Commons Sitting of 8 July 1997

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS

    KING'S COLLEGE LONDON BILL [Lords] (By Order)
    Order for Third Reading read.
    To be read the Third time on Tuesday 15 July.

    LEVER PARK BILL (By Order)
    Order for Second Reading read.
    To be read a Second time on Tuesday 15 July.

Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS

    Hong Kong
    Mr. Ben Chapman: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the handover of Hong Kong, and on the current state of British relations with China. [5724]
    Mr. Waterson: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Sino—British relations. [5728]
    Mr. Bennett: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make an assessment of the United Kingdom's future relations with China following the handover of Hong Kong. [5729]
    The Minister of State, Foreign and Commonwealth Office (Mr. Derek Fatchett): I apologise for the absence of my right hon. Friend the Foreign Secretary, who is attending the North Atlantic Treaty Organisation summit in Madrid.
    As my right hon. Friend told the Chinese Foreign Minister in Hong Kong, Britain and China have substantial common interests. We aim to build a new, broad and forward-looking relationship. We want Hong Kong to be a bridge not a barrier between us. That will depend on China honouring its commitments in the joint declaration.
    Mr. Chapman: I thank my hon. Friend for that reply. Does he agree that, on present trends, China has the potential to be the world's biggest economic power early in the next millennium? Does he also agree that it is already a growing and major market for our goods and services? Does he further agree that it is enormously
    754
    important politically, ecologically and demographically and has the potential to be a major outward investor? The handover of Hong Kong provides a new opportunity to develop a relationship with China, freeing us from the tensions inherent in the earlier relationship. Does my hon. Friend agree that, while human rights and our continuing responsibilities for the joint declaration may be features, we should pursue that new relationship with vigour?
    Mr. Fatchett: My hon. Friend had a distinguished career as a diplomat before he came to the House and has a real understanding of the situation in China. We are looking forward to a new, constructive relationship with China and are keen to engage with it on a range of political, trade and human rights issues. That is the best way to secure the future of Hong Kong. We are deeply committed to ensuring that we carry out our responsibilities under the joint declaration.
    Mr. Waterson: Can the hon. Gentleman explain the rationale behind the last minute volte-face, which resulted in British representatives being permitted after all to attend the swearing in of the new provisional Legislative Council? How can that be rationalised with the view—if it is still the Government's view—that that body is illegal?
    Mr. Fatchett: I am surprised that the hon. Gentleman raised that issue. The Government's policy was that no Ministers would attend the swearing in ceremony for the provisional legislature. It has always been our understanding that there will be a consensus on Hong Kong policy. We were deeply disappointed that three senior representatives of the Conservative party attended the swearing in ceremony. When the new shadow Foreign Secretary has the opportunity to come to the Dispatch Box, I hope that he will condemn those Conservatives who went against the Government's policy.
    Mr. Bennett: I do not suppose that my hon. Friend can tell me the CO2 emissions for China and Hong Kong and the likely emissions over the next 10 or 15 years. Does he agree, however, that they will make a significant contribution to global warming and that it is important that we draw China into the worldwide agreements that are beginning to emerge in respect of protecting the environment for us all?
    Mr. Fatchett: As my hon. Friend knows, it is difficult to predict precisely the CO2 emissions from China or any other country, but my hon. Friend is right to say that they are likely to be significant in the coming years simply because of the size and the growth of the Chinese economy. A further reason to engage China on a range of issues is that the environment is as important to the Chinese as it is to us. We have been working with the Chinese on a number of environment projects, and we wish to extend that work in future.
    Sir Patrick Cormack: Does the hon. Gentleman accept that there should be a continuing role for the House, and perhaps for the other place, in monitoring developments in Hong Kong during the rest of the 50-year period?
    Mr. Fatchett: I accept the thrust of the hon. Gentleman's question. There will indeed be great pressure

    755
    on the House to ensure that there is effective monitoring. We shall certainly provide the opportunities. As the hon. Gentleman knows, we are still discussing the detailed mechanisms for such provision.
    Mr. Campbell-Savours: Has my hon. Friend seen the reports in the Sunday newspapers of actions by the noble Lord Howe, which I support, to undermine the negotiating position of Christopher Patten as Governor of Hong Kong? Can we be sure that there will be a full inquiry into those allegations as many of us would like to know what really happened during that period?
    Mr. Fatchett: My advice to my hon. Friend is to allow the Conservatives yet again to have their internal divisions in public. I enjoy watching those internal divisions. It is important to look to the future, and in that context we must ensure that the joint declaration is honoured and that we and the Chinese carry out our commitments under the joint declaration. That is the best way to ensure the long-term future and prosperity of the people of Hong Kong.

    Commonwealth
    Mrs. Ann Winterton: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the future of the Commonwealth. [5727]
    The Minister of State, Foreign and Commonwealth Office (Mr. Tony Lloyd): The Commonwealth has an increasingly important role to play in the modern world. The shared values of its members, reflected in the Harare declaration, are an important force in strengthening democracy and prosperity around the globe. We will take this agenda forward at the Commonwealth Heads of Government meeting in Edinburgh in October.
    Mrs. Winterton: History will judge the Commonwealth as bringing great benefit to the emerging nations. Does the Minister accept that it needs new vigour and a new sense of purpose if it is to continue into the new millennium to be an effective alternative to the expensive, inefficient and power-hungry United Nations?
    Mr. Lloyd: I would not pretend for a second to share any of the hon. Lady's sentiments in respect of the United Nations. We applaud the work of the United Nations in many parts of the world. However, there is no conflict between our view of the Commonwealth as an important institution in terms of projecting Britain's own values and making sure that the values that we share with other members of the Commonwealth are appreciated throughout the world. My right hon. Friend the Foreign Secretary made it clear in his recent mission statement that the role of the Commonwealth is central to our foreign policy objectives and our shared values in terms of democracy, good government, anti-corruption and building a global sense of values through the Harare declaration to which all Commonwealth nations must adhere.
    Mrs. Dunwoody: My hon. Friend will be aware that Labour Members are delighted with my right hon. Friend the Secretary of State's strong commitment to the Commonwealth. He will have noticed that the previous
    756
    Select Committee on Foreign Affairs produced a useful blueprint for the work that could be done within the Commonwealth and the genuine help that could be given to everyone throughout the organisation. Will he study it carefully and carry forward its practical views?
    Mr. Lloyd: My hon. Friend makes a very important point. We of course welcomed that report, and we shall take its conclusions very seriously. We also share the view that, as I said, the Commonwealth is central to this Government's purposes. It is also central, though, in ensuring that the values that we espouse and those that we espouse in common with our Commonwealth partners are an example not only to the Commonwealth but to the whole world.
    Mr. Menzies Campbell: May I commend in his absence the recent robust remarks by the Secretary of State for Foreign Affairs in relation to Nigeria? Does the Minister remember that, in 1961, when South Africa left the Commonwealth, it was on the verge of expulsion for its persistent and unrepentant flouting of Commonwealth values? If the present regime in Nigeria persists in its denial of human rights and democracy, will the Government give serious consideration to supporting a policy of expulsion of Nigeria from the Commonwealth?
    Mr. Lloyd: As the hon. and learned Gentleman will know, the Commonwealth ministerial action group will meet at the end of the week. On its agenda, among other things, will be the future of Nigeria in the Commonwealth, and of course the future of its suspension. I think that he will understand if I do not go further than that today except simply to say that we shall be working actively with our Commonwealth partners to see what further action can be taken to bring pressure to bear on the Nigerians so that they recognise that their behaviour is despicable and that it is time they began to reform.
    Mr. Pike: As both Pakistan and India very much value their membership of the Commonwealth, does my hon. Friend believe that this year, given that it is the 50th anniversary of their independence and the 50th year of the Kashmir problem, the Commonwealth could have a role in trying to help resolve that problem?
    Mr. Lloyd: As we have made very clear, the Government are available to act to bring about a resolution of that very long-enduring conflict. The major parties of the conflict are not only the people of Kashmir, who are undoubtedly the victims, but the Governments of India and Pakistan. The British Government, and indeed the Commonwealth, can operate only within a framework established by those two nations.
    Mr. Blunt: Given the events in Kenya reported in today's press, which seem to be in complete disregard of the Harare declaration, what steps are the Government taking to put pressure on the Government of President Arap Moi? Given the division between the Foreign Office and the Department of International Development, would such pressure include the potential suspension of aid?
    Mr. Lloyd: I met President Moi and, indeed, Opposition figures when I was in Kenya just over a week

    757
    ago. I made it clear then that our Government expect all parties to make space available so that the forthcoming general election can be conducted without violence and in a way that allows the Kenyan people to exercise their democratic right to decide the future of the country. The events over the weekend are yet one further serious blow to that process.
    We have made it clear that we deplore the violence and suggestions that the authorities may have used excessive force in their attempts to restrain demonstration. Within such terms, it is clear that the pressure that we are seeking to place is to ensure that the Kenyan people are sovereign in the process. Although I cannot answer for my right hon. Friend the Secretary of State for International Development, I am sure that she will take note of the hon. Gentleman's comments.
    Mr. Howard: Further to the question by my hon. Friend the Member for Reigate (Mr. Blunt), in the light of the distressing scenes of violence in Kenya, what scope does the Minister think there is for representations by the Government, in co-operation with other Commonwealth Governments, to the Kenyan Government?
    Mr. Lloyd: We have already made representations to the Kenyan Government and said that we expect them to play their part in ensuring that the run-up between now and the election later this year—or perhaps early next year—must be conducted without violence and in a way that allows the Kenyan people to make a decision. Those representations are firmly established with the Kenyan Government. We shall of course be seeking to work with our close allies in the Commonwealth and elsewhere to ensure that acceptance of the Harare principle is central to the Kenyan Government's actions. I simply repeat that we are in the end seeking to ensure that the Kenyan people have the right to choose the Government of Kenya.

    Burma (Human Rights)
    Mrs. Brinton: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the steps being taken by his Department to improve human rights in Burma. [5730]
    Mr. Fatchett: We take every opportunity to press the ruling State Law and Order Restoration Council—SLORC—to put an end to violations of human rights in Burma.
    On 19 June, we announced that we would not provide any financial support to companies for trade missions to Burma or for trade promotion activities in Burma. We have also urged our EU partners to impose further measures against the SLORC.
    Mrs. Brinton: Will my hon. Friend assure the House that the Government will support the tremendous efforts of Aung San Suu Kyi and the National Democratic League to fight for democracy in Burma, which is the true test of democratic rights? Will he also assure the House that Government money will no longer be used to encourage British companies to trade with Burma?
    Mr. Fatchett: I can certainly assure my hon. Friend on the first point. We will continue to campaign for the
    758
    restoration of democracy in Burma. It may be some consolation to my hon. Friend to learn that I sent, on behalf of the people of this country, birthday wishes to Aung San Suu Kyi on 18 June. I hope that it is not too long before Aung San Suu Kyi assumes her true position as leader of the Burmese people.
    In addition, I can give my hon. Friend a commitment that no British taxpayers' money will pay for trade missions or trade promotion in Burma, unlike under the previous Government, who showed their hypocrisy by using taxpayers' money to promote trade in Burma while at the same time condemning its human rights record. Our actions match our words: as always, the Conservatives' actions and words do not go together.
    Mr. Alan Clark: The Foreign Secretary's preoccupation with human rights is well known, and I respect him for it. However, there are four separate questions on today's Order Paper about human rights, all of which clearly envisage supplementary questions urging United Kingdom action on human rights in Burma, Sri Lanka, Indonesia and Nicaragua. Is it not the primary duty of the Foreign Office to nurture British diplomatic and commercial interests? Does the Minister think that those are likely to be advanced or inhibited by meddling in the internal affairs of other countries?
    Mr. Fatchett: The right hon. Gentleman must have been away from the House for so long that he does not understand one of the conventions of the House, or perhaps it has been dropped by the Conservative party. He will recall that only a few moments ago the shadow Foreign Secretary raised the question of human rights in Kenya. It seems that a universal principle is being applied—the right hon. Gentleman may be the only person outside it.

    Middle East Peace Process
    Mr. Burden: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the middle east peace process. [5731]
    Mr. Ivan Lewis: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the middle east peace process. [5738]
    Mr. Fatchett: We are deeply concerned at the continuing stalemate in the middle east peace process and at the deteriorating situation in the occupied territories. We have impressed on all concerned the dangers of the situation as we see them.
    We played a major role in producing the Amsterdam European Council statement on the middle east peace process. We are conferring with our partners on the follow up to this statement.
    Mr. Burden: I thank my hon. Friend for that reply. Does he agree that one of the most difficult questions facing the peace process is the future of Jerusalem? That is why it is so important that neither side takes any action that pre-empts the negotiations that must eventually take place. Does he share my concern that the Government of Israel seem intent on removing residency rights from many of the 170,000 Palestinian Arabs who live in east

    759
    Jerusalem, even though many of them were born there? Will he undertake to investigate that, and does he agree that that policy of quiet deportation is contrary to human rights and to the spirit of the Oslo accord?
    Mr. Fatchett: We certainly condemn any action by Israel or the Palestinians that pre-empts the final status negotiations. The matters to which my hon. Friend refers seem clearly to fall within that category, and therefore we have no hesitation in condemning them.
    Mr. Ivan Lewis: Will my hon. Friend welcome the fact that, for the first time since March this year. tentative discussions have taken place between the Israeli Government and representatives of the Palestinian authorities, especially the surprising recent meeting between Mr. Sharon, one of Israel's well-known hard liners, and Abu Mazin? In that context, when my hon. Friend meets Mr. Arafat next week will he urge him to take every glimmer of hope that is available to him to ensure that the peace process can be put back on track?
    Mr. Fatchett: We welcome any opportunity to reopen negotiations and any initiative that is taken. I compliment Ambassador Moratinos, the European Union special envoy, on his work. He has been particularly influential in trying to restart the talks between the Israeli Government and the Palestinians. I also congratulate the Egyptian Government on their role in trying to restart the peace negotiations. They have shown leadership and statesmanship—characteristics and attributes that are often lacking in that process.
    Mr. Hogg: Does the Minister agree that the single most important step that the Government of Israel could take to promote peace would be to decide not to build new settlements and not to extend existing ones? If he agrees, will he take every opportunity to press that message on the Israeli Government, both collectively and unilaterally? In particular, will he enlist the support of the United States Government in making their position, alongside ours, absolutely plain to the Government of Israel?
    Mr. Fatchett: I am pleased to tell the right hon. and learned Gentleman that we have already made clear our opposition to the extension of settlements and to new settlements. I visited the Har Homa settlement in May, and I set out clearly the British Government's position, which is based in international law and well known to the Israeli Government. We shall continue to convey that view to the Israelis and to other interested parties.
    Mr. Soames: Does the Minister agree that, in the wider interests of peace and stability in the middle east, he should make the most vigorous representations to the Iraqi Government about the failure to return Kuwaiti prisoners of war? Will he assure the House that, if he has not already done so, he will take steps to represent our views very strongly on that matter?
    Mr. Fatchett: I am pleased to tell the hon. Gentleman that we have conveyed that view. During my recent visit to Kuwait, I expressed to the emir this country's concern about the missing Kuwaitis. I gave him a commitment that we will do all we can to assist in ensuring that those missing Kuwaitis get back to their families in Kuwait.
    Mr. Galloway: Does the Minister accept that the President Arafat who will come here next week is not
    760
    the President Arafat who came here with such high hopes a couple of years ago and sat in the Strangers Gallery? He is almost a beaten and broken man because of his identification with a peace process that has become a tragedy, if not a farce. It is a tragedy because there is neither peace nor a process.
    Although I welcome the Minister's promise to seize on what my hon. Friend the Member for Bury, South (Mr. Lewis) called a glimmer of hope, I am bound to say that I see no glimmers. The time has come when words of condemnation of Israeli policy in Jerusalem and the occupied territories are no longer enough. International action involving the United States of America, the international community and the United Nations is long overdue.
    Mr. Fatchett: I can assure my hon. Friend that, when I met President Arafat the other week, he did not look broken and beaten: he was in good spirits and was keen to maintain the peace process and to restart the negotiations. I wished him well and gave him a clear commitment that we will do all we can to assist. My hon. Friend is correct to say that it is important that we get back to the negotiating table, as that is the only and best option available to everyone in the middle east.
    Mr. Butterfill: Does the Minister agree that, however faltering, the peace process has been progressive, and there has been a steady handover of territory to Palestinian control? That process needs to continue if we are to achieve peace. Does he agree that the present state of unrest in Hebron is holding up that process? When he meets Yasser Arafat next week, will he impress on him the important role that he can play in creating a climate in which the peace process can proceed to completion?
    Mr. Fatchett: It is clearly important that the process continues apace, otherwise the commitment to the process will diminish. It is obvious that the process must meet the aspirations of the Palestinian people and the security needs of the people of Israel. It must also deliver economically, as one of the issues that must be addressed is the fact that, since Oslo, the living standards of Palestinians have fallen by nearly one third. That is unacceptable, and progress must be made quickly so that everyone has a clear interest in and commitment to the peace process.

    Export Trade
    Mr. Desmond Browne: To ask the Secretary of State for Foreign and Commonwealth Affairs what steps he proposes to take to promote Britain's export trade. [5732]
    Mr. Fatchett: We work hand in hand with the Department of Trade and Industry on export promotion. Together, we have established a new export forum which will consider how to improve our export promotion initiatives. We have given trade promotion a very high priority in my Department's mission statement
    Mr. Browne: Will my hon. Friend join me in paying tribute to the Scotch whisky industry for its considerable contribution to the UK's trade balance? Will he reassure the House that he will continue to use the World Trade Organisation's disputes settlement system to ensure a

    761
    level playing field for whisky exporters? In particular, will he ensure that everything possible is done to encourage India to include Scotch whisky in the early part of its trade liberalisation programme?
    Mr. Fatchett: I am sure that my hon. Friend will have no difficulty in gaining support for his first point—that is, to ask everybody to support the value of Scotch whisky. I know that Scotch whisky is an important export for the United Kingdom and an important industry for my hon. Friend's constituents. We wish to see open markets for whatever product, and Scotch whisky is no exception.
    During my recent visit to India, I raised with the Indian Finance Minister the question of open markets for Scotch whisky in India, and he was sympathetic to the argument. We need immediate action to achieve our objectives. I stressed the importance of that, and advised the Minister that Scotch whisky was a good nightcap for those touring India. He took my advice, and perhaps it will be open to others in the future.
    Mr. Cash: Does the Minister accept that the most essential means of promoting exports is competitiveness, which requires established Conservative principles with regard to the promotion of trade and economic liberalism? Will new Labour espouse these principles, as it has done with almost everything else we have put forward in the past 150 years? Does he agree that one effective way of demonstrating the Government's determination to improve exports would be to condemn and eliminate illegal subsidies in the EU?
    Mr. Fatchett: I was worried for a time that the hon. Gentleman might get through a question without mentioning Europe, and I was delighted that he arrived at that point at the end. As always, he saved the best bit for the end. Of course we condemn any subsidy that is illegal under European legislation.

    Nicaragua (Human Rights)
    Barbara Follett: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on human rights in Nicaragua. [5733]
    Mr. Tony Lloyd: I say with no apology that human rights are at the heart of our foreign policy. I recognise this receives approbation from hon. Members on both sides of the House. We will monitor human rights closely and raise our concerns with the Nicaraguan Government as necessary. We will encourage further steps to address police standards, prison conditions, banditry in the north of the country and discrimination against women and indigenous groups.
    Barbara Follett: Does my hon. Friend share my concern at the legislation recently introduced by the Nicaraguan Government which restricts the rights of women and children in that country and is in direct violation of the international agreements that Nicaragua signed in Beijing in 1996 and Copenhagen in 1995?
    Mr. Lloyd: I think that my hon. Friend is referring to the legislation on the ministry of the family. While we have not seen a draft of that legislation, I understand that it has received considerable criticism from
    762
    non-governmental organisations in Nicaragua and more generally, which believe that it will discriminate against certain women and families.
    The Government's position is that we support the rights of all women and families. Within that framework, we urge the Nicaraguan Government, which has signed and ratified the UN conventions on the removal of all forms of discrimination against women and on the rights of the child, to recognise that those conventions have to be put into practice in domestic law. We ask the Nicaraguan Government to study them carefully to ensure that any legislation conforms with their international treaty obligations.
    Mr. Swayne: Will the Minister take this opportunity to distance himself from the position taken by the Secretary of State for International Development who, before free elections in that country, called for the expulsion of the American ambassador and the suppression of La Prensa, the anti-Sandinista newspaper?
    Mr. Lloyd: I merely suggest that the hon. Gentleman should take those matters up directly with the Secretary of State for International Development. I am reliably advised that there is not a shred of truth in what he said. Perhaps he ought to check the source of the information, rather than simply pander to the prejudices of an era that even in Nicaragua is long gone.

    Amsterdam Agreement
    Mr. Skinner: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with other EU Foreign Ministers about the parts of the Amsterdam agreement that affect his Department. [5734]
    The Minister of State, Foreign and Commonwealth Office (Mr. Doug Henderson): My right hon. Friend the Foreign Secretary regularly discusses European Union issues with his EU counterparts.
    Mr. Skinner: What are the criteria for applicant countries wanting to join the European Union—the Common Market really, if we are talking straight? Every currency in the single market is being badgered to meet the criteria available to fit the economic and monetary union single currency, yet applicant countries apparently do not have to satisfy those to get in. Who pays the cost? Is it not true that we—the British taxpayers—are still paying large amounts of money for the German annexation of East Germany? Is it not odd that today we hear that Slovenia is being given a consolation prize—joining the Common Market—because it cannot get into NATO?
    Mr. Henderson: I am grateful to my hon. Friend, who, since the general election, has been building up a reputation for great support for the Government. I am glad that he is continuing that today. May I reassure him that enlargement of the European Community provides a great opportunity on the one hand for better security within Europe and on the other for British exporters to break into a larger market.
    A number of criteria will be given prominence by the European Commission when it publishes its assessment of the state of the various countries and their suitability

    763
    for membership, which I think will be next Wednesday. The Commission will take into account a country's human rights record, the establishment of parliamentary democracy, the extent to which there has already been economic convergence and the possibility of further convergence. Of course, there will be an assessment of costs.
    Mr. Howard: I hope that my right hon. Friend the Member for Kensington and Chelsea (Mr. Clark) will not be too upset if I return to the question of human rights. Will the Minister tell us a bit about the human rights provisions of the treaty of Amsterdam? Does he agree that, if a member state is in serious and persistent breach of those provisions, the appropriate action should be to suspend that state from membership or expel it, rather than require it to remain a member and remove its voting rights?
    Mr. Henderson: As one refugee from the Home Office to another, I welcome the right hon. and learned Gentleman to his new post. I know that he is embarrassed about raising economic, defence and foreign policy issues arising out of Amsterdam. The issue that he has raised is a red herring. European Union countries together stand for human rights. That was endorsed in the Amsterdam treaty and was very much initiated and supported by this Government.

    Arms Sales
    Dr. Lynne Jones: To ask the Secretary of State for Foreign and Commonwealth Affairs when he expects to make the announcement of the first countries to be blacklisted under the new code of conduct for arms sales. [5737]
    Mr. Tony Lloyd: We shall announce, as soon as it is completed, the results of the review of criteria used in considering licence applications for the export of conventional arms. We are taking this exercise forward as a matter of urgency. The review does not focus on individual countries and will not involve the compilation of a blacklist. It will, however, meet our commitment not to permit the sale of arms to any regimes that might use them for internal repression or international aggression.
    Dr. Jones: My hon. Friend will be aware that the Government have raised expectations that their attitude to the arms trade will be different. The previous Government rejected calls for a ban on arms sales to Indonesia, despite photographic, video and eye-witness evidence of the use of UK equipment for internal repression. Will the Government draw up guidelines to allow the acceptance of such evidence and will he confirm that breaches of those guidelines will lead to the cessation of arms sales to the country concerned?
    Mr. Lloyd: As I have said, the review is urgently under way. My hon. Friend would not expect me to comment on its impact on individual countries because its purpose is to ensure that we have a truly global framework. Nevertheless, in the context of Indonesia, the Minister, my hon. Friend the Member for Leeds, Central (Mr. Fatchett), has asked for precisely the sort of
    764
    information she mentioned, so that we can take a proper and informed view of the consequences of previous UK arms sales.
    Mr. Gerald Howarth: In advance of the review, will the Minister make it clear that the Government support the principle of defence exports? The hon. Member for Birmingham, Selly Oak (Dr. Jones) called them arms sales, but they are in fact defence exports. Will he confirm, that our defence exports are vital for Britain because they sustain tens of thousands of jobs, often high-technology jobs, not only in my constituency but in those of many Labour Members; that they enable us to provide our services with the best British equipment at a price that we can afford; and that they give us foreign policy levers over countries with which we enjoy good friendship?
    Mr. Lloyd: The Government might find it easier to take lectures from Conservative Members, and from the hon. Gentleman in particular, if they had not been part of a Government with an incredibly sleazy record on arms sales. He well recalls the way in which that Government prostituted the aid budget to obtain arms sales at the time of the Pergau dam scandal, and how that Government wriggled and tried to hide the truth about arms sales to Iraq. They were prepared not only to put at risk the lives of British people in the services but were so economically incompetent that we are still owed money by the Iraqis for those deals. If he wants to talk about arms sales, he should start by apologising to the House for his role in that shameful Government.
    Mr. Mullin: Talking of Indonesia—my hon. Friend will recall that the regime there came to power on the back of a bloodbath matched in Asia only by Pol Pot—was he as surprised as I was to find that the Ministry of Defence has given invitations, no doubt left over from the previous regime, to three Indonesian generals who are due in Britain later this month to discuss who knows what? What discussions has he had with the MOD about whether that is a good idea and whether it will send the right message to the Indonesian Government?
    Mr. Lloyd: I can confirm that the invitation was issued by the previous Government.
    Mr. Gerald Howarth: Disgraceful.
    Mr. Lloyd: Conservative Members speak for themselves.
    We do not know yet whether the invitation will be taken up. I can confirm that any sales to any part of the world that arise from that or other exhibitions of military equipment will, of course, be subject to the export licence procedures that I have already discussed. Inevitably, our commitment to making sure that the review ensures that we do not provide arms that can be used for internal repression or external aggression will also apply to such arms sales.
    Mr. Faber: Further to the last answer, does not the existing policy guidance document on defence exports already include the need to take into account the human rights record of recipient countries? With exactly what aspect of the current criteria does the Minister disagree?
    Mr. Lloyd: I suggest that the hon. Gentleman does not anticipate the outcome of the review but, that said, I remind him—as I said to the hon. Member for Aldershot (Mr. Howarth) a few moments ago—that his party in government ran defence sales in such a way that they brought great shame to Britain. They made Britain's name abroad one of disrepute. We intend to ensure that Britain, while recognising our legitimate right to trade on the world stage, operates with a degree of moral responsibility. That might shock Conservative Members, but at least we shall ensure that we can hold our heads high in the international arena.

    Kashmir
    Mr. Heppell: To ask the Secretary of State for Foreign and Commonwealth Affairs when he plans next to meet representatives of the Pakistani and Indian Governments to discuss an agreement on Kashmir. [5739]
    Mr. Fatchett: I discussed Kashmir with both Governments during my visit to India and Pakistan last month. In addition, I met the Pakistani Foreign Minister and the Indian Minister of State for External Affairs in Hong Kong, and we again discussed Kashmir. We shall continue to support both countries in their dialogue on the issues that divide them, including Kashmir.
    Mr. Heppell: I thank my hon. Friend for that reply. Is he aware of the reports that the Indian authorities in Srinagar have in their possession audio tapes that could shed some light on the motives and the identity of the people who have taken British hostages? Will he raise the issue with the Indian high commission in London as a matter of urgency?
    Mr. Fatchett: I can assure my hon. Friend that we have had close relationships with both the Indian and Pakistani Governments on the hostage question. Their help has been greatly appreciated. I am sorry to say that we have made no further progress, but I can give my hon. Friend and the families of the hostages every assurance that we shall continue to work closely and actively with both Governments until we find the hostages.
    Mr. Colvin: Will the hon. Gentleman confirm that the plebiscite that was promised to the Kashmiri people on their future in 1947 was denied them because the Labour Government of the day gave India and Pakistan independence six months earlier than had previously been agreed? Does he agree that this year—the 50th anniversary of those events—is a good window of opportunity to permit that problem to be resolved? Will he remind the House of the details of the criteria agreed by India and Pakistan, which must be met before that plebiscite can take place?
    Mr. Fatchett: I congratulate the Indian and Pakistani Governments on their efforts to renew discussions between the two Governments. It is an act of statesmanship and leadership by Prime Ministers Gujral and Sharif. We hope that those talks are successful. I was delighted with the news that, in the talks last month, it was agreed to establish a working party on Jammu and Kashmir. I assume that all the issues to which the hon. Gentleman referred will fall within the remit of that
    766
    working party. If that is the case, there are good prospects of making progress in an extremely difficult issue. We have made it clear to both Governments that, if they so wish, the good offices of the British Government will be made available to them.

    Korea
    Mr. Flynn: To ask the Secretary of State for Foreign and Commonwealth Affairs what new proposals he has to improve relations with Korea. [5740]
    Mr. Fatchett: At their recent meeting in New York, my right hon. Friend the Prime Minister and the President of Korea agreed that the relations between our two countries were improving all the time. We shall work closely together further to enhance this important partnership.
    Mr. Flynn: Does my hon. Friend agree that the decision to locate £2 billion of high-tech Korean investment in my constituency was made in the sure knowledge that the economy in Wales under a Labour Government and a Welsh Assembly would be a healthy one for growth and development? Is he aware that those jobs have been relocated three fields away from the site where British technology jobs once were, before they were relocated under the previous Government to countries that have both the minimum wage and the social chapter? What does my hon. Friend intend to do to ensure that the cordial relations between Korea and the United Kingdom improve this year, when we are celebrating the 200th anniversary of the first contact between those two countries?
    Mr. Fatchett: I congratulate my hon. Friend on all his efforts and on the initiatives that he took to persuade the Korean inward investment to come to Newport. I am sure that his constituents will be extremely pleased with the success of his efforts, and that all hon. Members on both sides of the House will wish to congratulate him in that respect. He also looks to the future and I think that he, along with many other business people, will be encouraged by the decisions taken by my right hon. Friend the Chancellor last week, when he reduced the level of corporation tax to an all-time low. That will be very attractive to new inward investors, and they will also notice that, at last, we in the United Kingdom have a Government who are sensitive and friendly to business requirements. That is why we have the lowest level of corporation tax—something that the Conservative party talked about but failed miserably to achieve.
    Mr. Rowe: Would the Minister care to share with the House his assessment of how long the present situation in North Korea can persist and what, if any, risk he perceives to South Korea from the impending collapse?
    Mr. Fatchett: The hon. Gentleman raises an important issue; and we are naturally concerned about both the nature of the regime in North Korea and the condition of the people there. He will know that the Government have already made £1 million available to help with food shortages. We are also working with our European partners to bring assistance to North Korea. It is crucial, not only to North Korea's immediate neighbours, but to

    767
    all of us, that the four-party talks are successful and that North Korea changes its political face and economic approach and gives its people the opportunity to achieve what has been achieved in South Korea. The hon. Gentleman is right to say that what is happening in North Korea has serious implications.

    Zimbabwe
    Mr. Davidson: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the United Kingdom's relationship with the Government of Zimbabwe. [5742]
    Mr. Tony Lloyd: The United Kingdom enjoys close and warm relations with the Government of Zimbabwe. We are important partners of Zimbabwe across a wide field, including trade, investment, development co-operation and military training. This week, the Zimbabwean Foreign Minister will come to London to take part in, and chair, the Commonwealth ministerial action group, and I look forward to meeting and working with him in that process.
    Mr. Davidson: I thank the Minister for his answer. Has he considered ways in which this country can assist the development of democracy in Zimbabwe by assisting non-racial, non-tribal opposition parties in that country and by encouraging greater democracy within the ruling party?
    Mr. Lloyd: We have welcomed the Zimbabwean Government's proposals to make the playing field considerably more level, specifically in respect of election law and the financing of opposition political parties. We would urge that they carry forward that process so as to make sure that Zimbabwe develops into a proper and pluralistic society.
    Mr. Ian Bruce: Why does the Minister believe that it is right to say that we should have export bans and stop people selling to certain other countries because of the problems they have with their democracies, when he does not propose that UK companies should stop trading with Zimbabwe? Is it not strange that we are keen to see Korean companies importing into this country, without sanctions, while constantly saying that we should have sanctions against British companies which are out there exporting?
    Mr. Lloyd: Korea is in Asia and Zimbabwe is in Africa. Of course, the question of how we relate to other nations in respect of their human rights and their domestic and global responsibilities is one that varies on a case-by-case basis. That is the position of any Government—it was the position of the Government that the hon. Gentleman supported before the general election and it is certainly the position of the present Government. However, the hon. Gentleman will notice that we shall be a lot more consistent in our views and a lot more honest.

    Indonesia (Human Rights)
    Mr. Andrew George: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a
    768
    statement on (a) the human rights record of Indonesia and (b) its impact on the licensing of future arms exports to that country. [5743]
    Mr. Fatchett: We have serious concerns about the human rights situation in both Indonesia and East Timor. We look to Indonesia to improve its human rights record. As announced to the House on 22 May, we are reviewing the criteria used in considering licence applications to export conventional arms. We expect the review to be completed in the next few weeks. We shall not issue licences for the export of arms, to Indonesia or any other country, which might be used for internal repression or international aggression.
    Mr. George: I thank the Minister for that reply. Does he agree that a genuine concern for the well-being of civilians and in other countries is not tantamount—
    Mr. Campbell-Savours: Take your hands out of your pockets.
    Mr. George: I am sorry.
    Does the Minister agree that it is not tantamount to a preoccupation with human rights, which Conservative Members implied was to be scorned? Has he sought legal advice as to whether the revocation of export licences would imply any compensation payments to those exporters? The legal advice that I have received implies that it would not.
    Finally, will the Minister inform the House how quickly he will move on to the revocation of licences when the review is over?
    Mr. Fatchett: I suggest that the hon. Gentleman never listens to any advice offered by my hon. Friend the Member for Workington (Mr. Campbell-Savours). It has never worked for anyone else, so there is no reason to believe that it will work for him. As for the general points that the hon. Gentleman raises on human rights, he is of course correct to say that we are dealing with universal principles of universal application, and that those will be the criteria that guide Government policy.
    As for the arms issues, I ask the hon. Gentleman to wait, with others, for the announcement of the results of the review that we have established.
    Mr. Sheerman: I am pleased that my colleague is carefully examining Indonesia's human rights record. Human rights has emerged repeatedly as an issue during today's Question Time. However, it does worry some of us who want consistency when, post-Hong Kong, all we have heard about is gung-ho trade with China and the fact that we have an enormous trade deficit with that country, when surely no one can defend the human rights record of that country.
    Mr. Fatchett: I suspect that my hon. Friend was not in the Chamber for the first question and the first answer that I gave; if he was, he may well have missed the point that I made about the human rights record of the Chinese Government and the need to engage that Government on the human rights agenda. All that we have said since the handover of Hong Kong, in replies in the House this afternoon and in statements, has been about the need to

    769
    ensure that China honours the Joint Declaration. That is about human rights, and that is about a consistent and universal commitment to human rights. That will apply in Indonesia, Hong Kong and throughout our policy.
    Mr. David Davis: I have a factual question for the Minister, which allows a yes or no answer. Given all the resources available to him in the Foreign Office, can he confirm that British-made Hawks are never used in East Timor?
    Mr. Fatchett: The hon. Gentleman is asking me to follow a practice that he never followed in office, and I can never remember him giving such a factual answer. On Hawk and every other arms deal, he will have to wait until the conclusion of our review. We shall have to consider the criteria and make a judgment, and then he will be in a position to support or to criticise the Government. I am afraid that he will have to show patience and to wait.

    Year of the Commonwealth
    Mr. Simon Hughes: To ask the Secretary of State for Foreign and Commonwealth Affairs what initiatives his Department is taking to mark the United Kingdom Year of the Commonwealth; and if he will make a statement. [5744]
    Mr. Tony Lloyd: We welcome the initiative of the Royal Commonwealth Society in naming 1997 the UK Year of the Commonwealth. This Department held a reception to mark its launch in January. As well as hosting the Commonwealth Heads of Government meeting and the Commonwealth Business Forum, we are funding the
    770
    Commonwealth Centre in the margins of the CHOGM and are contributing to, and are involved with, a number of other events during the year.
    Mr. Hughes: I thank the Minister for his reply. I would encourage him to realise that, out there in the community, lots of young people, in particular, are completely unaware of the Commonwealth, of our involvement in it, of its importance, and of the number of people who are Commonwealth citizens and who have settled in this country. They may also be unaware of its benefits, to Britain and to half the population of the world. Will the Minister, perhaps with his colleagues who are responsible for education, set up an initiative so that, by the autumn—around the time of the Commonwealth conference in Edinburgh—people will be more aware of the fact that the Commonwealth is one of the most valuable organisations to which we have ever belonged?
    Mr. Lloyd: The role of the Commonwealth, although rarely ignored in other Commonwealth countries, may ironically have been ignored in this country. That is perhaps because we take too easily for granted some of the central values that it represents: democracy, good government and so forth. We can be truly proud of those values; we can celebrate them. That is why the Government are placing considerable emphasis on this Year of the Commonwealth. We are grateful to the Royal Commonwealth Society, and to people such as the hon. Gentleman who support it. The society took the initiative to make this the Year of the Commonwealth. We intend to use the rest of this year to highlight the organisation in the run-up to the Edinburgh meeting, which will generate considerable publicity both for the institution of the Commonwealth and for the values that it underpins.

Points of Order
3.30 pm
Mr. Gerald Howarth: On a point of order, Madam Speaker. I know that you have responsibility for the printing of our proceedings, and it occurred to me that Hansard may have been misled by the answer I was given earlier by the hon. Member for Manchester, Central (Mr. Lloyd), who suggested that I was a member of the former Government with responsibility for defence exports. For the benefit of Hansard, may I point out that, so far from being a Minister, I was not even in the last Parliament? But my right hon. Friends did a fantastic job for Britain in the promotion of defence exports.
Madam Speaker: That is barely a point of order for me.
Mr. Geoffrey Clifton-Brown: On a point of order, Madam Speaker. Have you received a request from Foreign Office Ministers to make a statement on the attitude of the French authorities? I learned this morning that a constituent of mine, a British passport holder, has been told that he may not leave the camp site he is on in France while the French authorities investigate whether he is liable for French conscription—the second such case in a fortnight. Can you ask Foreign Office Ministers for a statement on what appears to be an increasing trend on the part of the French authorities? British passport holders should surely be free to travel in France without fear of arrest.
Madam Speaker: I am not aware that any Minister is seeking to make a statement on that matter today. I might advise the hon. Gentleman to make representations himself to the Foreign and Commonwealth Office, since the case concerns a constituent for whom he has some responsibility.

Film Classification Accountability and Openness
3.32 pm
Mr. Julian Brazier: I beg to move,
That leave be given to bring in a Bill to make the British Board of Film Classification accountable to Parliament; to require it to publish each year a list of its members, a register of their interests, minutes of its proceedings and copies of the expert advice it commissions; to give the Secretary of State power to dismiss its president; and for connected purposes.
The British Board of Film Classification is one of the last and worst examples of complacent, arrogant, secretive self-regulation. There is growing concern at the increasing culture of violence in this country, and the British Board of Film Classification should be playing a vital role in combating it.
The board had its origins before the first world war; it was set up by the film industry to provide independent and impartial advice to local authorities—the licensing authorities—on which films should be shown in cinemas. In 1984, Parliament gave the board a more statutory power over videos—it is a criminal offence to see a video which the board has not passed—yet the organisation remains, in effect, accountable to no one. It publishes an annual report, but it contains no register of interests, little or no mechanism for accountability and, worst of all, no trace of the specialist advice that it takes.
A recent celebrated case was the film "Crash", which portrays people getting sexual gratification from the most violent and dangerous motor crashes. It is especially worrying at a time and in a country where more children are killed each month than were killed in the Dunblane incident and where cars are more readily available than firearms—a subject on which the House has expended much time and energy. When asked to justify his decision to allow the film to be shown in Britain's cinemas, James Ferman, the director of the British Board of Film Classification, said that he had done so because he had taken specialist advice from a child psychologist who said that the film was safe. I argued with him on television and heard him repeat those claims.
Fortunately, the psychologist in question was very brave. I hope that it will enhance his standing in the profession that he chose to break confidentiality and blow the whistle, and release the full 12-page text of the report that he submitted. May I quote from it briefly? It said:
"Younger people, and those … who are particularly impressionable, are much more likely to be influenced by the moral vacuum associated with the sexuality shown by the main characters. … inexperienced people may look to the main characters as role models.
In addition, there exists in any community a small group of disturbed, psychologically vulnerable or deviant individuals.
But the main characters—… the Photographer, who pursues his 'art' in this film to the destruction of self and … others—could be seen as an inspiration or role model for these people to emulate."
A professional psychologist has therefore said that the film could encourage certain irresponsible young people to go out and kill people by driving dangerously. We would know none of that had Mr. Brittan not had the courage to blow the whistle on Mr. Ferman.
I wish to make a wider point rather than simply challenge that film. There is something profoundly wrong with a set-up in which an extraordinarily influential and powerful body can conduct its affairs in such secrecy.

773
Furthermore, the lack of a proper register of interests means that we cannot even be certain that none of the board members have commercial connections with films that come before them. The redoubtable Steve Doughty of the Daily Mail, whom I congratulate on his investigative journalism on this matter, unearthed the fact that one board member, who is supposed to review films in our interests, helps to run an escort agency that specialises in the entrapment of parties to divorces.
There should be a full register of interests, and the board should be moved towards the BBC model. Nobody wants the Government or Parliament to censor films, but we need a proper non-executive committee, the members of which would be appointed and potentially fired by the Home Secretary. That system works in the case of the BBC and provides accountability to Parliament, without allowing direct interference in operations.
Since the beginning of civilisation, it has been accepted that what people, especially young people, see and hear, influences them. Pythagoras testifies to the occasion when he prevented a riot by persuading a piper to change his tune—or so the story goes. I do not ask that we impose some new system of censorship; I simply say that in an era when commercial advertisers can spend billions of pounds trying to change people's opinions—rightly so, as part of the workings of the market—we should get the existing machinery to work. That is the Bill's aim.
We owe it to the weak, the innocent and the vulnerable in our society to protect them. Making the board, which had a long and honourable history until recent years, work and clean up its act is in the public interest. I urge the House to support this measure.
3.39 pm
Mr. Norman A. Godman: I object in principle to the Bill, but I promise to be brief. I have a great deal of respect for the hon. Member for Canterbury (Mr. Brazier) and I support his aim to protect vulnerable people in our society, but I object in principle to the Bill because, in my view, its covert aim is to impose a form of state or political censorship on British filmgoers.
Although I have every respect for the Secretary of State for the Home Department, my right hon. Friend the Member for Blackburn (Mr. Straw) and for the Secretary of State for Scotland, my right hon. Friend the Member for Glasgow, Anniesland (Mr. Dewar), I do not want to see them as film censors. I reckon that my right hon. Friend the Home Secretary—I hope that he will forgive me for this—confines his film viewing to old Hollywood musicals. I sometimes think that he sees himself in his dreams as playing the role of Gene Kelly in a British remake of "Singin' in the Rain". Heaven alone knows when my right hon. Friend the Secretary of State for Scotland last visited his local cinema—I am not sure that he even saw "Braveheart".
The British film board works well. Its members, under the stewardship of Lord Harewood, are not devotees of pornography or violent films. Perhaps unlike the hon.
774
Member for Canterbury, I have not seen the film "Crash" and I have no desire to see it. [Interruption.] I understood from the way that the hon. Gentleman was speaking that he had seen the film.
The members of the British film board make the occasional mistake, but those are honest mistakes. I have more trust in the members of the board than I do in politicians.
My trust in the board is shared by members of my local council, the Inverclyde council. When a cinema was built on the Greenock waterfront, the members of the council, including the opposition members, decided that they had no wish to act as local censors as a condition for the granting of a licence to the cinema proprietor. They say that they are perfectly willing to rely on the British Board of Film Classification for advice on such matters. Among those local representatives are members of the Church of Scotland and the Roman Catholic Church. They are regular churchgoers, but—unlike the hon. Gentleman—they have trust in the men and women of the British film board.
I have always supported the statutory powers given to the board to license videos. That is particularly important where children are concerned. Indeed, I supported Gareth Wardell's Bill in the House as far back as 1984. Gareth earned our trust and respect for his Video Recordings Bill, which became the Video Recordings Act 1984. That Bill was strengthened by sections of the Criminal Justice and Public Order Act 1994, which I supported.
On films, we should put our trust in the members—
Mr. Brazier rose—
Mr. Godman: The hon. Gentleman must learn the procedures of the House. I cannot give way to him.
We should put our trust in the members and officials of the British Board of Film Classification, not in politicians.
Question put, pursuant to Standing Order No. 23 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business), and agreed to.
Bill ordered to be brought in by Mr. Julian Brazier, Sir Teddy Taylor, Mr. Andrew Rowe, Mr. Edward Leigh, Miss Ann Widdecombe, Mr. Roger Gale, Mr. Andrew Robathan, Mr. Piers Merchant, Dr. Julian Lewis, Mr. Shaun Woodward, Mr. Oliver Letwin and Mr. Christopher Fraser.

Film Classification Accountability and Openness
  FILM CLASSIFICATION ACCOUNTABILITY AND OPENNESS
  Mr. Julian Brazier accordingly presented a Bill to make the British Board of Film Classification accountable to Parliament; to require it to publish each year a list of its members, a register of their interests, minutes of its proceedings and copies of the expert advice it commissions; to give the Secretary of State power to dismiss its president; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed [Bill 41].
Orders of the Day
  Local Government Finance (Supplementary Credit Approvals) Bill
  As amended (in the Standing Committee), considered.
  Local Government Finance (Supplementary Credit Approvals) Bill
    New clause 1

      DUTY OF SECRETARY OF STATE TO HAVE REGARD TO ACCESSIBILITY STANDARDS
      'In section 55 of the Local Government and Housing Act 1989 there shall be inserted after subsection (3)—
      "(3A) In determining the amount of a supplementary credit approval, the Secretary of State shall have regard to the strategy of the authority to ensure full accessibility standards in new build and in conversion or renovation of existing properties.".'.—[Mr. Sanders.]
      Brought up, and read the First time.
      3.45 pm
      Mr. Adrian Sanders: I beg to move, That the clause be read a Second time.
      The new clause would put some restrictions on the expenditure of moneys drawn down from the supplementary credit approvals. We believe that it presents an excellent opportunity to address the serious problem of the lack of accessible housing for disabled people. That problem has existed for many years.
      According to the Royal Association for Disability and Rehabilitation, a considerable amount of local authority housing is inaccessible to disabled people. That leads not only to disabled people waiting long periods for rehousing, and living in inappropriate accommodation, but to massive expenditure on building adaptions. In 1994–95, local authorities spent nearly £85 million adapting properties for disabled people. That is a considerable amount, and much expenditure is a direct consequence of not having a building regulation that makes the necessary arrangements should existing housing stock be required by people with disabilities.
      Two years ago, the Department of the Environment issued proposals to extend part M of the building regulations, which ensures accessibility to all new housing. The Department has not moved on from that initial set of proposals. Unless part M is extended quickly, it will have no effect on the supplementary credit approvals and an opportunity will be lost.
      New clause 1 would ensure that new build and renovated properties are accessible to disabled people. We hope that our new clause will be supported on all sides of the House so that people with disabilities will no longer have to wait for housing adaptions, and disabled people on housing waiting lists will be able to move into accommodation that is appropriate to their needs.
      The Minister for London and Construction (Mr. Nick Raynsford): As the hon. Member for Torbay (Mr. Sanders) has said, new clause 1 would place a new duty on the Secretary of State to take account of each local authority's strategy to ensure full accessibility standards in determining the amount of any supplementary credit approval. Although he may not be aware of it, the hon. Gentleman's new clause would apply
      776
      to the determination of all supplementary credit approvals and not just to those issued under the capital receipts initiative. Therefore, the new clause may go rather further than the hon. Gentleman intends.
      I do not think that, in his heart of hearts, the hon. Gentleman sees the purpose of requiring that accessibility standards be considered when distributing supplementary credit approvals for composting, flood defences or for cycle lanes. However, that would be the effect of the new clause. While we cannot possibly accept the new clause because it would create a nonsensical position, the hon. Gentleman has nevertheless raised an issue which the Government take very seriously. The hon. Gentleman knows that because, when he raised the issue on Second Reading. I assured him that the Government were considering seriously part M of the building regulations and its extension to residential dwellings.
      Under the previous Government, the Department issued a consultation paper on the subject. We have given careful thought to the many responses that we have received and I have been actively involved in bringing together the House Builders Federation and the Joseph Rowntree Foundation, which take slightly different views on how progress should be made. We are trying to find a sensible accord that will allow real progress without imposing unreasonable additional costs that might have an adverse effect on individual house buyers and the market. We are taking urgent action on the issue, which we take very seriously.
      In the meantime, measures are in place to ensure that all new developments of special needs housing, and housing for the elderly and frail, are covered by Housing Corporation scheme standards, which specifically require that the housing design must provide for the access needs of older people and must meet a range of accessibility standards. Housing specifically for wheelchair users has to meet further guidelines agreed between the corporation and the National Wheelchair Housing Association Group. Any passenger lifts in new social housing must be able to accommodate wheelchairs.
      Sir Paul Beresford: Funnily enough, in a way I support the Minister's argument that the new clause would increase bureaucracy and work for the Department and local authorities. I am particularly conscious of that, because the Bill will already double their work load. Does the Minister agree that the Bill introduces a twin-track approach, bringing in a separate parallel procedure similar to those already existing for local authorities and the Department?
      Mr. Raynsford: The hon. Gentleman is wrong on both counts. As I hope he knows, the Bill has been warmly welcomed by local authorities throughout the country. They see it as a means of increasing investment in housing, which has been scandalously neglected for the past 18 years.
      My point was not about bureaucracy, but about the need to ensure effective measures to extend accessibility standards in new housing and in the conversion of older housing without imposing unreasonable costs that would hit the consumer and possibly harm the housing market. That is a sensible concern. We are working in everybody's interests to improve accessibility for people with disabilities in a practical way.

      777
      I was assuring the hon. Member for Torbay that there were safeguards on all new housing association developments. Similar standards apply to new housing developments by housing associations supported by local authority social housing grant. Any housing associations developments with funding from supplementary credit approvals under the capital receipts initiative will have to meet those standards. The standards of accessibility that the hon. Gentleman is seeking in new investment undertaken as a result of the initiative will be guaranteed.
      In the light of my explanation of why the problem cannot be dealt with in the way that the hon. Gentleman suggests and my assurances that the Government already have that important matter under active consideration, I hope that he will agree not to press the new clause.
      Mr. Sanders: I thank the Minister for that comprehensive explanation, but the purpose of the new clause is not just to focus on developments that are specifically designed for people with disabilities, but to ensure that a person who acquires a disability in later life can remain in the home that they had lived in until they acquired that disability. For example, stairways should be designed with possible later adaptation to add a mechanical stairlift in mind. That would ensure that people with disabilities could remain in the community and would not be ghettoised in housing for the disabled. We look to the Government to bring in such standards, because they have been lacking until now.
      Whether or not the Bill goes that far, cycleways should be accessible to people with disabilities. If it does, all well and good, but, although we take on board the Minister's comments—and I thank him for his reply—we wish to push the new clause to a vote. It is an important marker which demonstrates our slightly different approach. We do not want people with disabilities to be ghettoised; everyone should have the possibility of their housing being adapted if that is required at a later date.
      Let me give a wonderful example from my constituency. Some houses had supposedly been designed for elderly people, but no provision to that effect had been made in the building regulations. The kitchen cupboards were too high for elderly people to reach, as elderly people are not quite as tall as younger people; we lose a few inches as we get older. The food cupboard was in front of a water heating pipe, so it was useless for the storage of food. Such incidences require local authorities to spend money on adjustments that would not be required if standards had been laid down before construction.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 38, Noes 303.

      Division No. 48]

      [3.55 pm

      AYES

      Ashdown, Rt Hon Paddy

      Cotter, Brian

      Baker, Norman

      Davey, Edward (Kingston)

      Ballard, Mrs Jackie

      Fearn, Ronnie

      Beggs, Roy (E Antrim)

      Foster, Don (Bath)

      Beith, Rt Hon A J

      George, Andrew (St Ives)

      Brake, Thomas

      Gorrie, Donald

      Brand, Dr Peter

      Hancock, Mike

      Breed, Colin

      Harris, Dr Evan

      Bruce, Malcolm (Gordon)

      Hughes, Simon (Southwark N)

      Burnett, John

      Keetch, Paul

      Campbell, Menzies (NE Fife)

      Kennedy, Charles (Ross Skye)

      Chidgey, David

      Kirkwood, Archy

      778

      Livsey, Richard

      Smith, Sir Robert (W Ab'd'ns)

      Llwyd, Elfyn

      Stunell, Andrew

      Maclennan, Robert

      Taylor, Matthew (Truro)

      Moore, Michael

      Webb, Professor Steve

      Oaten, Mark

      Wigley, Dafydd

      Öpik, Lembit

      Rendel, David

      Tellers for the Ayes:

      Russell, Bob (Colchester)

      Mr. Paul Tyler and

      Sanders, Adrian

      Mr. Paul Burstow.

      NOES

      Abbott, Ms Diane

      Cousins, Jim

      Adams, Mrs lrene (Paisley N)

      Cranston, Ross

      Ainger, Nick

      Crausby, David

      Ainsworth, Robert (Cov'try NE)

      Cryer, Mrs Ann (Keighley)

      Anderson, Janet (Rossendale)

      Cryer, John (Hornchurch)

      Armstrong, Ms Hilary

      Cummings, John

      Ashton, Joe

      Cunliffe, Lawrence

      Atherton, Ms Candy

      Cunningham, Jim (Cov'try S)

      Atkins, Charlotte

      Cunningham, Rt Hon Dr John (Copeland)

      Austin, John

      Barnes, Harry

      Curtis-Thomas, Mrs Claire

      Barron, Kevin

      Darling, Rt Hon Alistair

      Bayley, Hugh

      Davey, Valerie (Bristol W)

      Beard, Nigel

      Davidson, Ian

      Beckett, Rt Hon Mrs Margaret

      Davies, Rt Hon Denzll (Llanelli)

      Begg, Miss Anne (Aberd'n S)

      Davies, Geraint (Croydon C)

      Bell, Stuart (Middlesbrough)

      Dawson, Hilton

      Bennett, Andrew F

      Dean, Mrs Janet

      Bermingham, Gerald

      Denham, John

      Berry, Roger

      Dewar, Rt Hon Donald

      Best Harold

      Dismore, Andrew

      Betts, Clive

      Donohoe, Brian H

      Blackman, Liz

      Dowd, Jim

      Blears, Ms Hazel

      Drew, David

      Blizzard, Bob

      Drown, Ms Julia

      Boateng, Paul

      Eagle, Angela (Wallasey)

      Borrow, David

      Edwards, Huw

      Bradley, Keith (Withington)

      Efford, Clive

      Bradley, Peter (The Wrekin)

      Ellman, Ms Louise

      Brinton, Mrs Helen

      Ennis, Jeff

      Brown, Rt Hon Nick (Newcastle E)

      Etherington, Bill

      Brown, Russell (Dumfries)

      Fitzpatrick, Jim

      Browne, Desmond (Kilmarnock)

      Flint, Caroline

      Buck, Ms Karen

      Flynn, Paul

      Burden, Richard

      Follett, Barbara

      Burgon, Colin

      Foster, Michael John (Worcester)

      Byers, Stephen

      Fyfe, Maria

      Caborn, Richard

      Gerrard, Neil

      Campbell, Alan (Tynernouth)

      Gibson, Dr Ian

      Campbell, Mrs Anne (C'bridge)

      Godman, Dr Norman A

      Campbell, Ronnie (Blyth V)

      Godsiff, Roger

      Campbell-Savours, Dale

      Goggins, Paul

      Cann, Jamie

      Golding, Mrs Llin

      Caplin, Ivor

      Grant, Bernie

      Casale, Roger

      Griffiths, Jane (Reading E)

      Caton, Martin

      Griffiths, Nigel (Edinburgh S)

      Cawsey, Ian

      Griffiths, Win (Bridgend)

      Chapman, Ben (Wirral S)

      Grogan, John

      Chisholm, Malcolm

      Gunnell, John

      Clapham, Michael

      Hall, Mike (Weaver Vale)

      Clark, Dr Lynda (Edinburgh Pentlands)

      Hall, Patrick (Bedford)

      Hanson, David

      Clark, Paul (Gillingham)

      Heal, Mrs Sylvia

      Clarke, Charles (Norwich S)

      Healey, John

      Clarke, Rt Hon Tom (Coatbridge)

      Henderson, Doug (Newcastle N)

      Clarke, Tony (Northampton S)

      Henderson, Ivan (Harwich)

      Clelland, David

      Hepburn, Stephen

      Coaker, Vernon

      Heppell, John

      Coffey, Ms Ann

      Hewitt, Ms Patricia

      Colman, Tony (Putney)

      Hill, Keith

      Connarty, Michael

      Hodge, Ms Margaret

      Cooper, Yvette

      Hoey, Kate

      Corbett, Robin

      Home Robertson, John

      Corbyn, Jeremy

      Hood, Jimmy

      Corston, Ms Jean

      Hoon, Geoffrey

      779

      Hope, Phil

      Morris, Ms Estelle (B'ham Yardley)

      Hopkins, Kelvin

      Morris, Rt Hon John (Aberavon)

      Howells, Dr Kim

      Mountford, Kali

      Hoyle, Lindsay

      Mudie, George

      Hughes, Ms Beverley (Stretford)

      Mullin, Chris

      Hughes, Kevin (Doncaster N)

      Murphy, Denis (Wansbeck)

      Humble, Mrs Joan

      Murphy, Jim (Eastwood)

      Hurst, Alan

      Norris, Dan

      Hutton, John

      O'Brien, Bill (Normanton)

      Iddon, Dr Brian

      O'Brien, Mike (N Warks)

      Illsley, Eric

      Olner, Bill

      Jackson, Ms Glenda (Hampstead)

      Organ, Mrs Diana

      Jackson, Helen (Hillsborough)

      Osborne, Mrs Sandra

      Jamieson, David

      Pearson, Ian

      Jenkins, Brian (Tamworth)

      Pendry, Tom

      Johnson, Miss Melanie (Welwyn Hatfield)

      Pickthall, Colin

      Pike, Peter L

      Jones, Barry (Alyn & Deeside)

      Plaskitt, James

      Jones, Ms Fiona (Newark)

      Pollard, Kerry

      Jones, Jon Owen (Cardiff C)

      Pond, Chris

      Jones, Dr Lynne (Selly Oak)

      Pound, Stephen

      Jones, Martyn (Clwyd S)

      Powell, Sir Raymond

      Jowell, Ms Tessa

      Prentice, Ms Bridget (Lewisham E)

      Keeble, Ms Sally

      Prentice, Gordon (Pendle)

      Keen, Alan (Feltham & Heston)

      Prescott, Rt Hon John

      Keen, Mrs Ann (Brentford)

      Primarolo, Dawn

      Kemp, Fraser

      Prosser, Gwyn

      Kennedy, Jane (Wavertree)

      Purchase, Ken

      Kidney, David

      Quin, Ms Joyce

      Kilfoyle, Peter

      Quinn, Lawrie (Scarborough)

      King, Ms Oona (Bethnal Green)

      Rammell, Bill

      Kumar, Dr Ashok

      Rapson, Syd

      Ladyman, Dr Stephen

      Raynsford, Nick

      Lawrence, Ms Jackie

      Robinson, Geoffrey (Cov'try NW)

      Laxton, Bob

      Roche, Mrs Barbara

      Lepper, David

      Rogers, Allan

      Levitt, Tom

      Rooney, Terry

      Lewis, Ivan (Bury S)

      Roy, Frank

      Lewis, Terry (Worsley)

      Ruane, Chris

      Linton, Martin

      Savidge, Malcolm

      Livingstone, Ken

      Sawford, Phil

      Lloyd, Tony (Manchester C)

      Sedgemore, Brian

      Love, Andrew

      Sheerman, Barry

      McAvoy, Thomas

      Sheldon, Rt Hon Robert

      McCabe, Stephen

      Shipley, Ms Debra

      McCafferty, Ms Chris

      Simpson, Alan (Nottingham S)

      McCartney, Ian (Makerfield)

      Singh, Marsha

      McDonagh, Siobhain

      Skinner, Dennis

      McDonnell, John

      Smith, Rt Hon Andrew (Oxford E)

      McFall, John

      Smith, Angela (Basildon)

      McGuire, Mrs Anne

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      McIsaac, Shona

      McKenna, Ms Rosemary

      Smith, Jacqui (Redditch)

      McNulty, Tony

      Smith, John (Glamorgan)

      MacShane, Denis

      Snape, Peter

      Mactaggart, Fiona

      Soley, Clive

      McWalter, Tony

      Southworth, Ms Helen

      McWilliam, John

      Spellar, John

      Mahon, Mrs Alice

      Squire, Ms Rachel

      Mallaber, Judy

      Starkey, Dr Phyllis

      Marek, Dr John

      Steinberg, Gerry

      Marsden, Paul (Shrewsbury)

      Stevenson, George

      Marshall, David (Shettleston)

      Stewart, David (Inverness E)

      Marshall, Jim (Leicester S)

      Stewart, Ian (Eccles)

      Marshall-Andrews, Robert

      Stinchcombe, Paul

      Martlew, Eric

      Stoate, Dr Howard

      Maxton, John

      Stott, Roger

      Meacher, Rt Hon Michael

      Strang, Rt Hon Dr Gavin

      Meale, Alan

      Straw, Rt Hon Jack

      Michael, Alun

      Stringer, Graham

      Michie, Bill (Shef'ld Heeley)

      Stuart, Ms Gisela (Edgbaston)

      Milburn, Alan

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Mitchell, Austin

      Moffatt, Laura

      Taylor, David (NW Leics)

      Moran, Ms Margaret

      Thomas, Gareth (Clwyd W)

      Morgan, Ms Julie (Cardiff N)

      Thomas, Gareth R (Harrow W)

      780

      Timms, Stephen

      (Swansea W)

      Tipping, Paddy

      Williams, Alan W (E Carmarthen)

      Todd, Mark

      Williams, Mrs Betty (Conwy)

      Touhig, Don

      Wilson, Brian

      Turner, Dennis (Wolverh'ton SE)

      Winnick, David

      Turner, Dr George (NW Norfolk)

      Winterton, Ms Rosie (Doncaster C)

      Wood, Mike

      Twigg, Derek (Halton)

      Woolas, Phil

      Twigg, Stephen (Enfield)

      Wray, James

      Vaz, Keith

      Wright, Dr Tony (Cannock)

      Vis, Dr Rudi

      Wright, Tony D (Gt Yarmouth)

      Watts, David

      Wyatt, Derek

      White, Brian

      Whitehead, Dr Alan

      Tellers for the Noes:

      Wicks, Malcolm

      Mr. Graham Allen and

      Williams, Rt Hon Alan

      Mr. Greg Pope.

      Question accordingly negatived.

    New clause 2

      LOCAL AUTHORITY DEBT REDUCTION STRATEGIES
      'Alter section 55(3) of the Local Government and Housing Act 1989 there shall be inserted—
      "(3A) Supplementary credit approvals shall only be allocated to authorities which have published and submitted to the Secretary of State a five-year strategy for debt reduction.".'.—[Mr. Chope.]
      Brought up, and read the First time.
      Mr. Christopher Chope: I beg to move, That the clause be read a Second time.
      The new clause is designed to be helpful to the Government, because its purpose is to ensure that local authorities have the chance to participate in the Chancellor's five-year deficit reduction strategy. In essence, the new clause would require local authorities seeking supplementary credit approvals to submit a five-year debt reduction plan to the Secretary of State.
      Debt is a massive problem for local authorities. The "Financial Statement and Budget Report" produced by the Government shows in table 4A.3 on page 115 that local authority interest payments amount to £4.4 billion a year. That compares with some £6.7 billion of gross capital expenditure before depreciation. In other words, interest payments are almost as great as the capital expenditure or investment each year. We have tabled the new clause to try to get local authorities to concentrate their minds on the need to reduce that debt burden.
      The latest figures which I have for the total of local authority debt, which were published in the Bank of England Quarterly Bulletin for November last year, show that at the end of March 1996 it was some £49,563 million, or £49.5 billion. That is a very high figure indeed.
      Table 1.1 on page 12 of the Red Book shows the projected change to the public sector borrowing requirement forecast for this year as a result of the latest Budget compared with the November 1996 Budget. It puts the issues in context, because it shows the extent to which the Government have been generous by giving £200 million extra under the local authority capital receipts initiative. The table shows that there is, indeed, a £200 million increase in the PSBR forecast as a result of that initiative, but, as a result of everything else, it is reduced by £8.3 billion.
      At a time when the total PSBR is falling by £8 billion because of the previous Government's prudent budgeting, the Government find only £200 million extra for local

      781
      authority capital expenditure under the local authority capital receipts initiative. I suspect that, having looked at the figures more closely, housing authorities and people concerned about local authority housing will express disillusion and dismay at the fact that they have been misled by the Labour party into thinking that there would be a substantial input of extra money, whereas it is £200 million this year, which is paltry in the context of the PSBR forecast.
      Ms Louise Ellman: Would the hon. Gentleman like to comment on the fact that local authorities and the people of this country regarded as paltry and derisory the action taken by the Conservative Government to prevent house building, which led to a period of social crisis? Against that background, he should welcome every attempt to invest in our housing stock to provide homes and employment.
      Mr. Chope: The hon. Lady will be extremely disappointed when she looks at the figures. Each year, local authorities receive about £1 billion of capital receipts as a result of sales, so for the current financial year and next year, there will be another £2 billion of capital receipts. When the Labour party made its commitment before the general election to allow more of those receipts to cascade down and produce a housing revival, people thought that that money and some of the previous capital receipts that had been set aside would be made available, and that from the onset of a new Labour Government all capital receipts obtained by local authorities would also be made available.
      Existing capital receipts will be released at the rate of £200 million this year and £700 million next year, whereas we were told that £5 billion would be released over five years. The effect of taking this year and next year together is that about £900 million will be released under the so-called capital receipts initiative, but £2 billion will be added to local authority capital receipts as a result of the normal process. A comparison of the position in two years' time with the position as of April this year shows that local authorities will have more capital receipts that they cannot spend after two years of Labour government than they had at the end of 18 years of Conservative government.
      Sir Paul Beresford: I am in slight disagreement with my hon. Friend. The Bill deals with supplementary credit approvals and, in fact, no capital receipts are released, although reference is made to that. We will have the basic credit approvals allocated under the housing investment programmes on one system, and a parallel system—with extra bureaucracy—for supplementary credit approvals merely as a flag-waving exercise for the Labour party's manifesto pledge.
      Mr. Chope: My hon. Friend is right to challenge me for having fallen for the Government's propaganda. The Bill deals not with the release of capital receipts but with the application of supplementary credit approvals as a cover for a promise made during the election campaign which Labour has been unable to deliver in practice.
      4.15 pm
      Dr. Brian Iddon: Is the hon. Gentleman aware that, after 1979, the previous Government put so many people out of work in the
      782
      construction industry that restarting that industry will have to be done in a phased way, as my right hon. Friend the Chancellor proposes?
      Mr. Chope: I am almost speechless. The Government will have to come to terms with this—the construction industry is either booming or in the depths of a recession. The Chancellor has said that he will release capital receipts, taking account of the needs and capacity of the construction industry. I presume that the fact that the Chancellor only felt fit to release £200 million under the supplementary credit approvals programme shows that he thinks that he has inherited a construction industry from the previous Administration that is extremely healthy and is in danger of overheating. We have read of many fears that there is a danger of overheating in the construction industry. I find the hon. Gentleman's intervention amazing.
      I hope that the Government will accept the new clause—which is in line with their deficit reduction strategy—as recognition of the fact that there is a real debt problem for local authorities. The sooner authorities recognise that, if they reduce debt, they will be able to spend more on providing services and investment, the better.
      Mr. Andrew Lansley: On Second Reading, a number of questions were raised, and I was fortunate to be called to raise some. The context in which the Bill would emerge was not clear at that time, as we did not know the character of the Budget or the provision that would be made by the Chancellor. It is timely that my right hon. and hon. Friends have tabled the new clause, since it would have been difficult to structure such a clause at an earlier stage. I agree very much with my hon. Friend the Member for Christchurch (Mr. Chope) that the intention behind the new clause is to assist the Government.
      Reference was made in Committee by my hon. Friend the Member for Christchurch to the Labour manifesto, which stated that capital receipts would be
      "phased to match the capacity of the building industry"—
      to which my hon. Friend and others have referred—
      "and to meet the requirements of sound economic management."— [Official Report, Standing Committee A, 24 June 1997; c. 9.]
      Treasury Ministers estimate that the capacity utilisation of the building industry is above the long-run average at present.
      The new clause relates more to the question of sound economic management, and the addition of the new clause to the Bill would assist in that process. The Government have produced a Budget, the intention of which is to secure the reduction of borrowing in the public sector; however, the Bill will increase borrowing in the public sector. The two cannot be right. In present circumstances, we should not enact a measure that would negate the reductions in public borrowing. We ought to set the Bill in that context.
      I support the new clause because I represent two authorities in my constituency. One is debt-free, while the other has substantial debts. It is clear from the way in which the consultation paper issued by the Ministers is structured that they contemplate the possibility of debt-free authorities, although having been allocated supplementary credit approvals, choosing not to take them up. Paragraph 24 of that paper states:
      "Arrangements would be made to redistribute any SCAs made available either from debt-free authorities or from authorities which had not produced adequate spending plans."

      783
      In the case of debt free authorities, I can well understand members of South Cambridgeshire district council choosing not to take up the supplementary credit approvals. Taking them up would remove their debt-free status and lead them to incur costs through borrowing. The absence of such costs and the income that the authority receives from the set-aside receipts which it has accumulated enable it to be an authority that does not levy a council tax.
      Authorities that have been prudent and are meeting service needs but are not levying a substantial council tax may be allocated supplementary credit approvals but may choose not to take them up. If those SCAs are reallocated, it should be only to authorities that continue down the path of increased prudence in their financial management. Prudent authorities should not be benefiting profligate authorities that might increase borrowing.
      We now understand the consequences of the Bill, which were not clear on Second Reading. At that time, it was not clear who would pay for the cost. There is no cost-free option. The capital receipts do not sit around in a cash fund. Even in South Cambridgeshire district, the council's provision for credit liabilities set aside is not backed by cash. The cash generated has been used to pay off borrowing. Who pays?
      On Second Reading, various possibilities emerged—one idea was that it would be paid for through council rents and another was that it would be paid for through the council tax. The implication of the consultation paper is that the general taxpayer will pay, and we see that in the Budget. The increase in public sector borrowing requirement of £200 million and £700 million to which my hon. Friend the Member for Christchurch referred has had to be offset in the Budget by tax-raising measures.
      The direct result is that other taxpayers will be funding the increase in borrowing for this purpose. It is all the more important that those taxpayers should ensure that they are not building up a further and growing liability through borrowing that will magnify in time and add to the overall tax burden. It is bad enough that the Budget should have added 1 per cent. to the tax burden this year and another 0.5 per cent. next, without adding to the burden beyond that.
      For those reasons, it is important that we add the new clause to the Bill and give ourselves the opportunity to move public sector borrowing in the same direction in both local and central Government. Therefore, I support the new clause.
      Mr. James Clappison: It is a pleasure to follow the analysis given by my hon. Friend the Member for South Cambridgeshire (Mr. Lansley).
      My hon. Friend the Member for Christchurch (Mr. Chope) argued cogently in support of the new clause. It is important to return to the subject of debt and the servicing of debt, because the issue of debt is an important starting point in the history of capital receipts and the Bill. When in opposition, Labour Members and, certainly, present Ministers widely believed that the capital receipts—the proceeds of house sales and other assets—were locked away, being wasted, and were not put to any good purpose.
      784
      We were told—the Minister nods his head now, but I remind him of what he said in opposition. Last year, he said that a Labour Government would release capital receipts and added:
      "We will do it because it makes sense to use the resources that are currently wasted to get people back to work, to build homes".—[Official Report, Third Standing Committee on Delegated Legislation, 17 December 1996; c. 10.]
      The hon. Gentleman also talked about "foolish" Government restrictions. I hope that he realises the folly of his words, because those resources, as he well knows, have never been wasted but have been used by local authorities, as my hon. Friend the Member for South Cambridgeshire rightly said, to make provision for credit liability, to support the expenditure of local authorities and to service local authority debt.
      It is one of the fictions perpetrated by the Labour party that receipts have not been put to any good use. As the Minister knows now, if he did not when he uttered those words, debt-free local authorities have always been able to spend their entire capital receipts as they see fit. That is contained in his consultation paper. He has come to that knowledge. Local authorities with debts are required to set aside capital receipts on account of them: 75 per cent. for the proceeds of the sale of houses, and 50 per cent. for the sale of other assets.
      We must return to the important issue of how to make provision for local authority debt. It is interesting that the Treasury's financial statement was mentioned, because another fiction perpetrated by the Labour party was that the release of council house receipts would have no effect on public expenditure. I remember having that argument several times with Labour spokesmen in opposition. They would not have it that such a release amounted to public expenditure. As we told them, every penny spent from the capital receipts amounts to additional public expenditure, because provision must be made for the way in which capital receipts are used.
      It is interesting that the Labour party now admits, in the "Financial Statement and Budget Report" to which my hon. Friend the Member for Christchurch properly referred, that every penny of the capital receipts initiative, as it is called, amounts to extra public expenditure. That fact appears in the financial statement set out by the Chancellor as part of general Government expenditure, outside the control total, for that is what matters for these purposes.
      The Minister nods his head at that, but one of the classic fudges perpetrated by the Labour party was that, if public expenditure was outside the control total, it somehow did not count. He should know that the control total is for the internal purpose of controlling the expenditure of Departments. Expenditure outside the control total is still part of general Government expenditure which has to be paid for. It is also made clear in the financial statement that it counts towards the public sector borrowing requirement. In at least two places in the financial statement, it may be seen that that expenditure is counted as part of general Government expenditure and as counting toward the PSBR.
      I referred to the alleged capital receipts initiative because my hon. Friend the Member for Mole Valley (Sir P. Beresford) made an important point, which was properly accepted by my hon. Friend the Member for Christchurch. It is nonsense to talk about this money coming from capital receipts; it does not. There is not one penny piece of capital receipts in any of this expenditure.

      785
      It is all additional government expenditure by way of supplementary credit approval. The only way in which capital receipts come into the picture is as part of the formulae for the distribution of that spending.
      I draw the attention of the hon. Member for Liverpool, Riverside (Ms Ellman) to the somewhat bizarre formulae in the Government's consultation document. Three formulae are set out by the Government as ways in which the money could be distributed. The Government have chosen a way that will penalise authorities such as hers.
      Ms Ellman: Will the hon. Gentleman give way?
      Mr. Clappison: I shall let the hon. Lady respond in a minute, if she wishes. I advise her to examine the consultation document formulae. In 1997–98, Liverpool will lose about £600,000 on the Government's chosen formula and will lose more than £3 million in the following year. I shall give way, but I think that she must take issue with her Front-Bench colleagues.
      Ms Ellman: I am extremely surprised to hear those comments from the hon. Gentleman. The Bill states clearly that the needs as well as the resources of areas such as Liverpool will be considered. That is a major plank of the Bill. I remind the hon. Gentleman and his honourable colleagues that they are opposing the Bill in its entirety; therefore, it is hypocritical of them to pretend that there are deficiencies in the Bill when they are opposed to the principle of more building to meet social need and provide employment.
      Mr. Clappison: I accept the hon. Lady's point. She wants more spending. That is a theme that we shall no doubt hear from Labour Members on several occasions during this Parliament. The point that the hon. Lady needs to take up with her Front-Bench team—not with me, because I can see the force of the argument for the Liverpools of this world—is that her party in government has decided to spend this money and then chosen a formula for doing so that will penalise authorities such as Liverpool, the inner-London authorities and 33 of the 36 metropolitan district authorities, rather than authorities such as mine—Hertsmere—and Surrey Heath and Malvern Hills, all of which benefit from the formula chosen by the Labour party.
      4.30 pm
      Mr. Eric Pickles: My hon. Friend has great knowledge of these matters. Will he confirm that the previous Government's formula took need into consideration, especially in Liverpool, Riverside, and that the new formula dilutes consideration of need by taking into account capital receipts? The good people of Liverpool are materially worse off under the new formula than under the previous formula.
      Mr. Clappison: My hon. Friend makes an excellent point. We went to great lengths to produce a fair formula based on need. If the Government had chosen such a formula, they might have produced a different result. The alternative formula is in the Government's consultation paper. I invite the hon. Lady to look at it and do the arithmetic. She will see that her authority and many of those represented by her colleagues will lose out under the proposed formula for spending the money that has been chosen by her Ministers.
      Ms Ellman: I am surprised that the hon. Gentleman persists in his deliberate misunderstanding of what is
      786
      happening and what happened under the previous Government. Neither Liverpool's overall needs nor its housing needs were met by the previous Government. That is why there is now a major crisis in Liverpool in local authority housing and the housing stock needs to be improved. I suggest that the hon. Gentleman repent a little of the misdeeds of his Government and join us in trying to put right an injustice that has persisted for too long.
      Mr. Clappison: The hon. Lady would know if she had served on Committees with me—as the Under-Secretary, the hon. Member for Greenwich and Woolwich (Mr. Raynsford), has—that I am the first to admit a mistake and repent. I put a proposition to the hon. Lady and to the Minister that the Minister may deny. Under the formula that has been chosen by the Government of two thirds need and one third cumulative capital receipts, Liverpool receives less than it would have received under the alternative formula of 100 per cent. need set out in the consultation document. The same applies to many other authorities, in inner-city areas, metropolitan districts, and so on.
      Sir Paul Beresford: While my hon. Friend is in a repenting mood, will he repent a little of the formula and agree with me that it will in some aspects benefit those local authorities that have successfully pushed and promoted the right to buy and vacant sales?
      Mr. Clappison: My hon. Friend makes another important point, with which I am sure that the Minister will want to deal in his reply.
      Before I stray too far from the subject of debt, I emphasise that new clause 2 is important because local authorities have massive debts. We have to think as much about the repayment and servicing of those debts as we think about new spending, which the Government have undertaken in this new spending commitment. My hon. Friend the Member for Christchurch mentioned the huge proportions of total local authority debt—more than £49 billion. Within that overall total, some authorities have particularly severe problems of indebtedness.
      According to figures that the Library has supplied to me based on debt per resident, some of the worst cases of debt are in authorities such as Islington, which has almost £5,000 of debt per head. Many other local authorities of a similar nature have debts running into thousands and thousands of pounds. It is important that, when we look at debt reduction overall, we also look at local authority debt reduction. As my hon. Friend the Member for Christchurch so rightly pointed out, those liabilities are going to persist long into the future for the unfortunate residents of those local authority areas. The figures are huge, and it is right that we should think about that problem.
      Ms Margaret Moran: Will my right hon. Friend give way?
      Mr. Clappison: I am neither a Privy Councillor nor an hon. Friend, but I will give way.
      Ms Moran: I apologise for elevating the hon. Gentleman well above his station, but I want to draw his attention to certain facts. He speaks eloquently on the level of local authority debt, but he should perhaps be reminded that, during the period from 1990 to 1996, his Government

      787
      allowed public sector debt to double from the equivalent of £2,200 per head to £5,600 per head; yet, in the same period, local authority debt fell from the equivalent of £899 per head to £843.
      That completely contradicts the point that the hon. Gentleman is trying to illustrate and it demonstrates economic incompetence of the highest degree on the part of the previous Government, given that they also allowed house building to be cut by one third during the same period. Economic incompetence—housing incompetence.
      Mr. Clappison: I might be straying from the subject of the debate, but I invite the hon. Lady to pay attention to what is said in Labour's financial statement about the repayment of the public sector borrowing requirement. On the existing figures before the Budget, we were well on course to return to repaying public sector debt by 2000. Those were the figures given by her own right hon. Friend the Chancellor.
      As for debt, the overall lesson for Ministers is that, contrary to what they believed when they were in opposition, there is no such thing as a free lunch. Now they are in government, that has been confirmed—there is no such thing as a free lunch, not even if it has the blessing of the Minister without Portfolio.
      Mr. Oliver Letwin: Before I turn to the main subject that I wish to address, I cannot refrain from mentioning that it is evident to the majority of people in this country, if not to Labour Members, that the person or persons who were mainly responsible for not attending to the needs of Liverpool under the last Administration were Mr. Hatton and his colleagues.
      Sir Paul Beresford: And those who followed.
      Mr. Letwin: Indeed.
      The importance of the new clause lies in the fact that the Government's response will constitute an important test of their true motive in drafting the Bill in the first place. As our discussion of the Bill has revealed, the Bill's main purpose is, in the first instance, to release spending. Spending is being released in a way that enables the Government to claim that they can provide local authorities with the ability to spend money that otherwise the spending limits would not have allowed. If that were the sole purpose of the Bill, it would be a disreputable attempt by one Department of State to undermine the very effects that the Government as a whole and the Treasury are seeking to achieve globally.
      We have, however, been told by Labour Members and Ministers that the purpose of the Bill goes beyond that and that it is not designed merely to allow local authorities to spend rather more in the current year and the next. They say that the intention is to permit a progressive and phased—I believe that was the word used by the hon. Member for Bolton, South-East (Dr. Iddon)—increase in the amount that can be spent on the construction industry's activities, so as to permit a sustainable, long-term development of the housing programme in this country. That is a laudable aim and I have no doubt that it is shared by all hon. Members on both sides of the House.
      As I said, the new clause and the Government's response to it is a good test of the proposition that that is indeed the Government's true motivation. There can be
      788
      no doubt that the Bill permits, not only spending, but a considerable increase—in fact, pound for pound—in the amount of net borrowing in which local authorities will be engaged. Ministers have entirely admitted that proposition.
      If that is the case, the cumulative effect on the public sector borrowing requirement and on the stock of public debt in the coming years will be very noticeable. There will come a time, towards the end of this Parliament, when the Treasury, if not the Department of the Environment, will have to call a halt to that increase in PSBR and in the public debt. We are reminded, are we not, of the phrase, too happy to be quoted, of a late lamented Labour Member, Tony Crosland, when he eventually spotted that his policies were sending the PSBR in relation to local authorities out of control?
      If, in this instance, the Government genuinely intend not merely to release extra expenditure to mollify their Back Benches in this first year but to create a sustained programme of development, it must follow that the Government would wish to support moves to ensure that, over the long term, debt does not go out of control, and that the increased spending is matched by a phased debt reduction programme, as recommended in the new clause. For that reason, my hon. Friend the Member for Christchurch (Mr. Chope) has said that this is a helpful clause, which the Government should be prepared to accept if they are genuinely committed to a long-term programme.
      The Minister for Local Government and Housing (Ms Hilary Armstrong): Are you saying, Mr. Deputy Speaker, that the previous Government were not interested in controlling debt?
      Mr. Letwin: Mr. Deputy Speaker, I suspect it was not you who were saying that but I, but I am privileged to be associated with you, and I would that I had your eloquence or your authority in the Chamber.
      Undoubtedly, the previous Government were extremely anxious to control the public sector borrowing requirement. If I may reply in one word to that intervention and to the earlier remark of the hon. Member for Luton, South (Ms Moran), there is a great difference between increasing the PSBR at a time of recession and doing so at a time of growth. The Chancellor says in his recent great work—the magnum opus with which we have all been presented some time after the Budget was given to us—that he intends us to be in a time of sustained growth.
      In the theology—perhaps I should say the metaphysics—of the Chancellor and his colleagues, there is no excuse for an increase in the PSBR on a systemic basis over a period of sustained growth during this Parliament. If this is a coherent policy to achieve sustained growth in the housing market, there should be a phased debt reduction programme. If, in the light of that, the Government insist on rejecting the new clause, that will prove to the House and the country that the purpose of the Bill, as of much else that is being proposed in that domain, is merely to increase spending in the hope that no one will notice what is going on, without the slightest view of a long-term progression that we could support.
      Mr. Paul Burstow: I shall make only a few brief comments on the new clause—no doubt

      789
      to Labour Members' relief. I want to pick up one or two remarks that Conservative Members have made about the alleged virtues of the new clause.
      It is a hit rich for the Conservative party to advance the cause of debt reduction, given the overwhelming contribution that it has made in recent years to increasing the national debt. It is not that there are no lessons that Members of all other parties on both sides of the Chamber can learn from the Conservative party in that respect—simply that that might provoke some comment.
      Mr. Letwin: Does the hon. Gentleman not accept the proposition that I was advancing, that there is a significant difference between an increase in the PSBR in times of recession and such an increase in times of growth?
      Mr, Burstow: I am sure that, if the hon. Gentleman reads the Committee Hansard, he will note that I and my hon. Friend the Member for Torbay (Mr. Sanders) have been advancing on behalf of others—notably the Chartered Institute of Housing—the case for a change in the accounting regime, moving towards the use of the Government general finance deficit to deal with these issues.
      I note from reading the report of the Second Reading debate that the hon. Gentleman criticised the Liberal Democrats for advancing that device. We regard that device, not as a crock of gold or a panacea, but as a means by which we can change the accounting regime and treat borrowing for investment in the creation of new assets—which is what we are talking about—differently from borrowing to fund on-going recurring expenditure, which is what the previous Government often did. We criticise the way in which privatisation receipts have been used to deflate the PSBR but not for proper funding.
      Conservative Members have adopted a contradictory position. Surprisingly, they are moving hack towards supporting assessing the allocation of capital receipts solely on the basis of housing need. Having watched the way in which challenge and single regeneration budget initiatives progressed under the previous Government, I find it refreshing that a short time in opposition has changed the Conservatives' minds.
      We shall not support the new clause, because it adds nothing to the Bill. We do not believe that the argument about the Government's desire to increase expenditure is especially well made, because we criticise the fact that the Government are not adequately investing in housing as a consequence of the Bill, and we see no need to tie to it a specific measure to require local authorities to reduce debt. However, we do think that, obviously, local authorities need to manage their debt prudently, and that that should be a matter for local authorities, not Parliament, to dictate.
      4.45 pm
      Ms Armstrong: We have had an interesting little debate. When the hon. Member for Christchurch (Mr. Chope) moved the new clause, he appeared to have difficulty in keeping a straight face because, obviously, he was simply stirring the pot. He knows that the new clause is not serious, because, even were it incorporated in the Bill, it would not do what he wants it to do.
      For many years, the Conservatives were responsible for local authority debt, sanctioning the amounts that local authorities could spend and borrow. They frequently
      790
      castigated local authorities for having so much debt, but they never took action to tackle that problem or even saw the need to do so. As hon. Members have noted in interventions and the hon. Member for Sutton and Cheam (Mr. Burstow) has noticed, the Conservatives have been responsible for increasing debt, without using that debt to good effect—in other words, without using it to invest.
      Sir Paul Beresford: Will the hon. Lady give way?
      Ms Armstrong: Of course I will allow the hon. Gentleman to intervene, but I want to finish the point.
      The previous Government did not use increased borrowing to invest and get the economy growing—they did the opposite. The hon. Member for South Dorset (Mr. Bruce) appeared to acknowledge that we are just emerging from 18 years of recession. I believe that most people experienced the past 18 years as two severe periods of boom and bust, which is why we have adopted a very different approach to borrowing.
      My right hon. Friend the Chancellor said in his Budget statement that the Government would keep total national debt at a prudent and sensible level, but that, where the Budget does allow increased borrowing, it will be borrowing to finance investment, not day-to-day expenditure. I have said that throughout. I wondered whether hon. Members had not been present on Second Reading or had not read the report of that debate, because I have always said that we know that borrowing will increase, but that it is borrowing to finance investment, not to be frittered away on day-to-day expenditure. We want borrowing for investment, so that we may increase the capacity of the economy, and increase the capacity of the construction industry so that it may play its part in a growing economy.
      Sir Paul Beresford: May I take it that the Government are putting in £200 million, and then £700 million, in SCAs; and that BCAs will continue next year at the same amount, plus inflation?
      Ms Armstrong: This measure has to do with supplementary credit approvals, not basic credit approvals.
      The hon. Member for Christchurch tried to suggest that local government borrowing is increasing all the time, and that local authorities must play their part in the Government's overall programme for reducing national debt—hence the idea of a five-year debt reduction strategy as suggested in the new clause. Indeed, the new clause would make the issue of any SCA subject to local authorities publishing and submitting to the Secretary of State a five-year strategy of that kind.
      The new clause does not deal with basic credit approvals, or with how local government will pay for them or manage the debt. The condition would apply to any SCA, not just to SCAs issued under this initiative. I am not sure that that was the intention of the Opposition—although they may have intended to contrast SCAs issued under the capital receipts initiative for local authorities—a debt-increasing move—with the Chancellor's five-year reduction plan for the PSBR.
      Sir Paul Beresford: I have not yet heard an answer to my question. In helping local authorities to control their debt, is the hon. Lady going to bring in a reduction in

      791
      BCAs partly or completely to compensate for the SCAs? I repeat: may we assume that SCAs for next year will be the same as they were in this financial year, plus inflation?
      Ms Armstrong: Opposition Members should listen more carefully. I have answered that three times today; I also answered it on Second Reading and in Committee. This is additional spending—I have already accepted that it is.
      Sir Paul Beresford: So the answer is yes?
      Ms Armstrong: If it is additional spending, it means that there will be no specific measures to reduce what is already committed spending by the same amount—otherwise, it would not be additional spending.
      Sir Paul Beresford: So the answer is yes?
      Ms Armstrong: Opposition Members are having trouble keeping a straight face, and if we go on much longer like this, the whole House will have the same trouble. We know that the Conservatives are not serious about dealing with housing need, which the Conservative Government left in a state of desperate neglect. That explains the need for this Bill.
      Several hon. Members rose—
      Ms Armstrong: I may take more interventions later; meanwhile, I suggest that Conservative Members keep listening, because that will help them to understand what I have been saying.
      Conservative Members appear to believe—I deduce this from the new clause itself—that there is no prudent or sustainable strategy for reducing local authority borrowing. Yet the position in local government is fairly healthy. Local authorities' debts have remained steady in recent years; at the end of 1996, they represented only 13 per cent. of general Government debt. and 7 per cent. of GDP.
      It is important to allow local authorities themselves to decide how best to manage their debt and their investments, in conformity with good Treasury management practice and the need to achieve best value for money for the local taxpayer and rate payer. By insisting on publication and submission to the Secretary of State of a debt reduction strategy, the new clause would undermine the work that local authorities are already doing, thus necessitating extra spending and more paperwork. That would be undesirable, and unnecessary for local authorities.
      Mr. Pickles: If, as the hon. Lady says, local authorities already have a coherent strategy for reducing debt, what is the problem with announcing what that strategy is?
      Ms Armstrong: The hon. Gentleman's problem is that he lacks patience. I am about to explain to him what local government already does, and why what he seeks would impose more bureaucratic burdens. The former Administration said that they wanted to reduce
      792
      bureaucracy and increase deregulation, which is why I find the hon. Gentleman's support for the new clause somewhat bizarre.
      Sir Paul Beresford: We already have the bureaucracy associated with BCAs. Now we suggest a parallel system similar to it. That will indeed double the bureaucracy, and it would not be necessary, but for the fact that the Government feel the need to genuflect in the direction of their manifesto commitment on capital receipts—even though none is being released.
      Ms Armstrong: Perhaps the hon. Gentleman believes that political parties need not think about their manifestos. The Bill meets our commitment in that respect.
      It is far from obvious what the obligation to prepare a five-year strategy for debt reduction would require a local authority to do. The Chartered Institute of Public Finance and Accountancy already gives guidance to local authorities, building on section 45 of the Local Government and Housing Act 1989, which requires local authorities to make a Treasury management policy statement. I note that no Conservative Minister in the past seven years. when issuing SCAs, thought it desirable to require local government to produce such a strategy. In fact, existing controls on borrowing appear to have been accepted as perfectly adequate.
      Mr. George Stevenson: Has not my hon. Friend just put her finger on the bogus nature of the new clause? The previous Government extended the use of SCAs with no such debt reduction requirement. There is surely a world of difference between extending SCAs to stimulate the housing market and meet a need, and issuing SCAs, as the Conservatives did, simply to reduce Government support to local authorities.
      Ms Armstrong: Absolutely. That is why I began by pointing out that the hon. Member for Christchurch had difficulty keeping a straight face.
      Local authorities already have a statutory duty to set aside a fixed proportion of their net debt each year from revenue—known as the minimum revenue provision. I see no case for further restrictive controls or further bureaucracy.
      The new clause is flawed because it would act on supplementary credit approvals but not on basic credit approvals. As the hon. Member for Mole Valley (Sir P. Beresford) said, basic credit approvals authorise the bulk of new local authority borrowing each year, so much of local authority debt would not be covered by the new clause.
      May I deal briefly with the point made by the hon. Member for South Cambridgeshire (Mr. Lansley), who is no longer in the Chamber, about debt-free authorities? Debt-free authorities will not be disadvantaged or penalised by this measure. They will be free to take up credit approvals if they so wish, and they may choose to use them to meet housing need, without ceasing to be debt free, by spending money that they have set aside to meet their debts. That matter is clear because we have been through it several times in Committee, and most Committee members are now clear about the position of debt-free authorities.
      The new clause is undesirable and unwanted. I urge the House to reject it.
      5 pm
      Mr. Chope: I am disappointed with the Minister's response, because the new clause was tabled to try to help the Government. The Minister demonstrates the Government's inability to come to terms with the fact that there is more than one way to have a debt reduction strategy. She talks about phasing the payments and ensuring that local authorities pay so much capital back each year, but another debt reduction strategy is asset realisation—[interruption.]
      Labour Members are commenting on the fact that a number of Conservative Members have absented themselves from the Chamber. The reason is that they wish to participate in a democratic election for an important post on a Conservative Back-Bench Committee. They will be back. I am grateful for their active participation in this debate and to debates in Committee.
      I remind Labour Members that when the Bill was in Committee, speeches on the Government side were made only by Ministers; none was made by Labour Back Benchers. Indeed, there were no Scottish or Welsh Committee members, despite the fact that the Bill applies to Wales. We surmise that that was because Welsh Members might have wanted to speak, and it was clear that the Government had delivered an edict ensuring that only Government Front-Bench Members could speech.
      The Parliamentary Under—Secretary of State for Wales (Mr. Win Griffiths): You are struggling.
      Mr. Chope: We are not struggling at all. However, local authorities are struggling with the debt burden, which will increase as a result of the Bill.
      We suggest that local authorities should be encouraged in the process of asset realisation. During the debate, it has been suggested that the previous Government did nothing to help reduce local authority debt. The previous Administration did a mass to reduce local authority debt, because we enabled people to buy their own council houses, which was the largest privatisation that this country had ever known. Some £20 billion was realised as a result of that process. Without that successful policy, national debt would have increased by even more than it did during the recession.
      Some Labour Members talked about the net public sector debt per person. In 1979, when the last Government took office, the Conservative Government pulled this country up from virtually the worst performer in terms of net debt to one of the best, compared with other European countries. At the last general election, the only European country with a lower debt ratio was Luxembourg.
      Mr. Sanders: Was not this country's debt reduced purely because of the privatisation programme and how it related to the public sector borrowing requirement?
      Mr. Chope: We knew all along that the Liberal Democrats were against the privatisation programme. We now have the spectacle that the Government have made some obiter dicta to the effect that they may be in favour of certain privatisation programmes, but even the Liberal Democrats have not yet come round to accepting the benefits that flow from privatisation, particularly in housing—the large-scale voluntary transfer of housing to housing associations, and the sale of individual council
      794
      houses to tenants who wished to buy them. Those initiatives, which were the hallmark of the last Conservative Government, were opposed tooth and nail by the Liberal Democrat party.
      Mr. David Watts: Will the right hon. Gentleman comment on the cost of bed and breakfast to the taxpayer during the 17 yeas that the Conservatives were in power?
      Mr. Chope: Any money spent on bed and breakfast was too much. One of the problems was that the last Government brought in measures to deal with bogus asylum seekers who came to this country—
      Mr. Deputy Speaker (Mr. Michael Lord): Order. I should be grateful if the right hon. Gentleman would now return to the new clause.
      Mr. Chope: I was looking forward to the opportunity to respond to a point made in an intervention, but I accept your ruling, Mr. Deputy Speaker that it was too wide of the new clause.
      The new clause is designed to deal with capital debt reduction. I hope that the House will accept the purpose behind it. The hon. Lady's response was that it would create too much bureaucracy. She said that it would be too burdensome on local authorities to produce a debt redemption strategy, yet we know that any local authority worth its salt could produce such a strategy and should already have an asset realisation strategy, if it is to deliver what its rate and charge payers deserve. [Interruption.] I cannot hear what the Minister is mouthing from a sedentary position. I remain disappointed at her response.
      I am grateful to my hon. Friends who contributed to this debate so effectively. During the last Parliament, my hon. Friend the Member for Hertsmere (Mr. Clappison) witnessed from the Front Bench the suggestions made by the Labour party, leading people to believe that a pot of gold would be released as soon as a Labour Government came to power. My hon. Friend drew attention once again to the manner in which those people were cruelly misled.
      My hon. Friend the Member for West Dorset (Mr. Letwin) made another powerful speech, and effective interventions were made by my hon. Friends the Members for Brentwood and Ongar (Mr. Pickles) and for Mole Valley (Sir P. Beresford). We think that this issue is sufficiently important to divide the House. The burden of local authority debt should be brought under control and we are frightened that, under the present Government, it will run completely out of control without such a measure.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 142, Noes 355.

      Division No. 49]

      [5.9 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Bercow, John

      Amess, David

      Beresford, Sir Paul

      Ancram, Rt Hon Michael

      Blunt, Crispin

      Arbuthnot, James

      Body, Sir Richard

      Atkinson, David (Bour'mth E)

      Boswell, Tim

      Atkinson, Peter (Hexham)

      Bottomley, Peter (Worthing W)

      Baldry, Tony

      Bottomley, Rt Hon Mrs Virginia

      Beggs, Roy (E Antrim)

      Brady, Graham

      795

      Brazier, Julian

      Lloyd, Rt Hon Sir Peter (Fareham)

      Brooke, Rt Hon Peter

      Loughton, Tim

      Browning, Mrs Angela

      Luff, Peter

      Bruce, Ian (S Dorset)

      Lyell, Rt Hon Sir Nicholas

      Burns, Simon

      MacGregor, Rt Hon John

      Butterfill, John

      McIntosh, Miss Anne

      Cash, William

      MacKay, Andrew

      Chapman, Sir Sydney (Chipping Barnet)

      Maclean, Rt Hon David

      McLoughlin, Patrick

      Chope, Christopher

      Madel, Sir David

      Clappison, James

      Malins, Humfrey

      Clark, Rt Hon Alan (Kensington)

      Mates, Michael

      Clark, Dr Michael (Rayleigh)

      Maude, Rt Hon Francis

      Clarke, Rt Hon Kenneth (Rushcliffe)

      Mawhinney, Rt Hon Dr Brian

      May, Mrs Theresa

      Clifton-Brown, Geoffrey

      Merchant, Piers

      Collins, Tim

      Moss, Malcolm

      Colvin, Michael

      Nicholls, Patrick

      Cormack, Sir Patrick

      Norman, Archie

      Curry, Rt Hon David

      Page, Richard

      Davis, Rt Hon David (Haltemprice)

      Paice, James

      Davies, Quentin (Grantham)

      Paterson, Owen

      Dorrell, Rt Hon Stephen

      Pickles, Eric

      Duncan, Alan

      Prior, David

      Duncan Smith, Iain

      Redwood, Rt Hon John

      Evans, Nigel

      Robathan, Andrew

      Faber, David

      Robertson, Laurence (Tewk'b'ry)

      Fabricant, Michael

      Roe, Mrs Marion (Broxbourne)

      Fallon, Michael

      Rowe, Andrew (Faversham)

      Flight, Howard

      Sayeed, Jonathan

      Forth, Rt Hon Eric

      Shephard, Rt Hon Mrs Gillian

      Fowler, Rt Hon Sir Norman

      Shepherd, Richard (Aldridge)

      Fox, Dr Liam

      Simpson, Keith (Mid-Norfolk)

      Fraser, Christopher

      Soames, Nicholas

      Gale, Roger

      Spelman, Mrs Caroline

      Garnier, Edward

      Stanley, Rt Hon Sir John

      Gibb, Nick

      Steen, Anthony

      Gill, Christopher

      Streeter, Gary

      Gillan, Mrs Cheryl

      Swayne, Desmond

      Goodlad, Rt Hon Alastair

      Syms, Robert

      Gray, James

      Tapsell, Sir Peter

      Green, Damian

      Taylor, Ian (Esher & Walton)

      Greenway, John

      Taylor, John M (Solihull)

      Grieve, Dorninic

      Taylor, Sir Teddy

      Gummer, Rt Hon John

      Temple-Morris, Peter

      Hamilton, Rt Hon Sir Archie

      Townend, John

      Hammond, Philip

      Tredinnick, David

      Hawkins, Nick

      Tyrie, Andrew

      Hayes, John

      Viggers, Peter

      Heald, Oliver

      Walter, Robert

      Heathcoat-Amory, Rt Hon David

      Waterson, Nigel

      Horam, John

      Wells, Bowen

      Howard, Rt Hon Michael

      Whitney, Sir Raymond

      Howarth, Gerald (Aldershot)

      Whittingdale, John

      Hunter, Andrew

      Widdecombe, Rt Hon Miss Ann

      Jack, Rt Hon Michael

      Wilkinson, John

      Jackson, Robert (Wantage)

      Willetts, David

      Jenkin, Bernard (N Essex)

      Winterton, Mrs Ann (Congleton)

      Key, Robert

      Winterton, Nicholas (Macclesfield)

      Kirkbride, Miss Julie

      Woodward, Shaun

      Laing, Mrs Eleanor

      Yeo, Tim

      Lansley, Andrew

      Young, Rt Hon Sir George

      Leigh, Edward

      Letwin, Oliver

      Tellers for the Ayes:

      Lewis, Dr Julian (New Forest E)

      Mr. Richard Ottaway and

      Lilley, Rt Hon Peter

      Mr. James Cran.

      NOES

      Adams, Mrs Irene (Paisley N)

      Ashton, Joe

      Ainger, Nick

      Atherton, Ms Candy

      Ainsworth, Robert (Cov'try NE)

      Atkins, Charlotte

      Allan, Richard (Shef'ld Hallam)

      Austin, John

      Allen, Graham (Nottingham N)

      Baker, Norman

      Anderson, Janet (Rossendale)

      Ballard, Mrs Jackie

      Armstrong, Ms Hilary

      Barnes, Harry

      Ashdown, Rt Hon Paddy

      Barron, Kevin

      796

      Bayley, Hugh

      Darling, Rt Hon Alistair

      Beard, Nigel

      Darvill, Keith

      Beckett, Rt Hon Mrs Margaret

      Davey, Edward (Kingston)

      Begg, Miss Anne (Aberd'n S)

      Davey, Valerie (Bristol W)

      Beith, Rt Hon A J

      Davidson, Ian

      Bell, Stuart (Middlesbrough)

      Davies, Rt Hon Denzil (Llanelli)

      Bennett, Andrew F

      Davies, Geraint (Croydon C)

      Bermingham, Gerald

      Davies, Rt Hon Ron (Caerphilly)

      Berry, Roger

      Dawson, Hilton

      Best, Harold

      Dean, Mrs Janet

      Blackman, Liz

      Denham, John

      Blears, Ms Hazel

      Dewar, Rt Hon Donald

      Blizzard, Bob

      Dismore, Andrew

      Boateng, Paul

      Donohoe, Brian H

      Borrow, David

      Doran, Frank

      Bradley, Keith (Withington)

      Dowd, Jim

      Bradley, Peter (The Wrekin)

      Drew, David

      Bradshaw, Ben

      Drown, Ms Julia

      Brake, Thomas

      Eagle, Angela (Wallasey)

      Brand, Dr Peter

      Edwards, Huw

      Breed, Colin

      Efford, Clive

      Brinton, Mrs Helen

      Ellman, Ms Louise

      Brown, Rt Hon Nick (Newcastle E)

      Ennis, Jeff

      Brown, Russell (Dumfries)

      Etherington, Bill

      Browne, Desmond (Kilmarnock)

      Fearn, Ronnie

      Bruce, Malcolm (Gordon)

      Field, Rt Hon Frank

      Burden, Richard

      Fisher, Mark

      Burgon, Colin

      Flint, Caroline

      Burstow, Paul

      Flynn, Paul

      Butler, Christine

      Follett, Barbara

      Byers, Stephen

      Foster, Don (Bath)

      Cable, Dr Vincent

      Foster, Michael John (Worcester)

      Cabom, Richard

      Fyfe, Maria

      Campbell, Alan (Tynemouth)

      Galbraith, Sam

      Campbell, Mrs Anne (C'bridge)

      Galloway, George

      Campbell, Menzies (NE Fife)

      George, Andrew (St Ives)

      Campbell, Ronnie (Blyth V)

      Gerrard, Neil

      Campbell-Savours, Dale

      Gibson, Dr Ian

      Cann, Jamie

      Godman, Dr Norman A

      Caplin, Ivor

      Godsiff, Roger

      Casale, Roger

      Goggins, Paul

      Caton, Martin

      Golding, Mrs Llin

      Cawsey, Ian

      Gordon, Mrs Eileen

      Chapman, Ben (Wirral S)

      Gorrie, Donald

      Chidgey, David

      Grant, Bernie

      Chisholm, Malcolm

      Griffiths, Jane (Reading E)

      Clapham, Michael

      Griffiths, Nigel (Edinburgh S)

      Clark, Dr Lynda (Edinburgh Pentlands)

      Griffiths, Win (Bridgend)

      Grocott, Bruce

      Clark, Paul (Gillingham)

      Grogan, John

      Clarke, Charles (Norwich S)

      Gunnell, John

      Clarke, Eric (Midlothian)

      Hall, Mike (Weaver Vale)

      Clarke, Rt Hon Tom (Coatbridge)

      Hall, Patrick (Bedford)

      Clarke, Tony (Northampton S)

      Hancock, Mike

      Clelland, David

      Hanson, David

      Coaker, Vernon

      Harvey, Nick

      Coffey, Ms Ann

      Heal, Mrs Sylvia

      Colman, Tony (Putney)

      Healey, John

      Connarty, Michael

      Henderson, Ivan (Harwich)

      Cooper, Yvette

      Hepburn, Stephen

      Corbett, Robin

      Heppell, John

      Corbyn, Jeremy

      Hesford, Stephen

      Corston, Ms Jean

      Hewitt, Ms Patricia

      Cousins, Jim

      Hill, Keith

      Cranston, Ross

      Hodge, Ms Margaret

      Crausby, David

      Hoey, Kate

      Cryer, Mrs Ann (Keighley)

      Home Robertson, John

      Cryer, John (Hornchurch)

      Hood, Jimmy

      Cummings, John

      Hoon, Geoffrey

      Cunliffe, Lawrence

      Hope, Phil

      Cunningham, Jim (Cov'try S)

      Hopkins, Kelvin

      Cunningham, Rt Hon Dr John (Copeland)

      Howells, Dr Kim

      Hoyle, Lindsay

      Curtis-Thomas, Mrs Claire

      Hughes, Ms Beverley (Stretford)

      Dafis, Cynog

      Hughes, Kevin (Doncaster N)

      Dalyell, Tam

      Humble, Mrs Joan

      797

      Hurst, Alan

      Morgan, Ms Julie (Cardiff N)

      Hutton, John

      Morgan, Rhodri (Cardiff W)

      Iddon, Dr Brian

      Morris, Ms Estelle (B'ham Yardley)

      Illsley, Eric

      Morris, Rt Hon John (Aberavon)

      Jackson, Ms Glenda (Hampstead)

      Mountford, Kali

      Jackson, Helen (Hillsborough)

      Mudie, George

      Jenkins, Brian (Tarnworth)

      Mullin, Chris

      Johnson, Miss Melanie (Welwyn Hatfield)

      Murphy, Denis (Wansbeck)

      Murphy, Jim (Eastwood)

      Jones, Barry (Alyn & Deeside)

      Norris, Dan

      Jones, Ms Fiona (Newark)

      O'Brien, Bill (Normanton)

      Jones, Jon Owen (Cardiff C)

      O'Brien, Mike (N Warks)

      Jones, Dr Lynne (Selly Oak)

      Olner, Bill

      Jones, Martyn (Clwyd S)

      Öpik, Lembit

      Jones, Nigel (Cheltenham)

      Organ, Mrs Diana

      Jowell, Ms Tessa

      Osborne, Mrs Sandra

      Keeble, Ms Sally

      Pearson, Ian

      Keen, Alan (Feltham & Heston)

      Pendry, Tom

      Keen, Mrs Ann (Brentford)

      Pickthall, Colin

      Keetch, Paul

      Pike, Peter L

      Kemp, Fraser

      Plaskitt, James

      Kennedy, Charles (Ross Skye)

      Pollard, Kerry

      Kennedy, Jane (Wavertree)

      Pond, Chris

      Khabra, Piara S

      Pope, Greg

      Kidney, David

      Pound, Stephen

      Kilfoyle, Peter

      Prentice, Ms Bridget (Lewisham E)

      King, Andy (Rugby & Kenilworth)

      Prentice, Gordon (Pendle)

      King, Ms Oona (Bethnal Green)

      Prescott, Rt Hon John

      Kirkwood, Archy

      Primarolo, Dawn

      Kumar, Dr Ashok

      Prosser, Gwyn

      Ladyman, Dr Stephen

      Purchase, Ken

      Lawrence, Ms Jackie

      Quin, Ms Joyce

      Laxton, Bob

      Quinn, Lawrie (Scarborough)

      Lepper, David

      Rammell, Bill

      Levitt, Tom

      Rapson, Syd

      Lewis, Ivan (Bury S)

      Raynsford, Nick

      Lewis, Terry (Worsley)

      Rendel, David

      Linton, Martin

      Roche, Mrs Barbara

      Livingstone, Ken

      Rogers, Allan

      Lloyd, Tony (Manchester C)

      Rooker, Jeff

      Llwyd, Elfyn

      Rooney, Terry

      Love, Andrew

      Roy, Frank

      McAvoy, Thomas

      Ruane, Chris

      McCabe, Stephen

      Russell, Bob (Colchester)

      McCafferty, Ms Chris

      Salter, Martin

      McCartney, Ian (Makerfield)

      Sanders, Adrian

      McDonagh, Siobhain

      Savidge, Malcolm

      Macdonald, Calum

      Sawford, Phil

      McDonnell, John

      Sedgemore, Brian

      McFall, John

      Sheerman, Barry

      McGuire, Mrs Anne

      Sheldon, Rt Hon Robert

      McIsaac, Shona

      Shipley, Ms Debra

      McKenna, Ms Rosemary

      Simpson, Alan (Nottingham S)

      Maclennan, Robert

      Singh, Marsha

      McNulty, Tony

      Skinner, Dennis

      MacShane, Denis

      Smith, Rt Hon Andrew (Oxford E)

      Mactaggart, Fiona

      Smith, Angela (Basildon)

      McWalter, Tony

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      McWilliam, John

      Mahon, Mrs Alice

      Smith, Jacqui (Redditch)

      Mallaber, Judy

      Smith, John (Glamorgan)

      Marek, Dr John

      Smith, Sir Robert (W Ab'd'ns)

      Marsden, Paul (Shrewsbury)

      Snape, Peter

      Marshall, David (Shettleston)

      Soley, Clive

      Marshall, Jim (Leicester S)

      Southworth, Ms Helen

      Martlew, Eric

      Spellar, John

      Maxton, John

      Squire, Ms Rachel

      Meacher, Rt Hon Michael

      Starkey, Dr Phyllis

      Meale, Alan

      Steinberg, Gerry

      Michael, Alun

      Stevenson, George

      Michie, Bill (Shef"ld Heeley)

      Stewart, David (Inverness E)

      Milburn, Alan

      Stewart, Ian (Eccles)

      Mitchell, Austin

      Stinchcombe, Paul

      Moffatt, Laura

      Stoate, Dr Howard

      Moore, Michael

      Stott, Roger

      Moran, Ms Margaret

      Strang, Rt Hon Dr Gavin

      798

      Straw, Rt Hon Jack

      Walley, Ms Joan

      Stringer, Graham

      Watts, David

      Stuart, Ms Gisela (Edgbaston)

      Webb, Professor Steve

      Stunell, Andrew

      White, Brian

      Sutcliffe, Gerry

      Whitehead, Dr Alan

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Wicks, Malcolm

      Williams, Rt Hon Alan (Swansea W)

      Taylor, David (NW Leics)

      Thomas, Gareth (Clwyd W)

      Wlliams, Alan W (E Carmarthen)

      Williams, Mrs Betty (Conwy)

      Thomas, Gareth R (Harrow W)

      Wills, Michael

      Timms, Stephen

      Winnick, David

      Tipping, Paddy

      Winterton, Ms Rosie (Doncaster C)

      Todd, Mark

      Wood, Mike

      Touhig, Don

      Woolas, Phil

      Trickett, Jon

      Wray, James

      Turner, Dennis (Wolverh'ton SE)

      Wright, Dr Tony (Cannock)

      Turner, Dr George (NW Norfolk)

      Wright, Tony D (Gt Yarmouth)

      Twigg, Derek (Halton)

      Wyatt, Derek

      Twigg, Stephen (Enfield)

      Tyler, Paul

      Tellers for the Noes:

      Vaz, Keith

      Mr. Clive Betts and

      Wallace, James

      Mr. David Jamieson.

      Question accordingly negatived.

    New clause 4

      LOCAL AUTHORITY INVESTMENTS IN ENERGY EFFICIENCY MEASURES
      "After section 55(3) of the Local Government and Housing Act 1989 there shall be inserted—
      "(3A) In determining the amount of a supplementary credit approval the Secretary of State shall have regard to the strategy of the authority to implement a programme of investment in energy efficiency measures.".'.—[Mr. Yeo.]
      Brought up, and read the First time.
      Mr. Tim Yeo: I beg to move, That the clause be read a Second time.
      I shall follow the precedent established by my hon. Friend the Member for Christchurch (Mr. Chope) in moving new clause 2 and show the House that I wish to be helpful. I believe that the inclusion of a reference to energy efficiency in the Bill will strengthen it greatly.
      Energy efficiency is widely, perhaps universally, recognised as a desirable goal. It is one of the few areas where environmental and economic aims coincide. Greater attention to energy efficiency improves the environment, saves money and can, under certain circumstances, create jobs—at least on a temporary basis. Partly because of the lack of controversy surrounding the subject, the issue has become rather unglamorous. It does not attract as much political attention as is justified.
      Against that background, I am surprised that the Government did not include something like this new clause in the original draft of the Bill. Their failure to do so is part of a consistent and regrettable pattern. As with so many other environmental goals, the Government claim to support energy efficiency. Labour Members have referred to the subject many times in speeches and have used line phrases at home and sometimes abroad. However, there has not been much action—and there was no action at all in the Budget last week. A Treasury press release promised
      "to examine options to help people on low incomes to insulate their homes and save energy."
      A promise to examine options does not add up to much—particularly when it is set alongside other Budget measures, which include a powerful incentive to increase energy

      799
      consumption in the form of a cut in value added tax on domestic fuel prices. On 4 December 1996, the then Labour spokesman on environmental issues, the hon. Member for Lewisham, Deptford (Ms Ruddock), said:
      "each year we will publish a 'green book' alongside the Chancellor's Red Book, setting out the environmental implications of Government policy."—[Official Report, 4 December 1996; Vol. 286, c. 991.]
      No such green book appeared, because Ministers knew that it would expose the Government's gross failure to honour any of their environmental obligations. They knew also that it would expose the fact that the net impact of the Budget measures might well be to increase carbon dioxide emissions.
      Such an impact is in unhappy and stark contrast to the fine phrases used by the Prime Minister when he addressed the Earth summit in New York a couple of weeks ago. Perhaps the hon. Lady's commitment was the reason why she was not appointed as Minister of State, Department of the Environment. Perhaps she was shuffled off to the sidelines as a warning to other Labour Members not to make commitments of that sort.
      When the Minister for London and Construction replies to the debate, will he make it clear that the Government intend to make amends by publishing the "green book" that the hon. Member for Deptford promised last December? If he does not, should the House take it as a sign that new Labour, like old Labour, does not give a stuff about the environment—that this is just another pre-election promise that can now be junked, like the promises on pensions, the national health service and on tax? Every one of those promises is now worthless. They were given merely to win votes and are now forgotten.
      We are left with the Chancellor's promise that the Treasury will report to Parliament in October about the effect of a reduced rate of VAT on energy efficiency materials. However, we do not need to wait until October to know that cutting VAT on energy efficiency materials will encourage investment in energy efficiency. In that context, I draw much encouragement from the comments of the Minister for the Environment—I am sorry to see that he is not in his place for a debate that touches directly on his responsibilities. The right hon. Gentleman succeeded the hon. Member for Deptford, and is now the Minister with responsibility for environmental matters.
      As recently as last week—unfortunately for the right hon. Gentleman, it was the day before the Budget—he answered a parliamentary question about the need to levy VAT on energy-saving materials at the same rate as VAT on fuel prices. The right hon. Gentleman said:
      "I am certainly on record as supporting that argument. Such a policy is desirable".—[Official Report, 1 July 1997; Vol. 297, c. 90.]
      When the Minister replies to the debate, will he confirm that he shares the view expressed by his ministerial colleague? Will he confirm that he and his right hon. Friend will resign from the Government in October if the Treasury report does not support their view or will he merely confirm that his views on this issue, as on all other issues, are of no consequence whatever to the Treasury? [Interruption.] That seems to cause great mirth on the Government Front Bench. Will the Minister confirm that, in this Government, the Chancellor and the Treasury are all-powerful, and that the Treasury does not care about either his views or the environment?
      800
      Last week, the Deputy Prime Minister pronounced on the purpose of the Bill in the context of a press release that was issued with the Budget papers. He set out in two paragraphs the purposes to which the resources that he claims will be released by the Bill will be applied. In that press release, the Deputy Prime Minister did not see fit to mention energy efficiency in a single phrase.
      That was yet another missed opportunity for the Government to pay even lip service to environmental goals and another sign of their priorities. There are no public spending implications in mentioning energy efficiency in a press release. I am forced to conclude that Ministers mention energy efficiency only when they are attending events such as the Earth summit. As soon as there is a chance to do something, they quickly forget their commitment to green objectives.
      5.30 pm
      I have come to the rescue with the new clause tabled by my right hon. Friends. It gives the Government a chance to rectify their omission and reward those local authorities that show that they, unlike the Government, take energy efficiency seriously—local authorities that run their estates with energy efficiency as a priority; local authorities that provide buyers of council properties with information about energy ratings; local authorities that encourage private sector owners and tenants to invest in energy efficiency improvements. The new clause offers the Government a chance to reward authorities that are enthusiastic in implementing the Home Energy Conservation Act 1995, to which many are responding well. The laggards should be encouraged to catch up. Why are Scottish local authorities being given an extension in the timetable within which they must report under that Act?
      The new clause would benefit all local authorities that are willing to do what the Government will not do—act to promote energy efficiency. It would give local authorities with less good records on energy efficiency an incentive to improve. If the Minister is unable to welcome the new clause whole-heartedly and accept it, will he say whether energy efficiency considerations will play any part in determining the way in which supplementary credit approvals are allocated? What specific steps do the Government propose to encourage local authorities to invest in energy efficiency measures? Do the Government agree with the recommendations of the 1993 Environment Select Committee report on energy efficiency?
      Mr. Raynsford: I was on the Committee.
      Mr. Yeo: The hon. Gentleman has remembered. I remind him of recommendation 53, which said:
      "We also recommend that the Government revise the system of capital controls to provide an incentive for energy efficiency by extending the current capital receipts spending 'holiday' to enable local authorities to fund approved energy efficiency and CHP projects."
      Does the Minister still agree with that unanimous report? If he is unable to accept the new clause or finds it difficult in any way, he would cause himself much less embarrassment by recommending that his hon. Friends vote for it.
      Mr. John Gummer: The Government must think seriously about the problem

      801
      resulting from the arguments in New York. The United States does not believe that Britain is serious in its determination to reduce our carbon dioxide emissions by 20 per cent. by 2010. It is using that as an excuse for taking no action.
      I have asked the Government several questions about what they intend to do. The answers have been somewhat confusing. When I asked how much of the reduction industry would be expected to bear, the Department of Trade and Industry said that it did not know, but that it was thinking about it and was hoping to estimate the figure, which it would no doubt tell us.
      In the Budget, the Chancellor of the Exchequer appeared not to have worked out how much more had to be done because of his changes to VAT. He did not have a figure in his mind of the extra emissions that might occur because of the cheapening of fuel. That is a worry. When the Government make such decisions without the facts and suggest that the House should wait until October before we have the facts, it is hard to believe that the Chancellor and the Treasury are taking global warming as seriously as I had hoped they would or as seriously as I believe the Prime Minister suggested they would.
      The Minister for Local Government and Housing has smiled at every suggestion that has been made today. I hope that she will listen carefully to me now.
      If the Government do not support the new clause, what are they saying? They are saying that they will not take into account the strategy of any authority to implement a programme of investment in energy efficiency measures. They will ask the House to vote against taking that into account. That does not seem to sit squarely with what the Prime Minister said in New York or what the Government have been saying.
      The hon. Lady is still smiling. She spends the whole time smiling. That is very happy for her, no doubt, but it suggests that she does not take such matters with the seriousness that they deserve—or that she does not understand them. I have begun to believe that she giggles because she does not understand and does not want to listen to the facts.
      The Conservatives have agreed to support a bipartisan environment policy because we want to achieve the ends that the Government have said that they accept. In opposition, they did not help much. The two Ministers present today were not well known for coming to the aid of the Green party, but we have forgotten about that and we shall support them. However, we shall keep them to their promises. The Minister and those who flank her should remember this simple fact: if they say that they are going to reduce emissions, they must also say how. If they do not, nobody will believe them. Nobody believes the Government yet. I want to give them the chance to be believed about this—if about nothing else. It is the most important subject for them, because, if they get it wrong, the damage to future generations will be very severe.
      Does the Minister for London and Construction recommend that the House should vote that the Government should not take into account the energy efficiency strategy of a local authority? If he suggests that we should not vote for the new clause, he will be asking the House to ask the Department to ignore that essential issue. The Minister for Local Government and Housing should take the issue much more seriously if the nation and, more importantly, the international community, are
      802
      to take the Government more seriously. I despair of them taking her more seriously, but they would take the Government more seriously if they showed how they will deliver what we believe they want to deliver.
      Mr. Andrew Robathan: I support the new clause. My right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) spoke lucidly about the need to deliver gains in energy efficiency rather than just talking about them. We have heard fine words from the Prime Minister. In general terms, I applaud most of what he said in New York, as does the whole House, but we need to see some action. My right hon. Friend the Member for Suffolk, Coastal said that the Government's answers were confusing. We all understand that putting VAT on domestic fuel was not a particularly astute move politically by the last Government, but it was a good stick with which to encourage people to use less energy.
      If we are to reduce the effectiveness of the stick, we need to use a little more carrot to encourage energy efficiency. VAT on domestic fuel is now down to 5 per cent. What is the message from the Government? They cannot decide whether, at minimum cost, to reduce the rate of VAT on energy-saving measures and insulation. It is extraordinarily confusing. The new clause gives the Government the opportunity to benefit the environment by taking account of energy efficiency. It is a serious matter that does not deserve giggles from Ministers.
      I am not making special pleading for my constituency, but for many years Blaby district council has had a fine record of encouraging energy efficiency in its own housing stock and elsewhere. Harborough district council has a similar excellent record. However, some councils need to be encouraged with a stick and a carrot. The new clause provides a marvellous carrot for local authorities to take seriously energy efficiency and implement previous legislation.
      I am also involved with the all-party renewable and sustainable energy group, which takes a close interest in these matters. Hon. Members will have received today a communication from Greenpeace, an organisation with which I do not always agree. It is about solar energy being used in Silvertown in docklands. It is an extremely sensible piece of information. Under the new clause, the Government could further the use of solar energy in new housing stock and make an appreciable difference to the energy we use—and, indeed, the energy that we waste—and the carbon that we release into the atmosphere.
      Although the previous Government were attacked endlessly by the Labour party, they had a proud record in those matters. The home energy efficiency scheme and the neighbourhood energy action scheme resulted in better insulation in the homes of 2 million old people. That makes a profound difference to their lives and to the energy used.
      It is an absolutely vital issue. I applaud the new clause and support it whole-heartedly. The Government should consider it seriously and not just dismiss it with a giggle as being entirely irrelevant. It is a big issue that matters to a huge number of people. The Government have a chance to do something concrete about it and put their fine words into action.
      Mr. Raynsford: New clause 4 would place a duty on the Secretary of State to take into account each authority's strategy for investment in energy efficiency measures when determining its supplementary credit approval. As I hope that we have already established in debating earlier amendments, the drafting of the new clause would extend its impact well beyond the distribution of additional resources under the Government's capital receipts initiative. It would apply to all supplementary credit approvals.
      I welcome the hon. Member for South Suffolk (Mr. Yeo) back to the Front Bench, but I can see no compelling case for making a local authority's energy efficiency strategy a pivotal factor when a supplementary credit approval is issued for road safety purposes, firefighting, harbour improvements, flood defences or composting—possibly a subject of concern to some hon. Members.
      Mr. Clappison: It is a serious subject.
      Mr. Raynsford: Indeed, but it is totally irrelevant to energy efficiency in housing.
      Mr. Gummer: Will the Minister give way?
      Mr. Raynsford: I hope that the former Secretary of State will bear with me for a moment. He has jumped to his feet rather rapidly.
      We are debating measures to give effect to the Government's commitment to release capital receipts for housing purposes, including energy efficiency measures. Had the Opposition prepared the new clause more carefully, it might have achieved their intended effect. However, they have produced a completely unworkable new clause that would produce absurd consequences, as I have illustrated. The former Secretary of State knows only too well that it would be ridiculous to try to take into account energy efficiency in the home when issuing supplementary credit approvals for other purposes.
      Mr. Gummer: For 17 years, civil servants handed me precisely such answers. For 17 years I told them, "Take it away. I shall tell people that this is not the way to achieve what they want, but I shall tell them at the beginning that I want to achieve what they want and I shall make sure that we table an amendment to that effect." I have always told civil servants, "Don't tell me to make a cheap point across the Floor of the House. Let's deliver what we can do together."
      Our new clause may not be properly worded. The Minister knows from a long time in opposition—he will soon learn again in the same circumstances—that these matters are not so easy in opposition, so will he please give an undertaking that he will ensure that the purpose of the amendment is achieved in a sensible way? If he does, we can all go home quite happy and leave the composting to composters.
      5.45 pm
      Mr. Raynsford: I shall give the right hon. Gentleman exactly the assurance that he seeks. Had he taken care to read our consultation paper, he would know that the Government intend to do exactly what he has requested. Perhaps, in the intervals of jetting in and out of New York and other places, the right hon. Gentleman might have taken the time to look at our proposals in more detail. Had he done so, he would have been better informed for tonight's debate.
      Let me assure the right hon. Gentleman and other Opposition Members that energy efficiency is a central concern for the Government. It is a clear commitment. As the hon. Member for South Suffolk acknowledged, under the Home Energy Conservation Act 1995, local authorities have a duty to have strategies to make significant energy efficiency improvements in the domestic sector. Energy efficiency is already taken into account in the annual housing investment programme through which the Government distribute capital resources for housing to local authorities. The effectiveness or otherwise of those strategies will have a bearing on the resources allocated to authorities through the process that we are debating tonight.
      Let me remind Opposition Members what is in the consultation paper that we have issued to local authorities. We make it quite clear that
      "Expenditure under the capital receipts initiative should be directed at meeting local priorities consistent with the local strategy. Such works might include"—
      and there follow six headings, including
      "improving the energy efficiency of local authority and private sector housing and reducing CO2 emissions".
      That is a clear commitment to energy efficiency that should at least have been acknowledged by the right hon. Member for Suffolk, Coastal who spoke about a bipartisan approach, but never misses the opportunity to make a cheap point.
      Mr. Gummer: The Minister well knows that it is always easy for Ministers to read out their speeches, although I would have been pretty angry had any of my junior Ministers read out such a speech, which is clearly unamended. At least I hope that it is unamended. If the Minister has amended it, he clearly does not get the point.
      We want the provision on the face of the Bill. Only then can we be sure that local authorities comply with it, If the Bill says "might" or "may" or "could" or "we might have purposes to see" in the same way as the consultation document that I have before me, it does not have the effect of law. I am asking the hon. Gentleman to promise that the provision will be on the face of the Bill. If he answers that simple question, we need not hear the rest of his speech.
      Mr. Raynsford: Once again, the right hon. Gentleman reveals that he has not read the consultation paper. Paragraph 24 contains a clear statement of the mechanism that will be adopted to allocate resources under the initiative. Local authorities will be asked for detailed spending plans showing how they are taking account of the objectives that have been specified, including achieving greater energy efficiency. It states:
      "The Government Office will advise Ministers on the merits of the proposed spending plans … Having given due consideration to this advice, Ministers may wish to vary the final allocations to individual authorities."

      805
      There is a very clear mechanism for doing something about energy efficiency rather than talking about it.
      The right hon. Member for Suffolk, Coastal may have heard the hon. Member for South Suffolk referring to the Environment Committee report of 1993. That report recommended—indeed, the hon. Gentleman referred specifically to the recommendation—that the Government of the day should extend the capital receipts holiday to enable local authorities to do more in the way of energy efficiency. Did the Government of the day, whom Conservative Members supported, follow that advice? No, they did not. They did not continue the capital receipts holiday; they ended it. They ignored the advice of the Environment Committee, which they now have the cheek to quote at this Government.
      The Government are acting on the advice of the Environment Committee. We are releasing receipts under a capital receipts initiative which is designed to achieve precisely the energy efficiency objective among others.
      Mr. Yeo: The hon. Gentleman, and not any Opposition Member present, was a member of that Committee, signed that report and made the recommendation—it was a unanimous recommendation of the Committee—which he now appears to want to reject.
      Mr. Raynsford: On the contrary, as I have just pointed out to the hon. Gentleman, we are acting in accord with that recommendation. We are bringing forward the capital receipts initiative, we are making additional resources available to local authorities and we are saying clearly that energy efficiency is one of the objectives.
      Of course, there are other objectives. We know of the problems of homelessness that the previous Government ignored. Action is necessary to deal with that. We know about the number of people living in rotten, miserable, poor conditions due to the failure of the previous Government to invest adequately in improving the condition of the housing stock. That is a priority as well. We are clear that energy efficiency is one of our objectives, and we are acting under the initiative to give effect to it.
      Mr. Pickles: I am sorry that the Minister seems to be quite rattled on this subject. Perhaps I can bring him back to the central point. Will he explain why it is stronger and tougher on ensuring that energy efficiency is brought about to give discretion to Ministers rather then putting a provision in the Bill?
      Mr. Raynsford: Sadly, the hon. Gentleman, along with all his hon. Friends, appears to have ignored entirely the fact that the new clause as drafted would be totally defective, as I have said. If he wishes us to put into effect ineffective legislation that requires the Secretary of State or Ministers to have regard to entirely irrelevant considerations when allocating supplementary credit approvals for other purposes, all I can say is that his party has learned very little over 17 years.
      Mr. Pickles rose—
      Mr. Raynsford: No, I shall not give way. I have given way already.
      806
      In 17 years in government, Conservative Members entirely failed to learn one very simple lesson: to be effective one needs to have clear objectives, to state them and to have mechanisms for implementing them. The Government have clear objectives and a commitment to implementing them. We shall ensure increased investment, which will contribute towards increased energy efficiency: action, not words.
      Mr. Yeo: I must, with regret, refer to—since Hansard will not report—the frivolity with which the Minister for Local Government and Housing greeted nearly all the comments made by Opposition Members during a debate about a very serious issue, to which the Government and the Prime Minister pretend consistently to pay lip service. When faced with it in the House, all the hon. Lady was able to do was giggle and make cheap points from a sedentary position.
      As my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) pointed out, the Minister for London and Construction resorted to the oldest argument: to attack a new clause on the ground of its unworkability, some shortcoming in its drafting. I simply say that I hope that, in his own interests, he will not resort to that argument again when he deals with other matters in the House or in Committee.
      My right hon. Friend the Member for Suffolk, Coastal exposed the yawning gap between the Government's proclaimed environmental objectives and the actual policies that have so far been announced. The Minister could have put matters right in his reply, but he totally failed to do so. He relied on the drafting of his consultation paper, which says that the purposes for which supplementary credits might be applied might include energy efficiency.
      Given the Government's total disregard of the commitments that have been given in specific and unequivocal terms, I cannot be hopeful—nor can the House—that a commitment that is couched so vaguely in a consultation paper is likely to be honoured if it does not suit the Government at the time to do so. If the Government really intended to give energy efficiency proper priority, they would include it in the Bill, as I, my right hon. Friend the Member for Suffolk, Coastal and other hon. Friends have suggested.
      I very much regret that the Minister has so cavalierly ignored the key arguments advanced in support of the new clause. He will not look back on his contribution to the debate with much satisfaction. However, in the interests of the House and of getting on to other important matters, I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    New clause 6

      HOUSING NEED CRITERIA TO BE THE SAME IN ENGLAND AND WALES
      'In section 55 of the Local Government and Housing Act 1989, after subsection (3) there shall be inserted—
      "(3A) Any criteria of housing need used in the allocation of supplementary credit approvals shall be the same in England as in Wales.".".—[Mr. Evans.]
      Brought up, and read the First time.
      Mr. Nigel Evans: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker: With this, it will be convenient to discuss new clause 8—Total amount of supplementary

      807
      credit approvals to he allocated between England and Wales according to relative share of funding for local government in those countries—
      'The Secretary of State shall secure that the allocation of the total amount of supplementary credit approvals as between England and Wales accords with the formulae employed to determine the relative levels of funding of local authority revenue expenditure in England and Wales.'.
      Mr. Evans: I have great pleasure in moving new clause 6. It has become quite apparent that, although Labour Members have wailed 18 years to be in government, they have forgotten what it is to be the Government of the country. One of the great challenges and opportunities for a Government is to answer the questions that are posed. I am afraid that they have signally failed to do that since they took office.
      I shall give the Minister an opportunity to answer at least two questions on the allocation of supplementary credit approvals, which many people living in Wales will be asking themselves concerning the Bill—although, as we saw, the Government were asked many questions on the issue of devolution, and not only did we not get any answers, but we seemed to get more questions.
      I understand that there is a timetable for procedure involving SCAs, but Wales is seemingly being left in the dark about how much money it will receive. My hon. Friend the Member for Christchurch (Mr. Chope) tabled a question on the issue. Even though I am going to ask the question again in this debate, I should say that the Treasury did not seem to know the answer earlier. We shall be listening for any further information from the Minister.
      New clauses 6 and 8 will give the Minister the opportunity to tell the people of Wales specifically how much they will receive of the allocations of £200 million and £700 million. It will depend on what formula is used, how the money will be distributed and what criteria will be used. Will the Barnett formula he used to allocate the total budget?
      We know that the Barnett formula was first used in 1978. It is an example of a non-statutory policy rule based on a mutual understanding between parties in a policy network, the implementation of which is subject to both sides observing the behavioural rules of the game. Thus, for example, if £1 billion is added to planned health service expenditure in England, £106.6 million would be added to the Scottish block and £60.2 million to the Welsh block.
      The system offers three advantages to the territorial Departments. First, the operation of the formula protects to a large extent the existing situation, where spending per head is above the national average. Secondly, there is no need for the Departments to argue the case for equal treatment on each occasion that a relevant programme in England receives increased funding. Thirdly, the Secretary of State retains the freedom to allocate the block between programmes.
      We might this evening be seeing the ending of the use of the Barnett formula. Perhaps it is an idea of the Government in order to distance themselves from Wales. Together with the devolution referendum, perhaps the Government are slowly but surely moving away from their commitment to Wales.
      808
      If the Barnett formula will not be used, what measures will be used? We already know that Wales is being downgraded by the Secretary of State for Wales and that he wants to see Wales marginalised in the United Kingdom, with his powers being transferred almost lock, stock and barrel to the turbo-charged county council, otherwise known as the Assembly, which will sit in Cardiff.
      The Minister has the opportunity to tell the people of Wales, and she must do so, whether they will lose out under this deal. The great fear is that they will, and that Wales, which has suffered too long from Labour-controlled local authorities will lose out.
      6 pm
      Once the allocation is known—I hope that we will be told this evening—how will its distribution in Wales be defined? Will we be told that the definition of housing need in Wales is exactly the same as that used elsewhere? As a Member of Parliament for an English constituency, I regret that we have so few Welsh Members in their places on the Government Benches today. They speak long and loudly about their commitment to Wales, but it is a shame that so few of them have sufficient commitment to be present when we are debating something of great importance to Wales.
      I represent an English constituency, but my family live in Swansea and I have spent 17 of my 23 long years in politics in Welsh politics. As far as I am concerned, the definition of need should be the same whether in Wales or England. Local authorities need to know the definition of need that will be used and whether it will be the same. If it is not to be the same, what definition will be used? If a different needs formula will be used, will the Minister tell us why that is so?
      Mr. Win Griffiths: Has the hon. Gentleman read the Welsh consultation paper, because the answer is there?
      Mr. Evans: Yes. I have read the Welsh consultation paper, but I did not get the answers to my questions. I hope that we will not be fobbed off merely by advice to the people of Wales to refer to the Welsh consultation paper. The Minister has an opportunity to give us a clear figure for how much money Wales will get and what formula will be used. I know the definitions that have been used in the consultation paper, but I want to know whether they will be exactly the same as the definitions that will be used in England.
      The people of Wales will be put in double jeopardy by the Government, as they sway from a tried and tested formula that has served Wales well for many years. Different needs criteria could cause tremendous problems. The only thing that is certain is that the people of Wales face needless uncertainty. The Minister should understand that Wales is not second class and the Welsh people are not second-class citizens. Wales deserves the answers to these questions.
      I started my speech by saying that answering questions is a responsibility of government. This Government have been quick to shirk that responsibility. They asked us for trust during the general election, but trust is a two-way street, and the journey starts here.
      Ms Armstrong: It gives me great pleasure to answer the hon. Member for Ribble Valley (Mr. Evans). I realise that, because there are now no Welsh Tory Members of

      809
      Parliament in the Labour party, it has been difficult for Opposition Members to keep up with this debate and with what has already been said about allocations in Wales and the previous Government's practice in determining housing need in Wales. We have inherited the same formula that they used. The new clause would do down Wales and make its position much worse.
      I welcome the hon. Member for Ribble Valley to the debate on the Bill, because we are always pleased to welcome new recruits. We announced last week after the Budget the amounts that the Chancellor had allocated to England, Scotland, Wales and Northern Ireland. We will use the Barnett formula—
      Mr. Evans: Will the Minister give way?
      Ms Armstrong: I am trying to answer the hon. Gentleman's questions.
      We will therefore allocate £9.54 million this year to Wales and £33.38 million next year. That is the allocation according to the Barnett formula and we will undertake consultation in Wales on the precise distribution mechanism. As I have said, the definition of need was used consistently by the previous Government in their allocation year on year to the housing programme in Wales. They recognised that housing need in Wales is different from that in England, because Welsh housing stock is different. That is reflected in the manner in which need is assessed. I hope that the hon. Member for Ribble Valley understands that his new clause would be to the detriment of Wales.
      The indicators used in the allocation of resources for capital expenditure will cover broadly the same measures for all authorities, but the differences between England and Wales have been developed to take account of the differences in the housing needs of English and Welsh authorities. For example, the differences include the high demand for renovation grants in Wales, reflecting the higher level of unfitness in the private sector stock and the economic circumstances of owner-occupiers. Those needs will, of course, be reviewed when the results of the English and Welsh house condition survey become available.
      Consultation papers issued by the Department and the Welsh Office set out the needs indicators that we propose to use in each case. Those are available for people in Wales and all Welsh authorities to examine, and we will consult them.
      Mr. Bernard Jenkin: I am sorry to take the Minister back to the issue of the shares that England and Wales will receive. She gave us—strangely—the figures that the Chief Secretary failed to give in a written answer today. Will she explain why that information is available for her speech, but was not available to the Chief Secretary? Will she also explain, or perhaps confirm, that the Bill and the allocations represent extra money for housing in England and Wales but not in Scotland? Can she give us a figure for Scotland?
      Ms Armstrong: I suspect that I would be out of order if I strayed too far on to the subject of Scotland, but—as I have already said—the amount allocated by the Chancellor last week covered England, Scotland, Northern Ireland and Wales. I have not announced any
      810
      new figures today and I am concerned that that has not been reflected in the written answer. If the hon. Gentleman will give me a copy of the question, I shall respond to him on another occasion. I suspect that the problem lies in the nature of the question that was asked.
      Mr. Chope: Will the Minister give way?
      Ms Armstrong: I have already offered to respond to the question on another occasion.
      Mr. Chope rose—
      Mr. Deputy Speaker: Order. Is the hon. Lady giving way?
      Ms Armstrong: No. [Interruption.] I am sorry. I have not seen that question. I cannot be expected to give a response at the Dispatch Box.
      Mr. Richard Ottaway: That is what the hon. Lady is paid for.
      Ms Armstrong: It is not what I am paid for: I am paid to be honest and straight with Parliament. I must have proper and appropriate discussions with colleagues. Hon. Members earlier accused me of being frivolous, but I was not. I was trying to draw hon. Members' attention to the fact that they had not read the consultation document. They should have the decency to deal with questions properly. I am seeking to do that, and you are saying, "Oh no, you don't need to do it properly, you can give me a quick answer across the Dispatch Box." That is not the way I work. I shall come back to you with an answer.
      Mr. Deputy Speaker: Order. I remind the hon. Lady that she is continually using the word "you".
      Ms Armstrong: Sorry. Mr. Deputy Speaker, I was getting carried away.
      The people of Wales want parity and fairness. The Bill will give them the fairness that the previous Government were not prepared to give them, because they did not deal with the real needs of the people in Wales. This Government are prepared to face the problems of housing need that were so neglected by the previous Administration. I hope that, having been given straight answers to his questions, the hon. Gentleman will not press the new clause. If he does, we will resist it.
      Mr. Evans: The Minister began by saying that there were no Welsh Members of Parliament in the Labour party.
      Ms Armstrong: I said that there were none in the Tory party.
      Mr. Evans: Hansard will no doubt help the hon. Lady, but that is what she said. Perhaps she was pre-empting the next general election. We shall see.
      The hon. Lady also said that the new clauses would do down Wales. That is not our intention. We wanted to discover whether the Government were intent on doing down Wales. No one has done more to assist Wales in the past 18 years than the Conservative Government, as can

      811
      be seen from the figures for expenditure per head of population and from inward investment into Wales. I have no reservations about our commitment to Wales.
      We wanted clarification on the Barnett formula, because it was not clear in the document. It is amazing that my hon. Friend the Member for Christchurch (Mr. Chope) received a non-reply from the Chief Secretary to the Treasury earlier today, yet the Minister can give us the exact figures. I am quietly bedazzled by that, but perhaps she will consider the matter and tell us later why the Treasury Minister was unable to answer the question that she has just answered.
      We want clarification on a number of points. The Government have clarified one matter, but I am still not happy about the definition of housing need. However, I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.
      Mr. Chope: On a point of order, Mr. Deputy Speaker. An important issue arose in that debate. When the Budget was announced, a press notice said that the allocation between England, Scotland, Wales and Northern Ireland of the £200 million for housing would be announced shortly after the Budget. I tabled a priority notice question for written answer today from the Chancellor of the Exchequer. I received an answer from the Chief Secretary to the Treasury saying that he would write to me shortly. The hon. Lady has now given a partial answer to that question, which is extraordinary.
      Mr. Win Griffiths: The hon. Gentleman should think himself lucky.
      Mr. Chope: That is my point of order. Are the House and the Opposition entitled to obtain information by seeking answers to parliamentary questions, or are we to be given information as and when the Government design to give it to us?
      Mr. Deputy Speaker: The content of parliamentary answers is not a matter for the Chair.

    Clause 2

      POWER IN PLACE OF DUTY TO SPECIFY AMORTISATION PERIOD
      6.15 pm
      Mr. Chope: I beg to move amendment No. 3, in page 1, leave out lines 16 to 21.
      Mr. Deputy Speaker: With this, it will be convenient to discuss amendment No. 4, in page 1, line 21, at end add
      ', but no period so specified shall exceed seven years, except in respect of old loan charge grants.'.
      Mr. Chope: We discussed clause 2 in Committee at considerable length. The Opposition have grave suspicions about the clause. We were worried that it would be used to enable local authorities to capitalise their revenue expenditure, so that they would capitalise the money that they needed to spend this year and impose a burden on future generations through a debt that would be paid over a period of more than seven years.
      812
      In Committee, the hon. Member for Greenwich and Woolwich (Mr. Raynsford), was unable to give a specific example of a local authority that had asked the Government for a special dispensation for a period in excess of seven years. In the light of that, the Committee divided. The hon. Gentleman said that it was reasonable for a period of more than seven years to be allowed for the specific category of old loan charge debts. Accepting that, we have now tabled an amendment that would apply the seven-year rule to all categories of debt other than old loan charge debts.
      I hope that the Government will accept the amendment, because it would deal with all the points discussed in Committee. If they cannot accept it, our suspicions will be roused to an ever greater extent than they have been already by the Government's shilly-shallying on this issue. It is a short, simple point. If any more local authorities are pressing to wrap up their revenue expenditure in capital and repay it over a period in excess of seven years, let us hear about them tonight. We should be open about this issue, and if no local authorities are pressing for that, the Government should accept this reasonable amendment.
      Mr. Raynsford: As I said to the hon. Gentleman in Committee when we debated this matter, he is making a mountain out of a molehill. This is a relatively minor issue and certainly does not justify his paranoia about widespread financial consequences for local authorities. It is not like that at all.
      The two amendments are contradictory: one would leave out the whole of clause 2, and the second would make a specific amendment to the procedure. The hon. Gentleman accepted that there could be an appropriate arrangement for amortisation of old loan charge grants. That makes the point that amendment No. 3 is inappropriate, because it would remove the flexibility to make such arrangements.
      We do not believe that there is a case for amendment No. 3 under any circumstances. At present, supplementary credit approvals are issued in respect of capitalisation directions in limited circumstances. The only example of that being done routinely—I stress, routinely—is for the commutation of loan charge grants. That is a small, uncontroversial programme, for which about £4.5 million to £5 million a year is available. All we are seeking is for Ministers to have the discretion to specify an amortisation period appropriate for the particular expenditure and the circumstances of each authority.
      Although I gave an example to the hon. Member for Christchurch of the commutation of loan charge grants, that is not the only circumstance in which supplementary credit approval might be given.
      Mr. Chope: Can the Minister give some more examples?
      Mr. Raynsford: I can. Thurrock—the local authority which most recently made representations to the Department—is seeking assistance with the capitalisation of the cost of local government reorganisation. That is an issue where there might be a case for provision for capitalisation and for repayment over a longer period than

      813
      seven years. Certainly, Thurrock council told us that the seven-year amortisation period was too short and would represent a significant revenue burden on it.
      Mr. Chope: I am grateful for that example, but it raises concerns. Will the Minister agree to place the papers in relation to that application in the Library so that hon. Members can have a look at them? Will he confirm that the application is for a sum of £1 million or less?
      Mr. Raynsford: I shall be happy to write to the hon. Gentleman to set out the full details about that case, but I used it for illustration in response to a request for an indication of circumstances other than dealing with old loan charges where the provision might be appropriate.
      The commutation of old loan charge grants is a good example of the need for the clause. The previous Administration meant commutation to be neutral for local authorities, but it led to revenue losses through no fault of the authorities. Consequently, authorities are allowed to capitalise their commutation costs and borrow to meet them. It is unreasonable to impose a short amortisation period in these cases.
      The clause is relevant to other cases in which revenue expenditure is capitalised. We would allow authorities to borrow for revenue purposes only in the most exceptional circumstances where it would not be reasonable for them to meet the expenditure out of their existing revenue resources. The seven-year rule means that authorities would almost immediately have to start finding large sums to repay the debt which, in some circumstances, would have unacceptable financial consequences for authorities. We are seeking more flexibility to deal with cases on their merits.
      Amendment No. 4 would restrict the benefits of clause 2 to cases involving old loan charge grants. I agree that more flexible amortisation periods are needed in connection with SCAs relating to the commutation of old loan charge grants, but equal flexibility is needed in connection with other SCAs—in particular, those made possible by clause 1.
      Another example for the hon. Member for Christchurch is a case where there might be significant revenue expenditure—for example, on preliminary research or consultation necessary for one or more schemes involving expenditure under the capital receipts initiative. I am not suggesting that that will be the case, but there might be circumstances in which there would be a reasonable case for the revenue costs to be capitalised. In such cases, it would be absurd if there were no flexibility to allow that or an amortisation period appropriate to the circumstances of the authority.
      We would need to be sure that the authority could not afford to meet the expenditure from its existing revenue resources. Under the present law, we would tell the authority that it must find at least one seventh of the borrowed sum out of its revenue in the following year, and the same amount in each of the six subsequent years. If the authority could not cope with that revenue commitment, it would be denied this assistance.
      I hope that I have made clear to the hon. Member for Christchurch that we are not dealing with a major cause of additional local authority expenditure, but with limited circumstances. We are seeking the appropriate flexibility to cope with those circumstances and to respond to the needs
      814
      of individual authorities without an unduly rigid framework. I hope that the hon. Gentleman will agree, in the circumstances, to withdraw his amendment.
      Mr. Chope: I am grateful to the Minister for his response, although I am disappointed that he did not make such a response in Committee, where he seemed remarkably coy about giving any example other than the generality of loan charge grants. We now have it on record that there is a Labour-controlled local authority that is seeking to capitalise its revenue expenditure and to pay back that capital over a period in excess of seven years. How does that fit with the Chancellor's so-called "golden rule" on public borrowing? It does not fit in with it at all.
      We are anxious about the powers that the Government are giving themselves, and we shall seek to monitor vigorously the way in which the Government exercise these powers. But certainly we will not press the amendment to a vote, and I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Order for Third Reading read.
      6.26 pm
      Ms Armstrong: I beg to move, That the Bill be now read the Third time.
      We have had a relatively short but interesting set of debates leading to Third Reading. The Bill lays the foundation for the Labour Government to deliver on our manifesto pledge to increase the opportunity for housing need to be met through a capital receipts initiative. That is the first vital step towards the Government's objective of ending years of under-investment in housing. The Bill has been well received by local government and the housing world, which has struggled to come through those years of under-investment. Many people have suffered because their house has not been improved; others have not been able to get a house because there is insufficient housing in their area.
      The Government are living up to our undertaking in Committee that the Bill's Report stage would be taken after the Budget. One of our debates this afternoon arose out of the Budget and our spending commitments for this year and the next. We are having a comprehensive spending review and examining how housing need can be addressed in the future. The Chancellor announced that significant additional capital resources are being made available to meet pressing housing need across the UK and, as part of the Government's capital receipts initiative, an additional £174 million has been provided in England this year, with a further £610 million available in 1998–99. I am sorry that the hon. Member for Christchurch (Mr. Chope) did not get a fuller response. I shall write to him to ensure that he knows the amounts allocated to each of the four nations of the UK.
      Mr. Chope: Were the allocations announced through a press notice? In what way where the allocations communicated to those concerned in Northern Ireland, Wales, Scotland and England?
      Ms Armstrong: I shall write to the hon. Gentleman about this matter. I announced the English figures at a conference last week. I am responsible for those and

      815
      they were in a subsequent press release. I apologise for the fact that the hon. Member has not seen them, but I think that I referred to them in Committee last week. A Welsh Office press release announced the amounts in Wales on 3 July.
      Mr. Bernard Jenkin: That makes it all the more extraordinary that the Chief Secretary to the Treasury was not able to give my hon. Friend the Member for Christchurch (Mr. Chope) a proper answer today.
      Ms Armstrong: I have dealt with that matter and I have tried to be open and honest with Opposition Members. I have said that I shall write to the hon. Member for Christchurch. The Opposition's behaviour is extraordinary. They too have been in government and I can remember many occasions when they were less than perfect. Obviously they are learning how to be in opposition and it is going to be a long learning curve.
      The Government face a legacy of massive under-investment in housing throughout the United Kingdom. The capital receipts initiative should concentrate on England and Wales. When Opposition Members find out the amounts for Northern Ireland and Scotland, they will realise that although the receipts concentrate on England and Wales we know that there is real housing need in Northern Ireland and Scotland and so have extended the initiative to them. We will make announcements about the application of those resources in due course.
      The Government's proposals for England were set out in the consultation paper. The Welsh paper was issued recently and I am pleased that Opposition Members have read it. The initiatives have been warmly welcomed on both sides of the House and, in particular, by local authorities.
      The House will be pleased to note that, in Committee, Opposition Members were largely able to endorse and support the broad thrust of the initiative. I think that that has been true of our debates today. There have been some mischievous responses to some of our points, but I feel none the less that there was overall recognition that the level of housing need demands a response. It seems fair to us that some of the money made from the sale of council housing should go back into housing so that we invest in social housing in areas where houses have been sold and so that the nature and condition of the housing enables people to make it into a real home.
      Discussions with the Local Government Association will continue so that we can ensure that the initiative continues to benefit from a genuine partnership between central and local government. We look forward to receiving views from the LGA, local authorities and other interested parties when they have had time to read the consultation paper and consider how they would best be able to implement the intent of the Bill in their areas.
      The resources that will be released will enable local authorities to work in partnership with all housing providers, tenants, residents and the private sector to begin to tackle that legacy of neglect, decline and decay that is all too often the prospect in too many areas.
      We will also encourage authorities to take every opportunity to support projects that complement the Government's wider policy initiatives. We discussed one
      816
      earlier—the policy to encourage energy efficiency and CO2 emissions. The Government have more than that single objective in relation to this initiative. We want training opportunities to be increased. We are concerned about some of the training offered in the construction industry and the fact that so many young people start construction industry courses but do not finish them. Through this initiative, we want to get more people into training—good training—in the construction industry, so that they end up with a job and so that young people, in particular, can be led into work and financial independence. This initiative is one clear way in which that other overriding strategy of the Government will be met.
      Mr. Chope: Can the Minister tell the House how many extra jobs will be created in the construction industry as a result of the £200 million allocation this year in the supplementary credit approvals and the £700 million next year?
      Ms Armstrong: That depends on how authorities decide to use the initiative, whether they go into renovation or new build and whether they encourage work with other organisations, such as housing associations, whereby the money will be matched with money from the private sector so that the effect of the initiative will be greater. It is impossible to give a proper estimate of the number of jobs and I do not want to speculate. We know, however, that many more jobs will be created by this initiative than would have been if we had not taken it. This Government will create many more jobs in this area than did the previous Government.
      In particular, we will encourage young people to be involved in the initiatives that local government takes through the Bill. Opposition Members were somewhat scathing about the amounts that we intend to release this year. I remind them that we cannot release any money until the Bill is enacted. We want to get the Bill through to release some money to local authorities this year. That is why we are pressing ahead with it.
      The Bill will give us, local authorities and others in the housing sector the real opportunity to be imaginative and creative in how the money is used to encourage regeneration and pull in money from elsewhere so that jobs are created for young men and women and the other priorities identified in the consultation document can be put into practice.
      The Bill and the resources provided by my right hon. Friend the Chancellor of the Exchequer should leave the House in no doubt that the Government are serious about tackling poor housing, poor health, ghetto estates and joblessness. We are not content that we were left a legacy that did not need moving and shifting. If the previous Government were honest, they would be ashamed of that legacy. We are not prepared simply to inherit it. We want to give people opportunity. We are determined that they will be given opportunity. A decent home is always necessary if people are to be able to take advantage of opportunities.
      The Bill is one way in which the Government are fulfilling their commitment to the British people to open up opportunities, offer decent housing for everyone and ensure that it is no longer necessary for anyone to sleep in the streets—a shameful episode that we inherited from

      817
      the previous Government. The Bill is the first this Parliament to have reached Third Reading having been through a normal Committee stage. It is with great pleasure that I commend it to the House.
      6.39 pm
      Mr. Chope: The Minister noted that this is the first Bill this Parliament to have had a normal Committee stage. It is a commentary on the Government that none of their Back Benchers participated in Committee or on Report; everything has been left to the Front-Bench spokesmen.
      The Labour party manifesto included the following commitment:
      "capital receipts from the sale of council houses, received but not spent by local councils, will be re-invested in building new houses and rehabilitating old ones. This will be phased to match the capacity of the building industry and to meet the requirements of prudent economic management."
      Having discovered from the Budget that there would be some £200 million extra for Scotland, England, Wales and Northern Ireland this financial year. I asked the Chancellor of the Exchequer what estimate of the capacity of the construction industry in 1997–98 and 1998–99 underlay his decision to allocate extra sums under the Government's capital receipts initiative. I was asking him to explain exactly how the phasing would match the capacity of the building industry and meet the requirements of sound economic management. Today, the Chief Secretary to the Treasury replied that he would let me have a reply as soon as possible.
      I also asked the Chancellor about the allocation of the £200 million between England, Scotland, Wales and Northern Ireland. Again, I received the answer that he would let me have a reply as soon as possible. Put together, those answers leave one with the feeling that the Government are arrogant beyond belief. They are not even prepared to let an Opposition spokesman speaking in a debate material to the subject of the questions to have information that, we now learn from the Minister, she divulged during a press conference last week. It was divulged in debate today, but the Chief Secretary was not prepared to divulge it to the Opposition Front-Bench spokesman in answer to a priority written question.
      We know that the Government want to take debate away from this Chamber and this Parliament. This is another example of the arrogant way in which they are seeking to achieve that objective. I hope that you, Mr. Deputy Speaker, and Madam Speaker, will intervene to protect the rights of Parliament and of the Opposition to receive timely information.
      Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The hon. Gentleman must not draw the Chair into his case.
      Mr. Chope: I raised the issue on a point of order earlier. I shall insist that we get assurances from the Government that we will not again be put in a position where information that is clearly available to the Government is withheld from the Opposition.
      Ms Armstrong: The hon. Gentleman was given the information.
      Mr. Chope: The hon. Lady says that the information was given to me. It was given to the House three or four hours after I had been told that it was not available.
      Ms Armstrong: I understand that the hon. Gentleman asked for information from the Chief Secretary for all four
      818
      nations. The Bill relates to England and Wales. He was given the information on England and Wales. He did not ask for the information that he says he asked for.
      Mr. Chope: The hon. Lady is clearly desperate. In this debate, she said that the Barnett formula applies. If it applies to the £200 million, the results of its application could have been announced in a press notice on Budget day in the same way as detail was announced, using that formula, for allocations available under the health service and education initiatives. The Barnett formula was used for both those initiatives and the figures were produced. In respect of the so-called capital receipts initiative, the press notice from the Department of the Environment, Transport and the Regions said that the allocation would be announced shortly, clearly implying that either the Government had not made up their mind or they were not sure whether they would use the Barnett formula. Perhaps we now know that they wanted to keep the information secret and prevent the Opposition knowing about it so that they could divulge it to suit their convenience.
      Despite the Budget, at the end of this financial year and the next, local authorities will have more unspent capital receipts from the sale of council houses than at the time of the general election. I cannot believe that many Labour party supporters envisaged that, two years after the election of a Labour Government, the total of unspent receipts would be greater than at the time of the general election, yet that will be the impact of the Chancellor's Budget announcement and of the Bill. It is going to be a grave disappointment to Labour supporters.
      We know what the Bill does not do. Contrary to the wishes of the Local Government Association, it does not remove restrictions on the use of new receipts. As recently as 5 June, the LGA said:
      "Restrictions on the use of new receipts should be removed."
      Nor does the Bill remove restrictions on the use of set-aside receipts; it merely allows them to be taken into account in the granting of credit approvals. The Bill is a charade. It purports to be something other than what it is.
      Nor is the Bill's application confined to house receipts and housing authorities, as the Government said all along it would be. The consultation paper, the rhetoric and, indeed, the Labour party manifesto, refer to housing receipts, but under the Bill the Government are taking power to allow non-housing receipts set-aside to be taken into account in the granting of credit approvals. The Bill also allows set-aside receipts to be taken into account for any purpose of credit approval.
      I raised this issue in Committee. The Minister replied:
      "We have made it quite clear that the Bill deals specifically with housing receipts."
      Unfortunately, the text of the Bill does not match her words. She continued:
      "Over many years in opposition … we have been committed to an initiative to deal specifically with the sale of council houses and the proceeds of that sale. We wanted to deal with the problems that local authority areas have experienced as a result with both the state of their existing stock and, in some cases, a simple lack of housing.
      Our priority is to meet the commitments that we made in our manifesto."—[Official Report, Standing Committee A, 24 June 1997; c. 16.]
      The hon. Lady has not said during the passage of the Bill why it goes far wider than dealing with housing authorities and the receipts from housing sales.

      819
      We can consider the Bill on Third Reading with the benefit of the knowledge that the extra £200 million and £700 million announced in the Budget are a grave disappointment. The Local Government Association estimated that some £5 billion was available. It wanted an extra £500 million this year and a lot more beyond. The Bill has raised expectations that can never be realised. Conservative Members will oppose it.
      6.49 pm
      Sir Paul Beresford: I support what my hon. Friend the Member for Christchurch (Mr. Chope) has said, especially his latter points. There has been much talk on the Government Benches, when Labour Members have been allowed to speak, to the effect that the Bill is related to capital receipts, but it is related to set-aside. At present, councils can take into account the usable capital receipts, which obviously have a link to set-aside, especially if the local authority has debt. I emphasise the point that my hon. Friend makes. Clause 1 is merely flag-waving to a promise that the Labour Government cannot fulfil. They are releasing not capital receipts but capital credit allowances. That is all. Any claim that they are doing anything more than that is fictitious.
      My hon. Friend the Member for Christchurch did not touch on clause 2, which I find especially disturbing. To capitalise revenue in specific circumstances is just acceptable in accounting terms. The reorganisation costs of many of the local authorities that wished to be unitary authorities were accepted by the previous Government. I understand why. It was expected that those costs would be paid back within seven years.
      Thurrock was mentioned in the debate. Thurrock was enthusiastically in favour of unitary status because it would make the council more efficient, better able to handle its services and able to make considerable savings. Capitalisation over seven years could adequately be met by any competent authority, including Thurrock. As a proportion of its total expenditure, the revenue costs are small.
      We are giving an open cheque book to local authorities to allow them to approach the Secretary of State and ask to capitalise revenue on the never-never without reporting to the House. That is a dangerous move and one that the Government will rue. Local authorities and the children of the parents who are paying the bills now will have to bear the costs. This is a case of revenue costs on the never-never and I support my hon. Friend the Member for Christchurch in rejecting the Bill.
      6.52 pm
      Mr. Sanders: This is not a Bill about capital receipts. It is not about allowing local authorities to use their own money. It is about giving them permission to borrow someone else's money. The supplementary credit approvals announced in the Budget are not up to the scale of the task ahead. They are simply straws in the wind.
      About 28,000 homes could be built in the next two years if all the money allocated was put into new build—it will not be, but let us assume that it will—yet the Government's own estimates are that we need between 60,000 and 100,000 new affordable rented homes each year. So 28,000 has to be set against 60,000 at the bottom
      820
      end of the estimate and 100,000 at the top end. The amount of money available this year will provide only 4,000 new builds. We should put that into context.
      On 1 April 1996, in the constituency of the hon. Member for North-West Durham (Ms Armstrong), 4,738 people were on the waiting list. Hon. Members should remember that just 4,000 homes are to be built in the whole of the United Kingdom. In the constituency of the hon. Member for Greenwich (Mr. Raynsford) the waiting list is 6,445.
      I have an apology to make to the House for something that I said on Second Reading to the hon. Member for Luton, South (Ms Moran). I said that she might be disappointed to find that the Bill will provide enough money to provide only four new houses in Luton. I was wrong. It is five new houses. That is all that the new money will provide.
      We should not get too excited. Labour supporters will be extremely disappointed if they compare new Labour's proposals with those of previous Labour Governments. During the lifetime of this Government, it is likely that between 28,000 and 60,000 new homes will be built in the social sector as a consequence of the supplementary credit approvals. That compares with new build between 1945 and 1951 of 850,000. The Labour Government of 1965 to 1970 built 1,100,000 new homes. The Labour Government of 1974 to 1979 built 850,000. The new Labour Government's proposals are peanuts. The best that one can say is that some extra money is better than no money.
      It is with some sadness that we shall support the Government tonight—[Laughter.] it is with some sadness, because there was a possibility of doing a great deal more than has been proposed in the Budget. When one is in a hole, as the Government are over housing, one does not carry on digging. That is the problem. The Bill does not go far enough—[Interruption.]
      Mr. Deputy Speaker: Order. There must be quiet in the Chamber when an hon. Member is addressing it.
      Mr. Sanders: We support the Government with sadness because the Bill does not go far enough. I hope that the thousands of people in each hon. Member's constituency who are on waiting lists will know that their plight is being laughed at.
      Question put, That the Bill be now read the Third time:—
      The House divided: Ayes 350, Noes 138.

      Division No. 50]

      [6.56 pm

      AYES

      Abbott, Ms Diane

      Bayley, Hugh

      Adams, Mrs Irene (Paisley N)

      Beard, Nigel

      Ainger, Nick

      Beckett, Rt Hon Mrs Margaret

      Ainsworth, Robert (Cav'try NE)

      Begg, Miss Anne (Aberd'n S)

      Allan, Richard (Shef'ld Hallam)

      Beith, Rt Hon A J

      Allen, Graham (Nottingham N)

      Bell, Martin (Tatton)

      Armstrong, Ms Hilary

      Bell, Stuart (Middlesbrough)

      Ashdown, Rt Hon Paddy

      Bennett, Andrew F

      Ashton, Joe

      Bermingham, Gerald

      Atkins, Charlotte

      Berry, Roger

      Austin, John

      Best, Harold

      Ballard, Mrs Jackie

      Blackman, Liz

      Barnes, Harry

      Blears, Ms Hazel

      Barron, Kevin

      Blizzard, Bob

      821

      Borrow, David

      Eagle, Angela (Wallasey)

      Bradley, Keith (Withington)

      Edwards, Huw

      Bradley, Peter (The Wrekin)

      Efford, Clive

      Bradshaw, Ben

      Ellman, Ms Louise

      Brake, Thomas

      Etherington, Bill

      Breed, Colin

      Fearn, Ronnie

      Brinton, Mrs Helen

      Field, Rt Hon Frank

      Brown, Rt Hon Nick (Newcastle E)

      Flint, Caroline

      Brown, Russell (Dumfries)

      Flynn, Paul

      Browne, Desmond (Kilmarnock)

      Follett, Barbara

      Bruce, Malcolm (Gordon)

      Foster, Rt Hon Derek

      Burden, Richard

      Foster, Don (Bath)

      Burgon, Colin

      Foster, Michael John (Worcester)

      Burstow, Paul

      Fyfe, Maria

      Butler, Christine

      Galbraith, Sam

      Byers, Stephen

      Galloway, George

      Cable, Dr Vincent

      Gerrard, Neil

      Caborn, Richard

      Gibson, Dr Ian

      Campbell, Alan (Tynemouth)

      Godman, Dr Norman A

      Campbell, Mrs Anne (C'bridge)

      Godsiff, Roger

      Campbell, Menzies (NE Fife)

      Goggins, Paul

      Campbell, Ronnie (Blyth V)

      Golding, Mrs Llin

      Campbell-Savours, Dale

      Gordon, Mrs Eileen

      Cann, Jamie

      Gorrie, Donald

      Caplin, Ivor

      Griffiths, Jane (Reading E)

      Casale, Roger

      Griffiths, Nigel (Edinburgh S)

      Caton, Martin

      Griffiths, Win (Bridgend)

      Cawsey, Ian

      Grocott, Bruce

      Chapman, Ben (Wirral S)

      Grogan, John

      Chaytor, David

      Gunnell, John

      Chisholm, Malcolm

      Hall, Mike (Weaver Vale)

      Clapham, Michael

      Hall, Patrick (Bedford)

      Clark, Dr Lynda (Edinburgh Pentlands)

      Hancock, Mike

      Hanson, David

      Clark, Paul (Gillingham)

      Harvey, Nick

      Clarke, Charles (Norwich S)

      Heal, Mrs Sylvia

      Clarke, Eric (Midlothian)

      Healey, John

      Clarke, Tony (Northampton S)

      Henderson, Doug (Newcastle N)

      Clelland, David

      Henderson, Ivan (Harwich)

      Coaker, Vernon

      Hepburn, Stephen

      Coffey, Ms Ann

      Heppell, John

      Colman, Tony (Putney)

      Hesford, Stephen

      Connarty, Michael

      Hewitt, Ms Patricia

      Cooper, Yvette

      Hill, Keith

      Corbett, Robin

      Hodge, Ms Margaret

      Corbyn, Jeremy

      Hoey, Kate

      Corston, Ms Jean

      Home Robertson, John

      Cotter, Brian

      Hood, Jimmy

      Cousins, Jim

      Hoon, Geoffrey

      Cranston, Ross

      Hope, Phil

      Crausby, David

      Hopkins, Kelvin

      Cryer, Mrs Ann (Keighley)

      Howells, Dr Kim

      Cryer, John (Hornchurch)

      Hoyle, Lindsay

      Cummings, John

      Hughes, Ms Beverley (Stretford)

      Cunliffe, Lawrence

      Hughes, Kevin (Doncaster N)

      Cunningham, Jim (Cov'try S)

      Hughes, Simon (Southwark N)

      Cunningham, Rt Hon Dr John (Copeland)

      Humble, Mrs Joan

      Hurst, Alan

      Curtis-Thomas, Mrs Claire

      Hutton, John

      Dalyell, Tam

      Iddon, Dr Brian

      Darvill, Keith

      Illsley, Eric

      Davey, Edward (Kingston)

      Jackson, Ms Glenda (Hampstead)

      Davey, Valerie (Bristol W)

      Jackson, Helen (Hillsborough)

      Davidson, Ian

      Jenkins, Brian (Tamworth)

      Davies, Rt Hon Denzil (Llanelli)

      Johnson, Miss Melanie (Welwyn Hatfield)

      Davies, Geraint (Croydon C)

      Dawson, Hilton

      Jones, Barry (Alyn & Deeside)

      Dean, Mrs Janet

      Jones, Ms Fiona (Newark)

      Denham, John

      Jones, Helen (Warrington N)

      Dewar, Rt Hon Donald

      Jones, Jon Owen (Cardiff C)

      Dismore, Andrew

      Jones, Dr Lynne (Selly Oak)

      Donohoe, Brian H

      Jones, Martyn (Clwyd S)

      Doran, Frank

      Jowel, Ms Tessa

      Dowd, Jim

      Keeble, Ms Sally

      Drew, David

      Keen, Alan (Feltham & Heston)

      Drown, Ms Julia

      Keen, Mrs Ann (Brentford)

      822

      Kemp, Fraser

      Pickthall, Colin

      Kennedy, Charles (Ross Skye)

      Pike, Peter L

      Kennedy, Jane (Wavertree)

      Plaskitt, James

      Khabra, Piara S

      Pollard, Kerry

      Kidney, David

      Pond, Chris

      King, Andy (Rugby & Kenilworth)

      Pope, Greg

      King, Ms Oona (Bethnal Green)

      Pound, Stephen

      Kirkwood, Archy

      Powell, Sir Raymond

      Kumar, Dr Ashok

      Prentice, Ms Bridget (Lewisham E)

      Ladyman, Dr Stephen

      Prentice, Gordon (Pendle)

      Lawrence, Ms Jackie

      Prescott, Rt Hon John

      Laxton, Bob

      Primarolo, Dawn

      Lepper, David

      Prosser, Gwyn

      Levitt, Tom

      Purchase, Ken

      Lewis, Ivan (Bury S)

      Quin, Ms Joyce

      Lewis, Terry (Worsley)

      Rammell, Bill

      Linton, Martin

      Rapson, Syd

      Livingstone, Ken

      Raynsford, Nick

      Livsey, Richard

      Rendel, David

      Lloyd, Tony (Manchester C)

      Robinson, Geoffrey (Cov'try NW)

      Llwyd, Elfyn

      Roche, Mrs Barbara

      Love, Andrew

      Rogers, Allan

      McAvoy, Thomas

      Rooker, Jeff

      McCabe, Stephen

      Rooney, Terry

      McCafferty, Ms Chris

      Roy, Frank

      McCartney, Ian (Makerfield)

      Ruane, Chris

      McDonagh, Siobhain

      Salter, Martin

      Macdonald, Calum

      Sanders, Adrian

      McDonnell, John

      Savidge, Malcolm

      McFall, John

      Sawford, Phil

      McGuire, Mrs Anne

      Sedgemore, Brian

      McIsaac, Shona

      Sheerman, Barry

      McKenna, Ms Rosemary

      Sheldon, Rt Hon Robert

      Maclennan, Robert

      Shipley, Ms Debra

      McNulty, Tony

      Simpson, Alan (Nottingham S)

      MacShane, Denis

      Singh, Marsha

      Mactaggart, Fiona

      Skinner, Dennis

      McWalter, Tony

      Smith, Rt Hon Andrew (Oxford E)

      McWilliam, John

      Smith, Angela (Basildon)

      Mahon, Mrs Alice

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Mallaber, Judy

      Mandelson, Peter

      Smith, Jacqui (Redditch)

      Marek, Dr John

      Smith, John (Glamorgan)

      Marsden, Gordon (Blackpool S)

      Snape, Peter

      Marsden, Paul (Shrewsbury)

      Soley, Clive

      Marshall, David (Shettleston)

      Southworth, Ms Helen

      Marshall, Jim (Leicester S)

      Spellar, John

      Marshall-Andrews, Robert

      Squire, Ms Rachel

      Martlew, Eric

      Starkey, Dr Phyllis

      Maxton, John

      Steinberg, Gerry

      Meacher, Rt Hon Michael

      Stevenson, George

      Meale, Alan

      Stewart, David (Inverness E)

      Michie, Bill (Shef'ld Heeley)

      Stewart, Ian (Eccles)

      Milburn, Alan

      Stinchcombe, Paul

      Moffatt, Laura

      Stoate, Dr Howard

      Moore, Michael

      Stott, Roger

      Moran, Ms Margaret

      Strang, Rt Hon Dr Gavin

      Morgan, Ms Julie (Cardiff N)

      Stringer, Graham

      Morgan, Rhodri (Cardiff W)

      Stuart, Ms Gisela (Edgbaston)

      Morris, Ms Estelle (B'ham Yardley)

      Stunell, Andrew

      Morris, Rt Hon John (Aberavon)

      Sutcliffe, Gerry

      Mountford, Kali

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Mudie, George

      Mullin, Chris

      Taylor, David (NW Leics)

      Murphy, Denis (Wansbeck)

      Taylor, Matthew (Truro)

      Murphy, Jim (Eastwood)

      Temple-Morris, Peter

      Norris, Dan

      Thomas, Gareth (Clwyd W)

      O'Brien, Bill (Normanton)

      Thomas, Gareth R (Harrow W)

      O'Brien, Mike (N Warks)

      Timms, Stephen

      Olner, Bill

      Tipping, Paddy

      O'Neill, Martin

      Todd, Mark

      Öpik, Lembit

      Touhig, Don

      Organ, Mrs Diana

      Trickett, Jon

      Osborne, Mrs Sandra

      Turner, Dennis (Wolverh'ton SE)

      Pearson, Ian

      Turner, Dr George (NW Norfolk)

      Pendry, Tom

      Twigg, Derek (Halton)

      823

      Twigg, Stephen (Enfield)

      Williams, Mrs Betty (Conwy)

      Tyler, Paul

      Wills, Michael

      Vaz, Keith

      Wilson, Brian

      Wallace, James

      Winnick, David

      Walley, Ms Joan

      Winterton, Ms Rosie (Doncaster C)

      Watts, David

      Wood, Mike

      Webb, Professor Steve

      Worthington, Tony

      White, Brian

      Wray, James

      Wright, Dr Tony (Cannock)

      Whitehead, Dr Alan

      Wright, Tony D (Gt Yarmouth)

      Wicks, Malcolm

      Wyatt, Derek

      Wigley, Dafydd

      Williams, Rt Hon Alan (Swansea W)

      Tellers for the Ayes:

      Mr. Clive Betts and

      Williams, Alan W (E Carmarthen)

      Mr. David Jamieson.

      NOES

      Ainsworth, Peter (E Surrey)

      Collins, Tim

      Amess, David

      Colvin, Michael

      Arbuthnot, James

      Cormack, Sir Patrick

      Atkinson, David (Bour'mth E)

      Curry, Rt Hon David

      Atkinson, Peter (Hexham)

      Davis, Rt Hon David (Haltemprice)

      Baldry, Tony

      Davies, Quentin (Grantham)

      Beresford, Sir Paul

      Dorrell, Rt Hon Stephen

      Blunt, Crispin

      Duncan, Alan

      Body, Sir Richard

      Duncan Smith, Iain

      Boswell, Tim

      Evans, Nigel

      Bottomley, Peter (Worthing W)

      Faber, David

      Bottomley, Rt Hon Mrs Virginia

      Fabricant, Michael

      Brady, Graham

      Fallon, Michael

      Brazier, Julian

      Flight, Howard

      Brooke, Rt Hon Peter

      Forth, Rt Hon Eric

      Browning, Mrs Angela

      Fox, Dr Liam

      Bruce, Ian (S Dorset)

      Fraser, Christopher

      Burns, Simon

      Gale, Roger

      Butterfill, John

      Garnier, Edward

      Cash, William

      Gibb, Nick

      Chapman, Sir Sydney (Chipping Barnet)

      Gill, Christopher

      Gillan, Mrs Cheryl

      Chope, Christopher

      Gorman, Mrs Teresa

      Clappison, James

      Gray, James

      Clark, Rt Hon Alan (Kensington)

      Green, Damian

      Clark, Dr Michael (Rayleigh)

      Greenway, John

      Clarke, Rt Hon Kenneth (Rushcliffe)

      Grieve, Dominic

      Gummer, Rt Hon John

      Clifton-Brown, Geoffrey

      Hague, Rt Hon William

      824

      Hamilton, Rt Hon Sir Archie

      Robathan, Andrew

      Hammond, Philip

      Robertson, Laurence (Tewk'b'ry)

      Hayes, John

      Roe, Mrs Marion (Broxbourne)

      Heald, Oliver

      Rowe, Andrew (Faversham)

      Heathcoat-Amory, Rt Hon David

      Ruffley, David

      Horam, John

      Sayeed, Jonathan

      Howard, Rt Hon Michael

      Shepherd, Richard (Aldridge)

      Howarth, Gerald (Aldershot)

      Simpson, Keith (Mid-Norfolk)

      Hunter, Andrew

      Soames, Nicholas

      Jack, Rt Hon Michael

      Spelman, Mrs Caroline

      Jackson, Robert (Wantage)

      Spring, Richard

      Jenkin, Bernard (N Essex)

      Stanley, Rt Hon Sir John

      Key, Robert

      Steen, Anthony

      King, Rt Hon Tom (Bridgwater)

      Streeter, Gary

      Kirkbride, Miss Julie

      Swayne, Desmond

      Laing, Mrs Eleanor

      Syms, Robert

      Lansley, Andrew

      Tapsell, Sir Peter

      Leigh, Edward

      Taylor, Ian (Esher & Walton)

      Letwin, Oliver

      Taylor, John M (Solihull)

      Lewis, Dr Julian (New Forest E)

      Taylor, Sir Teddy

      Lilley, Rt Hon Peter

      Temple-Morris, Peter

      Lloyd, Rt Hon Sir Peter (Fareham)

      Thompson, William

      Loughton, Tim

      Townend, John

      Luff, Peter

      Tredinnick, David

      McIntosh, Miss Anne

      Tyrie, Andrew

      Viggers, Peter

      MacKay, Andrew

      Walter, Robert

      Maclean, Rt Hon David

      Wardle, Charles

      McLoughlin, Patrick

      Waterson, Nigel

      Malins, Humfrey

      Wells, Bowen

      Maples, John

      Whitney, Sir Raymond

      Mates, Michael

      Whittingdale, John

      Maude, Rt Hon Francis

      Widdecombe, Rt Hon Miss Ann

      Mawhinney, Rt Hon Dr Brian

      Wilkinson, John

      May, Mrs Theresa

      Willetts, David

      Merchant, Piers

      Wilshire, David

      Moss, Malcolm

      Winterton, Mrs Ann (Congleton)

      Ottaway, Richard

      Winterton, Nicholas (Macclesfield)

      Page, Richard

      Woodward, Shaun

      Paice, James

      Young, Rt Hon Sir George

      Paterson, Owen

      Pickles, Eric

      Tellers for the Noes:

      Prior, David

      Sir David Madel and

      Redwood, Rt Hon John

      Mr. James Cran.

      Question accordingly agreed to.
      Bill read the Third time, and passed.

  Local Government (Contracts) Bill
  As amended (in the Standing Committee), considered.
  Local Government (Contracts) Bill
    Clause 1

      FUNCTIONS TO INCLUDE POWER TO ENTER INTO CONTRACT
      7.10 pm
      Mr. David Rendel: I beg to move amendment No. 1, in page 1, line 10, at end insert—
      "(1A) The power of a local authority to do any thing (whether or not involving the expenditure, borrowing or lending of money or the acquisition or disposal of any property or rights) which is calculated to facilitate, or is conducive or incidental to, the discharge of its functions, includes the power to enter into a contract with another person for the provision or making available of assets or services, or both (whether or not together with goods), for or in connection with those purposes.'.
      Mr. Deputy Speaker, I apologise for the confusion if you thought that my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) intended to move the amendment. In Committee, my hon. Friend raised an issue somewhat similar to the one raised by amendment No. 1 and said that, if he was dissatisfied with the Minister's response, we might well table an amendment on Report.
      Having listened to the Minister's response on that occasion, and having had the opportunity to reflect on the matter again when it was reported in Hansard, I was not entirely satisfied with the Minister's response. Further reassurances are required before we feel it right to withdraw the amendment, because some sections of local government will continue to worry if the amendment is not passed and if further reassurances are not given.
      The amendment in no sense tries to expand the powers of local government, which is one of the confusions that arose in Committee. The Minister appeared to feel that we were trying to expand the powers of local government. That was not the point of the remarks made by my hon. Friend the Member for Sutton and Cheam at the time, and it is not the point of amendment No. 1.
      The amendment simply seeks to clarify the extent of the Bill and to ensure that it is wide enough to cover all those aspects of local government performance which I believe that the Government intend it to cover. In that sense, it is a helpful amendment, which tries to take out of the Bill that which might otherwise be a part of it and that leaves some of the potential contractors of local government in doubt whether local government really has the powers that it seems to think it has.
      In her reply, the Minister said:
      "the word 'functions' in the Bill covers both duties and discretions."—[Official Report, Standing Committee B, 1 July 1997; c. 12.]
      That does not appear to be a normal definition of the word "functions," and it is unlikely that the Bill could be interpreted in exactly that way in plain English. I therefore ask for further clarification from the Minister.
      I believe it is fair to say that the Bill talks only of functions that are conferred or imposed by statutory provision, and if the amendment is to be withdrawn the Government must explain how the Bill can cover the potential use of some discretionary functions by local government—especially, perhaps, those new functions that may not yet have been thought about. New ideas are
      826
      always emerging on what local government may wish to be involved in, as new technology comes into use, and the Bill should cover any such new functions in which local government may be involved in future.
      If the purpose of the Bill is as I understand it to be—to reassure potential contractors that they may go ahead with their contracts in the full assurance that they will be paid even if, on occasion, local government appears to have acted ultra vires—the amendment can only help the Bill to secure its true purpose. It will make it plain that the Bill does cover all the potential aspects of local government involvement, not only—as appears to be the case at present—those that are specifically laid down as the functions of local government directly in statute.
      Mr. Eric Pickles: I do not intend to detain the House long in considering the amendment, but as it is my first time at the Dispatch Box—
      Mr. Nicholas Soames: First-class man.
      Mr. Pickles: I thank my hon. Friend. I hope that I shall be here long enough to enjoy it.
      What the Liberals said on Second Reading and in Committee has changed a little; at first they talked about a general power of competence and now they say that they want to extend it because they want to be sure that it covers everything.
      I clearly recollect what happened in Committee. Several times I asked the Minister for Local Government and Housing whether discretionary powers were covered, and especially whether section 137 of the Local Government Act 1972 was covered. The hon. Lady was straightforward about that and unequivocal in her assurances that that would be covered.
      At a future date, there may be a case for examining the general competence of local government, but I do not believe that it should come about as a result of the amendment. It is true that, if it was decided to reconsider the way in which local authorities receive their powers, something like the amendment would need to be considered, but those with experience of local government and the way in which it approaches matters of general competence believe that what we need is a clear statement of powers and responsibility, and the Minister, in fairness to her, gave the Committee precisely that. We need to understand where responsibility lies in local government and in terms of the council tax payer.
      Local authorities have generally used the test that is set down in section 137 of the 1972 Act, which is one of direct benefit. There must be a clear demonstration that it is to the benefit of the local community or a substantial part of the local community or a substantial geographical part. It seems to me that, in ways of operating, powers are best left in terms of "must" or "may" take action, in recognition of the fact that there is always scope for ambiguity. That is why section 137 of the 1972 Act, and the previous section, section 111, came into existence.
      In Committee, the hon. Member for Newbury (Mr. Rendel) suggested that we might try to reverse the position and lay down several exceptions, so that local authorities have a wide power except in the case of the exceptions. I believe that that is the idea underlying the amendment. Arranging things in that way would only

      827
      result in a long list of exceptions. Would we want a local authority to trade? Probably not. Would we want it to manufacture windows? Probably not. I can, however, think of examples when we might be disposed to allow local authorities such powers—when an authority was in charge of a disabled workshop, for instance. The Liberal Democrat approach will not, I believe, produce any great benefits.
      I cannot help agreeing with Professor Grant's feeling that this approach is more symbolic than real. That sums up the amendment, too, and the general attitude of the Liberal Democrats to local government.
      The Minister for Local Government and Housing (Ms Hilary Armstrong): The Bill appears to enjoy the support of both Opposition parties, although they disagree about the amendment. I want to be helpful to both parties, if I can.
      The effects of the amendment are difficult to ascertain. It would insert new section (1A), lifting its words from section 111 of the Local Government Act 1972. That section empowers authorities to do anything that facilitates
      "or is conducive or incidental to, the discharge of"
      any of their functions. The amendment would enable authorities to enter into contracts for assets or services when relying on subsidiary powers under section 111, instead of primary powers. I wonder whether the hon. Member for Newbury (Mr. Rendel) realises that the amendment would have that impact.
      I fear that ingenious interpretation of the amendment might lure authorities into schemes in which their powers were at best highly ambiguous. The amendment would therefore seem to widen the effect of the Bill, which is not our intention. The Bill does not add to local authorities' powers. Clause 1 is designed merely to make explicit what is already implicit, so that authorities can more confidently enter into contracts in pursuance of their functions.
      Where entering into a contract is necessary to help an authority discharge a function, but it is not confident of being able to rely on the provision for the power to enter the contract, the authority could rely on section 111, on the basis that a contract is incidental to or conducive to the performance of the function. There were doubts in some quarters whether the main statutory provision, or section 111, empowered an authority to enter into contracts in all cases.
      The Bill removes that uncertainty. It does so by confirming, in clause 1, that the statutory provisions that confer functions also confer power to enter contracts for assets or services in connection with the discharge of those functions. The Bill makes this implicit power explicit. To that extent, inserting the words of section 111 is unnecessary. Indeed, such insertion could add an incidental power to an incidental power, thus augmenting local authorities' powers.
      I know that this is getting complex, so I shall provide some examples of what we think might happen. The first concerns an activity permitted under current legislation; clause 1(1) would confirm it. An authority can enter into a contract for the provision and servicing of computers
      828
      and other office equipment required to discharge its primary functions—for instance, education or social services.
      The second example concerns an activity not permitted under current legislation or the Bill, but possibly permitted by the amendment. Under it, an authority might claim that it could enter into a contract connected with borrowing or lending money but unconnected with the discharge of its functions—the very problem identified in the swaps cases, for which section 111 alone could not be relied on to facilitate an authority's actions: there needed to be a primary function.
      I hope that that is now clear. We believe that the Bill meets the points made by the hon. Member for Newbury. We are anxious to give lawyers no more of a field day than they will already have with this type of activity. Because the amendment might be interpreted as providing another incidental power, I believe that it goes against what we are all aiming for. I therefore hope that the hon. Gentleman will be reassured enough to withdraw his amendment.
      Mr. Rendel: I am grateful to the Minister. The hon. Member for Brentwood and Ongar (Mr. Pickles) appears to have missed the point of the amendment, which is not about a power of general competence. I thought that I had made that plain—good though it might be to introduce such a local government power, that is irrelevant to this amendment.
      The Minister said that the amendment would add a power to local authorities in some cases—she mentioned monetary transactions. It was certainly not my party's intention to add to local authorities' powers, and I accept that the Minister is worried about that. Instead of pushing on with the amendment at this stage, it may be sensible to withdraw it for the time being.
      I nevertheless hope that the hon. Lady will seriously look again at a possibility that she seems to discount. The legal advice of local government bodies is that there is still a problem in the Bill, in the sense that it may exclude some local authority contracting with external contractors. I am sure that we are at one in wanting to overcome such a problem, if there is one, and it would be wise of the Minister to examine it again. I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 3

      THE CERTIFICATION REQUIREMENTS
      Mr. Paul Burstow: I beg to move amendment No. 2, in page 3, line 16, at end insert—
      '(3A) A person signing the certificate on behalf of the local authority shall in doing so be under no duty to any party other than the local authority on behalf of which he has signed.'.
      I have read and reflected on the discussions that took place in Committee, in particular the comments of the Minister in this respect. I still believe that the case law to which I referred in Committee—the case of Burgoine and Cooke v. London borough of Waltham Forest—raises serious questions.
      The Minister reassured us in Committee that there would be a serious problem with negligence only if officers could be regarded as having acted in bad faith.

      829
      My reading of the Waltham Forest case is that the officers who were held to be liable in negligence were in no way acting in bad faith. I fear that that judgment may impinge on the working of the Bill once it becomes an Act. I tabled the amendment to make it clear in the Bill that the officers who certify these contracts are responsible only to their local authority and to no one else. That is the best way to offer legitimate protection to local government officers in carrying out their role as advisers to, and servants of, local authorities.
      If the wording of the amendment is imperfect but the point is valid, I hope that the Minister will find some appropriate wording to reassure officers who will sign those certificates.
      7.30 pm
      The Minister for London and Construction (Mr. Nick Raynsford): I hope that I can persuade the hon. Member for Sutton and Cheam (Mr. Burstow), who moved the amendment in a constructive and sensible way, that in practice his fears are groundless and the amendment is not required. The amendment appears to be based on the misapprehension that the Bill can somehow increase the potential vulnerability or exposure of council officers to legal action. The Bill does not do that.
      Local council officers who carry out their normal duties in good faith are not liable to third parties for the acts of a local authority, even where those acts turn out to be ultra vires. The Bill does nothing to add further burdens. Officers will be no more liable in signing a certificate than in putting their name to the contract to which it relates. I am sure that they will exercise the same care in signing certificates as they do at present in binding the authority under any contract or other transaction.
      There are no real grounds for concern, in connection either with the kind of contract for which the certificate might be given or with other contracts. We would not want to throw misplaced doubt on officers' positions in the generality of their activities by making a provision—in the form of the amendment—affecting the certifying of some contracts.
      The hon. Gentleman raised the case of Burgoine and Cooke v. London borough of Waltham Forest. The problems in that case were of a very different nature and flowed from the authority's lack of capacity to set up a particular company and appoint its officers as company directors. It was not concerned with the day-to-day activities of an officer, of which certification would naturally form a part. The officers in that case were acting not as local authority officers but as company directors, and that difference created the problems.
      I hope that the hon. Gentleman accepts that we have given this matter serious consideration. We do not wish to create a situation where council officers are exposed to the risk of litigation or liabilities simply through exercising their normal functions in good faith and in a proper way. We are satisfied that there is no risk of that. I hope that the hon. Gentleman will therefore not press the amendment.
      Mr. Burstow: I am grateful to the Minister for his response. It is important to put such a matter clearly on the record. If, in the unlikely event that the courts look into this matter, the fact that it is set out in Hansard will undoubtedly be of great benefit to judges in deciding what we legislators were attempting to achieve through the Bill.
      830
      I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 5

      SPECIAL PROVISION FOR JUDICIAL. REVIEWS AND AUDIT REVIEWS
      Mr. Burstow: I beg to move amendment No. 3, in page 4, line 15, at end insert—
      '(3A) Before making a determination under subsection (3), a court shall have regard to the consequences for the parties to the contract of such a determination arising from provision made in any relevant discharge terms relating to the contract.'.
      I shall be even more brief on this amendment, but I look forward to hearing the Minister's detailed response. I raised this matter in Committee in the clause stand part debate, and I remain concerned about it. It concerns a court's power, and what the court will take into account, when considering contracts and whether they are ultra vires, and the consequences for local authorities and therefore council tax payers if the discharge clause comes into effect.
      The discharge clause in the Bill could place on local authorities a heavy burden, which would be passed on to council tax payers. The amendment would include in the Bill a provision requiring judges to take the impact on council tax payers into account when assessing whether a contract should be allowed to continue to operate. Although I listened to, and later read, the Minister's comments in Committee, I am not yet convinced that judges will be able to act as I hope. I want an assurance that the amendment is not necessary, but I believe that it is.
      Ms Armstrong: As the hon. Gentleman noted, the Bill deals with the possibility that, in the unlikely event of a contract being subject to audit review because it has been successfully challenged, a heavy burden will be placed on council tax payers. It is precisely for that reason that the Bill has been drafted as it has. The Bill makes it clear that, before entering into a contract, a local authority must have assured itself that it will be acting within its powers. The Bill is constructed so as to ensure that that happens.
      I appreciate that the hon. Gentleman wants to be helpful and that he seeks to ensure that, in the unlikely event of a certificated contract being subject to audit review, a court, when considering the setting aside of a contract, is required to act as on judicial review and therefore take full account of all the circumstances. Clause 5(3) already requires a court to act as it would on judicial review and the court will take account of all circumstances and arguments that can be presented to it about the contract and its effect on the parties if it is set aside.
      There is a danger that, if one factor, such as that emphasised in the amendment, is stated in the Bill, it will have the opposite effect and raise doubts about what the court should consider in the contract. We are trying to ensure that the court properly considers what the contract contains and what, in the context of the case, is proper for the court to consider. We therefore want to ensure that the Bill properly addresses that. We shall continue to listen to and hear representations, but the hon. Gentleman's intention is accounted for in the Bill. The amendment could make matters more difficult rather than ease the path.

      831
      I wish to be helpful to the hon. Gentleman. Had I been assured that the amendment would improve the Bill, I would have been much more sympathetic. We cannot accept the amendment because it would probably make matters much worse. The judge would have to address that specific issue rather than the context within which the contract had proceeded, and therefore the common-sense view of what the contract sought to do and what was in the best interests of the council tax payer.
      Mr. Barstow: I am grateful to the Minister for that full response. My intent is to improve the Bill, not to stop it or wreck it, and certainly not to create a situation in which a judge's hands would be more tied than necessary. However, I welcome the fact that the Minister is willing to consider how the intention of my amendment could be given effect. I hope that, perhaps in another place, the Government will take the opportunity to introduce wording that they find acceptable and that would achieve the intention of my amendment. On that basis, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Order for Third Reading read.
      7.40 pm
      Ms Armstrong: I beg to move, That the Bill be now read the Third time.
      It is with great pleasure that we come to the Third Reading of what I admit is an exceptionally complex Bill. None of us is certain that what we want from the Bill is what we will end up with. Unfortunately, that is the nature of such legislation. The previous Government had much experience of that with a Bill on the national health service and the private finance initiative. In the week in which the election was called, they admitted that that Bill did not meet the needs that they had intended it to meet. We are now considering a further Bill relating to that.
      It is important to restate what the Bill does and what it does not do. Its purpose is to remove an obstacle to successful local authority public-private partnerships.
      The Bill does not change the fundamentals of the law. It does not add to local authorities' existing powers. Equally, there can be no question of it rendering ultra vires transactions that have always been within authorities' powers. It merely makes explicit what was already implicit: that local authorities can enter into contracts in pursuance of their functions.
      Mr. Tony Colman: May I declare an interest as chair of 4 Ps—the Public Private Partnerships Programme—and ask my hon. Friend whether she would support an experiment, a pathfinder project, for the use of PFI in HRA housing. I believe that that could lead to best value, and 4 Ps has established that there is support from financial institutions. Would my hon. Friend support such an experiment?
      Ms Armstrong: I am grateful to my hon. Friend, who probably has more experience than any other hon. Member of the matters covered by the Bill. I should be happy for the Government to work with 4 Ps on a pathfinder project for housing. We are always looking for
      832
      ways in which we can draw in private sector money to increase housing capacity. I thank my hon. Friend for his constructive suggestion.
      The Bill deals with a certification procedure, which does not permit authorities to act ultra vires. It does not give them immunity from challenge in public law by a taxpayer for entering into deals that are outside their powers. It does not restrict the auditors' right of challenge.
      The certification procedure enables authorities to say to contractors, and to financiers who are backing deals, that, to the best of the authority's knowledge and belief, the deal in question is within powers.
      The Bill also provides contractors and financiers with the assurance that if, at some later stage, there are proceedings to enforce the contract, the authority will not then be able to claim that the deal is ultra vires. However, should the deal none the less be found to be ultra vires, the authority will have to recompense the other parties to the contract.
      For those reasons, the Bill has been welcomed by the finance community. The other partners are also extremely important.
      What is in the Bill for local authorities? First, it provides a valuable clarification that statutory powers carry with them a power to enter into associated contracts for assets or services, or both.
      Secondly, the Bill means that authorities will be able to give assurance to potential partners in innovative partnership schemes that if, after certification of a scheme and in the unlikely event of the scheme nevertheless being found to be ultra vires as a result of a challenge in public law, the provider and the bank will be protected. The local authorities understand that. They know that they will have the responsibility to ensure that schemes that they enter into are within their powers.
      It has been suggested that certification will be too burdensome, and will entail additional requirements. We do not believe that it will be complicated or burdensome. It should reflect the process of considered assessment that an authority will have to go through in any case, and which an authority should undertake before entering any partnership agreement.
      The certification process will focus specifically on powers. For that reason, it is not the appropriate vehicle for giving assurance about other matters, important though those may be. It need not be cluttered up with details of risk transfer, procurement processes, planning matters and so on. The authorities should address those issues, but in another context.
      We do not believe that certification adds to officers' liability. I know that that has been a particular concern of local government officers and of Liberal Democrat Members. On the contrary, by clarifying authorities' powers, the Bill is likely to reduce the risk that officers entering into contracts, especially innovative partnership deals, might inadvertently act ultra vires. Signing the certificate carries no more liability than signing the contract to which it relates.
      There is every reason why local authority officers will act in good faith in going about their business. If they act in good faith, honestly and without malice, they will have nothing to worry about.
      I welcome the hon. Member for Brentwood and Ongar (Mr. Pickles) to the Dispatch Box, and apologise for not doing so earlier. It is one of the better innovations of the

      833
      new Conservative party that Back Benchers are being encouraged to join Front-Bench teams on appropriate occasions. This is such an occasion. It is a pity that the hon. Gentleman has been left on his own—no, I see the that hon. Member for Eastbourne (Mr. Waterson) is also present, and I welcome him. I am sure that his support is of great encouragement to the hon. Member for Brentwood and Ongar.
      It might seem entirely reasonable for parties to contracts to agree not only to the issue of certificates, but to their content. However, any amendment along those lines, although apparently innocuous, would destroy the Bill's good effect. If contractors and banks had to agree that schemes were intra vires, rather than just relying on the authority's opinion, they would be tied into the decision-making process. They would have to form a view, when they would prefer not to do so. Not only would contractors and banks not be well placed to form an opinion, but they would have to exercise due diligence in expressing a view. The Bill aims to protect financiers and contractors in the unlikely event of authorities' making a mistake about whether contracts fall within their powers.
      I believe that the Bill will achieve the stated aims of all hon. Members. We want to engender confidence in the contracts that local government will sign with the private sector. This is a very important development for local government, because it is about the future of local services to local taxpayers. I commend the Bill to the House.
      7.50 pm
      Mr. Eric Pickles: I thank the Minister for her kind remarks. I forgive her for not making them earlier—no doubt she was struck dumb by the sight of me at the Dispatch Box. I also thank the hon. Lady and the Minister for London and Construction for the courteous way in which they conducted business in Committee.
      I agree with my hon. Friend the Member for Christchurch (Mr. Chope): it is a great pity that we have not heard much from Government Back Benchers in this debate. It is also a pity that the hon. Member for Putney (Mr. Colman) did not serve on the Committee. Committees are often stuffed to the gills with people who know nothing, and care even less, about the subject under consideration. The hon. Gentleman is an expert on whom we could have leaned. We could have listened to his advice, and probably concluded our deliberations much sooner. I hope that he will speak on this subject in the future—in fact, I look forward to hearing from him in a few moments.
      This is an uncontroversial Bill, and we shall not divide the House on it this evening—although it is not terribly wise to send Labour Members home just yet. The debate on the Bill was quite exciting. At times, I expected to see great shafts of light issuing from the ceiling and cherubim and seraphim dancing in it, because this is the stuff of the road to Damascus. The Government have a new enthusiasm for private finance initiative projects. In the past few years, I have listened to Labour Members of Parliament and parliamentary candidates describing the wickedness of the PFI, which they called a waste of taxpayers' money.
      834
      However, there is now a new enthusiasm for the PFI. PFI projects worth about £7 billion are in the pipeline, thanks to the Conservative Government. I recall Labour Members' cynicism about the PFI and the vitriol that they aimed at it—but that was then, and this is now.
      The Government have embraced existing legislation that was prepared for a Conservative Government, which complements perfectly the 1997 local government capital finance regulations. Hon. Members referred to several high-profile court cases that sent a shiver down the back of the banks and financial institutions. Partnership agreements were found to be unenforceable and banks suffered losses, seriously harming confidence in local authorities as serious risks.
      We have heard a little about the Waltham Forest and Allerdale cases. Contracts that had been entered into were found to be null and void because the local authority lacked the necessary credits. The repercussions were quite serious. The company had no recourse to legal action, and was saddled with considerable bad debts. The company in the Allerdale case is pursuing individual councillors as company directors. I have some sympathy—as do Labour Members—for those councillors who sought professional advice and were badly let down by their advisers.
      The Bill provides clarity where there was doubt, and parties now know where they stand. The public will know where they stand, thanks to a concession secured by my hon. Friend the Member for Christchurch that will ensure that documents are open for inspection.
      I have referred to the road to Damascus, but perhaps it might be better to regard the legislation as the manifestation of a crate culture in the Labour party. Hon. Members will recall that, during the second world war, the American air force parachuted crates on to remote Pacific islands in order to look after their fliers who might be stranded there. The islanders created a new religion from that activity, and the same sort of thing is happening with the PFI. The PFI is being bandied around the Chamber as the solution to every problem: if we need a new hospital, call for PFI; if we need a new tube network or a new school, call for PFI. The scheme seems to have no limitations.
      However, the PFI has limits. It transfers the risks, and offers the opportunity of new finances for public services. That risk transfer allows the release of provisions that were needed in order to deal with that risk. However, although the PFI brings new finance, it certainly does not bring new funds for local authorities. It is simply a rescheduling of debt. New funds can be created only through the release of real resources—and the PFI does not do that.
      During the recent debate on the future of the London underground, I likened the PFI process to that of a person buying a home: the building society provides the finance, but the purchaser provides the funds. Companies that enter into contracts with local councils will be seen to enjoy a special relationship. We must consider carefully the way in which the Bill will operate in practice. We must be absolutely certain that no special favours are shown to those who enter into contracts with local authorities.
      When that issue was considered in Committee, the hon. Lady referred to local authorities as having the powers of planning authorities and of those who enter into contracts. She seemed to suggest that that situation was well

      835
      established. However, she has since retreated from that position. In her winding-up speech today, she said that there was no need to consider the situation, as it was well established.
      I have read her remarks in Hansard, and I believe that we will have to re-examine the matter in another place by way of certification and through greater openness because of problems with planning gain. The situation is slightly different from that suggested by the hon. Lady. Earlier this year, the Department of the Environment issued a circular, which made it clear that,
      "To retain public confidence, such arrangements must be operated in accordance with the fundamental principle that planning permission may not be bought or sold. This principle is best served when negotiations are conducted in a way which is seen to be fair, open and reasonable".
      What better way to achieve to achieve that than in the process of certification?
      I have the smallest criticism of the previous Government, because one point was left open on planning problems. I am sure that the Minister would like me to mention it.
      When an important company cosies up to a local authority, officers from the council and the company will inevitably get to know one another, and in many ways the arrangement almost becomes an extension of the council. The recent case of Tesco v. the Secretary of State for the Environment shows that, if an authority decides not to follow the guidance, and the application is not called in, the local authority does not have to follow Government guidelines. Perhaps we shall have to come back to the important—
      Ms Armstrong: I should like to help the hon. Gentleman. He may know that Lord Nolan has today published his third report on local government. He makes recommendations about how planning decisions are made and handled. We shall consult widely on that in the light of the report, and will therefore be able to return to some of the issues that we discussed in Committee. I do not believe that those issues need detain us at the moment, but we shall take any recommendations seriously and consult on them.
      Mr. Pickles: That is most helpful. In Committee, the hon. Lady said that the issue was one of certification, and had nothing to do with planning. If she is moving from that position, that is marvelous.
      Ms Armstrong rose—
      Mr. Pickles: I hope that the hon. Lady is not going to disappoint me by retracting.
      Ms Armstrong: I am trying to be helpful. What I have just said does not interfere with what I said about certification. We shall deal with any concerns about planning issues through consultation and our response to the Nolan committee. I do not want the hon. Gentleman to run away with the thought that we are not serious about that, but nor do I want him to think that we shall have to
      836
      come back to the Bill with subsequent amendments. The Bill deals adequately with the situation. Planning issues will have to be dealt with in the other way.
      Mr. Pickles: I cannot imagine the hon. Lady being anything other than helpful. She claims that what she has just said does not interfere with what she said in Committee, but it slightly contradicts some of what she said before.
      The public would expect to know about the state of planning in certification. I cannot put that better than Mr. Charles Kirkman did. He is quoted in the Nolan report, setting out the problem that we are asking the Minister to address. He said:
      "I appreciate that this is a difficult problem to solve but it does appear in principle wrong, that councils should determine planning applications, in which they themselves have a strong financial interest. Even if a theoretical division of development and planning functions were introduced, it would be difficult to implement under a single Chief Executive."
      I share that view. I recognise that the hon. Lady will want to return to the Nolan recommendations, but we must consider the issue. We all felt deep shame when we read this morning about the problems of Doncaster council. The problem is not just the level of corruption in Doncaster, but the apparently cosy relationships between developers and councils.
      I repeat that we do not intend to press for a Division, but we expect the Government to look carefully at the difficult issues of conflicts of interest.
      8.4 pm
      Mr. Tony Colman: I congratulate the Government on the speed with which they have brought the Bill forward. We must remind ourselves that it is still only 68 days since the general election. As chairman of 4 Ps, I know that there was no Bill ready to inherit. For some time, 4 Ps had been asking for one, representing local authorities and the private companies working on PFI projects. Bringing the Bill forward so rapidly shows the Government's determination to do business and to ensure that public-private partnerships flourish between local authorities and the private sector.
      I was surprised to hear the hon. Member for Brentwood and Ongar (Mr. Pickles) talk about a Damascene conversion. That conversion has really been on the other side. My right hon. Friend the Member for Hull, East (Mr. Prescott) started down the road towards the private finance initiative back in 1991. It is important to remember that it is a Labour party idea. We are now going to demonstrate properly how it can be carried into local government and other areas.
      I am pleased that the Opposition do not want to press for a Division, and that they support the Bill. I hope that the slight threats issued by the hon. Member for Brentwood and Ongar do not presage possible changes in another place. I am concerned, because the private sector and local government want to get on with the projects. We want to give local government and the private sector the assurances in the Bill.
      Credit is due to officials at the Department of the Environment, Transport and the Regions and at the Treasury, as well as to the 4 Ps legal forum. In particular, I pay tribute to the work of Paul Bryans and Peter Fanning, the new chief executive of 4 Ps, for their work

      837
      in preparing the Bill. We have had to concertina the consultation, but local government and private sector lawyers were fully involved. There were 24 Government amendments in Committee, showing how those views were taken into account. As a humble Back Bencher in the Government party, I take pride in the Bill, which I believe will be acceptable to those to whom it will apply.
      Clifford Chance—one of the largest legal practices in the United Kingdom and a member of the 4 Ps legal forum—has welcomed the Bill, calling it a
      "quick fix response to current uncertainties about local authority powers"
      and
      "an improvement on the present position."
      Many other legal practices, including Evershed, have echoed that strong endorsement of the Bill as a way forward.
      The Bill has clear, limited objectives, addressing the concerns of private companies wishing to do business with local authorities. Those objectives were drafted against an extremely complex framework of local authority legislation and regulation. As a former leader of a local authority, I can vouch for the difficulties that the Bill has had to confront to fit in with that legislation. Some Opposition amendments could not be taken on board.
      The Bill appears to meet its limited objectives admirably. However, the private finance initiative is a new and developing approach for local government. It would be imprudent to rule out the possibility of further legislation being needed should gaps emerge as ideas for public-private partnerships develop. I have every confidence that the Government will be ready to act if the need arises.
      8.8 pm
      Mr. Burstow: I shall try not to detain the House too long, but I should like to raise several points that were mentioned earlier but remain of concern.
      First, I should like to pick up one or two of the comments by the hon. Member for Brentwood and Ongar (Mr. Pickles). He remarked on the Government's Damascene change of attitude on the PFI. We seem to have witnessed two roads to Damascus this evening, as he made some refreshing and honest comments on the validity and value of the PFI as a significant way of levering private finance into local government. I was grateful to witness two Damascene changes of belief tonight.
      Secondly, the hon. Gentleman referred to our discussions in Committee about the need to be concerned about conflicts of interest that might arise in determining planning applications. I agreed with the Minister's comments in Committee, and raised concerns that accepting an amendment that would effectively put an obligation on an authority to have regard to its planning decisions in its contracting arrangements could be construed as fettering the discretion of elected members of local authorities in discharging their planning responsibilities. I would not wish that to be included in the Bill in any way, shape or form.
      The hon. Gentleman and the Minister referred to the third report of the Committee on Standards in Public Life, and particularly to the section dealing with potential conflicts of interest. I draw attention to the conclusion of that section of the report, which states:
      838
      "Our conclusion is that the balance struck at present between local autonomy and central guidance and supervision is broadly correct. The Department of the Environment must however be kept fully informed and show due diligence. It must not hesitate to step in if public disquiet is clear. Respect for local autonomy is a good principle, but it has led the Department to fail to respond to serious local concerns in the past."
      The report then makes two specific recommendations, to which I am sure the House will return.
      The question of autonomy goes to the heart of what the Bill should have been about. It has been our contention throughout its passage that an opportunity has been missed to pursue something in which we believe passionately, and which we thought, in a measured way, the Government also supported—the idea of extending to local authorities a power of local competence or, as the Labour party calls it, a power of local initiative. We were hoping that the Bill would provide an opportunity to engage with the Government on how we might achieve that end.
      We do not agree with the view advanced by Ministers and shadow Ministers that a power of general competence is an illusion, and is simply symbolic. In evidence for that belief, we point to the many examples of powers of general competence that operate in other European countries that cherish and protect their local government in a clearer constitutional framework than ours.
      I was grateful to the Minister for giving us on Report assurances in respect of the potential for exposing officers to liability for negligence. However, we regard the Bill as something of a red herring. That is not just because we believe that a power of general competence would address many of the issues that have caused concern in the business community in terms of the ability to enter into binding contracts with local authorities.
      We also believe that the Government have slipped into the same habit that the previous Government had, of imposing duties on local authorities rather than giving them discretions. We fear that, although the Minister has told us that the Bill imposes no new duties, we should have done one of two things tonight. Either we should have implemented a power of general competence, or we should have sought to clarify the law in respect of the powers and duties of local authorities. The Bill forces the obligation on to local authorities, and creates a cumbersome and bureaucratic procedure.
      Like the official Opposition, we have no intention of dividing the House as we believe strongly that although the Bill is imperfect, it provides some reassurance to the private sector and in that sense it represents a useful safeguard. However, if the Government are serious about building a new relationship with local government over the next few years, as I am sure they are, because they have many friends and colleagues in local government—they probably want that relationship to extend beyond the Labour party—they have to engage in a serious discussion about what a power of general competence might mean, as many in local government—not just from the Liberal Democrats but across all parties—believe that it is an appropriate next step.
      Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The hon. Gentleman should not be discussing next steps. On Third Reading, he should discuss only what is in the Bill, and not what should be done in future.
      Mr. Burstow: I am still on a learning curve in respect of the procedures of the House, Mr. Deputy Speaker. Please forgive me for not being aware of that.

      839
      In conclusion—[HON. MEMBERS: "Hear, hear"]—I thought that those words would be popular. We still regard the Bill as a rather crude and dirty measure. We do not believe that it achieves everything that is necessary, but we see it as a stop-gap that we hope will reassure the private sector. However, given the comments by Ministers that they are uncertain whether it will provide all the necessary assurances, we have our doubts. We remain to be convinced that we will not need to make further amendments to the legislation to provide further reassurance to business. That seems to be entirely the wrong approach.
      Question put and agreed to.
      Bill accordingly read the Third time, and passed.

  SELECT COMMITTEES RELATED TO GOVERNMENT DEPARTMENTS
  Ordered,
  That Standing Order No. 152 (Select committees related to government departments) be amended—
  (1) by leaving out items 3.4, 10 and 15 in the Table in paragraph (2) and inserting the following items at the appropriate places:

  'Education and Employment/Department for Education and Employment/17/5';

  'Environment, Transport and Regional Affairs/Department of the Environment, Transport and the Regions/17/5';

  'International Development/Department for International Development/11/3";

  (2) by leaving out line 10 and inserting the words 'The Education and Employment Committee and the Environment, Transport and Regional Affairs Committee shall each have the power to appoint two sub-committees; and the';
  (3) in line 25, at the end, by inserting the words 'and to lay upon thc Table of the House the minutes of the proceedings of sub-committees';
  (4) in line 36, alter the word 'House', by leaving out the word 'and'; and
  (5) in line 37, after the second word 'place', by inserting the words 'to report from time to time the minutes of their proceedings, and to meet concurrently with any committee appointed under this order or any sub-committee thereof for the purposes of deliberating or taking evidence'.—[Mr. Graham Allen.]

  SELECT COMMITTEE ON PUBLIC ADMINISTRATION
  Ordered,
  That Standing Order No. 146 (Select Committee on the Parliamentary Commissioner for Administration) be re-named 'Select Committee on Public Administration'; and that the said Standing Order be amended, in line 7, after the word 'therewith', by inserting the words 'and to consider matters relating to the quality and standards of administration provided by civil service departments, and other matters relating to the civil service'.—[Mr. Graham Allen.]

Low Flying (Northumberland)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Graham Allen.]
8.16 pm
Mr. A. Beith: I welcome the Minister to his new responsibilities at the Ministry of Defence. He will often be preoccupied by the issue that I am about to raise in relation to various parts of the country, but I shall seek to show that the position in Northumberland is especially difficult.
Most people in Northumberland accept that low-flying training is necessary and that we have to take a share of it. The issue is how much and what limits and controls there should be. It has been a local issue not only during my twenty-three-and-a-half years as a Member of Parliament, but during the time of my predecessor who changed from being one of the hon. Members complaining about low flying to being the Minister with responsibility for these matters, who had to sign the letters explaining why it was essential.
I acknowledge the assistance that I have received from the Royal Air Force, the RAF police and the Ministry of Defence in dealing with the great deal of correspondence and the many inquiries that the subject generates and in securing avoidance of major equestrian events by low-flying aircraft.
The problem in the public mind is low-flying military jet aircraft. We also have extensive low flying by helicopters, but that does not create as much public anxiety, partly because helicopters do not appear so suddenly and partly because of the perceived high value to the community of the search and rescue work by RAF Boulmer. Indeed, the helicopters earn applause and enthusiasm when they visit local events. Nor do the Hercules low-level transport flights arouse great public concern except when they are involved in evasion exercises that also involve Tornado F3s.
The difference lies in the speed and the surprise or shock created by the sudden appearance at close quarters of a fast jet fighter or two jets chasing each other. Motorists are taken aback when aircraft appear below them when they are driving on the hillside roads. Horse riders fear for their safety. Many people feel that their isolated house or the landmark close by is being used as a target, attracting a succession of dry-run approaches right at the minimum permitted height limits. It is notoriously difficult to judge the heights accurately, and speed makes identification difficult if a member of the public wants to make a complaint.
For many years, it was impossible to get figures for the number of flights taking place but, in March, the Ministry of Defence produced a report on the geographical distribution of military low-flying activity in the United Kingdom. I have been making use of the figures, which show that Northumberland gets a greatly disproportionate share of low flying. I should like first to ask some questions about the figures themselves.
My constituency is in low-flying area 12, with slight overlap from areas 16 and 13. It includes an area where flying can take place not merely down to 250 ft but right down to 100 ft. The figures are dramatic enough so far as Northumberland is concerned, but they do not show the further impact of night low flying, and might be

841
artificially reduced by the exclusion of sorties, which are primarily over the sea or mainly, in the case of Tornado F3s, at medium height—although in both instances some of those sorties will include low flying. Will the Minister confirm whether I am right in assuming that, if such qualifications of the figures had not been made, Northumberland's share would appear even higher? It is also unclear whether the figures include operational low flying which is below 250 ft.
The MOD's figures for 1996 show that, taking 100 per cent. as the average figure for fixed-wing low-flying intensity in the 15 areas included in the UK low-flying system, Northumberland—area 12—had 301 per cent. No other area had more than 175 per cent. One has to bear in mind that those are the averages for areas where military low flying is permitted and do not include London or the Thames valley. Moreover, within each area, there are exclusions around airports and centres of population.
In area 12, low flying is concentrated in the area between Morpeth and Berwick and in the Tyne valley. To some extent, the figure might he particularly high because the area provides access to the Otterburn and Spadeadam ranges, although low flying in those areas is much less intense than over the coastal strip of Northumberland. I put it to the Minister that, precisely because we have and accept obligations in support of the ranges at Otterburn and Spadeadam, which are important to Northumberland, there should be some compensating reduction in the amount of other military low flying that is allowed over area 12.
In 1979, there was a substantial reorganisation of low-flying areas, and that was supposed to lead to a more even distribution and, therefore, a reduction in intensity over Northumberland. That it did not was primarily due to the introduction of the Tornado aircraft, which doubled the amount of low flying. The report concerned said that the withdrawal of some units from overseas stations to the United Kingdom
"should result in no noticeable increase in the amount of low flying in the UK."
In an article in Scotland on Sunday in May 1996, Malcolm Spaven predicted a 10 per cent. increase arising from the RAF's withdrawal from Germany. He has also referred to the amount of low flying by aircraft from allied countries, which is not on a reciprocal basis but may be in return for cash payments or supply of equipment, or generated by the need to promote greater use of the Spadeadam range by other countries so as to support its continuance.
I am told that Italian aircraft use the low-flying facilities despite refusing similar facilities to the RAF in Italy. Furthermore, the RAF does not appear to have been allowed to make full use of the opportunities that it could have in Goose bay facilities in Canada. The Dutch and German air forces use those facilities, which are expensive to maintain, and I believe that they could relieve some of the pressure on Northumberland.
What particularly annoys the inhabitants of Northumberland is to be told that they have to accept most of the low flying because it needs to be over uninhabited areas. The area is not uninhabited. Northumberland is sparsely populated, but more than 200,000 people live there and hundreds of thousands of tourists are to be found there, especially on the fine days that are favoured for low flying.
842
To the extent that there is a risk, it is a risk to the towns and villages and activities of Northumberland, just as it would be to anywhere else. As the RAF would want to point out, however, the risk is very low indeed, and those most at risk are the courageous and highly skilled men and women who fly the aircraft. There has, of course, been a substantial loss of aircraft from accidents over the years, although thankfully not of aircrew or civilians.
The disturbance is a much more apparent problem than the risk. Since we all benefit from air defence, we should all share as far as possible the disturbance that is required to maintain it. That seems a reasonably fair principle. Whether we live in a sparsely populated area or in a more populated area, we all benefit from the defence capability that is being maintained, so we should all share in the disturbance which it generates.
The exception must be areas where low flying is incompatible with civil aircraft activity. Indeed, those who live on the flight paths of civil airports put up with considerable disturbance. I see and hear more aircraft from my London flat than I do from my home in Northumberland. since they go into Heathrow at about one a minute. Some low-flying areas are, however, not carrying a fair share of the burden, and within LFAs, there may be too many exclusions, some of which are out of date or unjustified.
I was very pleased to get a letter dated 9 June from the Secretary of State, in which he said:
"It is clear from my Department"s recent analysis of the distribution of military low flying in the UK that in recent years our use of airspace in the north-east has been heavier than we would have
… liked. I can assure you dial my Department is looking to see what can be done to achieve a more equitable balance for the future."
That is a very important and honest admission. I therefore look to the Minister to put some initial substance on that promise.
Does the Minister accept, as the Secretary of State clearly does, that Northumberland should not be getting three times the average of military low flying? I ask him to take active steps to see that it is distributed more fairly. In particular, will he tell the House what assessment is being made of the operational importance and value of low flying? There is some argument about this. There are those who say that the air forces of allied countries do not find it necessary to place such dependence on it, but it is clearly a skill that is highly developed by the RAF and one that it believes is important to its combat role.
Will the Minister say whether the total amount of low flying will increase or decrease? What provision has been made for the use of our low-flying facilities by aircraft from other countries on a non-reciprocal basis? I was pleased to note that an exercise involving French aircraft, which was announced the other day, involves reciprocal use by the RAF of facilities in France. What provision is being made to ensure that, when other aircraft come to this country to use our facilities, wherever possible reciprocal arrangements are made?
What prospects does the Minister see for the wider use of simulators in low-flying training—an issue that is regularly raised? Will he seek to make increased use of Goose bay and other overseas facilities? Will he review the exclusions, so as to ensure that those which remain are fully justified? Will he take active steps to reduce Northumberland's share of low flying by redistributing the permitted activity?

843
Those seem to be reasonable requests to put on behalf of a community which acknowledges the importance of the RAF, is proud of the RAF's work, feels it right to share some of the burden of disruption and anxiety that can result from low flying, but believes that that should be a fair share.
8.28 pm
The Parliamentary Under-Secretary of State for Defence (Mr. John Spellar): I thank the right hon. Member for Berwick-upon-Tweed (Mr. Beith) for setting out so clearly and reasonably the concerns of his constituents about military low flying. I hope to cover his specific questions in my reply.
It is some two years since the last debate on military low flying. Tonight's debate therefore gives me a timely opportunity to set out clearly why the ability to fly low continues to be an essential requirement for our armed services in the post-cold-war years and to explain why we must continue to train aircrew in that specialised skill.
It has been said many times that we live in an unstable and unpredictable world; we do. It has also been said many times that we, as a nation, expect to have well trained armed forces ready to defend our interests and those of our allies anywhere in the world and at short notice; we do. Because we have those expectations, we must ensure that when we send our armed forces off to deal with the unexpected, they are able to achieve their objective and take control of the air, at the earliest opportunity.
Why do we need aircrew well trained to fly low and fast? Low flying is a vital element in our armoury of tactics, not just to deliver weapons on target with pinpoint accuracy. but to enable aircrew to penetrate and reconnoitre hostile airspace with minimum risk to themselves. The most effective defence against any aggressor is to attack his capability to make war. Aircraft provide the firepower and flexibility to deny an aggressor the sanctuary of secure bases from which to launch attacks.
Both military fixed-wing aircraft and helicopters have to penetrate modern, capable radar and anti-aircraft air defence systems to do that. An aircraft's best chance of survival against those sophisticated weapons lies in flying very fast and low, using ground contours to escape detection. Flying fast and low screens them from hostile fighter aircraft, missiles and anti-aircraft artillery. RAF air defence fighter aircraft must also be able to fly at low level so that they can, should the need arise, intercept and defend against enemy aircraft using the same tactics. Our aircrew must be able to reduce the effectiveness of an enemy's air and ground defences when required to do so. They must train to be able to do so.
I can assure the right hon. Gentleman that the need for low flying is kept under review. It is an essential tactic for a modern air force and, as I have said, one of the most effective ways of penetrating hostile air defences.
The Gulf war demonstrated so well how low-flying missions by RAF Tornados made an important and unique contribution to coalition air operations. Flying low-level missions because of the threat from enemy air defence systems at medium level, they contributed greatly to the
844
success of the coalition air campaign which achieved air superiority as early as the fourth day. They were a great success flying against heavily defended targets, and that says a great deal for the skill of our RAF aircrews.
Low flying is a specialised and perishable skill. Like other professional skills, it is perfected only through rigorous training and continuous practice in a realistic environment. Without that, it is a skill which, like many others, quickly fades. Although the Gulf war was six years ago, and the threat of an all-out war has diminished, the warning time to prepare for the type of operations to which our forces are now deployed—such as those in Bosnia, and so nearly in Zaire—mostly allows only for the honing of flying skills, not their creation.
Aircrew must attain and continuously maintain a high standard of proficiency in peacetime. We cannot, and will not, put their lives at risk by sending them off inadequately trained, and unprepared for their task. Regular low-flying training is essential if we are to meet our defence commitments. Our Navy, Army and RAF aircrews are rightly respected throughout the world for their skills and professionalism. We are most grateful for the support and understanding that they receive from all parts of the country as they carry out their training.
I assure the right hon. Member for Berwick-upon-Tweed that maximum use is made of simulators, which he mentioned, for those activities, such as cockpit procedures and general handling, for which they are, currently, best designed. Unfortunately, even the most advanced technology available today cannot replicate, or impart the necessary physiological and psychological pressures to substitute for, actual low flying. We monitor carefully modern advances in simulator technology to assess the scope for their use for the future, but, in the meantime, they complement, rather than replace the need for, low flying.
As the right hon. Member mentioned, the United Kingdom low-flying system comprises the open air space of the whole of the UK and the surrounding over-sea areas from the surface up to 2,000 ft above ground level. The normal lower limit for fixed-wing aircraft is 250 ft, even though aircrew are required to fly much lower in operational theatres. The training value of that combat skill degrades rapidly as height increases, and is considered of little value above 500 ft.
A small amount of fixed-wing low flying, down to 100 ft, is permitted in three specially designated tactical training areas in the Borders, which, as the right hon. Gentleman said, is partly in his constituency, northern Scotland and central Wales. The amount of that lower level activity, operational low flying, is limited to that absolutely necessary, and is spread across the three special areas proportionate to their size. It amounts to no more than 1 per cent. of the 110,000 low-flying sorties flown annually.
We realise, of course, that military low-flying training can be intrusive, and we implement various measures to minimise it as far as practicable. The amount is limited to that strictly necessary for aircrew to achieve and maintain operational effectiveness. Most low flying takes place during the daylight hours of weekdays. Public holidays are avoided, as are weekends, as far as possible, although some activity may be permitted then, mainly in support of reserve forces who are unavailable for training during

845
the week. Night low flying is required to be completed as soon as possible in the evenings, and it is rare for jet aircraft to be permitted to operate after 11 pm.
My Department announced in 1991 a target to reduce the amount of jet low-flying sorties across the UK by 30 per cent. by the end of 1994 against the 1988 baseline. That target was achieved by the end of 1993, ahead of time. It is our intention that the reduced figure will be maintained.
I also wish to reassure the right hon. Member that each request for foreign aircraft to use the UK low-flying system is considered on its merits, taking into account the principle of reciprocity, the mutual benefit of such flying to the UK and our allies, and the wider defence interest. The right hon. Member will know that, wherever possible, we try to inform him, and other hon. Members whose constituencies might be affected, in advance when large-scale exercises are planned, and about unusual activity such as the very low-level operational low flying.
Mr. Beith: Can the Minister say whether some low flying by foreign aircraft is done in return for equipment supplies, use of other range facilities or for other reasons than reciprocity?
Mr. Spellar: As far as I am aware, reciprocity is one of the key elements, but I will note the right hon. Gentleman's comments and look into the situation.
We are unable to inform hon. Members when it comes to the routine day-by-day flying training, since the sorties are generally arranged at short notice to take account of variable factors such as the prevailing weather at the time.
We are frequently asked to avoid overflying certain locations such as schools during examination periods, environmentally sensitive areas, wildlife, bird colonies during nesting time, horse riders, and much of the country during the lambing season. While we are sympathetic to the requests—the right hon. Member mentioned some of them—it would be invidious to accede to some and not others. Granting all the requests would exclude aircraft from large areas of the country for most of the year, making it impossible for us to meet our essential training requirements.
As the right hon. Member will know, there are no uninhabited areas of the UK large enough to meet our essential low-flying training needs, which is not surprising when an average fast jet sortie may cover some 500 to 600 miles. As I said, in principle, the whole of the UK is open to low flying, but certain areas, such as restricted air space around civil aerodromes, glider sites, major industrial hazards, and major conurbations of 10,000 or more inhabitants, must be avoided. With those exceptions, however, it is our aim to spread low-flying training across the whole of the country, thereby spreading the disturbance caused as broadly as possible.
The right hon. Gentleman mentioned reviewing areas excluded from low flying. He can be assured that we carry out a continual review of the UK low-flying system to ensure that it remains properly reflective of current environmental and flight safety considerations.
I shall deal specifically with the position in Northumberland. As the right hon. Gentleman said, most of Northumberland is in LFA 12, with some of the area in the adjoining LFAs 13 and 16. In March this year, my Department published an analysis of the distribution of
846
military low flying activity in the United Kingdom, to which the right hon. Gentleman referred. It did so because the volume and location of low flying had increasingly become the subject of uninformed comment based on inaccurate and misleading information, especially in the media.
In response to the right hon. Gentleman's questions about the abatements used when calculating the figures in the paper, I can say that it is true that, without them, the figure for Northumberland's share would have been higher, but I must stress that that would also have been the case for other low-flying areas across the country.
The figures given represent the amount of activity, including operational low flying, over the land areas that give rise to disturbance on the ground. They provide a clear picture of the intensity of low-flying activity across the country as a whole. We found that the areas that generated the largest numbers of complaints did not necessarily see the most activity.
The analysis showed that, in 1995 and 1996, the right hon. Gentleman's constituents experienced more low flying than the overall average for the country as a percentage, although there was a reduction in the gross numbers. I am afraid that, for a number of valid reasons, it is inevitable that LFA 12 will see a concentration of low flying. Its undulating terrain offers valuable training, and there are a number of training facilities within and close to Northumberland, which the right hon. Gentleman mentioned.
The Otterburn training area provides vital training for our ground forces. Those forces will often be moved into the training area, or supported while they are there, by low-flying support helicopters, air transport aircraft and jet aircraft providing close air support. There is also an air-to-ground bombing range, which is used by ground attack fast jets.
The RAF Spadeadam electronic warfare tactics range and the associated bombing range at Wiley Sike provide excellent training for our aircrew in defence and counter-measure tactics under simulated combat conditions. They are the only such ranges in the United Kingdom and they have proved invaluable in preparing our aircrew for operational deployments. I welcome the right hon. Gentleman's kind comments about them.
Two low-level operational training areas overlie Northumberland. They are used to facilitate the training of air defence aircraft, which conduct combat air patrols in those areas above 2,000 ft, before descending to low level to conduct affiliation training with ground attack aircraft.
There are also a number of geographical reasons why LFA 12 sees more than average low flying training. Aircraft from the many air bases situated on the eastern side of the country, and from our bases in Germany, fly through LFA 12 on sorties to and from the Spadeadam range or low flying areas in Scotland. That is necessary because of the built-up areas and controlled air space in the midlands, Yorkshire and the north-east, over which they are not able to fly. They must also avoid conflicting with other military activity at RAF bases at Leeming, Linton and Topcliffe.
The increase in movements into LFA 12 since 1992 is also due, in part, to a change in the boundary between LFA 12 and the neighbouring LFA 17, which covers Cumbria and parts of Yorkshire and Lancashire. As a

847
result, a narrow band of air space north of the gap, between the controlled airspace around Teesside airport and the RAF Leeming military air traffic zone, known as the Leeming/Teesside gap, became part of LFA 12. In the past, aircraft flying through that gap had to fly through LFA 17; now, they must fly through LFA 12.
I hope that I have made it clear that there are compelling reasons why Northumberland will see more low flying than the United Kingdom average. However, there is a reduction in the overall number of flights.
Mr. Beith: The number of flights may not be much higher than the average, but it represents 301 per cent., which is way above any other figure. Given the specific reasons why some low flying is bound to take place in the area, does the Minister realise that, to give effect to the Secretary of State's intention to achieve a fairer balance, he will have to find ways of reducing the low flying over Northumberland that could take place elsewhere?
Mr. Speller: The right hon. Gentleman should not have been so precipitate, because I was coming to that.
We are sympathetic to the problems suffered by those in the area: we recognise the burden that they carry. We are not complacent, and we will examine carefully the distribution of activity each year. We do not assume that we can carry out flying training without regard to the intrusion that such activity causes to those on the ground. We will do all that we can to ensure that there is no more flying training than is absolutely necessary.
848
We said in the published paper that we will try to do better. We have now improved the way in which we routinely record statistics on the daily use of the low flying system so as to manage better the overall distribution of activity. We will say each year how well we are doing in achieving those aims. We will, of course, continue to look for overseas locations in which to train: the right hon. Gentleman mentioned Goose bay. We already make use of the facilities for low flying training in Canada and North America.
One of the results of the work undertaken was last summer's decision to reduce the amount of operational low flying in the Borders area. I am glad to say that we are already achieving that by doing more of that training in the Highlands area, which in the past saw less than its fair share of such activity, in spite of being relatively less densely populated. We will continue to control this activity carefully. I look forward to making available next year the information about the distribution of activity for 1997, and we will continue to provide it annually.
For the reasons I have given, it is simply not possible to promise the right hon. Gentleman that we will be able to distribute all low flying training on a fully equitable basis. Nor can I promise that things will change dramatically and noticeably in the short term. What I can say is that we hope to see a gradual and more even spread of activity. We shall take into account the considerable contribution made by Northumberland.
Low flying is an essential skill for our aircrews. It can be perfected only through rigorous training and continuous practice in a realistic environment. It is vital that our aircrews continue to do that.
Question put and agreed to.
Adjourned accordingly at fourteen minuses to Nine o'clock.