on previous occasions, all sports governing bodies in receipt of Sports Council grants are also required to have their annual accounts audited and to supply a copy of those audited accounts to the Sports Council. Additionally, the Comptroller and Auditor General may conduct more detailed audits. The Sports Council also has the right to conduct more detailed audits, and the Sports Council's management audit programme includes a review of the operations of a sample of governing bodies in receipt of Sports Council grants. That applies to the British Cycling Federation.
As a result of the very serious allegations and concerns raised by hon. Members about the British Cycling Federation, I have asked the Sports Council to provide me with a full report on the situation. The Sports Council's internal auditors have now conducted an investigation into the affairs of the British Cycling Federation, and it has revealed that financial accountability and control are not as strong as they should be for an organisation with responsibility for spending public—or membership—funds.
The chief executive of the Sports Council has recently written to the board members of the British Cycling Federation, drawing their attention to these shortcomings and making recommendations to address those concerns. The recommendations include the employment of a qualified management accountant, whose immediate role would be to review the financial position of the federation,
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British Cycling Promotions Ltd. and Manchester Velodrome Ltd., with a view to making recommendations to remedy the weaknesses identified.
The Sports Council is, however, satisfied that despite the administrative difficulties experienced by the British Cycling Federation, the council's continued investment of £370,000 for the annual development programme to December 1996 represents value for money. The sport is working hard to establish the proper structures necessary to harness the considerable potential that exists and to promote itself more positively to participants, the media and sponsors. In recognition of this, the Sports Council announced in May this year that cycling, among 21 other sports, will be eligible to receive the enhanced service that it is to provide to those activities which have significant development potential and are of particular relevance to the new focus of the Sports Council: young people and the development of excellence.
At the competitive level, Britain already has riders such as Chris Boardman and Graeme Obree, who are among the best in the world. At grass roots level, the British Cycling Federation has begun to focus on attracting more young people into the sport, with a major recruitment initiative being developed. Funding is also providing additional coaching and training opportunities, made possible by the Manchester velodrome.
As I have already mentioned, the hon. Member for Hemsworth has previously raised questions with me about the way in which sports governing bodies, and the British Cycling Federation in particular, let contracts to suppliers of goods and services. I hope that the hon. Gentleman was reassured by the answers that I gave him on 24 July, which I have repeated to the House today, providing information about the practices of the Sports Council in controlling and monitoring the use of public funds.
I hope that I was similarly able to reassure the hon. Member for Hemsworth about his concerns for the future of the Manchester velodrome in the light of the threat of legal action between the federation and its former president, and about the protection of public funds in respect of any legal proceedings. The Manchester velodrome is operated by a separate legal entity—Manchester Velodrome Ltd. This company is a wholly owned subsidiary of the British Cycling Federation. The Sports Council has entered into a formal agreement with Manchester Velodrome Ltd. which requires the operational and accounting records of the company to be kept separate from the records of any other activities of the British Cycling Federation, its associated companies and any related organisations. Also, all transactions between these parties are to be on a full commercial basis. In addition, the Sports Council has formally advised the British Cycling Federation that the grant that it receives cannot be used to pay any legal expenses or costs associated with the legal proceedings between the federation and its former president.
I am sure that the British Cycling Federation will be taking a keen interest in tonight's debate, and I shall certainly be drawing the Sport Council's attention to what has been said in this place. I shall also be seeking the Sports Council's reassurance that any further grant in aid payments to the federation will be on the basis that the Sports Council is fully satisfied that the federation is taking appropriate action to implement the various recommendations made.

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The recommendations set out in the Sports Council's letter to the British Cycling Federation were discussed at the federation's annual general meeting on 2 November. There are already signs that the British Cycling Federation is taking positive action to address the concerns. The federation has now formed a new management committee, comprising four members of the previous board and seven new members. The management committee has indicated that it will carry out a complete review of all the federation's activities. It has also indicated that a key priority is to reassure the Sports Council that the British Cycling Federation is now in the hands of a competent, experienced, committed, and democratically elected group of people who are determined to take a firm grip of the situation. The Sports Council is due to meet the new management committee shortly to take those matters further forward.
I am sure that the federation will now be keen to get its house in order and make a fresh start—the more so because of the vast sums of revenue support that the Government have now made available for sport through the changes in the national lottery directions. It is in the interest of all governing bodies to run their affairs efficiently and effectively and, in particular, to satisfy the
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Sports Council that they are not only committed to the development of their own sport, from grass roots through to elite level, but that they have the proper financial management systems and controls in place to handle the public funding that they receive.
The National Cycling Centre has taken time to establish itself and begin to fulfil its potential. The minor design faults have been, or are being, addressed. Attendances at events have steadily grown and the cycling track is now used by riders of every level, from elite sportsmen to local schools.
A measure of the status that the velodrome now has can be gauged from the recent world-class successes of Chris Boardman who, in winning the individual pursuit title at the world track championships in August, twice broke the world record that had been set in Atlanta a month earlier. He then went on to break the world one-hour record eight days later at the same venue.
I will expect the Sports Council to continue to monitor the position closely to ensure that proper accountability and control of public funds are maintained.
Question put and agreed to.
Adjourned accordingly at six minutes to Eight o'clock.