Commons Sitting of 10 March 1997

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

    River Thames
    Sir Michael Neubert: To ask the Secretary of State for Transport what recent representations he has received on the establishment of regular passenger services on the River Thames. [17753]
    The Minister for Transport in London (Mr. John Bowis): My Department is in regular contact with boat operators, the millennium exhibition organisers, the Port of London Authority and other interested parties about the possibility of introducing new passenger services on the River Thames. I met my hon. Friend, with representatives of the Transport on Water Association, to discuss this subject last September.
    Sir Michael Neubert: Is my hon. Friend aware that during the Festival of Britain, 5 million people took to the river for transport? Does not the millennium exhibition at Greenwich represent an outstanding opportunity to establish a regular passenger service on the Thames?
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    What is the prospect of public funds for piers, the essential infrastructure if this long-awaited and much to be desired service is to become a reality?
    Mr. Bowis: My hon. Friend is right persistently to draw attention to the need to attract more passenger traffic to the Thames, particularly in the context of the millennium exhibition at Greenwich. Bids can be made to support the building of piers, and in the recent capital challenge allocations we have been able to support a pier for Bankside which will serve both the Tate and the Globe. The pier for the millennium exhibition, which will be at north Greenwich, is within the plans of the millennium company. I hope that it will attract a great many people as a result of the park-and-sail opportunities at the pier and at the sites at Barking and Woolwich.
    Mr. Spearing: Does the Minister agree that the concept that I have presented to him, along with the hon. Member for Romford (Sir M. Neubert) and the Transport on Water Association, has the advantage over the London First scheme in that it would be integrated with the transport network and would not result in tourists paying £5 or £10 a go? The Minister has received the correspondence and should be aware that no fewer than 10 piers could be constructed between Vauxhall and the Tower for a third of the cost of the London First proposals, and that those could be used not only by passenger services but by other vessels. Would not such a public investment be good value for money compared with the £80 million to £100 million being spent on two platforms of the Jubilee line—albeit, of course, that that could interchange with passenger services such as I have described?
    Mr. Bowis: The hon. Gentleman will recognise that the Jubilee line extension will carry many more people to the millennium exhibition and the other stations on the route than could possibly be transported by water. Nevertheless, I acknowledge that he has consistently supported travel on water. With his twin interests, I suspect that he will one day press us to introduce a Thames pedalo. We have taken on board his points, and he and my hon. Friend the

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    Member for Romford have written to me. We have passed on their information and calculations to the cross river partnership, the organisation that we are part-funding to carry out an in-depth study of the possibilities of cross-river transport.
    Mr. Jacques Arnold: May I welcome the Government's keen interest in regular passenger services on the Thames? May I remind my hon. Friend that the Thames does not stop at Greenwich—or even at the great barrier—but extends all the way to Gravesend, where we have excellent piers and much maritime industry and tradition? I welcome what he says, and I give him all encouragement to make greater use of our great river.
    Mr. Bowis: I am happy to acknowledge my hon. Friend's support for extending the use of the river right along to the mouth of the Thames, and he will know that the Thames gateway initiatives are working on that in terms of road and rail links. I am sure that my hon. Friend will continue promoting the interests of north Kent for many years to come.

    Millennium Festival
    Mr. Timms: To ask the Secretary of State for Transport what road improvement measures he proposes to improve access to the site of the millennium festival at Greenwich. [17754]
    The Secretary of State for Transport (Sir George Young): The completion of the Hackney-M11 link road and the provision of an escape ramp for lorries at the southern end of the Blackwall tunnel will help coaches get to the site and help cars get to off-site car parks. The only additional roads needed for the exhibition are the local access roads, linked to the A102(M) by improved sliproads. We have made it clear from the outset that access to the exhibition site itself will be by public transport and river, not by car.
    Mr. Timms: I thank the Secretary of State for that answer. He will know that the organisers' plans entail only 1 per cent. of visitors reaching the festival site in their own cars. That means that there will need to be a great deal of parking elsewhere, almost certainly including sites over the river and north of the river in Newham. Does he share my concern that, to make that possible, there will need to be road infrastructure improvements? It is now getting rather late for some of them to be put in place. For instance, if Newham docklands is to be used for parking, there will need to be a new bridge on the A406 over the A13, and it will take 18 months to build; and if the Stratford rail lands are to be used, there will need to be new bridges over both the rail lands and over the River Lea.
    Does the Secretary of State agree that we need to plan ahead to avoid traffic chaos around the time of the millennium festival; and will he consider carefully what needs to be done now to ensure that the necessary road improvements to facilitate off-site parking are in place in time?
    Sir George Young: The hon. Gentleman is right to say that there will be a large number of park-and-ride and park-and-sail sites. Of course it is right to plan ahead for
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    adequate provision. The promoters are still in the process of finalising their plans for both park-and-ride and park-and-sail sites. All sites will require adequate access arrangements, and those will have to be included in planning applications. It will then be for the promoter to agree the details with the planning and highways authorities.
    Mr. Hawkins: My right hon. Friend may or may not be aware that I had the opportunity this very morning to visit the site of the proposed millennium festival at Greenwich. It was very interesting to see how little opportunity there has yet been for hotel development. Does he agree that if the promoters on Greenwich council and in Millennium Central are to be able to fulfil their ambitions to have hotels, there will need to be a great deal of improvement to road access and car parking?
    Will my right hon. Friend also look into the matter of the pier mentioned during exchanges on the first question today? The Port of London Authority needs to take a careful look at the standard of that pier and at road access to it.
    Sir George Young: I shall certainly pursue the point about the end of the pier. My hon. Friend is right to point out that the Jubilee line extension will access the millennium site and open up a large number of sites for development in the part of London in question, which urgently needs fresh investment. I am sure that hotels also have a role to play. But their location, and whether they are to be developed, are matters primarily for the local planning authority.

    Traffic Congestion, London
    Mrs. Bridget Prentice: To ask the Secretary of State for Transport what was the estimated cost to business of traffic congestion in London in the last year for which figures are available. [17755]
    Mr. Bowis: There is no agreed measurement of the cost of traffic congestion to businesses, but we have in place a programme of road and rail improvements designed to reduce congestion to enable buses and bicycles to move more freely and to encourage greater use of rail services.
    Mrs. Prentice: Does the Minister agree with the London Pride partnership, which recently said that London cannot succeed with a deteriorating transport system? If he does, what does he have to say to the millions of London commuters who have been told in the past month that the maintenance and renewal programme, worth up to £400 million, has been scrapped as a result of the Government's incompetent handling of the network?
    Mr. Bowis: I would say to them: unlike the Labour party's programme of no new money, no new lines, no new roads, and no privatisation—for ideological reasons—we have in place a programme of about £200 million for London's trunk roads, £22 million for the red routes, over £100 million for the transport supplementary grant and capital challenge network enhancement projects, about £47 million for bus improvements, and hundreds of millions of pounds for rail

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    improvements. More than £1 billion, moreover, is in the programme for the London underground system—and all this in the coming year.
    Mr. John Marshall: Does my hon. Friend agree that the only answer to traffic congestion in London is an improved underground system? He and I have both successfully driven one of the new Northern line trains, but does he agree that the privatisation of London Underground is the only hope for increased investment and that it is absurd of the Labour party to oppose it for purely doctrinal reasons?
    Mr. Bowis: My hon. Friend is 100 per cent. correct. We have a programme of renewing investment in London's underground over the years leading up to privatisation and thereafter, within five years, completing the task of bringing the system up to date, in addition to the work and investment in new lines. Privatisation will come with all the guarantees in terms of fares and travelcards that the public expect. Any party that stands up in London at the general election without a policy to match that does not deserve the support of Londoners.
    Mr. Tony Banks: Traffic congestion in London and the south-east costs billions of pounds every year. It is no good for the Minister to say that the problem will eventually solve itself: it can be solved only by proper traffic-restraining measures. We should stop private cars coming into central London, enforce parking regulations and have a decent tramway system. Those are all positive proposals and I hope that my Front-Bench colleagues will endorse them when they are in government.
    Mr. Bowis: I am tempted to give way and let the hon. Gentleman's Front-Bench colleagues endorse that, if it is new Labour's policy to stop cars moving at all in London. I have already described to the hon. Member for Lewisham, East (Mrs. Prentice) our investment in a range of policies for road and rail, as well as the underground. Much of the road investment is aimed at improving traffic movement and includes traffic calming. Congestion in London is a result of the continuing improvement in London's economy, which we can be proud of, but to manage the increased traffic and to encourage greater use of public transport we shall have to take the steps that only the Government are prepared to take.

    South West Trains
    Dr. Goodson-Wickes: To ask the Secretary of State for Transport what recent consultations he has had with the chief executive of Stagecoach Holdings plc about the operation of South West Trains. [17756]
    The Minister for Railways and Roads (Mr. John Watts): The performance of franchised train operators is a matter for the franchising director. [Interruption.] Just wait. I have discussed the situation with Mr. Brian Cox and Mr. Peter Cotton of South West Trains.
    Dr. Goodson-Wickes: Does my hon. Friend agree that the recent running, or rather re-running, of South West Trains by Stagecoach has been characterised by gross incompetence on the part of that company's management?
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    However, does he further agree that that is an unacceptable exception to the general rule that privatisation has brought improved punctuality, reliability, information to passengers and, above all, investment? [Interruption.] That is in stark contrast to the bad old days of British Rail, when passengers were at the mercy of so many Labour Members, sponsored by the very trade unions that were meant to be running that inadequate system.
    Mr. Watts: Yes. My hon. Friend will know that I described the handling of the situation by South West Trains as inept. The good news for him and his constituents is that from Easter South West Trains will be back to its original timetable. He will be aware that since the emergency timetable was introduced in the middle of February the number of peak-hour cancellations into London was reduced to one, and that of the remaining services cancelled 24 are outside the passenger service requirement: services between West Croydon and Guildford, which were introduced with the franchise as part of the new arrangements and are also served by Network SouthCentral. The arrangements were made to minimise the impact on passengers, particularly those coming into London during the peak hour.
    Mrs. Dunwoody: If the Minister wants to be taken seriously, he should talk to the passengers who have had to wait for many hours on Waterloo station. What fines will be imposed on South West Trains for its behaviour to date? Unless they are punitive, no one will take him seriously.
    Mr. Watts: The penalties for poor performance are as set out in the franchise agreement, and are of the order of £600 per train in the peak hour. They will be imposed in the normal way, when the performance figures for an accounting period are determined.
    Mr. Norris: Does my hon. Friend agree that it is extraordinary to hear Labour Members urging the franchising director to fine South West Trains for its acknowledged errors and mistakes when, under the previous nationalised railway, such nonsense occurred regularly and the only redress for passengers was the usual unintelligible announcement of some vague excuse? Is not the reality that this time, South West Trains will be made to pay for its mistake, and that there is real accountability? Does he agree that the one thing that we can guarantee is that this problem will not happen again?
    Mr. Watts: My hon. Friend is right. There was no regime to ensure that poor performance in the public sector was penalised. We have a regime that will penalise those responsible for poor performance. We expect far better of the private sector than we became used to accepting from the public sector. We are determined to ensure that passengers enjoy the better standards of service to which they are entitled.
    Mr. Chidgey: Can the Minister confirm reports that South West Trains mark 1 slam-door coaches will not be replaced until 2007? Does he remember that after the Clapham rail disaster some years ago, which injured many people including some of my constituents, the Health and Safety Executive condemned slam-door coaches as

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    increasing the risk to passenger safety? Does he agree that not only passenger interests but passenger safety are being compromised by the inept rail privatisation programme?
    Mr. Watts: No. On the contrary, I can confirm that South West Trains intends to buy £90 million of new rolling stock to replace some of the mark 1 stock that it inherited from British Rail. On safety in general, the hon. Gentleman is wrong to suggest that the rolling stock is inherently unsafe. The matter is under review by the Health and Safety Executive, which will report its conclusions in due course.
    Mr. Tracey: My hon. Friend will, like all of us, recall that the situation is just as bad as the old British Rail system. I welcome his message from South West Trains that services will be back to normal from Easter, but will he take the message back that it must maintain total consistency of service thereafter and accelerate the programme of improvements such as closed circuit television in car parks at stations such as Surbiton in my constituency?
    Mr. Watts: I assure my hon. Friend that that message is understood clearly by South West Trains. He is right that the regrettable level of cancellations that passengers have suffered recently is no worse than the pattern of cancellations that was commonplace throughout the decades of state ownership.
    Mr. Andrew Smith: How much penalty has South West Trains paid to date under the performance regime and has it broken the franchise agreement?
    Mr. Watts: As I said in reply to an earlier question South West Trains will pay £600 for every cancelled peak-hour train. It would be foolish to try to give a total, because, as I said, there is still one scheduled peak-hour service to London that is being cancelled under the emergency timetable.
    Mr. Forman: Does the Minister agree that the real point of these exchanges is that we expect better things and higher standards from a privatised railway, and on the whole we are likely to get that? Is he aware that those of my constituents who travel regularly to London Bridge from Carshalton Beeches and Wallington expect the 8.07 from Carshalton Beeches to arrive on time and for that train to go on to Wallington at 8.10, and to be there on time? As one of those who travels from those stations regularly, it is distressing to find that cancellations take place. Will my hon. Friend make extra efforts to ensure that such cancellations are the exception rather than the rule?
    Mr. Watts: My hon. Friend is right that we expect higher standards of performance from the private sector. We will continue to demand that those higher standards are delivered. I am sure that my hon. Friend would also acknowledge, however, that until the unfortunate past month of regular cancellations, the reliability and punctuality of South West Trains was very much better when compared year on year with the services provided in the last year of operation under British Rail.
    Taking the year as the basis of comparison provides a more valid measure of the performance of the company than studying a period of four weeks in which it has
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    handled matters ineptly. It is now taking rapid steps to deliver the standard of service that it wishes to deliver to its customers, and which we demand that it should deliver.

    Barking to Gospel Oak Line
    Mr. Corbyn: To ask the Secretary of State for Transport what investigations are being undertaken by his Department into the safety of the infrastructure of the Barking to Gospel Oak railway line. [17757]
    Mr. Watts: None.
    Mr. Corbyn: Does the Minister agree that it is regrettable and deplorable that no investigations are being undertaken into the safety of the infrastructure of the line when on 7 February all services were cancelled because of concerns about the safety of one of the bridges over the River Lea? Many concerns have also been expressed about the safety of the infrastructure of many other bridges. Many people suspect that in the absence of any programme of investment, modernisation, upgrading and improvements to the safety features of the line, someone somewhere wants it closed altogether. Can the Minister assure us that that line is secure and safe? Will he also assure us that a full safety inspection will be undertaken as a matter of priority?
    Mr. Watts: It was as a part of Railtrack's routine inspection of bridges along the route that a particular problem was discovered on bridge 35 over the River Lea. The services over that bridge were suspended while a more thorough investigation took place. That work has now been completed. The affected abutment of the bridge was exposed for detailed examination, which revealed that the piled foundations were unaffected, but concrete was poured into an eroded hole in order to strengthen the bridge until a more permanent repair could be undertaken. The Health and Safety Executive was aware of the problem and is satisfied that Railtrack has managed it adequately. All restrictions on the bridge have now been lifted.
    As to the withdrawal of services on the line, that is no part of our plan or that of National Express, which is now the operator. Indeed, that company is committed to replacing all the slam-door mark 1 rolling stock on the Barking to Gospel Oak line and the Bedford to Bletchley line within two years.

    South West Trains
    Mr. Jon Owen Jones: To ask the Secretary of State for Transport what instructions he has given to the franchising director to ensure the disruption on South West Trains is not repeated (a) on that company's lines and (b) on other lines. [17758]
    Mr. Watts: The franchising director's objectives, instructions and guidance require him to secure an overall improvement in the quality of services available to railway passengers. Franchise agreements contain provisions which give operators both direct and indirect incentives to achieve that.
    Mr. Jones: Does the Minister agree that fining South West Trains £600 per train is completely inadequate given

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    that the taxpayer is subsidising it to the tune of £60 million a year? May I inform the Minister that only on Saturday a constituent of mine found himself stranded at Ascot on a journey to Aldershot when a train was cancelled with no more than two hours' notice? Is not it true that although the leading company behind South West Trains is called Stagecoach, it has acted like a bunch of cowboys while it has run the rail service? Is it not time that the Minister did something to take effective action to stop that company from leaving our constituents stranded at stations such as Ascot?
    Mr. Watts: I am sorry that the hon. Gentleman's constituent was inconvenienced. As someone who lives in Ascot, I would say that there are worse places to be stranded. However, that performance is not acceptable and I am sure that his constituent will obtain recompense from the company for its failure.
    The Opposition's protests on behalf of passengers might have a ring of truth were they not comparable with the sponsored silence that we hear whenever passengers are inconvenienced by the activities of their friends in the trade unions.
    Mr. Andrew Smith: Is it not remarkable how the Minister stands there as though all this had nothing to do with him? He cannot tell us the total penalty, nor even whether the franchise agreement has been broken, yet after all the chaos with South West Trains, Connex South Central is reported to be breaking its agreement and West Anglian-Great Northern is now planning to cut peak-hour services to Stevenage by a third. What responsibility will the Minister accept for that utterly disgraceful state of affairs on the privatised railways, or do the Government think that, having privatised the railway, they can now wash their hands of all responsibility? The House demands action from the Government to sort out the mess that they have created.
    Mr. Watts: I am just as willing to take credit for all the good things that are happening as a result of privatisation, including the improved service to the hon. Gentleman's constituency of Oxford on the Oxford to Paddington line, as I am to criticise if performance slips below the standard that we have the right to expect. The hon. Gentleman based his question about West Anglian-Great Northern on false information. A one-third reduction in services to Stevenage is not proposed. Between 7 am and 10 am, there are 26 trains from Stevenage to London and the proposed number is 22; in the evening, there are 25 departures from London and the proposed number is 23. What the hon. Gentleman has missed is that peak-hour commuter services into London are regulated both in terms of a minimum number of train movements and, more importantly, by load factor regulations. The obligation on the train operator, which was never an obligation on British Rail, is to ensure that overcrowding does not exceed specified limits. If a certain number of train movements is not adequate to meet passenger demands, there is a requirement to provide more trains. The dual protection of a minimum number of trains per hour and load factor regulations ensures that passengers will have a far better standard of service than they ever had from British Rail.

    European Ground Handling Directives
    Mr. Steen: To ask the Secretary of State for Transport what organisations and companies he has consulted with regard to the European ground handling directives; and what representations he has received. [17759]
    Sir George Young: My Department consulted extensively within the aviation industry during the negotiation of the European Council directive on, round handling, and will shortly consult again on its implementation into UK law.
    Mr. Steen: As, unlike European airports, most British airports have already carried out the spirit and competitive requirement of the directive, will the Secretary of State explain why his officials seem determined to extend the directive and interpret it even further so that the British support services at British airports will have to tender all over again, at enormous cost to them but with no real advantage to the public or the airports? Why cannot we just enforce the directive as it is, as every other European country does?
    Sir George Young: My hon. Friend is right to point out that the directive will bite much harder on European airports than on UK airports because in many European airports there is no competition. Indifferent services are sometimes provided at a high cost whereas within UK airports, especially the larger ones, there is an element of competition. It is therefore in the interests of passengers generally and of the UK ground handling industry that the industry should have access to European airports, and the directive provides that.
    As for implementing the directive in the UK, we are not in the business of gold plating directives. Our objective is to implement the directive with the minimum burden on UK industry, and we shall shortly consult industry on the draft regulations. I shall certainly take my hon. Friend's exhortation to heart.

    London Underground
    Mr. Congdon: To ask the Secretary of State for Transport what assessment he has made of the long-term capital funding requirements of London Underground. [17760]
    Sir George Young: The Government have considered very carefully the long-term capital funding requirements of London Underground. That was a key factor behind our decision that privatisation of the underground was the right way forward. I do not believe that any other approach to the funding of London Underground could deliver the same results.
    Mr. Congdon: Given the significant investment in London Underground in the past five years, which doubled in real terms compared with the previous five years, and given that much more investment is needed to improve the underground's infrastructure for the benefit of Londoners, does my right hon. Friend agree that it has been shown conclusively that the underground should be privatised? Privatisation will deliver much-improved services to the people of London, and I warmly support that initiative.
    Sir George Young: I am grateful to my hon. Friend for pointing out that we have done better than our

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    predecessors on the level of core investment in London Underground, which is now 50 per cent. more than in the 1980s and 100 per cent. more than in the 1970s. None the less, we want to do even better. Against that background, I introduced proposals for the privatisation of London Underground, with the key element of recycling the proceeds back into the underground to remove the investment backlog within five years of privatisation.
    Mr. Simon Hughes: The Secretary of State knows that I am a big supporter of the Jubilee line. What is the funding position of the extension? Will it be open in March next year, as originally planned? If not, when will it open?
    Sir George Young: Funding of the Jubilee line extension is not an issue: it has underspent against budget. There is no question of resources being inadequate to secure the completion of the extension. It looks likely that the extension will not open in full in March next year. London Transport hopes to make an announcement shortly about the precise dates.

    Road Markings
    Mr. French: To ask the Secretary of State for Transport how many vehicular accidents have been caused by defective road markings in each of the last three years; and if he will make a statement. [17761]
    Mr. Bowis: The information collected by my Department about accident sites and road conditions does not distinguish between road markings and other traffic signs, but only 0.5 per cent. of all reported accidents involve defective road surfaces or signs.
    Mr. French: Has my hon. Friend noticed the increase in diagonal hatch marks, the original purpose of which was to improve lane discipline? Has he also noticed that, on certain stretches, the part of the road that has a diagonal hatch mark is considerably wider than the part that has no mark? The motorist sometimes has to drive down a stretch of road that is narrower than is reasonable for a motor car. Will my hon. Friend try to ensure that the use of such excess road markings is curbed?
    Mr. Bowis: My hon. Friend makes an important point. He is right: the purpose of such road hatching is to segregate traffic, discourage overtaking, encourage driver discipline and provide crossing opportunities for pedestrians. However, as he said, it can also lead to vehicles being closer to pedestrians. Great care is required when planning such measures. It is the responsibility of the highway authority concerned. The Department issues guidance, and we shall review that guidance during the coming year. I shall ensure that my hon. Friend's points are taken on board.

    Rail Investment
    Mr. Betts: To ask the Secretary of State for Transport if he will make a statement on investment in the national railway infrastructure. [17762]
    Mr. Watts: In the first six months of 1996–97, Railtrack spent an additional £100 million on the renewal
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    or enhancement of its infrastructure, 25 per cent. more than it spent in the first six months of 1995–96. In its network management statement, published last month, the company announced that it intends to spend an average of more than £4 million a day between 1995 and 2001—some £10 billion in total—on maintaining, renewing and enhancing the rail network.
    Mr. Betts: Will the Minister explain to the users of the midland main line what possible benefits they will receive from privatisation, given that Railtrack's plans show no significant investment in that line, although it is one of the slowest and worst-maintained main lines in the country? Does he accept that the franchise operator has told me that there is no provision in the franchise for tilting trains, which is the only other way in which speeds on the line can be significantly increased? Was any thought given during the privatisation process to the interaction between investment in track and investment in rolling stock? It seems that users of the midland main line will get neither under privatisation. Apparently, the only benefit that my constituents will get will be free cups of tea and coffee, and longer times sitting on the trains in which to enjoy them.
    Mr. Watts: The main benefits for passengers on the midland main line will be the provision of an extra 22 trains a day, served by new rolling stock which the company has ordered, and the refurbishment of all existing high-speed train sets. Because of the additional services that will operate each day, journeys to Sheffield will be shorter, and because stations will be served by the new rolling stock and the extra 22 services, the high-speed trains will have to make fewer intermediate stops. Moreover, passengers are already benefiting from the "foursight fare", which allows four people to travel anywhere on the network for a flat fare of £29.
    Mr. Matthew Banks: Will my hon. Friend continue to put pressure on Railtrack to implement, sooner rather than later, the multi-million-pound plans for upgrading the west coast main line? Does he accept that those of us who use the line regularly expect to experience an altogether higher level of service in the coming years as a result of Mr. Richard Branson's takeover of the line?
    Mr. Watts: Railtrack will spend £1.5 billion on the west coast main line, in addition to the £500 million that Virgin Rail will spend on the new tilting rolling stock to reduce journey times on the line. On current plans, the tilting trains and shorter journey times will be introduced from 2002, and there will be further improvements in journey times in subsequent years.
    Mr. Bradley: Can we really have any faith in Railtrack's investment plans, given its record to date? Has the Minister seen the findings of the Railway Development Society? According to those findings, because of a lack of investment and for other reasons, private train operators in southern England are running fewer trains than agreed in the minimum service level requirements.
    May I ask the Minister again whether the private train operators have broken their franchise agreements? Will they do anything about that? Will the Minister intervene? What protection will he give the public, given that

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    thousands, if not millions, of pounds of taxpayers' money is still going to the private train operating companies, to ensure that they are given the decent, reliable, efficient service for which they are crying out?
    Mr. Watts: As I said in response to the initial question, Railtrack's expenditure is £100 million, or 25 per cent., up on last year in the first half of the current year. As for the passenger service requirement, on South West Trains there are some minor discrepancies between the PSR and the timetable that was written by, and inherited from, British Rail. Those discrepancies will be corrected when the new timetable is introduced in May or June.
    The Office of Passenger Rail Franchising has described the discrepancies to me as minor. They arise from the fact that the private franchise operator has not yet written a timetable based on the PSR. As I said, it inherited timetables drawn up by British Rail.

    Air Services Agreement
    Mr. Wilkinson: To ask the Secretary of State for Transport what progress he has made with the negotiation of a new air services agreement with the United States of America. [17763]
    Sir George Young: Good progress has been made, most recently at a round of discussions in Washington last month.
    Mr. Wilkinson: I am grateful for that reply. Will my right hon. Friend ensure in the concluding phase of the negotiations that they remain bilateral, and that there is no question of European Union interference, especially in the special relationship that the United Kingdom and the United States have in regard to air transport, as in so much else? In so doing, will my right hon. Friend ensure that the need for British carriers, such as British Airways, to have adequate gateways into the United States will be maintained at the conclusion of the agreement?
    Sir George Young: I can confirm that responsibility for air service negotiations between this country and the United States is a matter for Her Majesty's Government. That responsibility is discharged by my Department, and we are opposed to any extension of the competence of the European Union into this dialogue. The hon. Gentleman will know that British Airways is a successful and competitive international airline. It would in the interest not just of British Airways but of other airlines in the UK if we could move towards a more liberal regime between the UK and the United States. I am sure that our airlines would compete effectively in that liberalised environment.
    Mr. Pike: The Secretary of State will know that there has been a particular difficulty in opening up United States airlines' access to regional airports such as Manchester. Do the Government fully support the case for the regional airports? What progress has been made in that direction?
    Sir George Young: As the hon. Gentleman may know, I recently had the pleasure of attending a meeting of the all-party group supporting Manchester airport, where hon. Members registered their pleasure at the recent decision on a second runway. We support regional airports.
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    We will do all that we can in international dialogues to make it easier for people to access Manchester airport, so that that highly successful airport can continue to expand.

  HOUSE OF COMMONS

    Disabled Staff
    Mr. Corbyn: To ask the right hon. Member Berwick-upon-Tweed, representing the House of Commons Commission, what steps the Commission is taking to increase the recruitment of disabled staff. [17783]
    Mr. Flynn: To ask the right hon. Member for Berwick—upon—Tweed, representing the House of Commons Commission, what proposals he has to improve the conditions of disabled staff. [17786]
    Mr. A. J. Beith (on behalf of the House of Commons Commission): All disabled people applying for House staff posts are offered an interview, provided that they have the minimum qualifications and that their disability would not prevent them from satisfactorily carrying out the duties of the advertised post. Provisions and adjustments are made to ensure that disabled people can work in the precincts, and candidates for jobs are asked to say what special arrangements they would need if taking up a job. The House of Commons complies with the provisions of the Disability Discrimination Act 1995 and follows the guidance in the code of practice.
    Mr. Corbyn: Is the right hon. Member aware that, on 13 January, he told me that only 13 people with disabilities were employed by the House of Commons Commission, and that it would pursue vigorously a policy of increasing the number of people with disabilities who work for the Commission? In that case, will he tell the House where these jobs are advertised, what contact he has with disability organisations and, above all, what serious steps have been taken to ensure that this building is fully accessible to people, whatever their disability? Many of us have been raising this issue in the House for more than 10 years, and we have had the same evasive and delaying answers from him and his predecessors, saying that it is very difficult and very complicated. Every other public building usually makes efforts to ensure that it is fully accessible—why not this one?
    Mr. Beith: Strenuous efforts are made to make this building more accessible. The hon. Gentleman must be aware of some of the particular difficulties. As far as I am aware, the Commission has never refused to fund any improvements suggested by its expert advice that would assist disabled people, but of course ensuring that they take up posts in the House involves ensuring that advertisements invite them to apply, as they do, that they are given positive consideration, which I have just described, and that, wherever they need special help to be able to do the job, that too can be given. Those are valuable developments, although we are far from satisfied with the results achieved so far.
    Mr. Flynn: Why has the right hon. Gentleman not responded to the questions that I tabled two, three and five years ago seeking improvements to this Chamber?

    15
    If there were a box in the corner of the Chamber and it were used by civil servants—which of course it is not—it would be totally inaccessible to some civil servants, and there would be a bar on their career prospects if they could not use such a box.
    There is another problem in the Chamber which might immediately arise, because some candidates in the election are wheelchair-bound. Why have arrangements not been made for those people to be able to do their work as Members of Parliament? That should have been done many years ago. The problem will be with us in a few weeks.
    Mr. Beith: The hon. Gentleman will know that considerable steps are taken to assist one of his hon. Friends who has a disability to ensure that he can do the job of a full Member of Parliament properly, although that does not arise directly from this question. I will consider the hon. Gentleman's point about facilities for civil servants attending the House.
    Mr. Matthew Banks: Does the right hon. Gentleman agree that this is not simply a matter of statistics, but that the House has to try to set an example and lead the rest of the country? Although we recognise that this is an ancient building, over a period we need to make further investment to make it more accessible, not just to visitors but to people who work here.
    Mr. Beith: The Commission agrees with that view and seeks to act accordingly.

    Staff (General Election)
    Mr. Tony Banks: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of Commons Commission, if he will make a statement about the financial arrangements for staff on short-term contracts during the general election period. [17784]
    Mr. Beith: In general, House of Commons staff on short-term contracts are not affected by the general election period. Their duties and remuneration remain unchanged.
    Mr. Banks: I put it to the right hon. Gentleman that a large number of Conservative Members will jump ship before the general election and that perhaps a larger number will be going down with it at the election. In both cases, a generous financial lifeboat is available for them. What about the staff here? For example, what about those who rely on overtime payments because they serve hon. Members in the canteen? What happens to them? Would it be possible to have a general election financial bonus for those staff, to go along with the bonus of having a Labour Government after the election?
    Mr. Beith: None of the House of Commons staff will lose his job or not have his contract renewed as a result of any outcome of the general election. I think that the hon. Gentleman refers primarily to the staff of hon. Members who are not the responsibility of the Commission. He must address questions about them to the Leader of the House. Most Refreshment Department staff will continue to be paid in full during the Dissolution, although they are not
    16
    required to attend, and they will be able to carry out other activities if they wish. Those on evening duty are on half-pay during the Dissolution.

    Staff (Overtime)
    Mr. John Marshall: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of Commons Commission, what is the Commission's current estimate of the staff overtime bill for 1996–97. [17785]
    Mr. Beith: The House expects to spend £850,000 on staff overtime in 1996–97.
    Mr. Marshall: Does the right hon. Gentleman agree that our staff who work this overtime serve the House with skill, courtesy and charm? Therefore, does he further agree that it is quite unnecessary for 70 members of our staff to go to a charm school during the general election campaign? Would not the money spent on that charm school be better spent on some hon. Members?
    Mr. Beith: No overtime payments are involved in the training programmes that go on in the House and affect a far larger number of people. If there are valuable courses of this kind, I should be tempted to go on them myself, but I expect to be busy during the general election period.

  TRANSPORT

    M25
    Mr. Mackinlay: To ask the Secretary of State for Transport what are the reasons for the delay in completion of the widening works of the M25 at Reigate; and who will meet the additional related costs. [17765]
    Mr. Watts: The principal reasons have been the need to replace more of the existing road than was expected and the formation of ruts in the resurfaced carriageway. These costs of unforeseen works will be borne by the Highways Agency. I am happy to say that four lanes in both directions were opened on Saturday 8 March.
    Mr. Mackinlay: Does the Minister understand that the people of Reigate are not interested in the petty squabbling and spite of the Conservative party but want to know why they have been frustrated in using the motorway between junctions 6 and 8, along with thousands of other people who use that road for commerce and for getting to and from work? Who will pay the additional costs that have been incurred by the inordinate and unacceptable delay over which the Minister has presided? What is the cost to the taxpayer of the absolute shambles and scandal over which he is presiding?
    Mr. Watts: I have been inconvenienced from time to time in travelling from my home, and I know that the hon. Gentleman has also been inconvenienced. Throughout the roadworks, three lanes in each direction have been kept open. Until the contract is completed and the final accounts settled, the final cost cannot be determined.

    Road and Rail Traffic
    Mr. Grocott: To ask the Secretary of State for Transport what recent assessment he has made of the effectiveness of his policy of transferring traffic from road to rail. [17766]
    Mr. Watts: I review the effectiveness of this policy regularly. Newly privatised train operators have ambitious plans to attract new passengers and freight by getting traffic off the roads and on to the trains.
    Mr. Grocott: That was not an answer to the question. May I help the Minister? Since the Conservative party came to power, despite its declared support for the transfer of traffic from road to rail, the proportion of passenger traffic by rail has gone down from 7 per cent.—admittedly low—to 5 per cent., and the proportion of freight traffic has gone down from 11 per cent. to 6 per cent. I have a simple proposition which is common sense to everyone except the Government. If a national rail system is dismembered and fragmented, as the Government have done through their privatisation policy, any strategy of trying to transfer goods from road to rail, which is difficult at the best of times, is made almost impossible.
    Mr. Watts: There might be a little more in the hon. Gentlemen's argument on the effects of restructuring if it were not for the fact that, in 1996, the level of rail passenger traffic was higher than at any time in the previous five years. I am sure that he will welcome the intention of the new franchisee for the west coast main line to investigate the feasibility of through services to Shrewsbury, which I believe would be of benefit to his constituency.
    The newly privatised rail freight operators have been succeeding in winning new business. More than 150 rail freight grants have been awarded, securing traffic to rail—which is equivalent to more than 3 million lorry journeys per year. Last Thursday, I announced that we are introducing regulations to extend to piggyback operations the 44-tonne derogation that is currently enjoyed by lorries taking containers and swap bodies to railheads. That is a further measure to encourage the switch of freight from road to rail. Those are some of the actions of which we are justifiably proud.
    Sir Teddy Taylor: Is the Minister aware that the much improved service to Southend on the London-Tilbury-Southend line—it used to be called the misery line under British Rail—since privatisation is being helped further by the promise of new and faster trains? Is that not only one example of how we can get traffic from road to rail, and bring great benefits to the travelling public?
    Mr. Watts: My hon. Friend is absolutely right. The order for new rolling stock placed last week will be widely welcomed by passengers on a line that used to be called the misery line but is now among the most popular lines on the entire railway network.

  HOUSE OF COMMONS

    Legislative Programme
    Mr. Simon Hughes: To ask the Lord President of the Council what proportion of the Government's legislative programme he plans to complete by Easter. [17787]
    The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): As much as possible.
    Mr. Hughes: I suppose that is about par for the course. On my calculation, 25 Government Bills are still before one or other House of Parliament. It would be helpful if the Leader of the House would give us a slightly more accurate estimate of how many of those he proposes should be completed—he must have a timetable. Just a postscript: will the extraordinary and possibly farcical change of party by the hon. Member for Reigate (Sir G. Gardiner) have any effect on the composition of the Committees considering any of those Bills?
    Mr. Newton: It is not for me to determine the composition of Committees, as that is done under an order of the House which was passed only about two years ago. The hon. Gentleman will also be aware that relatively few Bills are now in Committee.
    On the hon. Gentleman's general question, I am no more able to give him an answer now than I was when he asked it on a previous occasion, when I said that the number of variables involved would make any estimate merely speculative. That remains the case.
    Sir Patrick Cormack: Does my right hon. Friend expect to be able to give us a better answer this Thursday? Will he give us some indication of whether the House is likely to sit until 27 March or to come back after Easter and a short recess?
    Mr. Newton: I am mindful of the interest in that question.

    London Grand Committee
    Mr. Cohen: To ask the Lord President of the Council if he will establish a Grand Committee for London. [17789]
    Mr. Newton: I have no plans to do so.
    Mr. Cohen: Why have the Tories brought nothing but decline to London? They abolished the Greater London council and will not allow Londoners to have any strategic say in their own affairs. Consequently, traffic chokes up the capital; the health service and public transport have been run down; and there is large-scale homelessness, crime and unemployment. It has also damaged London's prosperity and prospects. As Labour will establish a new democratic authority for London and raise London's status, is it any wonder that discerning Londoners are turning in droves to Labour?
    Mr. Newton: According to my information, London already has 84 Members of Parliament, more than 2,000

    19
    councillors, if we include the Corporation of the City of London, and 10 Members of the European Parliament. I have seen no evidence that Londoners want to pay for yet another level of expensive bureaucracy. Far from the picture painted by the hon. Gentleman, one reads almost daily in newspapers of London's reputation abroad and of the number of people brought here by that reputation.
    Mr. Dykes: Obviously every capital city needs some type of collective system of government for the entire capital territory. Which system does my right hon. Friend personally prefer?
    Mr. Newton: I personally prefer the position which the Government have adopted whereby there is, for example, a designated Minister for Transport in London, who was in the House only a short time ago, and whereby my right hon. Friend the Secretary of State for the Environment, as Minister for London, co-ordinates a Cabinet sub-committee for that purpose.

    Summer Recess
    Mr. Llwyd: To ask the Lord President of the Council how many recent representations he has received on the length of the annual summer recess; and if he will make a statement. [17790]
    Mr. Newton: I have been asked about this on a number of occasions during questions on my weekly business statement.
    Mr. Llwyd: With respect to the Lord President, that was not a very good answer, was it? I am interested to know whether the right hon. Gentleman has received any
    20
    representations on shortening the ridiculously long long vacation and having a set working week to finish at a given time on Thursdays.
    Mr. Newton: I have been asked about that a couple of times during business questions in the past six or seven months, or perhaps a little longer. I have commented on the matter fairly frequently and referred to the report of the Jopling Committee, which made no recommendations for changes along the lines suggested by the hon. Gentleman.

    European Directives
    Mr. Steen: To ask the Lord President of the Council if he will bring forward measures to ensure that all European directives are debated on the Floor of the House. [17791]
    Mr. Newton: I have no plans to do so.
    Mr. Steen: As it has become the practice to get European matters in and out of Committee as quickly as possible and with as little debate as possible, will the Leader of the House consider dealing with all European matters on the Floor of the House until the general election, as happened years ago, so that the whole country can see the extent of Brussels' interference in our way of life?
    Mr. Newton: I note my hon. Friend's concern, but were we to proceed as he suggests and were all European matters to be discussed on the Floor of the House, I would want a signed undertaking from him that he did not wish to have an Easter recess at all.

Point of Order
3.31 pm
Mrs. Helen Jackson: On a point of order, Madam Speaker. My point of order relates to a response to a question asked by my hon. Friend the Member for Edinburgh, East (Dr. Strang) about the disposal by landfill of cattle carcases. He was told that 6,100 carcases suspected of having bovine spongiform encephalopathy had been disposed of by landfill, but that the locations, details and dates were too expensive to be provided. As a Back Bencher interested in environmental protection, I have been endeavouring to pursue the issue for some months but am finding it frustrating and almost impossible to operate solely by means of parliamentary questions and answers which are later contradicted and countermanded. I wonder whether you could advise me, Madam Speaker, whether you keep a record of the number of times Ministers have to correct their parliamentary answers to hon. Members so that, in the absence of any authoritative report on the disposal of carcases from the BSE cull, a Back Bencher like myself can arrive at the truth.
Madam Speaker: There is no way in which I can keep track of all that Ministers say in the House, any more than I can keep track of what Back Benchers say—[Interruption] I am perfectly aware of what is happening. I was asked a question by the hon. Lady and I have every intention of replying to the point of order.
The Chancellor of the Duchy of Lancaster (Mr. Roger Freeman): Further to that point of order, Madam Speaker. I am glad that the hon. Lady is not referring to the over-30-months scheme, which of course came into operation in the spring of last year; clearly, she is referring to earlier periods. I give her and the House an undertaking that I shall discuss the matter further with my right hon. and learned Friend the Minister of Agriculture, Fisheries and Food and then return to the House.
Mrs. Helen Jackson rose—
Madam Speaker: There can be no further point of order. The Minister has answered the hon. Lady; he will take the matter up with the Minister of Agriculture, Fisheries and Food and will report back to the House as a result of the hon. Lady's point of order.

Orders of the Day
  Opposition Day
  [7TH ALLOTTED DAY—FIRST PART]
  Opposition Day

    Public Responsibility For Social Justice
    3.33 pm
    Mrs. Margaret Ewing: I beg to move,
    That this House calls for a concerted effort to eradicate poverty and create full employment; believes in a society free of social injustice and inequality where decent, democratic values ensure that priorities become the defeat of homelessness, the maintenance of free health care and the guarantee of dignity from cradle to grave for all citizens; pledges itself to working against the politics of selfishness and greed and to developing a society where the contribution of the whole community is sought and valued; and, for the above reasons, rejects the Government's proposed spending plans for 1997–98 and 1998–99.
    I welcome the opportunity to highlight social and economic justice and our public responsibility in this House for those issues. Central to the debate is the political will to effect change to the benefit of all our constituents, the communities that we represent and people outwith our country.
    Politicians are not held in the highest regard at any level of political activity—community council, local council, Parliament or Europe. However, my experience during 15 years in the House is that the majority of Members of Parliament work very hard on behalf of individuals and hold dearly concepts of social and economic justice. We do not always achieve the results that we want, but there is a genuine consensus among politicians that we are here to represent people and we want to achieve the best for them.
    It is tempting to concentrate on what the media tell us are the critical issues of the day, but we should step back from that from time to time and consider what we are doing as legislators, because that is fundamental to all of us. Everyone in the House—I am glad to see a substantial number of hon. Members present—should ask themselves why they signed up to represent their party and why they decided to become involved in politics, particularly when many people appear to regard politics as despicable.
    I joined my party for a simple reason. People are always asked why "they" did not do something. That "they" was a grey, amorphous organisation. People should ask, "Why don't I become involved? Why don't I do something about what is happening in my community and my country?" As a young student at Glasgow university—that well-known breeding ground for politicians—I listened to our lecturers talking about history, culture and literature. I was struck by the words of John Donne, the metaphysical poet. Metaphysical poets are one of my great joys in life. I read them regularly. John Donne wrote:
    "No man is an Island, entire of it self… And therefore never send to know for whom the bell tolls; It tolls for thee."
    Whatever our party or our constituency, we are all here to talk about the people for whom the bell tolls. Politics is about the involvement of people. It is about thought and analysis of the situation in which we find ourselves.

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    When this institution was founded, we did not have electronic media or journalists wanting a quick quote on every issue. In one respect, insularity and immediacy have perhaps undermined our political process. Those who fought for you and me, Madam Speaker, to have the right, as women, to be members of this House and to vote did so because they believed that society would be changed irrevocably through representation. Indeed, such campaigns have changed many aspects of society.
    Dame Elaine Kellett-Bowman: The hon. Lady made some interesting observations about people saying not, "What can I do about it?", but, "What are they going to do about it?" I received 30 letters from children at a school in my constituency asking what I, the Government or somebody else could do. Only one out of 30 letters said, "What can I do?" It seems to me that the desire to fob off responsibility starts at far too early an age and I honestly do not know how to tackle that problem.
    Mrs. Ewing: The hon. Lady has raised a genuine point that I shall address later in my speech. We all, as individuals, have a responsibility to contribute to society and the values and visions that we hold dear.
    I studied history at university and it is clear from our history books that many social reforms would not have occurred without representation. One such example is slavery. People were told that black people could not be freed from slavery as they would not cope with society. I pay tribute to those who argued against that in Parliament and, with great difficulty, achieved the abolition of slavery.
    Representation helped to remove the horrendous attitudes that allowed small boys and girls to work as chimney sweeps and stopped them being sent up chimneys to clear out the soot. I do not believe that the welfare state would have been established without representation. Those fundamental issues should underpin every aspect of our work as Members of Parliament, councillors, Members of the European Parliament, members of community councils or any organisation that works for society.
    One reason why the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) and I tabled today's motion is that there seems to be a lull in politics. We no longer talk about visions and values. Perhaps it is the immediacy of having microphones stuck under our noses and having to make comments to journalists.
    Mr. Phil Gallie: The hon. Lady will be aware that only this week my right hon. Friends the Prime Minister and the Secretary of State for Social Security announced far-reaching changes to the pensions system, looking well into the next century. Does that not suggest that we take a long-term view rather than relying on short-term soundbites as she suggests?
    Mrs. Ewing: I shall return to pensions later in my speech. The problem has been with us for many years and it is sad that such a major issue now seems to be part of a general election campaign rather than being addressed seriously by the House of Commons through a series of meetings in relevant Committees and elsewhere.
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    As I was saying, there seems to be a lull in politics whereby we deal with immediate rather than long-term issues. Lloyd-George described himself in "Dod's" as a Welsh nationalist and a radical, but he dropped that description in 1922. I wonder why we have dispensed with the idea of being radical and examining long-term issues. Did it start in the 1960s with the "I'm all right, Jack" philosophy, or was it with the "Sermon on the Mound", as we refer to it in Scotland, when Baroness Thatcher said, "There is no such thing as society"?
    The Secretary of State for Scotland (Mr. Michael Forsyth): What my right hon. and noble Friend said was that there was no such thing as society; society consisted of individuals who have to make their contribution. I am sure that the hon. Lady would not want to misrepresent my right hon. and noble Friend. In the spirit in which her speech is intended—to have a serious debate and move away from soundbite politics—and given that her party is quoting that Scotland has had a surplus since 1978 of £26 billion, will she confirm that, on the basis of her own figures and her party's calculations, which are of course misconceived, Scotland in fact had a deficit of £25 billion over the past four years and therefore received a contribution from England?
    Mrs. Ewing: The right hon. Gentleman raises two points. First, society consists of individuals and the contribution that they make to it. Society has to take account of general perspectives and how we help all the people. Secondly, he wants to challenge the figures that his Government have produced. If he is really saying that Scotland is a poor nation, I wonder what he wants to do. Quite honestly, Scotland is not a poor nation. If it is, why do those sitting on the Treasury Bench want to hang on to it and not let us go? The money is to provide the kind of society that we want in Scotland.
    Mr. Forsyth: On the specific point about the figure, I asked a simple question. Perhaps I put it in too complicated a manner. Will the hon. Lady confirm that, on the basis of her own party's figures, Scotland had a net contribution from England of £25 billion over the past four years—that there was a deficit of £25 billion? That is her party's figure; will she confirm it?
    Mrs. Ewing: The right hon. Gentleman is talking about a United Kingdom deficit. The Government's statistics have shown that Scotland has been subsidising that UK deficit for a very substantial period of time. We want to change that and use the resources in Scotland. The right hon. Gentleman is trying once again to reduce the debate to the bandying around of statistics. All the analysis that has been undertaken by economists in Scotland and by the Government has shown that Scotland is a net contributor to the United Kingdom. The United Kingdom has a substantial deficit. If we could restore our assets to Scotland, we could achieve a great deal.
    Underpinning all our actions are the philosophical arguments that I want to put to the House. I believe that it is important to have a philosophical debate about values and vision in the House of Commons before the election. We are all privileged and honoured to have been elected to serve in this place, but we need to see out of our own back windows into a world where fear, poverty and depression dominate the lives of citizens in our

    25
    constituencies and countries, and indeed abroad. Today's headlines, to which the Secretary of State for Scotland was trying to draw attention, must not distract any of us from the vision and deeply held value that we are all Jock Tamson's bairns. Today's debate is about vision and values, and Plaid Cymru and the Scottish National party are proud to lead it.
    Any of us in the House who read the mail from our constituents and listen sincerely to what people say in our weekly surgeries or in formal or informal meetings with organisations in our constituencies know that real concern is centred on vision and values. Let us take education, for example. In a social democratic society, we have always believed in Scotland that education was a means by which people from a poor background could rise through the meritocracy and project themselves into a better life. That is what my parents wanted for my brother and me and what everybody's parents want for their children. Yet education is under severe threat in Scotland at the moment.
    We are told that every home should be a castle, but 75,000 Scots were homeless last year and there were 50,000 homeless people in Wales. Those figures are horrific. Imagine not having the right to go home after a day's work, walk into a warm home and say, "This is mine, this is my security and this is where I feel good." The statistics are appalling.
    Mr. Cynog Dafis: I thank the hon. Lady for giving way on housing. I draw her attention to the amendment tabled to the Finance Bill which would reduce the level of VAT on energy-saving materials to 8 per cent. Does she agree that that would have a beneficial environmental effect, improve health and comfort and create jobs? Is she as disappointed as I am that, by all accounts, Labour Front Benchers will not support the amendment tomorrow night? Does she agree that that is significant? If the amendment is not supported, we will fail to make an important gain for the fuel poor, and to take the opportunity to inflict a defeat on the Government.
    Mrs. Ewing: I am grateful to my hon. Friend for reminding me of that amendment. He may be interested to learn that when the Scottish Labour party held a conference this weekend in Inverness, it issued an executive statement stating:
    "Because of the pressing need to renovate Scotland's housing stock, we will make housing repairs—including energy efficiency measures—one of our key priorities for our environment task force".
    It is strange that a measure that has been investigated by the all-party warm homes group, of which my hon. Friend is a member, and that would cost only £8 million, has been abandoned by the Labour party.
    Sir Russell Johnston: I am not trying to argue with the hon. Lady, but she said that there were 75,000 homeless in Scotland. I thought that the Shelter figure for last year was 31,000. Whom does her figure cover?
    Mrs. Ewing: I gave the most recent figures given to me by Shelter in Scotland. Substantial debates on housing were initiated by my party in the Scottish Grand Committee and in Adjournment debates in the House. It is always difficult to assess exact numbers, but we have
    26
    pinpointed the extent of the problem that we face. Our councils are hard pressed for cash. The measures in the Budget will make it even more difficult for our councils to address the problems, both by new build and by renovating existing stock.
    Mr. Brian Wilson: I am sympathetic to the hon. Lady's arguments, but I wonder why we should be less concerned about people in England who are homeless than about those in Scotland and Wales. A proportionate number of people are homeless in England, many of whom are Scottish or Welsh in origin. Does that upset the primary nationalist argument that England is somehow a land flowing with milk and honey at Scotland's expense?
    Mrs. Ewing: That is a flippant remark. If the hon. Gentleman reads the motion carefully, he will discover that we are discussing public responsibility for social and economic justice. I am speaking specifically as a Scottish Member of Parliament about Scottish issues—and some of my colleagues will speak as Welsh Members on Welsh issues—but I am deeply concerned about the problems faced by everyone in the United Kingdom and, indeed, all those further afield in the international community. That is why we have put the subject of social and economic justice back on to the political agenda in the run-up to the general election.
    The hon. Member for Ayr (Mr. Gallie) mentioned the issue of health and care for the elderly. We await with interest the White Paper to be published later this week, but I wonder why we have had to wait so long for such a document to be produced.
    When I worked in the administration of training social workers in the west of Scotland—an area that included the whole of Strathclyde and Dumfries and Galloway—there was always deep concern about care for the elderly, which was then called "the sleeping giant". Why have we suddenly started to discuss this problem on the eve of an election? It is cheap electioneering, rather than a serious attempt to address a situation that should have been dealt with years ago. The facilities exist in this House to allow us to have a considered review of the difficulties that we now face.
    Mr. Gallie: Will the hon. Lady give way?
    Mrs. Ewing: I know that the hon. Gentleman wants to intervene again, but I have promised that I would be brief. I have been generous in giving way to other hon. Members.
    We must have principles in the run-up to the general election. The vast majority of people throughout the United Kingdom—irrespective of their country of origin or beliefs—dislike selfishness and greed. The motion aims to encourage a society where the contribution of the community is sought and valued, and where social injustice and inequity are eradicated. The constitutional change that we seek will benefit not only the nations of Scotland and Wales, but will act as a catalyst for a rethink and a rejection of vested interests, traditions and attitudes. We seek the removal of centralisation, and this has been one of the most centralising Parliaments in the EU—and, indeed, throughout western civilisation.
    Eurosceptics talk about a democratic deficit between Europe and the United Kingdom, but they seem to be blindly ignorant and unaware of the democratic deficit

    27
    between this place and the nations of Scotland and Wales, as well as the regions of England. We have to face up to new challenges, and we should not simply bandy around figures or cheap sound bites and slogans at the election. The new challenges involve the EU, and raise questions. Where does it go? Will it be confederal? Will it be federal? What decisions will be taken? How many countries will join us? The United Nations is as representative an organisation as we would want at a time when we face the crisis in Albania, and when we have yet to resolve the problems in Bosnia. There is a plethora of international organisations—both voluntary and statutory—in which we should be involved and in which we must take a more long-term view. We should represent citizens at home and abroad and we must say to them that we have visions and values.
    I still believe that politics is an honest profession. I can only reiterate that in my 15 years as a Member of Parliament, I have gained a great deal of respect for those men and women who give so much to try to resolve people's problems. The SNP and Plaid Cymru are today challenging the failure of the two major parties and of this institution. The two main parties are political clones—although their Back Benchers are not—and are in a mood of retrenchment rather than reform. Nothing is likely to change after the election, whichever party is in government.
    Politics is at a crossroads. The public are cynical, and I defy any hon. Member to say other than that. What are we to do? Do we keep on in the same direction, with the same political and social philosophies of the two main Unionist parties? On the other hand, should we tell the public that there is now an opportunity for a change of direction, as signposted in the motion that we have tabled today? We want social and economic justice to be at the heart of the coming election campaign, not just because it is what we believe in but because it is a cause dear to all the peoples of the United Kingdom.
    3.59 pm
    The Secretary of State for Scotland (Mr. Michael Forsyth): I congratulate the hon. Member for Moray (Mrs. Ewing) on securing a debate on this important topic. I am not sure which the Labour party in Scotland is more afraid of: the Scottish National party, or a debate on social and economic justice. I never thought to see such an appalling turn-out of Scottish Labour Members for a debate on these issues; we are reduced to one spin doctor posing as a Labour Back Bencher.
    Public responsibility in the SNP sense means more state interference, in the form of public ownership, for instance. That used to be a widely shared view among Labour Members. Those of us who, not so many years ago, proclaimed that only the market could generate wealth were derided as outcasts—but where are the outcasts now? They appear to be on the Opposition Benches, doubtless bruised by their fraternal conference in Scotland last week.
    The truth is that market forces reign unchallenged around the world. More and more people in more and more political parties understand the importance of the market as a means of creating the wealth to ensure prosperity and social and economic justice. Indeed, Scottish Labour Members seem to have bowed rather
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    spectacularly to their masters in Islington; the party elections were the final pogrom against the old left. Today, socialism appears to be the creed that dare not speak its name. New Labour seems to have new priorities, forged in the harsh environment of the Islington cocktail party—more socialite than socialist.
    The guttering flame of socialism, however, still burns bright in Scotland. The Scottish nationalists appear to be the last remaining socialist party in Britain: the most left-wing party in Europe. That is what makes a mockery of their prattle about social justice. Dispensing social justice means having the resources, and the SNP's programme is a blueprint for the impoverishment of Scotland—a one-way ticket to the third world.
    SNP Members want to take Scotland out of the United Kingdom, where they apparently feel stifled among a population of 55 million, and into a federalist Europe of, eventually, 500 million. They have, of course, no guarantee of getting into Europe at all. They have no admission ticket; and the price of admission would be entry on the most integrationist of terms.
    The SNP, like the Labour party, would sign up to the social chapter and the minimum wage, and in so doing would condemn hundreds of thousands of Scots to the dole queue. Unemployment in Germany in the past two months rose by 500,000; unemployment in France and Spain showed the same trend. That shows where these policies lead—not to social justice. They may lead to better conditions for those in work—conditions governed by legislation—but that comes at the expense of other people's jobs, and long-term job security.
    Sir Russell Johnston: The right hon. Gentleman has referred to German unemployment. How does he think this country would have managed if it had had to absorb a country of 17 million people with a rotten economic system?
    Mr. Forsyth: I shall treat that as the hon. Gentleman's argument against economic and monetary union.
    The Scottish nationalists would enter their brave new world with a deficit of £8.2 billion. Even if they got all the oil and gas revenues, which they will not, that would shrink to a mere £6.4 billion.
    The hon. Member for Banff and Buchan (Mr. Salmond) produced some fantasy figures, claiming that Scotland has a budget surplus of £400 million. He did it by applying 1994 Treasury figures to 1996, assuming that 90 per cent. of North sea oil revenues would accrue to Scotland, and rounding up Scottish income tax receipts to inflate them by a mere £60 million—15 per cent. of the alleged surplus.
    There are 68 Scottish National party spending commitments, including extravagances such as the renationalisation of Railtrack which were not costed in its programme, which promises a 20 per cent. increase in public spending, with no increases in taxation.
    Mr. Alex Salmond: Will the Secretary of State give way?
    Mr. Forsyth: In a moment: I want to finish with the hon. Gentleman first.
    The hon. Gentleman then got more ambitious, did a paste-up job of Treasury answers to disparate parliamentary questions, and magicked out of the air a

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    Scottish cumulative surplus of £26.7 billion since 1978. That figure keeps appearing in letters in The Scotsman and elsewhere. I know that our policies in Scotland have been brilliantly successful, but the figures are a mirage. The calculations assume that Scotland's share of United Kingdom general Government borrowing requirement was constant at 17.9 per cent. throughout the period, but it was not: in 1991, it was 54 per cent.
    As the hon. Member for Moray confirmed by her silence, and as the hon. Member for Banff and Buchan can confirm now, over the past four years—using the SNP's own assumptions, which are, of course, crackpot—Scotland had a cumulative deficit of £25 billion.
    Mr. Salmond: The Secretary of State is wrong about the figures in several ways. They come from an answer from the Chief Secretary to the Treasury, not from the Scottish National party. Without any argument, the United Kingdom general Government deficit over the past five years is £176 billion, which has doubled the national debt. Does the Secretary of State therefore conclude that the UK is non-viable?
    This debate is about public responsibility, and we read in the press over the weekend that the Scottish Office had a copy of the draft report on slaughterhouse hygiene that was not passed on to Professor Hugh Pennington. Does the Secretary of State think that his Department had a public responsibility to pass that vital information on to the professor whom he appointed to study the issue of E. coli?
    Mr. Forsyth: The report has been passed on, as the hon. Gentleman knows.
    It is significant that, for weeks on end, the hon. Gentleman has been going around saying that Scotland is subsidising England to the tune of more than £26 billion. I have now asked the hon. Gentleman, his party's leader, whether the SNP's bogus calculations show that England has been subsidising Scotland for the past four years to the tune of £25 billion. I do not accept his figures for a moment; they are his own figures, and he has refused to confirm the position.
    Mr. Salmond: Will the Secretary of State give way?
    Mr. Forsyth: Only if the hon. Gentleman deals with the specific point.
    Mr. Salmond rose—
    Mr. Forsyth: The hon. Gentleman clearly does not intend to deal with the specific point, so I will not give way to him.
    Mr. Salmond rose—
    Mr. Forsyth: I will give way to the hon. Gentleman if he will show that he is prepared to deal with the specific point.
    Mr. Salmond: The Secretary of State should know that he cannot set conditions on giving way.
    In the past five years, the United Kingdom had a general Government deficit of £176 billion, so it is hardly surprising that Scotland, as part of the United Kingdom,
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    was in deficit over that period; it is perhaps more interesting that, if we apply the Secretary of State's and the Scottish Office's calculations for the next five years, the Scottish subsidy to London becomes £12.5 billion. Does he accept that calculation, based on the Treasury answer of 30 January?
    Mr. Forsyth: All I can say is that I am glad that I am not the hon. Gentleman's bank manager. He has been travelling the length and breadth of Scotland saying that England has been subsidised by Scotland, but he has made a clear admission this afternoon that, for the past four years, England has, on his calculations—which I do not accept for a moment—provided £25 billion for Scotland.
    If the SNP were honest, and said, "Tighten your belts to the last notch and accept a massive slump in living standards, for that is the price of separatism," it would find few takers, but it would earn respect for its integrity, which it certainly does not deserve on its performance this afternoon.
    Mr. Rod Richards: My right hon. Friend has struck at the very heart of the nationalists' argument. Is he aware that, in Wales in 1994–95, the last year for which figures are available, the fiscal deficit was £5.7 billion, and that the total tax take from all sources was £9.9 billion, which means that taxes right across the board in Wales would have to be raised by about 57 per cent. merely to maintain the current level of public services?
    Mr. Forsyth: My hon. Friend is right. What is offensive about nationalists in both Scotland and Wales is that they prate about social justice when their programme entails national bankruptcy. The SNP's only ideological allies in Europe are in the south of Albania. Further afield, there are the encouraging examples of socialist North Korea and Cuba. There can be no social justice without wealth creation
    At its 1995 conference, the SNP voted to renationalise the public utilities. Is that still its policy? It is committed to renationalising Railtrack and similarly destroying Scotland's bus services. It would lose our seat at the top table everywhere: NATO, the G7, the UN Security Council. Our voice would be unheard in the councils of the world. How would that help the disadvantaged?
    The SNP would abolish the assisted places scheme—a kick in the teeth to every lad and lass o'pairts in Scotland. [Interruption] The groans come from an Opposition who are led by a man who enjoyed a public school education, and who would kick the ladder away from families with incomes of less than £9,000 a year. That is new Labour: "Don't do as I do—just take the message."
    Only one thing can strike down poverty and bring social justice to every Scot: the sound Conservative free enterprise policies of privatisation, deregulation and devolution of decision-making to families and individuals. Opposition Members did not want Scots to buy their council houses or even to decide what colour to paint their front doors or to make any other decision. Now that Labour in Scotland is being led by the nose and forced by its Islington ringmaster to go through the capitalist hoop, the last unreconstructed socialists in Scotland are the Scottish nationalists.
    Mr. Dafis: We can assume that the Secretary of State for Wales will pursue the same line of reasoning on

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    Wales, with which I shall deal later. Does he think that the voice of Ireland, a country similar in size to Scotland and Wales, is unheard in the councils of the world? Would Scotland really suffer the deficiency that he described?
    Mr. Forsyth: The hon. Gentleman should examine what is happening in Ireland. It has far higher unemployment, because it has embraced the social chapter. He may have read the recent article in the Financial Times about the Irish business community complaining about how they lose inward investment because of the burden of the social chapter. The difference between us and Ireland is that we are a net contributor to the Community; Ireland is dependent on subsidy from the Community. That is how successful the policies advocated by the nationalists have been in creating prosperity in Ireland.
    If the hon. Member for Moray wanted a serious debate on what is being achieved in dealing with our social and economic problems, she should have examined what has been achieved in Scotland by the Government's policies. Some £7.7 billion of investment has been attracted to Scotland since 1981, with the expected creation or safeguarding of 130,000 jobs. That investment has come because we rejected the policies of Opposition Members, who have had to come round to supporting policies that they had vehemently opposed.
    The percentage of households in owner-occupation has risen to almost 60 per cent., compared with 35 per cent. in 1979. That huge revolution in giving people a stake in the community is matched by the proposals of my right hon. Friend the Secretary of State for Social Security for a new deal for pensioners. Once again, the Opposition parties suck their teeth and oppose anything that transfers real power to individuals and real ownership to the people.
    The proportion of school leavers with no Scottish certificate of education qualifications fell from 31 per cent. in 1980 to less than 8 per cent. in 1995. The proportion of pupils staying on for the fifth year at school has nearly doubled. The number of full-time students in higher education has risen by more than 90 per cent. since 1980. The crime clear-up rate has risen by one quarter from 30 per cent. in 1978 to 39 per cent. in 1995. Recorded crime has fallen by 15 per cent. since 1991. Average full-time earnings have increased by nearly one third in real terms since 1979.
    Where has the hon. Member for Moray been? All that has been achieved in Scotland by a Conservative Government, who have pursued the right policies for Britain.
    We have achieved those results because of our commitment to three principles. First, we are committed to economic and fiscal policies that create the environment for business to succeed—an environment of low inflation and low taxes. The United Kingdom is currently reaping the benefits of that policy stance as it approaches its sixth year of sustained growth. It is enjoying the strongest economic recovery of any major European country, yet all we hear from people who describe themselves as Scottish nationalists is prattle about Ireland. Why do they not start singing the praises of Scotland instead of running their country down?
    Mr. Andrew Welsh: My hon. Friend the Member for Moray (Mrs. Ewing) asked for this to be a
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    debate about the principles, vision and values that should be directing our society. Instead, all that the right hon. Gentleman has produced are selective statistics that are designed, first, to rubbish his opponents and, secondly, to put the best possible gloss on his own opinion. That is why people are turning off politics. If the Minister is so clever and is running Scotland so well, why has his party been totally rejected? The Conservatives have been wiped out from local councils and from Europe. They are now about to meet the wrath of the electorate.
    Mr. Forsyth: We shall see.
    Mr. Gallie: On a point of order, Madam Speaker. I have read the Opposition motion on the Order Paper. It refers not to principles but to poverty and the means of addressing it. As far as I am aware, that is precisely what my right hon. Friend is doing.
    Madam Speaker: That is not a point of order; it is a matter of argument. Let us continue the argument.
    Mr. Forsyth: In fairness to the hon. Member for Moray, I think that the record will show that she said that parties must have principles in the run-up to a general election. That is the difference between us and the opposition parties: we have principles that we have applied and stuck to all the time that we have been in power.
    Our second principle, which has been responsible for the transformation of our country, is that we have ensured that Scotland's distinctive priorities and needs are fully taken into account by the Government as a whole. The post of Secretary of State for Scotland would be lost as a result of the proposals for devolution from the hon. Member for Hamilton (Mr. Robertson).
    Mr. George Robertson: No, it would not.
    Mr. Forsyth: What would happen if there was a Tory Government at Westminster and a Labour Administration in the Scottish Parliament in Edinburgh? Would the Labour leader come and sit in a Tory Cabinet? Of course not. He will be a message laddie, which is no doubt why the hon. Member for Hamilton is being groomed for that role. My voice in Cabinet ensures that the Scottish dimension is never overlooked in the policies of the United Kingdom Government, and that, wherever appropriate, a distinctively Scottish approach, which reflects Scottish circumstances, is taken.
    The third principle to which we have been committed is to ensure that, wherever possible, we have moved government closer to the people. Our consistent approach has been to devolve power downwards from centralised bureaucracies to local consumers and the community. [Interruption]
    I note that the hon. Member for Monklands, East (Mrs. Liddell), who has earned a reputation in Scotland as the voucher snatcher, is laughing. She cannot abide the idea of parents being able to choose the nursery education for their families. She cannot stand that. She would rather have a bureaucracy telling people who can and cannot have a place, and one which patronised people by telling them what it thinks is good for them. That is the difference between us.

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    Take, for example, the reforms that we have introduced into the health service to make it more effective. The clear distinction that we have made between the purchase of health services on behalf of the population in a given area and those organisations that provide those services has led to greater clarity about the respective roles and responsibilities. [Interruption] I note that the hon. Member for Cumbernauld and Kilsyth (Mr. Hogg) is trying to find out who is here from the Labour party to speak up for economic and social justice.
    The benefits of our reforms, which apparently the Labour party now accepts, including the separation of the purchaser and provider roles—remember how the Opposition used to oppose that—are seen in the increased willingness of the national health service trusts to be innovative and to develop new ideas to provide a better service to patients. Those benefits are also reflected in the imaginative way in which the health boards are able to look more strategically at the health service that their population really needs.
    A key feature of our reforms is the emphasis on the primary care sector, which is closest to patients on a day-to-day basis and which is obviously in the best position to identify worthwhile improvements that patients want. GP fundholders now cover half the population. They have benefited patients by bringing down waiting times for in-patient treatment and increasing the range of services available locally in GP premises.
    Taken together, those key changes allow the NHS to focus ever more clearly on the needs of the individual citizens whom they are there to serve. In that way, we ensure that change is driven by what people need. Our recent White Paper on the Scottish health service, "Ready for the Future", signals our intention to build on achievements so far to make the Scottish health service even more responsive to patients' needs. A more detailed agenda for action in primary care will be issued later this week.
    We shall continue to ensure that services are accessible, and provided as close as possible to patients' homes. We shall ensure that decisions about the pattern of services are taken by those with the greatest awareness of patients' needs.
    That is underpinned by our unequivocal commitment that the health service will continue to be free at the point of delivery, funded largely by general taxation—and, of course, funded for every year of the next Parliament, so that there is a real increase year by year. How sad that the Labour party, which claims to have been involved at the start of the health service, now finds itself muddled and unable to give the same commitment to the health service.
    Not only will the hon. Member for Hamilton not make that commitment, but the Labour party—in opposition, not in government—is writing to NHS trusts in Scotland, telling them to sack health service employees. The Leader of the Opposition told his party that it must not be complacent, that it must take nothing for granted, but the hon. Member for Hamilton wrote to chief executives of NHS trusts in Scotland:
    "I am writing in advance of the General Election to intimate what the approach of an incoming Labour Government would be towards NHS Trusts, especially in relation to the number operating in Scotland."
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    He goes on at length and then comes to the main point of his letter:
    "I would therefore like you to start immediate consultations with other Trusts with the overall objective of reducing the total number of Trusts in Scotland from 45 to 25. The elimination through the common sense merger of 20 NHS Trusts will in time free substantial funds for patient care and the National Health Service will be the stronger for it.
    There is only a maximum of nine weeks to the General Election and it is the constitutional convention"—
    I think that that is meant to be a joke—
    "that the government machine does prepare contingency plans for a change of government. This notification therefore is perfectly in order and I hope it is also helpful in allowing you to plan ahead for a government with very different priorities to the present one."
    The hon. Gentleman's priorities are to sack staff in the NHS, centralise services, and merge hospital services as part of a hatchet job on the NHS to provide money for his chums in local government. That is Labour's agenda.
    Mr. George Robertson: Our priority is patient care, not bureaucracy. By reducing the number of bureaucracies in Scotland, we can help the interests of patients.
    I rose to the Dispatch Box to ask the Secretary of State a specific question: will he rule out any future privatisation in the health service along the lines that we saw in Stonehaven hospital? Will he rule out the possibility that a future Conservative Administration will include clinical services in bids, as they did at Stonehaven hospital?
    Mr. Forsyth: My right hon. Friend the Secretary of State for Health has answered that question on a number of occasions.
    The hon. Gentleman has not addressed the point that I put. He is writing to the chief executives of NHS trusts, telling them to sack staff in advance of Labour winning a general election. That is a piece of arrogance of enormous proportions, and we now know the hon. Gentleman's agenda for the health service. [Interruption] The hon. Gentleman says that it would save £30 million as a result of merging those NHS trusts. I have asked my officials to work out exactly how many people we would need to sack to save that sum—[Interruption]I am perfectly entitled to ask my officials to tell me how many people I would have to sack to save £30 million by merging NHS trusts.
    The hon. Gentleman has made it his policy, so he can now give me the answer. Will he tell the House how many people, whom he dismisses as bureaucrats and administrators, would be sacked to achieve savings—on top of the savings that we are already making—of £30 million, net of redundancy costs? I am happy to give way to the hon. Gentleman. The hon. Gentleman either does not know, or will not say. I suspect that he will not say.
    Mr. Robertson: A merger or amalgamation of national health service trusts in Scotland should be easily attainable. Some trusts are already talking about amalgamations, and the Secretary of State for Scotland goes on endlessly about local authorities stripping out levels of administration.
    Why will the Secretary of State not answer the central question? The people of Scotland want to know before the general election whether his policy is to privatise clinical

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    services. That was tried at Stonehaven, but no one has tried it in England yet. Will he rule out the privatisation of clinical services in the NHS?
    Mr. Forsyth: The hon. Gentleman knows the answer, but I shall repeat it if he really wants to hear it again. We would not rule out any proposal from clinicians themselves.
    Mr. Robertson: So clinical services could be privatised?
    Mr. Forsyth: The hon. Gentleman knows perfectly well that, if clinicians brought forward a proposal, we would consider it, and would not rule it out in principle. We think that the health service should be driven by the demands and needs of those who are involved in the provision of front-line services.
    The hon. Gentleman held a press conference, and with a great flourish announced that he would save £30 million by merging NHS trusts. He said that that is where the money for patient care would be found. Our White Paper put £40 million extra into the NHS. The hon. Gentleman knows that savings have been achieved. He cannot tell us how many jobs would be lost in the NHS under his proposals, because he does not want to say. He knows that, in order to save £30 million, he will have to cut into clinical services.
    The hon. Gentleman dismisses administrators, and talks about posh reception areas. People who work in the front room of the health service take the details of distressed patients who come into hospital. Are they not part of the NHS team? Are those administrators to be swept away? Does he denounce as unimportant the people who look after patients' records? Where will the money be saved? Let us have the figures.
    If the hon. Gentleman cannot give them now, perhaps he will give them in his speech, after he has received the information from those in Islington who tell him what to say these days. [Interruption] The hon. Gentleman is now getting worried about the time. It is time he answered some of these questions. We want to know in which parts of the health service people's jobs are on the line, thanks to his commitment to that policy.
    In education, as in the health service, the Government have ensured that decisions are increasingly devolved to the people in schools who know what is required.
    Sir Hector Monro: We have been talking about unemployment in the health service as a result of Labour's policies. Could my right hon. Friend extract from the Scottish National party a figure for the number of jobs that would be lost at the Royal Air Force bases at Leuchars, Kinloss and Lossiemouth, and among personnel in the Royal Navy, the Scottish regiments and the defence industry were we to have Scottish independence? I am sure that the figure would be substantial.
    Mr. Forsyth: My right hon. Friend is right. I am not sure what the hon. Member for Moray has to say on the subject, but I will happily give way to her if she wants to answer that question. She is also not prepared to say what
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    the consequences of her policies would be, although she opened the debate by saying that we should have a proper discussion on these important issues.
    Mrs. Ewing rose—
    Mr. Forsyth: I give way to the hon. Lady—it is like fishing.
    Mrs. Ewing: I will not take any lectures from Conservative Members, given that the Government have amalgamated and destroyed some of our proud regiments in Scotland. They have reduced by 31 per cent. the number of personnel employed in the RAF.
    We have made it perfectly clear that no bases will be closed. Such arguments are propounded by a desperate party. It is moral blackmail. The Government try to destroy people's confidence in their own ability to participate in the international community in all aspects of our life, including defence. We have made it clear in our defence policy document, which we have put in the public domain, that an independent Scotland would have no implications for the key elements of our defence forces. That is against a background in which the defence forces themselves, and international defence communications, are changing.
    Mr. Forsyth: I do not want to be distracted too much, but I suggest that, if the hon. Lady gives that answer again, she should begin it with "Once upon a time".
    Let me make another point about the consequences for Scotland's economic prosperity. [Interruption] The Labour party used to be concerned about such issues. It used to be concerned about jobs. It is this Government who have delivered prosperity to Scotland and created new opportunities for employment, thanks in part to the efforts of the enterprise network and Scottish Enterprise, which we established. Now a Scottish parliament is being proposed, with tartan-tax-raising powers that would destroy jobs and prosperity, and damage people's savings and their income from dividends and other sources.
    Not content with damaging the business climate in Scotland and allowing business rates to be sent sky high by the irresponsible councils that their party runs in Glasgow and elsewhere—the same people who would be in a Scottish parliament—Opposition Members who are committed to a Scottish parliament want to destroy Scottish Enterprise and the local enterprise companies. They want to destroy the engine—the job creation machine—in Scotland.
    We have that on the authority of a Glasgow councillor, no less—Councillor Jean McFadden, who produced a report from the John Wheatley centre. We are told that, under a Scottish Parliament, the functions of the LECs would be transferred to local authorities, and that the structure of the national enterprise bodies, Scottish Enterprise and Highlands and Islands Enterprise, would be reformed—in other words, crushed. As for the Scottish National party, we have confirmation from Mr. George Reid, who is described as the party's trade and industry spokesman, that the transfer of the LECs to local authorities would also be its policy.
    Here we have a structure that has been successful in delivering jobs, but both those Opposition parties plan to wreck it in order to find the money to pay the £80 billion for their "pretendy parliament"—as I believe Billy Connolly called it— in Edinburgh.

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    That is in complete contrast to the Government. We will continue to support Scottish Enterprise and the local enterprise companies, because we support people who deliver. I am therefore pleased to announce further support for Scottish Enterprise and Highlands and Islands Enterprise in the current year. I shall be providing a further £5 million for Scottish Enterprise—
    Mr. George Robertson: Where will you find the money?
    Mr. Forsyth: We shall find it by not spending it all. Local government under Labour control has something to learn from that.
    Among other things, that support will allow Scottish Enterprise to meet existing and planned inward investment pressures created by the recent successes of Locate in Scotland in attracting overseas companies to Scotland, particularly in relation to the Hyundai project, and will ensure that the priority that the Government attach to supporting Scotland's indigenous companies is continued.
    The recent successes of Locate in Scotland are a significant boost for the Scottish economy, with the Hyundai project alone expected to bring an additional 2,000 direct jobs to Scotland. The extra resources will allow Scottish Enterprise to consolidate and build on that success, while protecting the equally important support currently given to Scotland's indigenous companies.
    As the hon. Member for Moray represents a constituency in the highlands, I could not allow this occasion to pass without announcing that Highlands and Islands Enterprise will receive £525,000 in extra support in the current financial year. Those extra resources will enable it to spend on a number of key projects, and will help to relieve funding pressures in the coming year.
    Mr. Salmond: Will the Secretary of State give way?
    Mr. Forsyth: Wait for the good news.
    The projects to benefit reflect the wide range of programmes through which Highlands and Islands Enterprise pursues its role to promote the economic and social development of the highlands and islands. This is good news for the highlands and islands: it will allow Highlands and Islands Enterprise to continue to play a full part in the regeneration of the highlands and islands economy, and to build on the success of its achievements to date.
    Mr. Salmond: We should obviously have more of these debates, so that the sweetie bag can be brought out even more often.
    Once upon a time—last Thursday night—the Scottish Office was briefing against the Ministry of Agriculture, to the effect that the slaughterhouse report had not been received by Scottish Office civil servants. Does the right hon. Gentleman accept that, as was reported in the newspapers at the weekend, the draft report was in the hands of the Scottish Office? Does he accept that he, as Secretary of State for Scotland, was responsible for the fact that the report was not passed on to Professor Hugh Pennington?
    Mr. Forsyth: If the hon. Gentleman reads his newspapers a bit better, he will be aware of the facts. The original report that referred to E. coli was never given to any meeting attended by a Scottish Office official.
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    I ask the hon. Member for Moray: is it not embarrassing to have the hon. Gentleman intervening in the debate? She started off by saying that she wanted it to be on a serious subject and to move away from soundbite politics, and here we have the hon. Gentleman, as normal, trivialising the debate. I think we must conclude that he fears that the hon. Lady's performance has not quite delivered what he had hoped for in terms of the coverage tomorrow.
    It is probably time for me to draw this speech to a conclusion. I realise that it is proving an uncomfortable experience for Opposition Members, who used to say that they were in favour of jobs, prosperity and investment in the health service, but who are now beached like whales, unable to deliver and doomed.
    Scotland is flourishing, and there is every reason to believe that it will continue to flourish as long as the Union is maintained. The truth is that the Union has secured for all of us, whether English, Scottish, Welsh or Northern Irish, a long history of freedom, prosperity and stability under the Crown.
    It is our historic partnership of nations that has forged a role throughout the globe. It is together that we have influenced affairs on the world stage. That is why the maintenance of the Union is fundamental to the prosperity and well-being of the people of Scotland. We have identified and will continue to seek ways to help Government to listen to the people of Scotland and to respond to their concerns and priorities in a way that does not threaten the United Kingdom. That is the best way forward for Scotland, and for all the people of the United Kingdom.
    4.36 pm
    Mr. Brian Wilson: It is a little unwise for the Secretary of State for Scotland to quote what Billy Connolly said about anything because, if he does that again, I might tell him what Billy Connolly says about him.
    It was a bit tasteless for the Secretary of State to wax lyrical on the subject of national health service teams. Probably no hon. Member has done more personally to destroy the concept of teamwork in the NHS than the Secretary of State. Some of us are old enough to remember his private business life, much of which was devoted precisely to the business of breaking up teams in the NHS by denying the concept that all auxiliaries and non-medical staff in hospitals were part of a team, privatising, cutting their wages, and making their positions as insecure as possible—all for the private profit of Michael Forsyth Associates and its client companies. For the Secretary of State to arrive here a decade later and bleat about the role of teams in the NHS provokes the memories of what he built his dubious reputation on.
    The Secretary of State referred to me as a spin doctor. That cannot possibly be true—I am more of a consultant, I think. However, if he wants to go down that road a little, I will give him a little lesson. This is from a spin consultant. If he wants to retain any credibility, he should not send out a special adviser one night to say that he is incandescent and to brief against another Minister and appear the next morning wide-eyed and innocent, claiming to have forgotten all about what was done in his name and at his instruction because, frankly, no one believes that sort of performance. He does not even have the virtue of subtlety to commend him. His performance

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    last week did no good for Scotland and even less good for the office he holds. If he has anything to say against his colleague the Minister of Agriculture, Fisheries and Food, he should have the guts to say it out loud and not leave the Prime Minister in the ridiculous position of saying the next morning that the stories were ridiculous and absurd and that he could not imagine where they had come from—when everyone in the House knew that the stories came from only one man: the Secretary of State for Scotland.
    I am grateful for the opportunity to make a short speech. I do not currently make many speeches for a simple reason: I have the nominal title of shadow Minister for election planning. As is all too conspicuous, there is no Minister for election planning, which may account for the Tories' current difficulties.
    I shall take the quite unusual course of picking up some of the points that have been made in the debate. I come from a good Scottish education system in which I was taught that that is what debate is about; not about set speeches but about dealing with issues that have been raised.
    I support the distinguished hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). The hon. Gentleman intervened on the Minister to ask about employment in Germany, and was given a typically trite response. The Secretary of State seems to think that a debating point is a substitute for an argument. The hon. Gentleman's intervention was important. I travelled in east Germany at the time of the first democratic elections in the whole of Germany and saw the incredible industrial museums that employed 10,000 to 12,000 people. The only possible course on health and safety grounds alone was to close them and start again.
    Germany has done an incredible job for the whole of Europe by taking on that task. It has encountered difficulties, largely as a result, and that has given rise to schadenfreude among Conservative Europhobes who have temporarily suppressed their prejudices to toe, not very successfully, the Cabinet line. That is a sad reaction. As the hon. Member for Inverness, Nairn and Lochaber said, imagine what state this country would have been in even with North sea oil and the proceeds of privatisation if it had had to do that. We are in a bad enough economic mess. What would it have been like if we had inherited a country of 17 million people with the incredible economic problems that east Germany presented to west Germany on reunification?
    On a more micro level of debate, I should like to refer to the assisted places scheme. I shall start by registering a complaint. How many families in my constituency benefit from that scheme—if benefit it is? I am by no means convinced that sending kids to the environment of a private school provides any lifetime benefit for them, but that is a wider issue. I have tabled questions asking to be told, by constituency, how many children are funded under the assisted places scheme. The Scottish Office has refused to give me that information under the facade of the usual evasion that the information could be collected only at disproportionate expense. Yet every family that benefits must have an address and there are not so many of them that they cannot be easily listed and divided among 72 constituencies. The reason for the Scottish Office's not giving that information has nothing to do
    40
    with the expense of collecting it. It does not want to give the information because it would reveal how few children from a constituency such as mine are catered for by the scheme.
    Mr. Michael Forsyth: That is another scurrilous allegation from a rather nasty Member, if I may say so. It is quite wrong to suggest that the information is not being provided by the Scottish Office because it would not be politically expedient to do so. The cost of collecting the information—perhaps this is the answer that the hon. Gentleman has been given—would be beyond the established guidelines. However, if the hon. Gentleman wants the information to be collected I have no objection to that being done. I imagine that it will reveal that the city in the United Kingdom with the greatest number of assisted places and the greatest dependency on the assisted places scheme is Edinburgh. I said in my speech that that city had provided the Leader of the Opposition with his ladder up. What is the hon. Gentleman's objection to children from families with incomes of less than £9,500, as half of them are, being able to get the same opportunities as the Leader of the Opposition? Why does it matter which parliamentary constituency they live in?
    Madam Deputy Speaker (Dame Janet Fookes): Order. The same rules apply to the Front Bench as to other hon. Members. That was a rather long intervention.
    Mr. Wilson: I am delighted to be called nasty by the Minister. Given his political creed, I would be distinctly worried if he did not describe me as nasty—I am opposed to everything that he stands for, dogmatically and philosophically. Nothing could be as juvenile as judging anybody by the school to which his parents sent him. [Interruption] I do not know which is the organ grinder and which is the monkey, but I should be pleased to hear from either the Secretary of State or his parliamentary private secretary. Neither wants to respond.
    No one is judged by the school to which his parents sent him. There is no envy involved because, by and large, I believe that sending kids to private schools is not good for them. Even if I thought differently I would recognise that, in any society, priorities must be set. An interesting parliamentary reply last week showed that even in Scotland, where there is a legal maximum of 33 children in a primary school class, 74,000 Scottish children are in primary classes of more than 30. That shows that the resources have much work to do. I want to know how many children in my constituency are in the assisted places scheme because I want to be able to tell my constituents that one, two or three children benefit under the scheme but that, by an alternative use of the resources, 500, 600 or 700 children could benefit. That is a reasonable point for any hon. Member to make.
    Mr. Forsyth: Will the hon. Gentleman give way?
    Mr. Wilson: The last time the Minister tried to make four interventions in a speech by my right hon. Friend the Leader of the Opposition he made a complete fool of himself. I do not see why he should be anxious to do that again.
    Mrs. Ewing rose—
    Mr. Wilson: I do not propose to take any more interventions.

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    The Minister said that we wanted to crush—I think that that was the word he used—Highlands and Islands Enterprise and Scottish Enterprise. Those two bodies would never have existed but for Labour Governments. The Highlands and Islands development board and the Scottish development agency were among the great creations of Labour Governments in the 1960s and 1970s.
    I am reminded of the kind of stuff that the Minister comes out with. In his heyday in the 1980s he described the Women's Rural Institute as a Marxist front organisation. In the 1960s, when Willy Ross was setting up the HIDB, Michael Noble, the shadow Secretary of State for Scotland at that time, described it as a Marxist conspiracy. There is a long tradition of that.
    I assure the Secretary of State that, long after he has gone, the successors to the Highlands and Islands development board and Scottish Enterprise will be not only secure, but will once again be enhanced as agencies of economic and social change. The great feature of the HIDB was that, originally, it was not simply an economic organisation, but had a strong social remit which has been largely eroded by the Government's ideological changes.
    The hon. Member for Moray (Mrs. Ewing) moved the motion with dignity. Its spirit is absolutely right. It is entirely proper, in the run-up to a general election campaign, that the agenda of poverty and homelessness and the conditions that afflict a substantial proportion of our constituents should be given an airing, and not brushed aside in the general melée of agendas that are set either by the media or by politicians.
    In the past couple of weeks, I have had a couple of all-party meetings in my constituency. They were organised by Church organisations which said that the issues that they want to put across form what might broadly be called the humane and social agenda. The issues include homelessness and poverty, not just in our country, but throughout the world. It is entirely right that, in the period before a general election, those subjects should receive an airing.
    Sometimes, we are all too clever. If there is a problem of homelessness in any society, it is very likely that its very simple cause is that there are not enough houses. That is the case in this society. We have a Government who are driven by ideology—with the Secretary of State playing his full role—and have refused to allow local authorities to provide houses for rent. That has been the primary cause of homelessness, including hidden homelessness, in any community—and certainly in those that I represent.
    I believe that a national minimum wage will be one of the major social innovations of the post-war years. It will be a landmark reform, which the Tories will despise and oppose because they cannot bear the idea of the introduction of a minimum standard of decency into any sphere of a society that they want to be driven by the market. However, once a national minimum wage is established as a concept, they will never dare overturn it. Until the day the national health service was created, the Tories bitterly opposed it, because they opposed the idea of people having access to the best medical care irrespective of their ability to pay for it. Once it was in place, they could chip away at its edges, erode it and
    42
    remove bits of it, but they never dared to attack its core. A national minimum wage will be in that category of great social reforms.
    Mr. Gallie: The hon. Gentleman's comments on a minimum wage may well be true. A minimum wage exists in other countries. In France, for example, it is set at the equivalent of about £2. Would he like to tell the House at what level he thinks a national minimum wage would be set on its introduction here?
    Mr. Wilson: No, I would not. The level at which a national minimum wage is set will be determined by a commission, which will consider the views of both employer and employee bodies. I understand why the hon. Gentleman takes a very short-term view of politics. I take a slightly longer-term view, however, and believe that it is far more important to establish the principle of a national minimum wage. That is what will be done in the next Parliament. Once the principle is established, it will never be abolished.
    Part of the tragedy, and the indictment of the events of recent years, is that there is almost no level at which a national minimum wage could be set which would not benefit a substantial number of people. In this supposedly wealthy society and successful economy, hundreds of thousands of people are earning below £2 an hour, and millions of people are earning below £3 an hour. In his last days in the House, the hon. Member for Ayr (Mr. Gallie) would do well to support the concept of a national minimum wage.
    The motion is ostensibly unexceptional, although I have not conducted a close textual analysis of it. It states that the House
    "rejects the Government's proposed spending plans"
    for the next two years. I did not hear the hon. Member for Moray say whether that means that she rejects the Government's global figures or only their detailed breakdown of them. I hope that she does not really believe that, after 18 years of Tory government, every penny—or even every billion pounds—of public expenditure has been so closely scrutinised and intelligently applied that there is not an awful lot of room to reapply priorities so that we can provide very different forms of public expenditure.
    Mrs. Ewing: What would the hon. Gentleman cut?
    Mr. Wilson: It would have been more helpful if the parties that tabled the motion had made some suggestions on that subject. It is extraordinary that, since the previous general election, expenditure on social security, for example, has increased annually by £15 billion. That is astonishing. It would also be astonishing if an incoming Government could not produce a great deal of intelligent thought on how that money could be better spent, to create a successful economy rather than subsidised failure. Expenditure on subsidising low pay—for which the taxpayer pays—instead of providing a national minimum wage is one very obvious example of that.
    The thrust of the comments made by the hon. Member for Moray is right. I also do not think that anyone needs to go further in politics, when looking for a big idea, than the eradication of poverty. The real debate is about the means of attaining that goal, about the speed at which it

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    is possible to move in achieving it and about the priority that it should receive. Despite all the brickbats that are tossed and all the attempts to sap the morale of those looking forward with hope and optimism to the advent of a Labour Government, I have not the slightest doubt that, in the future, as in the past, eradicating poverty will be the priority of a Labour Government.
    Perhaps the hon. Member for Moray should remember that Labour Governments delivered all the desirable features in society—such as the education system, which provided opportunity to her and me; and the national health service, which entitled us both to high-quality health care, to which we insist our children should be entitled—and the broad range of social reforms that have made the United Kingdom a civilised place in which to live. I have never heard much credit given to those Governments by the Scottish National party, but that goal is our hope and our inspiration—in which the public are now sharing. They look forward to the return of a Labour Government, to address the issues raised in today's motion.
    4.56 pm
    Mr. Bill Walker: The hon. Member for Cunninghame, North (Mr. Wilson) seems to have made a reputation in politics for attacking organisations and people who are involved with organisations that assist companies. It was therefore interesting to hear him praise the Highlands and Islands development board and Highlands and Islands Enterprise. He did so without declaring an interest: the fact that he and his company have been substantial beneficiaries of those organisations. It seems that he has one rule for others and another for himself. If he wants to speak in the House about standards and values, I suggest that he should first look in the mirror.
    Mr. Wilson: The company with which I am very proud to be involved is probably the only one in the highlands and islands which, before grant and loan disclosure existed, made a specific request that every penny given to the company—it was not very much—should be made public. That is the openness that we have practised ourselves and have always expected from others. Having made that point, I hope that the hon. Gentleman will now tell us how much he has received from his time with Stagecoach.
    Mr. Walker: Nothing—absolutely nothing. The hon. Gentleman has picked on the wrong target. He should do his homework more carefully. I say again that, if he wants to be critical of other hon. Members, he should first look in the mirror. Those who live in glass houses should not chuck bricks.
    Like the hon. Member for Moray (Mrs. Ewing), hon. Members care about the society in which we live. I do not think that any individual or party can claim sole concern for people's well-being—the only difference is that some of us see different routes for arriving at similar answers. The issue is whether the route one travels will or will not produce the answer.
    I should also tell the hon. Member for Moray that I have always respected people in Scotland who say that they want independence and who are prepared and willing
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    to pay the costs, whatever they are, for it. There will be costs, because no one yet knows what the debate will entail. All we currently know is that separation, in whatever form, can be very expensive if it is achieved in acrimonious circumstances. Also, independence in Europe is simply a slogan. It is nonsense. Jim Fairley, a well-respected nationalist in Tayside, has written and spoken at great length about it, and much more effectively than I.
    If the hon. Member for Moray seriously believes that the Royal Air Force bases in Scotland would remain unchanged, she is not living in the real world. She has only to consider the aircraft on those bases to realise that the Tornado, Jaguar and Nimrod are very expensive and require massive support from the many people who work on the bases, in or out of uniform. Their number would change substantially if the types of aircraft were changed. Anyone who has any experience of military matters will tell the hon. Lady that. I do not believe that the Royal Marine base at, for example, Condor in Arbroath would remain in its current form, because it is part of the Royal Marine Brigade, which requires certain things that would not exist if the base were operating alone.
    The SNP's policies, especially those relating to social and economic matters, belong, as my right hon. Friend the Secretary of State for Scotland clearly said, to the world of fairytales and make-believe. If Scotland and the UK are as bad as the hon. Lady claims, why are so many people from all over the world desperate to come and live here? If this is such an awful place, why do we face the ghastly problem of more people wanting to come here than we can possibly take? Of course, some people in the UK and Scotland have problems, but the vast majority have a quality of life of which our grandparents never dreamed. I have seen a dramatic change in my lifetime. I was one of six children living in a two-roomed house with my parents.
    Of course there are problems—anyone who thinks that there are not does not hold surgeries—but it is interesting that a substantial number of the problems brought to Members' surgeries are really local authority matters, involving the failure of those authorities. Councillors are there to deal with them. The system that other hon. Members and I operate shows that, if one writes to the chief executive of a local authority, it is surprising how quickly one can unclog things that should have been unclogged without their having to be brought to the authority's notice.
    I could use all my speech to comment on the SNP's military budget, which is a fairytale, but I shall deal with some matters that the SNP fails to address. How does it account for the fact that so much is missing from its budget? One of the problems with operating a budget, whether in government or in business, is that one has to state everything, or there will be a deficit at the end of the day.
    The SNP wishes to remove standing charges for gas, electricity, telecommunications and other utilities and says that the cost will be met from the profits of the companies involved. The SNP has obviously never run a company if it thinks that such a change will not have an impact on profits. If we link this idea with Labour's utility tax, it is clear that profitable companies will quickly cease to be profitable. I recommend that the left-wing SNP recall the

    45
    selective employment tax, which Labour introduced many years ago and which savaged employment levels and the profitability of businesses in the service sector.
    The SNP wishes to abolish the assisted places scheme—so does Labour—but does not tell us how the youngsters currently in the scheme will be educated and how the cost of their education will be met. It wishes to abolish nursery vouchers—it will be a voucher snatcher—and transfer the provisions to local authorities. No mention is made of how the cost of changes to the administration will be met. The list is endless—I should like to ask questions about some 50 items in the SNP's budget, but I shall not.
    This is an interesting debate, because it has given my right hon. Friend the Secretary of State for Scotland the opportunity to demolish the SNP's arguments. We can all wander around with our hearts on our sleeves—that is easy and costs nothing—but we have to consider how to implement policies and cost ideas.
    The hon. Member for Cunninghame, North mentioned the massive increase in the social security budget. Had the Government not looked after people who had been adversely affected by the recession, they would have been condemned—and rightly so. The Government, however, quite properly dealt with matters, as any Government would be required to do.
    Funnily enough, that brings me to the point about Germany made by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). My right hon. Friend the Secretary of State gave him a pointed response about the single currency. I have recently been talking to representatives of business and business organisations and talking at seminars, conventions and annual general meetings. I put to them a question that I now put to the House: if one is running a company that is the leader in its field—that accurately describes the UK's position relative to the rest of Europe in that UK plc is outperforming all the other countries—would the directors link that company to others that are not doing nearly so well, or doing very badly, and leave to them all their company's financial policies? The directors said that of course they would not and that it would be crazy to do so. I pointed out that that is exactly what some people are suggested UK plc should do, because that is what joining a single currency would mean. It would mean giving control to those who are not doing as well as we are and allowing them to make judgments on economic and fiscal policy affecting this country.
    Whatever the merits—if there are any—of a single currency in theory, in practice if one is doing well, one does not allow the decision making to be taken over by those who are doing worse. That is basic to the running of any organisation.
    Sir Russell Johnston: The hon. Gentleman is skirting around my point. I said that it was unfair of the Secretary of State for Scotland—it is not unusual for him to be unfair—to compare our employment position with that of Germany, given that Germany had just managed to absorb into its economy 17 million people who are economically backward. I said that we could not have done that, and that is perfectly true. By the way, on the question of a
    46
    single currency, perhaps the hon. Gentleman should ask Toyota what it thinks and take notice of the fact that inward investment in France is higher than that in Britain.
    Mr. Walker: The hon. Gentleman should do his homework more carefully. Toyota has done a U-turn on the single currency; it now says the opposite of what it was saying and, given the UK's current performance, can see an advantage in its being outside the single currency. It is important to note that, during unification, the Germans miscalculated the basis on which the various currencies should be made one. They are now paying a terrible price and will continue to do so—chickens always come home to roost in relation to financial and fiscal policy.
    As with a company's balance sheets, it may be possible to hide things for a year or even two but, over a period, the truth always emerges. The SNP wears its heart on its sleeve but, as my right hon. Friend the Secretary of State showed using the SNP's own figures, its budget reveals a massive deficit. That does not mean that Scotland could not be an economic entity on its own, if it was able to get somebody else to pick up the tabs, as southern Ireland has. Our money—United Kingdom taxpayers' money—has made southern Ireland what it is.
    Mr. Gallie: Does my hon. Friend recall a meeting of the Scottish Grand Committee not long ago when the hon. Member for Moray (Mrs. Ewing) suggested that Scotland would have to subsidise the rest of Europe, unlike Ireland?
    Mr. Walker: I do not believe any figures that come from the hon. Member for Moray or any other member of the Scottish National party. I would not want to be involved in any kind of merger on the figures that they produce, which do not stand up to close examination. Their figures are wishful thinking and fairytale economics.
    One can address the problems of society only if one has a thriving economy in which employers can create jobs, producing goods and services for which the world will pay. Scotland and the United Kingdom have no option—we have to be a world trading nation. Just to stand still, we have to export more than one third of the goods and services that we produce. It is essential that we have an economic climate in which entrepreneurs—risk takers—can create jobs.
    The problem for members of the left-wing Scottish National party is that they have not learnt the lesson of modern history, which is that their kind of socialism does not work. They cannot point to any country in which it brings home the goods. Despite our difficulties during the recession, the United Kingdom has come out of it better than anyone else and the world is looking to us.
    I remind Opposition Members that the hours that we spent in Standing Committee changing trade union legislation helped to create today's enterprise economy. To throw all that away would be crazy, whether in an independent Scotland or in the United Kingdom. Jobs would vanish, as has happened in every other socialist country, and we would end up with money being printed and ever fewer people being employed.
    The Scottish nationalists wear their hearts on their sleeves and tell people that they care, but they would not be able to sort out the problems because they would

    47
    not have the necessary economic circumstances. After 18 years, the Conservative Government have produced a situation that we dreamed about in the post-war years. We have had growth for nearly six years and we have low inflation and low interest rates. We are the dynamo of Europe. We would be crazy to throw all that away with hearts-on-sleeves, fairytale, economic policies.
    5.12 pm
    Sir Russell Johnston: I welcome the way in which the hon. Member for Moray (Mrs. Ewing) introduced the debate. I shall try to follow the path that she set. Social justice and the problem of poverty are proper subjects for serious debate, focusing attention not only on specific policies, but, as she tried to do, on the principles and attitudes that animate the main political forces in Scotland and Wales, throughout the United Kingdom and across the European Union.
    I have been in the House for 32 years. I came here in 1964—at a younger age than the number of years I have since spent here—motivated by idealism and hope. My deepest disappointment, 32 years on, is that so many of those ideals seem not to have been shared by others, although I continue to regard them as self-evidently right.
    Long exposure to shock newspaper headlines rather anaesthetises one, but I remember the headline in The Independent on Sunday on 21 July last year. It said, "UK most unequal country in the West". The Secretary of State might well remember that, as might other Conservative Members. Let me quote a little from the article:
    "Britain is now the most unequal country in the Western world, an authoritative new United Nations report reveals. The gap between rich and poor is as great as in Nigeria.
    Detailed statistics in the Human Development Report published last week also demonstrate that inequality has grown sharply during Conservative rule and that the poor in Britain now have to live on much the same incomes as their equivalents in Hungary and Korea."
    The article goes on:
    "The report shows that the poorest 40 per cent. of Britons share a lower proportion of the national wealth—14.6 per cent.—than in any other Western country. This is only marginally better than in Russia, the only industrialised nation, east or west, to have a worse record."
    Later, the article says:
    "The British poor are much better off in absolute terms than the poor in most Third World countries, but they are worse off than those in other Western nations."
    I draw this particularly to the attention of the hon. Member for North Tayside (Mr. Walker), who has just sat down after vigorously blowing his trumpet. The article says:
    "The poorest fifth of Britons have an average per capita income 32 per cent. lower than their equivalents in the US and 44 per cent. lower than in the Netherlands."
    The social protection offered in the Netherlands, the Federal Republic of Germany, France and other European countries—
    Mr. Bill Walker: Will the hon. Gentleman give way?
    Sir Russell Johnston: One moment. I should like to finish this point, then I shall give way. The social
    48
    protection that led those countries to devise the social chapter of the Maastricht treaty is openly rejected by Conservatives. The Secretary of State did so this afternoon. I find that the most bizarre political stance that I have ever witnessed from a party.
    Mr. Walker rose—
    Sir Russell Johnston: I can see the hon. Gentleman. He does not need to flap his hands all the time. I shall give way to him in a minute.
    It seems odd for a party that has had responsibility for government for 18 years to try to get votes by going around saying, "The great thing about us is that we are going to reduce social protection for you."
    Mr. Walker: Will the hon. Gentleman go back to his newspaper article and tell the House about different spending priorities and what money can buy? That is what is important, and I think that he will find that it is missing from the article.
    Sir Russell Johnston: With great respect to the hon. Gentleman—with effort—I do not accept what he says. That factor has been taken into account.
    I find it a matter for shame to be told that my country is the most unequal in the west. It should be a matter for shame for the Government that their 18 years of uninterrupted, unfettered power have produced such inequality.
    One of the affirmations of the 1947 founding document of Liberal International refers to
    "security from the hazards of sickness, unemployment, disability and old age."
    That is part of the reason why I am a Liberal. Further on, the document says:
    "The welfare of the community must prevail and must be safeguarded from the abuse of power by sectional interests."
    I do not agree with the Secretary of State's attempt to excuse the comment of Lady Thatcher—then Mrs. Thatcher—that she did not believe in society. That meant that she did not believe in the community. Much damage has been done to the concept of public service in this country by her ideological commitment to the free market. It has also contributed to the increase in poverty, which we are now debating. She and her equally ideologically driven advisers, such as Sir Alan Walters and Lord McAlpine—where are they now, pray?—espoused the trickle-down theory, in which perhaps the Secretary of State still believes. She said—he cannot get out of this one—that
    "It is our job to glory in inequality."
    She argued that scraps from the rich man's table would, in the end, be widely distributed. Presumably, the poor should be appropriately grateful. As we know, that did not happen and life at the bottom became worse. The deliberate promotion of inequality, far from encouraging growth, hinders it.
    Last year, the chief economist of the World bank, Michael Bruno, said:
    "Reducing inequality not only benefits the poor immediately but will benefit all through higher growth."
    The economic arguments are not the determinant of my opinion, which is based on concepts of fairness and generosity and the political imperative—certainly for a

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    Liberal Democrat—to work towards a harmonious society, not only of opportunity but of kindness and concern, but it is significant to find the moral and economic arguments coinciding.
    One of my mentors—I have a number—has been the great American liberal economist, John Kenneth Galbraith. Let me quote a portion of a speech he made to the Liberal International Congress in Ottawa in 1987, as it remains entirely relevant today. It is not very long, but it will certainly be good for the Secretary of State. As I am in the business of helping the underprivileged, including—
    Mr. Menzies Campbell: Intellectually.
    Sir Russell Johnston: I am grateful to my hon. and learned Friend, whose sharp legal brain seizes the right words so solicitously.
    Professor Galbraith said:
    "There is a further matter on which liberals take an adverse view of current ideological fashion"—
    it is still current for the Secretary of State—
    "As always, we seek an economic world in which all can participate and from which all have a decent return. We want progress towards a greater equality of return; we see this as a broadly civilizing tendency in modern society. In support of this goal we stand firmly for the principle of effectively progressive taxation and for income and other welfare support to the disadvantaged and the poor.
    Here we encounter another ideological aberration of our time."
    That is not a personal remark about the Secretary of State, although it could be. Professor Galbraith continued:
    "That is the effort to make increasing inequality socially respectable. It is not permissible in the modern democratic polity ever to legislate explicitly for the rich. Accordingly, there must be a cover story, however implausible; what is wanted cannot be admitted. We have had, in these last years, large reductions in the effective rates of income tax on the very rich."
    Professor Galbraith was referring to the United States, but his comments are relevant to Britain. He continued:
    "And also a powerful crusade against the welfare services to the poor. The rich, it is held, need incentives to greater economic effort; the poor need release from the debilitating effect of welfare; they must, in the words of one exceptionally convenient contemporary philosopher, have 'the spur of their own poverty'. The rich have not been working because they have too little money; the poor have not been working because they have too much."
    That is the nonsense that has underlined the Government's economic approach over the years and has done so much damage.
    The hon. Member for Moray was fair and generous in speaking of the commitment of the great majority of hon. Members to solving the problems of their constituents and the search for general betterment.
    We argue a lot about ways and means and the effect of specific policies. We also argue about intention and motivation. It can be said absolutely fairly that, in 18 long years, the Government have not demonstrated any drive to reduce poverty or inequality.
    The hon. Lady also spoke about the fear of poverty. According to Shelter, last year there were 31,000 homeless people on the streets of Scotland. We had a small exchange on the figure; the hon. Lady said that it was 75,000. I do not know which is correct, but it is still awful. The responsibility for that lies cross the Floor of the House.
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    I shall read one further quote from Galbraith. It is only short, but it is good stuff:
    "There are some matters on which the market is in inescapable default. In no industrial country does it supply good housing to people of moderate income or below. Nor does it supply medical and health services and care to the least advantaged people. Or good mass transportation in the cities. Or needless to say, education of the required universality and quality. These things the market does not do."
    The hon. Member for Moray referred to education. The Liberal Democrats have said clearly that we would support an increase in taxation to improve educational provision. The public response has been positive; Labour's response has been silence. We are committed to arguing for the removal of nearly 500,000 of the lowest earners from income tax by increasing tax on earnings above £100,000 a year. That would be a practical contribution to the alleviation of poverty and a redistribution of wealth, as is our concept of low-income benefit.
    The hon. Lady deserves our gratitude for raising an important set of issues in a very reasonable way. Sadly, the Secretary of State did not exactly follow her example. In his speech and his approach, the Secretary of State epitomises what is wrong with British politics. He is interested only in point scoring. He is very good at it, but it is a superficial, nihilistic exercise. Rational debate and calm reflection are concepts that are alien to him, as are consensus and co-operation. The hon. Member for Cunninghame, North (Mr. Wilson) has vanished, but he spoke about team work. Those qualities characterise so many successful countries in continental Europe, but they are ideas that the Secretary of State simply does not understand. He thinks that politics is about fighting. It should not be about fighting. I fear that his style will dominate the forthcoming general election. Let us hope that some will not follow him, but will try to maintain higher standards.
    5.26 pm
    Mr. Phil Gallie: I understand that we could well have heard the valedictory speech of the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). It is a privilege to follow him, and I congratulate him on his 32 years in the House and the way in which he has conducted himself throughout. The humour in his speeches—certainly in those that I have heard in the past five years—is always welcome. I cannot hope to match his use of long words and the way in which he strings them together, and I shall not attempt to do so, but I certainly admire him. Having said that, I have to add, as he would expect me to do, that I seldom agree with the principles in his word: that is a difference between us.
    The hon. Gentleman said that he was disappointed that, after 32 years in the House, he had not achieved all his aims. I am pleased about that, because I disagree with many of them. None the less, I congratulate him, and I feel sure that the House will be the poorer for his absence after the general election.
    Sir Russell Johnston: The hon. Gentleman is being very kind, but he is speaking as if I was about to be borne out of here and buried.
    Mr. Gallie: I hope that will not be the case, and that the hon. Gentleman may return to another place, but

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    that is beyond my knowledge and power. I am quite sure that all hon. Members join me in congratulating him on his 32 years in the House.
    I take issue with the hon. Gentleman on several points. He referred to my right hon. Friend Baroness Thatcher. Countries throughout the world have taken her lead on privatisation. Her handling of the economy is now the model for other world economies. She deserves great credit for that. At the same time, she recognised that, unless a country has a successful economy, is able to earn and its privatised companies do well, the poor are the people who suffer, because there is no cash to go into the services that we would all like to supply. One difference between the hon. Gentleman and those on the Opposition Front Bench is that he has at least stuck to his principles over the years. It seems strange that, at this late stage, those in the Labour party have abandoned theirs.
    The hon. Member for Inverness, Nairn and Lochaber spoke of the great majority in the House who back the words of the hon. Member for Moray (Mrs. Ewing). I suggest that, if there were any substance to that statement, the hon. Lady would win the vote, but I suspect that she will not. That point underlines the inaccuracies of the hon. Gentleman's words tonight.
    I return to the point that the hon. Member for Moray made about pensions, on which I intervened. I should point out to her that Conservatives have been aiming for reform of pensions over many years. That is why this country has such a pool of private and works pensions backing up the current state pension. The Government have achieved that by taking a long-term view. It is right at this time to speak out about the longer term, well into the next century, and the fact that provisions will have been made, unlike in other countries such as Germany and France, which have buried their heads in the sand on the issue. The Government should take great credit for that.
    One of the keys to the eradication of poverty has to be employment, aiming perhaps for full employment—although whether that is ever achievable is open to question. In this country, unlike every other country across Europe, jobs are being created and unemployment is falling.
    Since I came into the House, unemployment in my constituency has fallen from 11.4 per cent. to 7.7 per cent. I welcome that. In that time, we have had great difficulties. Companies such as British Aerospace have had to change priorities; instead of the Jetstream programme being a big seller, it greatly cost that company. Jobs have been lost in such enterprises, but at the same time, they have been created around the periphery and in other areas, especially in small business. The Government should be given great credit for their efforts.
    I turn to inward investment in Scotland—I make no apology for concentrating on Scotland. The United Kingdom takes 50 per cent. of the inward investment coming into Europe. Of that, 50 per cent. goes to Scotland. I would have thought that the hon. Member for Moray and her colleagues would be singing the praises of my right hon. Friend the Secretary of State for Scotland, those who have operated Locate in Scotland and Scottish Enterprise, and everyone else who has been involved in those great successes.
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    In considering employment, we have to look at the threats to it and the risks that would arise from the social chapter—another major difference between Conservative and Opposition Members.
    Mr. Dafydd Wigley: I listened with considerable interest to the hon. Gentleman saying that half of all inward investment coming into the United Kingdom goes to Scotland. We are told in Wales that half of the inward investment goes to Wales. Does nothing at all go to England and Northern Ireland?
    Mr. Gallie: I cannot speak for England and Northern Ireland, but I would certainly expect them to have got something. I am prepared to be corrected by my right hon. Friend the Secretary of State, whose figures I never dispute, because I find accuracy behind them. I do not know the figures for Wales, but I do know what I understand to be the factual figures for Scotland.
    Mr. Michael Forsyth: The United Kingdom gets about 40 per cent. of the inward investment coming into the whole of Europe, and Scotland and Wales get considerably more than their proportion according to population, as one would expect.
    Mr. Gallie: I shall re-examine my figures. If the figures were not what I understood them to be, I would be quite happy to apologise to the hon. Member for Caernarfon (Mr. Wigley) in advance and thank him for correcting me on the issue.
    The amount of defence spending in Scotland and in my constituency is a major factor. I know that the hon. Member for Moray takes great interest in the Nimrod programme. The fact is that that programme will sustain jobs in my constituency just as it does in hers. If we were to go the way of the hon. Lady and her colleagues, I suspect that that programme would have very little chance of retention in Scotland, given the importance of its strategic defence aspects.
    The hon. Member for Cunninghame, North (Mr. Wilson) mentioned the minimum wage, but did not specify the level. I concede that a minimum wage of £2, such as that in France, would not be a great danger to jobs. The hon. Gentleman's words were very guarded. He moved well away from any thought of a minimum wage of £4 or £4.30, as suggested by the trade unions. I suggest that my figure of £2 an hour is much nearer to the hearts and minds of those who lead the Labour party than to the hearts and minds of trade unionists who advocate adoption of such a policy.
    We are told that one reason why the United Kingdom attracts so much inward investment is that we have low-wage policies. As my right hon. Friend the Secretary of State said, average wages in the United Kingdom have risen by 30 per cent. since 1979 under 18 years of Tory government. Where does that put the last Labour Government? That certainly paints them as a Government of low wages. Hopefully, the electorate will reflect on that in the coming election—not as an afterthought but as a consequence of ill-conceived and ill-judged decisions.
    Tackling homelessness involves much more than simply building houses. We must look at the structure of society. We must consider the number of divorces. At one time, the chance of a marriage breaking up was well

    53
    above 4:1, but it has since dropped to 3:1 and is on its way down towards a 2:1 chance. There lies one reason for homelessness rising. There have been changes in family life—youngsters leave home at an earlier age.
    Irrespective of such matters, I understand that, over the past three years, 18,000 new homes have been built each year in Scotland. The housebuilding target for the next 10 years is 130,000 homes. On that basis, the Government are well ahead of the targets that have been determined. When we consider housing programmes, we cannot avoid the fact that, nowadays, almost 60 per cent. of people in Scotland own their own homes compared with 35 per cent. in 1979. That means that individuals are putting their own cash into housing, housing is being improved to meet the needs of individuals and rising housing standards are funded differently from in the past, when public housing was to largely under the control of local authorities.
    Those were the days of slum housing and bad judgment on housing issues. The public sector building programmes of the 1950s have been followed by the demolition of many of the houses that were built then. The local authorities' plans were ill conceived. Thank God we have moved on and now allow people to make their own judgments, even if they are not home owners. People now have a say in the provision of their homes, through Scottish Homes, co-operatives, contracts with private companies and shared ownership schemes. Those approaches are the way forward, rather than the old ways of local authority domination and dictatorial behaviour.
    Mrs. Ewing: Does the hon. Gentleman realise that the Budget will mean that local authorities' budgets for housing renewal and improvement will be cut by 35 per cent.? That is a severe cut. I have no objection in principle to the concept of home ownership—which is right—but the houses that are left in council hands need much renovation and improvement. The Conservatives' Budget will make it much more difficult for councils to solve that problem.
    Mr. Gallie: I do not know what the local authorities in the hon. Lady's area are doing, but in my constituency in the past five or six years, we have been blessed by a Conservative majority on Kyle and Carrick district council. It has done more than any other local authority in Scotland to improve the standard of local authority housing. It achieved that partly with capital receipts and partly with the capital allocations made available to it by the Scottish Office. Our housing stock is now better than ever before.
    It is true that some steps must be taken to reduce the debt burden on the reduced number of houses in local authority control. The clawback of 75 per cent. for next year will reduce capital expenditure by local authorities, but perhaps they should have reduced the debt burden earlier. If they had, we might not have needed to take the stringent steps now necessary.
    The Labour party claims that the health service has problems with bureaucracy. It should remember the situation in 1979, when there were real cuts in the health service; when nurses were underpaid; when the number of nurses and doctors was cut; and when patients had to send their bed linen home with their families to be washed. New voters will not remember that time, but many others will. God forbid we ever go back to those days.
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    I have taken the trouble to find out how much administrative costs have changed in the North Ayrshire and Arran NHS trust's hospitals. Since the trust was established in 1993, the number of nurses has increased by some 5 per cent., the number of junior doctors and clinicians has increased by 22 per cent. and the number of administrators has fallen by 21 per cent. So much for the claims by Labour Members. I suggest that they do their homework on the subject.
    It was interesting that the hon. Member for Hamilton (Mr. Robertson) had no answer to my right hon. Friend the Secretary of State's question about the savings that could be made by changes in trust structures. Those structures have worked well for people in my constituency.
    The nationalists live in a dream world. They offer increases in every area of public expenditure, but they do not believe that any burden would be passed on to the taxpayer. However, I commend them for sticking to their socialist beliefs. Such socialist beliefs were responsible for the problems in eastern Europe that the hon. Member for Inverness, Nairn and Lochaber mentioned, but the people paid the price for the socialist regimes and their mistaken policies.
    The Labour party, on the other hand, is like St. Peter, because it now denies socialism at every opportunity. The poor would be threatened by Labour's plans for a Scottish Assembly, which would mean wasted resources. The only jobs that a Scottish Assembly created would be for politicians and bureaucrats. If the Labour party wants to tackle bureaucracy, I suggest that it abandons plans for an ill thought-out Scottish Assembly.
    The windfall tax would not be a new tax. I would have expected the Labour party to abhor such a tax, because it will be a tax on fuel. As the regulator has pointed out time and again, the gas, electricity and telecommunications industries will be required to pass on the cost of the tax to the consumer.
    The well-being of people in Scotland, and the rest of the United Kingdom, would be risked further if the Labour party sought to give back to local authorities the power to tax local businesses, industry and commerce. The establishment of the uniform business rate was a great achievement by the Government, and we jeopardise it at our peril. I wonder whether anyone on the Labour Front Bench is prepared to say now that the Labour party has no intention of making any changes to the uniform business rate.
    Our debate today is about poverty. To combat poverty, we need a prosperous and thriving nation. Our industries must be competitive and able to trade with Europe and the world. Inflation has been under control for some years, and interest rates are balanced. Economic growth in the past five or six years has been higher than in virtually every other nation in Europe. We have much of which to be proud, and the re-election of a Conservative Government is the best hope for those who feel the pangs of poverty.
    5.48 pm
    Mr. Elfyn Llwyd: May I first congratulate the hon. Member for Moray (Mrs. Ewing) on her opening speech, setting the scene for the debate? I also congratulate the hon. Member for

    55
    Inverness, Nairn and Lochaber (Sir R. Johnston) on an excellent and thoughtful speech that I enjoyed immensely and from which I learnt a great deal.
    I am pleased to be able to contribute to this important debate, and it is noteworthy that there are no Welsh Labour Members in the Chamber—[Interruption.]—apart from the hon. Member for Cardiff, West (Mr. Morgan), who has come back into the Chamber. I am pleased to note that there is one Welsh Member in the Chamber.
    The Parliamentary Under-Secretary of State for Wales (Mr. Jonathan Evans): What about me?
    Mr. Llwyd: I meant Labour Members. I will come to the Minister in a minute. I would like to get on with my speech, as this is a serious subject. I must not fall into holes that I have dug for myself.
    This important area of policy appears to have been overlooked by the Government and the Official Opposition. The reason is that neither the Conservative party nor the Labour party has any distinct policies that could in any way be described as recognising the core values that are so vital to millions throughout the United Kingdom.
    I wish to confine my remarks to the effects of the last few years' financial settlements on local government. I well recall serving on the Standing Committee which scrutinised the Local Government (Wales) Act 1994. The Under-Secretary of State for Wales, the hon. Member for Brecon and Radnor (Mr. Evans)—among others—also served on that Committee.
    Mr. Rhodri Morgan: So did I.
    Mr. Llwyd: I beg the pardon of the hon. Member for Cardiff, West, who seeks further attention.
    The Government's view was that change was vital because of perceived confusion among the public about the roles and functions of district and borough councils and county councils. So vital was it that the status quo was retained in large swathes of England a short time later. During the debates, there were fine words from the Government about the future role and aspirations of local government—"equipping local government for the 21st century" and so on. Fine words they were, but the reality was considerably different.
    More than 110 measures have been passed by this House in the past 18 months which have curtailed or adversely affected local government's powers and responsibilities. It is therefore logical that the Government should starve local authorities of funding. After all, the local authorities will have to bear the brunt of complaints from constituents. The same smokescreen which appears between health trusts and the Government is now also appearing between constituents and the Government. Increasingly, people complain to local government when, frankly, the fault lies at the feet of the Government. If the Government do not give local government the resources, it cannot possibly to its job.
    It is important that the public know and understand what is happening in local government. The dead hand of central Government is clearly upon it, and councils are
    56
    expected to make substantial cuts year on year. This year is the sixth successive year of cuts, and one must ask where on earth those cuts are to be made.
    On Friday evening, a headmaster of a small primary school came to my surgery and said that he was being asked to cut £10,000 from his budget for the coming year. Last year, he had to cut £4,000. The upshot is that there will be fewer members of staff teaching, and he—in addition to all his administrative tasks—will have to teach in the substantial special needs section of the school. He is desperately concerned and anxious about the future and about the quality of schooling that the school will provide. The school is Dolgarrog school, a few miles away from the school I attended at Llanrwst.
    Mr. Richards: Will the hon. Gentleman give way?
    Mr. Llwyd: I will not give way to the hon. Gentleman.
    The school will suffer a cut of £160,000 from its budget and, inevitably, this will mean the loss of between eight and 12 teaching jobs as the cuts cannot be made anywhere else. This will adversely affect those whom the system is designed to serve. Schools the length and breadth of Wales—and Scotland, I am sure—are faced with huge crises. The one area left to cut is teaching staff, but it is obvious that those cuts are at best counter-productive, and at worst downright damaging to children's education.
    The Government today are all about cost, cost, cost. I fear that, during the past 18 years, a culture has emerged that is best summarised by saying that people know the cost of everything and the value of nothing. It is surely plain that no cuts should be entertained which affect the quality of education, but that is precisely what is happening—to everyone's dismay.
    Plaid Cymru-controlled Gwynedd must make cuts, as will all other local authorities in Wales, and is facing huge cuts again this year. But it values the provision of good education and, consequently, is cutting less from its education budget than any unitary authority in Wales. That is the right approach, and a shining example of a council putting values first and costs second. I am not saying that everything will be rosy in Gwynedd—far from it. Like everywhere else in the British Isles, Gwynedd will face savage cuts in leisure, planning, highways and social services. But it has decided to cut only 3 per cent. from the schools budget, and that is a recognition that education is extremely important to us all. We must invest in the future.
    The worst possible example of short-termism is effectively to cut society's investment in its greatest asset—young people and children—for the sake of limiting public expenditure so as to offer tax bribes to middle England in an attempt to secure the re-election, God forbid, of this ineffective and morally bankrupt Government.
    We will also see cuts in policing budgets. The budget for North Wales police, for example, will not even meet the force's pension commitments. That police force is expected to continue to deliver an excellent service and to buy into the latest computer networks to gain easy access to criminal records. It simply cannot do that. At best, it will stand still, while at worst, there will be cuts. The force is severely undermanned at the moment, in any event.

    57
    However, I acknowledge that the Home Office recently agreed to forward extra moneys to help cover the crisis North Wales police is facing with regard to the north Wales abuse inquiry. For that, I am grateful.
    Mr. Wigley: Although any additional resources for the police are to be welcomed, does my hon. Friend agree that local authorities' social services departments in north Wales need additional resources so that their budgets are not adversely affected to a greater extent next year?
    Mr. Llwyd: That is the next worry, and local government seems to be going from one crisis to the next. It grieves me that we have ended up in this situation in important services that need to be planned well in advance.
    The Conservative Government and the Labour party have fully signed up to the "lock 'em up" brigade. I served on the Committee discussing the Crime (Sentences) Bill, and I found it astonishing that it appeared to be a right-wing beauty contest between the two parties. There was no question of investigating why youngsters offended—it was simply a case of lock 'em up. That is the easy way out, as it takes no skill and no care, and it appears to be the only answer available to the larger parties.
    I am intensely worried that the core services so valued by our constituents will be subject to cuts. Schools are in crisis, homes for the elderly are closing, and spending on social services will be cut. The point made by my hon. Friend the Member for Caernarfon (Mr. Wigley) fits in neatly there. Once again, the weak and defenceless in society will bear the brunt of the cuts. Those who benefit from special needs and the community care budget—including the elderly and the infirm—will bear the brunt of savage cuts.
    We are taking a huge retrograde step, and attacking the very values that we hold dear. I find that deeply unacceptable. Do the Government or the Labour party have any values left? They seem content to cut income tax and preside over cuts in the services for the vulnerable. What kind of values are those?
    As long as the bulk of local government finance comes from central Government, the former will for ever be at the mercy of the latter. I want greater local financial autonomy—probably in the form of a local income tax. Tension between local authorities and central Government will continue to increase; local authorities are daily criticised for having to cut services but they are not really responsible for the cuts they are forced to make.
    Often before in the House I have referred to the common-sense idea that, if we want someone to act responsibly we must give him responsibility. That may be a truism, but it is a useful maxim. Local government should have far more direct responsibility and financial responsibility. Our system of paying for local government is antiquated, and needs a complete overhaul. The standard spending assessment approach is deficient in many ways. It is unfair to rural areas, because it does not sufficiently recognise the added cost of providing essential services for rural communities with sparse populations. Certainly, lip service is paid to those indices, but the system remains unfair, and it is not adequate to meet the needs of local government.
    The nursery voucher scheme is another gimmick that owes more to politics than education. It will undermine and damage Mudiad Ysgolion Meithrin, the Welsh
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    language playgroup organisation, a much valued body, which has been built up on good values and a great deal of excellent voluntary work. I should hate to see that excellent provision damaged for no other reason than the exercise of Tory dogma and a vain attempt by the Tories to come up with a so-called big idea.
    It would not be overstating the problem to say that local government is in crisis this year. The immediate future is extremely worrying, and there will be widespread distress and anxiety. What compounds this desperate situation is the fact that both the Conservatives and the Labour party believe firmly in a tax-cutting agenda. The shadow Chancellor has said that he will abide by the spending plans for the next two years—so no change there.
    What on earth, therefore, is the point of voting for Labour? If people want to vote for a reactionary, regressive, ambitious party which has lost touch with the common people, they now have a choice between the Tories and the Blair Tories. Each party is as devoid of values as the other. Neither is listening; both are scrambling to be the most right wing when it comes to social and penal policy. In short, they are virtually indistinguishable.
    The hon. Member for Ayr (Mr. Gallie) mentioned increased wages. It is, however, a great shame that the link between wages and pensions has not been retained. Had it been, pensioners would at a stroke have been far better off today—even on the evidence of the hon. Gentleman's speech.
    I have been delighted to note the emphasis in this debate on the needs of the vulnerable, but no one speaks for the pensioners any more. They form a large section of society, who gave their all to secure our futures. We owe them a large debt, which we ought to set about paying honourably. They deserve better; Plaid Cymru and the Scottish National party will ensure that this most important issue is given due political priority. I respectfully remind the House that it was the Conservatives who, by decoupling pensions from earnings, created this problem and made our senior citizens lag behind. Surely a society that espoused proper values would address that unfairness as a matter of urgency.
    The Government are content to spend £940 million a year on part of the defence programme, but they deem improving the lot of tens of thousands of pensioners prohibitively expensive. That is plain immoral.
    The Labour party, in its craving for power, has jettisoned all the values it once had. I sincerely hope that the people of Wales and Scotland will realise that they are mere pawns in a power game. The other evening I listened to the leader of Glasgow city council complaining bitterly that she was getting no change from her Labour colleagues in Parliament—the crisis facing Glasgow, she said, was falling on deaf ears. And that is happening even before the right hon. Member for Dunfermline, East (Mr. Brown) reaches No. 11.
    I have always thought that the Opposition were meant to oppose, not to go along with everything regardless of its merit. The truth, however, is dawning on the electorate. The people of Wales and Scotland are beginning to realise that they are being sacrificed on the altar of Labour's search for power—which is the all-consuming passion surrounding Blair and the Labour party. But come the election, the people of Wales and Scotland, I believe,

    59
    will say that Labour has taken them for granted once too often. They will, I hope, realise that all core values have been abandoned in the race for middle England and the affluent south-east.
    What is more, as the dreadful local service cuts begin to bite throughout Wales and Scotland, the people of Wales and Scotland will realise that the Labour party has no core values any more, and no regard for the interests or well-being of ordinary folk. In Wales, only one party opposes these cuts; just as the SNP opposes them in Scotland. Labour will not intervene, for fear of not reaching those ministerial limousines.
    Both Labour and the Tories agreed to cut income tax last year and this year. Plaid Cymru, the SNP and the Liberal Democrats did not agree. At least we can stand on our record, and say that we were prepared to stand up for ordinary people. Tax cuts are fine, but tax cuts for the sake of cuts are immoral at a time when services are being cut and people are struggling to make ends meet.
    If values are to be upheld, if the voices of ordinary men and women are to be heard. and if vital local services are to be protected, the choice for the people of Wales is clear. A vote for Plaid Cymru is a vote for the future of Wales—and not just for one part of it, but for the well-being of everyone in Wales.
    6.6 pm
    Sir Hector Monro: It is always a pleasure to follow the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd). All I can say to him is: best of luck at the national stadium on Saturday, when Wales play England. The rest of what he said, and of what the Scottish National party and Labour party spokesmen have said, was most disappointing. They always run the country down and never say a good word about the achievements of the past 18 years. I am quite sure that the Secretary of State for Wales will put the hon. Gentleman right about the tremendous economic achievements in Wales under a Conservative Government. I refer particularly to the remarkable amount of inward investment, of which we are all justly proud.
    For some months now I have thought that each speech I made in this place would be my last, but more Scottish business seems to come up week by week. Like the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), I arrived here in 1964 and made my maiden speech on Second Reading of the Finance Bill in November of that year—in front of a much more crowded and rumbustious House, during the white heat of the 100 days of socialism which ended in the raging disaster of the late 1960s.
    Today represents a dreadful climbdown for the SNP. A fortnight ago there were headlines all over the Scottish press to the effect that the SNP would press for a vote of no confidence in the Government today. The Labour party, the Welsh and the Irishmen would support SNP Members in that endeavour, we read, and the Government would fall. In fact, hardly a socialist or Labour Member has been present for the debate—just two of them on the Front Bench and no Back Bencher, with the exception of the hon. Member for Cunninghame, North (Mr. Wilson). So the whole idea of a vote of no confidence in the Government has failed. That just goes to show how the Labour party, the SNP and other parties in the House are at war with each other.
    60
    Perhaps Labour deserted this debate because of its significant fall in the polls last week; or perhaps it was to do with steamrollering democracy through the Labour party conference in Inverness at the weekend. Most disappointing of all is the fact that neither Labour, nor the Liberal Democrats, nor the SNP will clearly outline their policies even though we shall, in a week or two, be entering a general election period. The hon. Member for Hamilton (Mr. Robertson) in particular refused absolutely to explain his party's policies for Scotland. He waved the question aside and said that the debate was over.
    We shall enter the election period not knowing the Labour party's position on the West Lothian question, the tartan tax, pensions and how many Scottish Members of Parliament should be in Westminster; on local government expenditure in Scotland, all we know is that Labour is not prepared to give a penny more.
    We are bemused by the fact that the Labour and Liberal parties have decided to have a referendum after a decision and legislation on proportional representation—our electoral system is an extremely important matter—yet the same Labour party is prepared to go ahead with a referendum on a Scottish Assembly before legislation is introduced, which is quite the wrong way round. The Opposition cannot have it one way for proportional representation and the other for the constitution.
    Economic growth, success in controlling inflation and interest rates and the general expansion in industry with the consequent reduction in unemployment are all going well, as voters will know, yet the Opposition can do nothing but pour cold water on every aspect of Government activity over recent years.
    The motion is full of fine phrases. We all want to
    "eradicate poverty and create full employment",
    although it would be interesting to ask the Opposition what they mean by full, because all Governments have accepted that there is a limit beyond which one cannot go. Of course we want to create
    "a society free of social injustice"
    and to espouse "democratic values". Conservative Members have those values, but we sometimes wonder about the Labour party and the Scottish nationalists.
    The Government have provided
    "free health care… from cradle to grave"
    with ever increasing significance and to an ever higher standard. We help elderly folk as much as we can, and further information will be forthcoming later this week on an important step forward in health care for the elderly. We all believe in the community values advocated in the motion.
    The motion contains all those ideas, with which all hon. Members would agree, but ends without any indication of how they are to be paid for. The Opposition say that they do not accept the Red Book figures for this year and the next, which shows that they have no idea whatever how to pay for the additional facilities that they have called for in this debate.
    The hon. Member for Hamilton, in particular, was rumbled, because he was nonplussed by my right hon. Friend the Secretary of State's attack relative to the health service. The health service is doing exceptionally well in Scotland and quality is improving all the time. My local health board spent £121 million in 1994–95, increasing to

    61
    £131 million this year. That is a huge increase in real terms in health service spending. The hon. Member for Hamilton is prepared to cut staff and reduce expenditure by £30 million, which we all find hard to understand, bearing in mind our definite decision to continue increasing health service expenditure in real terms, year in and year out.
    I asked my right hon. Friend the Secretary of State about defence. The hon. Member for Moray dodged the issue. Nobody worked harder than many of us in the House of Commons to retain the Scottish regiments. We effectively lost two: the amalgamation of the Gordons and the Queen's Own Highlanders, and the second battalion of the Scots Guards.
    As much as I disliked its happening, the total lost was only 1,000 men, while the Scottish National party's policy would affect many thousands of men currently serving at Lossiemouth, Kinloss and Leuchars and in the Royal Navy and the Scottish regiments. That would be a serious setback for Scotland in terms not only of employment but of the prestige of the services and our great love for our regimental and Royal Air Force service men.
    The SNP also refused to accept the point about the inevitable loss of our voice in the world were we to go for independence. The United Kingdom as it is today has tremendous power throughout the world, but if we are cut down to a relatively small country, we shall lose the importance of our vote not only in Europe but further afield.
    I find it hard to understand why, when the SNP continually complains, as does the Labour party, about quangos, it intends to set up a host of new ones, such as a Scottish land commission, a Scottish export unit, a Scottish forest enterprise board, a Scottish commission for racial equality—
    Mr. George Robertson: I said no such thing.
    Sir Hector Monro: I am not accusing the hon. Gentleman: I am talking about the Scottish National party; he should listen occasionally. He is not always in trouble—only 99 per cent. of the time.
    There are costs, costs, costs under Opposition parties' socialist proposals, but no indication of where the money is to come from: it will come inevitably from increased taxation. The shadow Chancellor said that there would be no increase in income tax, but that means only that tax will go bang, bang, bang on everything else. As my hon. Friend the Member for Ayr (Mr. Gallie) rightly said, the windfall tax, especially on electricity, will inevitably have more impact than value added tax on electricity had. It will have a dramatic impact on fuel and power, yet the Labour party is prepared to go ahead with it.
    Between now and the general election, Labour has a great deal of explaining to do about how the country is to be taxed out of existence to fulfil the many promises that it has made, largely with the support of the SNP and the Liberal Democrats.
    All in all, the debate has been a tremendous disappointment to the Scottish National party: it set out to have a great day and show what a great party it was, but it has ended up with no Labour Back Benchers whatever to support it, precious few from any other party, and one Liberal. The debate has been the biggest damp squib that
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    I have attended in all my years in the House of Commons, and I hope that the nationalists feel thoroughly ashamed of themselves.
    6.17 pm
    Mr. John McFall: First, I congratulate the hon. Member for Moray (Mrs. Ewing) on securing the debate and on the way in which she expounded her views. I also congratulate the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) and the right hon. Member for Dumfries (Sir H. Monro) on their distinguished service in the House. I do not want them to be spirited away and would like their wise counsels to be available to us in the next Parliament from outside the Chamber, so I shall not go on for as long as did the hon. Member for Ayr (Mr. Gallie).
    Is not it amazing that the Secretary of State knows which the next party of government will be, in that he spent almost 90 per cent. of his 32 minutes attacking Labour in the style of a true oppositionist? He mentioned the issue raised by my hon. Friend the Member for Hamilton (Mr. Robertson) about the national health service trusts and job losses.
    The Secretary of State for Wales (Mr. William Hague): What is the hon. Gentleman going to say about that?
    Mr. McFall: The right hon. Gentleman asks what I am going to say, but with immaculate timing the Under—Secretary of State for Wales, the hon. Member for Cardiff, North (Mr. Jones), when asked in a written question today by the hon. Member for Clwyd, North-West (Mr. Richards),
    "if he will make a statement about the development of NHS Trusts in Wales",
    said:
    "There are currently 30 NHS Trusts in Wales.
    My right hon. Friend and I have received a joint application from the Pembrokeshire and Derwen NHS Trusts to dissolve and create a new single trust from April 1997. Public consultation on this application ended on 17 February 1997.
    Taking full account of the many representations received, and of the individual merits of bringing the two trusts together, we have decided to approve the merger."
    All the huff and puff—
    Mr. Michael Forsyth rose—
    Mr. McFall: The Secretary of State had 32 minutes. He has said enough. If it is good enough for Wales, what is wrong with Scotland?
    Mr. Forsyth rose—
    Mr. McFall: The Secretary of State cannot bully his way to the Dispatch Box. He was hyper in his 32 minutes. Let him sit down, take the tablets and listen to the debate. He has had his say.
    Mr. Forsyth: Will the hon. Gentleman give way on that point?
    Madam Deputy Speaker: Order. It is clear that the hon. Gentleman is not giving way. Perhaps he can further clarify that.
    Mr. McFall: It is not on for a member of the Cabinet to call hon. Members nasty and then expect to get his way

    63
    thereafter. He must sit in his place because I have the Floor. The question is, if it is good enough for Wales, why not Scotland? Perhaps the Secretary of State for Wales will answer that question in his civilised way, unlike the Secretary of State for Scotland.
    The message from the Secretary of State for Scotland was about privatisation of the health service in Scotland. He is on record as saying that if clinicians want it, privatisation of clinical services will take place. Despite the fact that the Secretary of State for Health has ruled it out, the Secretary of State for Scotland says that privatisation of clinical services is on the agenda for Scotland. The agenda for a fifth Tory term in Scotland is going to strike at the heart of the NHS. The message to the people of Scotland is that is the Secretary of State for Scotland will destroy the public element of the NHS, another example of his being at odds with his Cabinet colleagues. It is not enough that he is at odds with them on E. coli; he is now at odds with them on health service privatisation.
    We have come to a pretty pass when we read in the weekend papers that the Minister of Agriculture, Fisheries and Food has instructed his officials to write to the Cabinet Secretary, Sir Robin Butler, about the Secretary of State for Scotland's off-the-record criticism of him last week during the row on the report on failing hygiene standards in abattoirs. The Secretary of State for Scotland ordered his staff on Thursday night to tell the press that he was "incandescent with rage" with another member of the Cabinet. Reporters to whom we have spoken gave us the names of the press representatives he sent out. One newspaper said:
    "Said one seasoned Whitehall observer: 'It's every man for himself. And if that is the case, you can bet on Michael Forsyth being among the first on board.">
    There are serious questions on E. coli for the Secretary of State for Scotland. I listened carefully to his remarks. If the Scottish Office received the Swann document from the Minister of Agriculture, why did the Secretary of State not pass it on to Professor Pennington? He said in the Chamber that it was not received by a Scottish Office official but that it was received by the Scottish Office. When did the Scottish Office receive it? The Secretary of State, with a great wave and flourish, announced that he had persuaded the Prime Minister to establish a Cabinet sub-committee. By doing that, he took the issue to a national level. How many times did the sub-committee meet and what documents and papers did it request? Those questions are still pending. I hope that the Secretary of State will apologise to the people of Scotland for the inaction of his Department and his Government, and for the fact that 20 people died of E. coli in Scotland. An apology is required and so are answers on the E. coli document. The Secretary of State will not get away with it.
    The debate is about public responsibility for social justice. The Government's record on social and economic injustice in Scotland is nothing short of disgraceful. Let us rehearse quickly the statistics of 18 years of Conservative Government in Scotland. One in five households of working age have no one in work. That is the direct result of Conservative policy. Since the Prime Minister took over, 1 million Scots have experienced unemployment. The number of people living on means-tested benefit has
    64
    doubled since 1979. Some 85,000 Scots earn less than £2.50 an hour. That is why the Labour party argues the case for a minimum wage. There is, first, a moral case and, secondly, an economic case. I have never heard Opposition Members explain whether it is fair that a security guard earns £1 or £1.20 an hour or say what they will they do about it.
    The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch): Opposition?
    Mr. McFall: I said "Opposition" because my mind is travelling ahead, as it should be. The Government have not answered the case morally or economically.
    The Secretary of State goes on about the tartan tax, but the people of Scotland do not believe what he says. The real tartan tax is VAT on fuel. He and his colleagues voted, not once, but twice for that unfair tax: they voted to introduce it and then to double it. The Tories are the party of unfair tax. A fifth term of Tory Government in Scotland would see the reintroduction of VAT at 17.5 per cent., but they will not get in.
    The Secretary of State and his colleagues have devalued Scottish democracy. Ten Scottish Conservative Members—and the five in St. Andrew's house—are responsible for the £6.9 billion that has been spent on quangos. There are now nearly four times as many quango members, personal appointees of the Secretary of State, as local councillors.
    Mr. Michael Forsyth: Where is the fifth man?
    Mr. McFall: The Secretary of State asks about the fifth man; is there not a Minister in the House of Lords?
    The Tory years have been an absolute disaster for Scotland. We agree with the Scottish National party about that, but we differ on what to do next. Scottish nationalists believe that destroying the Union and making wild and unrealistic spending pledges will solve Scotland's problems, but it will not. Scotland needs the realistic plans to combat social injustice and poverty which Labour will deliver, not the pie-in-the-sky promises of the separatists.
    Let us consider some of the separatists' promises. They raise the issue of defence. Like the hon. Member for North Tayside (Mr. Walker), I do not have the time to go into the matter in detail, but they estimate that the annual cost of a Scottish military would be £1.7 billion. However, evidence from similar sized countries such as Norway, suggests that the bill would be at least £800 million higher, at about £2.5 billion. Moreover, most comparable countries achieve that level of spending only by relying on less expensive troops through conscription. The only way in which the SNP's spending targets could be even nearly met is by the large-scale reintroduction of conscription in Scotland. The separatists are telling the young people of Scotland, "Two minutes spent voting for us and we will give you two years of military service." The SNP cannot run away from that.
    Mr. Salmond: Will the hon. Gentleman give way?
    Mr. McFall: I will not give way because I have only a few minutes left. The Secretary of State made a few points on the SNP's wild financial promises. Its economics is fantasy politics.

    65
    Let us look at some of the SNP promises. It has said that it will restore benefits to 16 and 17 year-olds—that would cost £20 million a year. It has said it will abolish housing debt and build 15,000 new houses—that would cost £1.3 billion. It has said it will reduce whisky duties to 10 per cent.—that would cost £90 million a year. It has pledged a 15 per cent. increase in income tax allowances—that would cost £4 billion a year. It has also said that it will introduce a maximum charge of £45 a week for residential care—that would cost £45 million a year. It has also pledged a £5 increase in the single pension and a £8 increase for a couple's pension, which would cost £200 million a year. Those promises are equivalent to a total of £5.65 billion a year. Where would that money come from?
    Perhaps the cartoon that appeared two weeks ago in The Herald got it better than any of us when it portrayed the hon. Member for Banff and Buchan (Mr. Salmond) outside a business park which carried the sign

    "Scottish National Phantasia

    Business Theme Park

    Sponsored by the Brigadoon Self-belief Tartan Think Tank

    No Rates No Taxes

    No Bad News

    Free Oil

    Massive Bungs

    'Together we can blow it'.

    Beware flying pigs."

    That is the scale of the SNP's promises.
    What about what the Tories have done to Scotland? The Secretary of State should go back to his constituents in Stirling and tell them that, since 1992, the Government have raised an extra £47 million from them. The Under-Secretary, the hon. Member for Aberdeen, South (Mr. Robertson), should tell his constituents that the Government have raised an extra £54 million from them. The hon. Member for Ayr (Mr. Gallie) should tell his constituents that the Government have raised an extra £50 million from them. The right hon. Member for Dumfries (Sir H. Monro) should tell his constituents that the Government have raised £57 million from them, while the hon. Member for Eastwood (Mr. Stewart) should tell his constituents that the Government have raised £59 million from them. Since 1992, the Government have raised a total of more than £500 million from those constituents. That is the real tartan tax and that is why the people of Scotland will not tolerate the Conservatives' future.
    For my text at the end of my speech—
    Mr. Michael Forsyth: Text?
    Mr. McFall: Indeed, it is an epistle. Let me read it out.
    Mr. Salmond: An epistle?
    Mr. McFall: This is the epistle. It states:
    "When parents dare not let their children out to play; when senior citizens who have given a lifetime of service to the community are forced to spend their sunset years—which should be amongst the most rewarding in their lives—as prisoners in their own homes, then we have reached a point where action must be taken."
    66
    My hon. Friends and I say "Hear, hear" to that. Who wrote that? Was it my hon. Friend the Member for Hamilton? No. It was the Secretary of State for Scotland. It is a testimony to the 18 years of misrule by the Conservative Government in Scotland. The people of Scotland will appreciate those comments, and they will never again appoint a Secretary of State like him, or a Conservative Government. They will vote for the return of decency and fairness to Scotland and to Government.
    6.32 pm
    Mr. Cynog Dafis: I am glad to have a few minutes to draw together the strands of the debate. I do not want to spend too much time responding to the depressing line of reasoning pursued by the Secretary of State for Scotland, which, I dare say, the Secretary of State for Wales will repeat. They have tried to prove that Scotland and Wales are dependant nations and that they do not have the resources, wherewithal or ability to stand as nations in their own right among the other nations of the world. That story was peddled to every colony, internal or external, throughout the history of imperialism. It was usually peddled by the Governor General—there was no difference tonight.
    Plaid Cymru will effectively challenge the figures that have already been bandied about by the Secretary of States for Wales, just as our colleagues in the Scottish National party will challenge those relating to Scotland.
    This is an important time for the debate to take place because we are approaching an election. It is a time when profound misgivings have been expressed about the direction in which our society is moving. Just one manifestation of that concern was the conference held last week by the Forgotten 30 Per Cent. Group. That group, which consists of Church of England clergy, supported by Church Action on Poverty, expressed its profound concern about the exclusion of 30 per cent. of our people from society through poverty. That group called for the
    "revitalisation of community and public resources"
    and a "fundamental shift in values". Our debate is a response to that concern.
    One aspect of that concern relates to inequality, deprivation and social breakdown; another is the trend towards serious short-termism, which has starved society of the resources that we need in public investment to guarantee future stability, sustainability and success. The current political concern stems from the fact that the two big political parties are vying with each other to prove that they are capable and willing to reduce public expenditure and cut taxes. That is the game that they are playing.
    Getting public expenditure below 40 per cent. of gross domestic product has become an economic and political virility symbol for the two largest parties. According to that Tory-Labour consensus, public expenditure is seen as problematic and burdensome. The only measure of success is the level of private consumption. That was the clear message of the undertakings on taxation and public expenditure from the shadow Chancellor in January. He justified the refusal to raise the top rate of income tax by saying that it reflected Labour's acceptance of the need to reward work.
    What about the importance of rewarding the work among the low paid and those who are insecurely employed in the public sector? What about rewarding

    67
    those working in the health sector and in social services, who currently work well over the hours for which they are paid because they are unwilling to see the people they care for left without care? What about rewarding those people rather than just those who pay the top rate of income tax? How are we to address such inequality except by providing adequate public expenditure? It comes back to that.
    One would not, of course, expect better of a Thatcherite Tory party than the pursuit of a line of reasoning dictated by the desire to cut public expenditure. The party is still Thatcherite although the lady of that name has departed from the scene. There is widespread dismay, however, at the fact that the Labour party seems to be accommodating Thatcherism. That dismay was well expressed in an editorial in The Guardian following the shadow Chancellor's statement on 20 January. It stated:
    "It is a frightening admission that Labour may not put the moral and political case for redistribution except at the margins of social deprivation…Labour is relinquishing the chance to make the much-needed changes to the Britain it inherits."
    That is a pretty severe indictment.
    What does that rightward shift portend for Wales? According to current targets, the Welsh Office budget for public expenditure for 1997–98 will be reduced in real terms by 0.9 per cent. In 1998–99, there will be a real terms reduction of 2.3 per cent. The going is already tough for service providers and service users, but it will be worse next year, and very much worse the year after. In other words, "They ain't seen nothing yet," unless a Labour Government are prepared to increase Welsh Office spending at the expense of other departmental budgets. It is just as possible, however, that that Government will reduce the Welsh Office and Scottish Office budgets according to other priorities in order to increase the budgets of other Departments. A recent article by the Labour leader on defence in The Daily Telegraph suggested that there was no likelihood that Labour would shift resources from the defence budget to the Welsh Office and towards other more progressive activities.
    Where will the resources come from for the health service in Wales—for example, in Dyfed Powys, where trusts already face significant deficits at the end of the next financial year? Their staff are already under severe pressure, but the trusts will be forced to cut vital services unless extra resources are made available. There is no doubt about that. I should like to hear tonight that extra resources will be found.
    What about the severe pressure facing colleges of further education in Wales, which will have reduced budgets next year? Higher education is a key area of the Welsh economy, as well as a public service, employs more than 14,000 people, and has teaching and research programmes that are vital for the future prosperity of Wales. Its staff, too, are under pressure. University staff salaries have fallen well behind those of other sectors of society as their work loads have increased. They have called for a pay review body to look at the salary issue; we strongly support that call. They have delivered efficiency gains of some 30 per cent. over the past decade, but what is to come next?
    In the two years from 1996 to 1998, cumulative cuts will amount to 7 per cent., and over the next three years capital funding will be cut by 64 per cent. in the vain
    68
    hope that the private finance initiative will pick up the tab. Such cuts in a key sector amount to short-termism of the worst kind. The Institute for Grassland and Environmental Research is in my constituency. It is not a Welsh Office responsibility. It should be, but in Wales scientific research does not come under the ambit of the Welsh Office. The institute has an outstanding record: it is world famous and successful, and it attracts commercial funding but, this year, funding cuts by the Ministry of Agriculture, Fisheries and Food will lead to a reduction in IGER funding of some 10 per cent., seriously imperilling the coherence of the programme and the institute's ability to attract commercial funding because core funding makes it more, not less, possible to attract commercial funding.
    My final example is housing. Next year, the Tai Cymru budget will be cut by £259 million—a 31 per cent. cut in one year—moving us even further away from a programme that will eliminate homelessness and raise the quality of the housing stock in Wales, which we should be putting together. Such a programme was identified in the well-researched document issued by the Welsh Federation of Housing Associations entitled "Target 2000", which called for a doubling of the housing budget. What we get, however, is a halving of the housing budget.
    That is the inheritance left us by the Tories as they face oblivion. We all earnestly desire that oblivion as soon as possible, the Labour party is intent on maintaining that inheritance for two years, and probably more. There is a clear contrast between that perception of matters and the perception of the SNP and Plaid Cymru. The alternative approach can be seen, in terms of Plaid Cymru's policies, in the "100,000 Answers" programme for employment creation and for sustainable economic, social and environmental development. We are talking about a public investment programme, at a net annual cost of £400 million, funded from a progressive taxation system, which would reduce the burden on the low paid while requiring wealthier people—including me and many more like me—to pay more. That is a reasonable trade-off in terms of the benefit to be gained.
    That is a programme for a self-governing Wales, but its principles are relevant to the rest of Britain. It bears an uncanny resemblance to the programme of the Real World coalition of more than 30 organisations, published just last year. That document, aptly named "The Politics of the Real World", calls for a major programme of public investment over 10 years to create work opportunities and meet social needs. It also emphasises the national status of Wales and Scotland and calls for powerful parliaments for both those countries.
    The final chapter of the document talks of the dangers of the politics of self interest and the pursuit of what it calls "safety through insulation". It speaks about the dangers of the better off and about
    "withdrawing… into the bunker of narrow self-interest: reducing taxes, cutting public services, ending overseas aid, restricting immigration, erecting security walls"—
    and so on. It continues:
    "In the short term, this approach looks cheaper"—
    it does—
    "it seems to offer a private way out, not dependent on the uncertain cooperation of others. But it is doomed to failure."

    69
    It is important to emphasise that such an agenda is doomed to failure. Real World goes on to say:
    "Most people in Britain, we believe, will regard this prospect"
    —retreating into a security bunker, which already happens in significant parts of the United States where that kind of economic agenda has been pursued—
    "as appalling, and will wish to avoid it. The alternative seems to us inescapable. Responsibility for the whole community—globally, and within the UK—must be accepted by all. The problems we face must be reduced by common action, not shut away. Though there will be financial costs, the return in terms of genuine security and the quality of community life will be far higher. This is in everyone's interest, even that of the reasonably affluent who will have to pay the larger share."
    The document concludes:
    "If Real World's vision looks radical this is a measure of how feeble the idea of political purpose in Britain has now become."
    That is true of the debate that we have had over the past couple of years.
    We are seeing the convergence of the two big parties on social and economic policy. It springs from Labour's wish to take votes and seats from Tories in England. That is misguided and the Labour leadership is going well beyond what is necessary to achieve it, given the current change in attitudes. In any case, there is a different consensus in Wales and Scotland; it is not a necessary exercise in our countries. What is happening shows how vital it is for the SNP and Plaid Cymru to take votes and seats from both Tories and Labour in Wales and Scotland on our kind of agenda—[Interruption.] Hon. Members may laugh, but it is very likely to happen.
    That is vital for Scotland and Wales, but it is also important for England because it is one of the few ways in which we can keep alight the torch of the values that we have tried to debate with some success, but not a great deal, tonight.
    6.46 pm
    The Secretary of State for Wales (Mr. William Hague): This has been an interesting and varied debate. It was opened by the hon. Member for Moray (Mrs. Ewing), who began by saying how pleased she was that it was well attended. Unfortunately, she was greeted by a sea of green, particularly on the Benches of the official Opposition. They continue to be a sea of green. It was an early example of what characterised the hon. Lady's speech—an expression of wishful thinking in the absence of factual support. However, she is the mover of the motion and she deserves special attention, which I shall give her later.
    First, I pay tribute to what were probably the valedictory speeches of the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) and my right hon. Friend the Member for Dumfries (Sir H. Monro). Given that they have been Members of this House for almost as long as I have been alive, I must pay tribute to them with appropriate humility. The whole House will wish to pay tribute to their length of service and their consistency of view and, in the case of my right hon. Friend, to his contribution to the good government of the United Kingdom in general and of Scotland in particular.
    Those of my hon. Friends who spoke in this wide-ranging debate drew attention to the huge economic progress being made in this United Kingdom, including Scotland and Wales, particularly in the creation of jobs.
    70
    Opposition Members called for vision, but were unable able to provide any; they called for more spending, but did not describe where they would find the money; and they called for a re-ordering of priorities, but did not say what the priorities should be.
    Only two members of the official Opposition spoke. The hon. Member for Dumbarton (Mr. McFall) referred to the merger of the Pembrokeshire and Derwen trusts, which the Under-Secretary of State for Wales, my hon. Friend the Member for Cardiff, North (Mr. Jones), announced earlier today. I must stress that the merger came after proposals from the trusts themselves and after a long consultation period. That is different from issuing diktats, which is what the shadow Scottish Office team appears to be doing.
    The real question about the health service, to which the motion refers, is that, given that the Government have guaranteed that in every year of the next Parliament we shall increase health spending over and above inflation, why do not the official Opposition give that guarantee? What are they trying to hide about their plans for the health service?
    Mr. Morgan rose —
    Mr. Hague: The hon. Member for Cardiff, West (Mr. Morgan), whom we welcome to the debate, and whose recent haircut we welcome even more, now wishes to intervene.
    Mr. Morgan: In spite of the Secretary of State's obvious jealousy at the proliferation of my hair, I put it to him that, far from being cast-iron, the guarantee about real terms increases in national health service expenditure in Wales has already been broken. The increase for next year is only 2.4 per cent. more than what is being spent this year, which is less than the Bank of England's projection for the rate of inflation.
    Mr. Hague: The hon. Gentleman's hair style is the only thing about him of which I am jealous. I am not jealous of his arithmetic. Our plans for the coming year compared with those for the corresponding period last year provide for a like-for-like increase in spending on the national health service in Wales of £94 million. That increase is above the rate of inflation, and the hon. Gentleman does not promise to match it in the next Parliament.
    The other speech by a member of the official Opposition was made by the hon. Member for Cunninghame, North (Mr. Wilson). He said that a national minimum wage would be a landmark reform and would transform the situation of many people. His speech was all the more remarkable because he could not answer the most elementary questions about it, such as at what level it would be set. If we had been able to ask him, I have no doubt that he would not have been able to tell us how many jobs would be lost. He said that such issues would be considered by a commission. The deputy leader of the Labour party once said that a minimum wage would lead to a shake. Evidently not every fool knows that.
    The hon. Gentleman said that, with such a huge amount of public expenditure, there was bound to be room for a re-ordering of priorities. He said that there must be scope to re-order priorities, given that the Government spend

    71
    billions of pounds. Where is that argument when we discuss local government spending? How come Labour wants the Government to give more money because there is no scope whatever to re-order priorities in local government?
    The hon. Gentleman called for a long-term view and left in a great hurry to get on with his role as shadow Minister for election planning.
    Mr. Wilson: On another aspect of the property debate, will the Secretary of State tell us whether any Cabinet Minister is holding out the prospect of a doubling of the rate of VAT on fuel to 17.5 per cent.? Is he going against the views of the Government and of the Conservative party? Yes or no.
    Mr. Hague: As far as I know, no Cabinet Ministers are making announcements about that matter.
    We have achieved a revolution in the job prospects of the people of this country. That has gone widely unnoticed by Opposition Members during this debate. My hon. Friend the Member for North Tayside (Mr. Walker) referred to the rise in living standards in recent years, and the performance of the United Kingdom economy in topping the league for inward investment. Do Opposition Members think that Hyundai would be coming to Scotland and LG to Wales if those companies thought that this country was the no hope wasteland that the Opposition often describe it as?
    Mr. Salmond: Will the right hon. Gentleman give way?
    Mr. Hague: I shall not give way any more: I am dealing with the points raised in the debate, as the Minister who winds up is meant to do.
    We have the highest proportion of people in work of any major European economy. In Wales, we have more people in manufacturing employment than it was 10 years ago. Total employment is almost 100,000 higher than 10 years ago. None of those points was acknowledged by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd). He spoke about the financial position of local authorities. Local government in Wales receives 88 per cent. of the money it needs from the Welsh Office. It gets a higher level of assistance than local government elsewhere in the United Kingdom. It has had an increase in line with inflation, which adds up to £64 million for the coming year. Local authorities should explain to their electors how they are spending the money.
    The hon. Member for Meirionnydd Nant Conwy complained that the link between pensions and wages had been broken. If that link were to be restored, it would, at a stroke, cost the taxpayer more than £8 billion a year. How would Plaid Cymru finance that in an independent Wales? It is all very well to behave like a pressure group, writing cheques that it knows will never be cashed, but some of us have to deal with the practical realities of government.
    My hon. Friend the Member for Ayr (Mr. Gallie) referred to our success in attracting inward investment, and pointed out the dangers of the social chapter. Opposition Members have not grasped the fact that the
    72
    Government are addressing those issues by extending opportunity for people. The new generation in Britain today has a greater opportunity to go on to higher and further education than any previous generation, and a wider choice of career than any comparable generation in Europe, because new jobs and investment are going to Britain. When young people start a career, they have the freedom to join or not to join a trade union, which was not previously possible. In the past few years, it has been easier and cheaper for them to buy a first home than at any time for 35 years. When they have their own children, they will be able to choose how they will be educated. Opposition Members do not believe in giving people that choice.
    This is a curious motion to put before the House: some hon. Members have actually read it. It bears all the hallmarks of having been written by a committee. It mentions almost any subject that anyone could think of, and throws in a variety of terms that are not defined, and which were not defined in the debate. It ends up with a mixture of pious hopes and vague wishes, rather like a composite motion at a Labour party conference, which probably explains why most Labour Members have not been present.
    The hon. Members who introduced the motion have not said where they would get the money from to meet their pious hopes. I said that I would comment on the opening speech of the hon. Member for Moray. The most memorable moment in her speech was the intervention of my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman), who said that people have to take responsibility for themselves and their families, and that they want to do so. My hon. Friend said that individuals, as well as the Government, should ask what they can do about social justice.
    The hon. Member for Moray said that people no longer talk about visions and values. Conservatives talk about visions, which is why we have launched a new vision of the pension system. The hon. Member for Birkenhead (Mr. Field), who has just come into the Chamber, should welcome that. The Government have a vision of rising living standards and increased personal freedom. We value freedom of choice in education rather than the hypocrisy of denouncing choice and then exercising it oneself, as practised by some Opposition Members. The hon. Lady said that we must have vision, and then gave a list of issues on which we must have vision. She asked, "Where does the European Union go?" Imagine John F. Kennedy standing up to announce his vision and saying, "Where do we go?" She said, "Is the United Nations as respected as it should be?" Imagine Martin Luther King saying, "This is my vision: is the United Nations as respected as it should be?" She said that we should be involved in a plethora of international organisations. She may not have noticed that we are involved in a plethora of international organisations. She said that we should reach out and show that the political body still has a vision. If the debate is anything to go by, the political bodies sitting on the Plaid Cymru and Scottish National party Benches have no vision.
    The hon. Lady complained that people were cynical about politicians. People become cynical about politicians when they raise expectations that cannot be fulfilled and present misleading information. What is the real vision of nationalist parties? Insular Governments in declining countries with bankrupt economies. That is what they

    73
    offer to the people of this country. They have come to the House with unsubstantiated assertions, out-of-date statistics and futile wishful thinking. They have called for justice and equality without defining it, for spending without saying how they would finance it and for jobs while pursuing policies that would destroy them.
    The Scottish National party and Plaid Cymru have reminded us that the distinction of being wrong about every major issue of the late 20th century does not belong to the Leader of the Opposition on his own. They share that distinction. Being wrong about every issue that they have raised in the debate, and, most important of all, being wrong about their wish to destroy the United Kingdom, means that their motion deserves to be emphatically rejected by the House.
    Question put, That the original words stand part of the Question:—
    The House divided: Ayes 26, Noes 281.

    Division No. 90]

    [6.59 pm

    AYES

    Alton, David

    Jones, Ieuan Wyn (Ynys Môn)

    Ashdown, Rt Hon Paddy

    Kennedy, Charles (Ross C&S)

    Beith, Rt Hon A J

    Lynne, Ms Liz

    Bruce, Malcolm (Gordon)

    Maddock, Mrs Diana

    Campbell, Menzies (Fife NE)

    Molyneaux, Rt Hon Sir James

    Carlile, Alex (Montgomery)

    Salmond, Alex

    Chidgey, David

    Smyth, Rev Martin (Belfast S)

    Cunningham, Ms Roseanna

    Steel, Rt Hon Sir David

    (Perth Kinross)

    Taylor, Matthew(Truro)

    Dafis, Cynog

    Tyler, Paul

    Davies, Chris (Littleborough)

    Wallace, James

    Ewing, Mrs Margaret

    Wigley, Dafydd

    Foster, Don (Bath)

    Tellers for the Ayes:

    Harvey, Nick

    Mr. Andrew Welsh and Mr. Elfyn Llwyd.

    Johnston, Sir Russell

    NOES

    Ainsworth, Peter (E Surrey)

    Browning, Mrs Angela

    Aitken, Rt Hon Jonathan

    Bruce, Ian (S Dorset)

    Alexander, Richard

    Budgen, Nicholas

    Alison, Rt Hon Michael (Selby)

    Burns, Simon

    Allason, Rupert (Torbay)

    Burt, Alistair

    Amess, David

    Butler, Peter

    Arbuthnot, James

    Butterfill, John

    Arnold, Jacques (Gravesham)

    Carlisle, John (Luton N)

    Ashby, David

    Carlisle, Sir Kenneth (Linc'n)

    Atkins, Rt Hon Robert

    Carrington, Matthew

    Atkinson, David (Bour'mth E)

    Carttiss, Michael

    Atkinson, Peter (Hexham)

    Cash, William

    Baker, Rt Hon Kenneth (Mole V)

    Channon, Rt Hon Paul

    Baldry, Tony

    Chapman, Sir Sydney

    Banks, Matthew (Southport)

    Churchill, Mr

    Banks, Robert (Harrogate)

    Clappison, James

    Bates, Michael

    Clark, Dr Michael (Rochf'd)

    Batiste, Spencer

    Clifton-Brown, Geoffrey

    Bellingham, Henry

    Coe, Sebastian

    Bendall, Vivian

    Congdon, David

    Biffen, Rt Hon John

    Conway, Derek

    Body, Sir Richard

    Coombs, Anthony (Wyre F)

    Bonsor, Sir Nicholas

    Coombs, Simon (Swindon)

    Booth, Hartley

    Cope, Rt Hon Sir John

    Boswell, Tim

    Cormack, Sir Patrick

    Bottomley, Peter (Eltham)

    Couchman, James

    Bowden, Sir Andrew

    Currie, Mrs Edwina

    Bowis, John

    Curry, Rt Hon David

    Boyson, Rt Hon Sir Rhodes

    Davies, Quentin (Stamf'd)

    Brandreth, Gyles

    Davis, Rt Hon David (Boothferry)

    Brazier, Julian

    Day, Stephen

    Bright, Sir Graham

    Deva, Nirj Joseph

    Brooke, Rt Hon Peter

    Devlin, Tim

    74

    Douglas-Hamilton,

    Johnson Smith,

    Rt Hon Lord James

    Rt Hon Sir Geoffrey

    Dover, Den

    Jones, Gwilym (Cardiff N)

    Duncan, Alan

    Jones, Robert B (W Herts)

    Duncan Smith, Iain

    Kellett-Bowman, Dame Elaine

    Dunn, Bob

    Key, Robert

    Dykes, Hugh

    Kirkhope, Timothy

    Elletson, Harold

    Knapman, Roger

    Evans, David (Welwyn Hatf'ld)

    Knight, Mrs Angela (Erewash)

    Evans, Jonathan (Brecon)

    Knight, Dame Jill (Edgbaston)

    Evans, Nigel (Ribble V)

    Knox, Sir David

    Evans, Roger (Monmouth)

    Kynoch, George

    Evennett, David

    Lamont, Rt Hon Norman

    Faber, David

    Lang, Rt Hon Ian

    Fabricant, Michael

    Lawrence, Sir Ivan

    Fenner, Dame Peggy

    Legg, Barry

    Field, Barry (Isle of Wight)

    Leigh, Edward

    Fishburn, Dudley

    Lennox-Boyd, Sir Mark

    Forman, Nigel

    Lidington, David

    Forsyth, Rt Hon Michael (Stirling)

    Lilley, Rt Hon Peter

    Forth, Rt Hon Eric

    Lloyd, Rt Hon Sir Peter (Fareham)

    Fowler, Rt Hon Sir Norman

    Lord, Michael

    Fox, Rt Hon Sir Marcus (Shipley)

    Luff, Peter

    Freeman, Rt Hon Roger

    Lyell, Rt Hon Sir Nicholas

    French, Douglas

    MacGregor, Rt Hon John

    Gale, Roger

    MacKay, Andrew

    Gallie, Phil

    Maclean, Rt Hon David

    Gardiner, Sir George

    McLoughlin, Patrick

    Garel-Jones, Rt Hon Tristan

    McNair-Wilson, Sir Patrick

    Garnier, Edward

    Maitland, Lady Olga

    Gill, Christopher

    Malone, Gerald

    Gillan, Mrs Cheryl

    Mans, Keith

    Goodlad, Rt Hon Alastair

    Marland, Paul

    Goodson-Wickes, Dr Charles

    Marlow, Tony

    Gorman, Mrs Teresa

    Marshall, John (Hendon S)

    Gorst, Sir John

    Marshall, Sir Michael (Arundel)

    Grant, Sir Anthony (SW Cambs)

    Martin, David (Portsmouth S)

    Greenway, Harry (Ealing N)

    Mates, Michael

    Greenway, John (Ryedale)

    Mawhinney, Rt Hon Dr Brian

    Griffiths, Peter (Portsmouth N)

    Mellor, Rt Hon David

    Grylls, Sir Michael

    Merchant, Piers

    Gummer, Rt Hon John

    Mitchell, Andrew (Gedling)

    Hague, Rt Hon William

    Mitchell, Sir David (NW Hants)

    Hamilton, Rt Hon Sir Archibald

    Moate, Sir Roger

    Hampson, Dr Keith

    Monro, Rt Hon Sir Hector

    Hanley, Rt Hon Jeremy

    Montgomery, Sir Fergus

    Hannam, Sir John

    Needham, Rt Hon Richard

    Hargreaves, Andrew

    Nelson, Anthony

    Harris, David

    Neubert, Sir Michael

    Haselhurst, Sir Alan

    Newton, Rt Hon Tony

    Hawkins, Nick

    Nicholls, Patrick

    Hawksley, Warren

    Nicholson, David (Taunton)

    Hayes, Jerry

    Norris, Steve

    Heald, Oliver

    Onslow, Rt Hon Sir Cranley

    Heath, Rt Hon Sir Edward

    Oppenheim, Phillip

    Heathcoat-Amory, Rt Hon David

    Ottaway, Richard

    Hendry, Charles

    Page, Richard

    Heseltine, Rt Hon Michael

    Paice, James

    Hicks, Sir Robert

    Patnick, Sir Irvine

    Higgins, Rt Hon Sir Terence

    Patten, Rt Hon John

    Hill, Sir James (Southampton Test)

    Pattie, Rt Hon Sir Geoffrey

    Hogg, Rt Hon Douglas (Grantham)

    Pawsey, James

    Horam, John

    Peacock, Mrs Elizabeth

    Hordern, Rt Hon Sir Peter

    Pickles, Eric

    Howard, Rt Hon Michael

    Porter, David

    Howell, Rt Hon David (Guildf'd)

    Portillo, Rt Hon Michael

    Howell, Sir Ralph (N Norfolk)

    Powell, William (Corby)

    Hughes, Robert G (Harrow W)

    Rathbone, Tim

    Hunt, Rt Hon David (Wirral W)

    Redwood, Rt Hon John

    Hunt, Sir John (Ravensb'ne)

    Renton, Rt Hon Tim

    Hunter, Andrew

    Richards, Rod

    Hurd, Rt Hon Douglas

    Riddick, Graham

    Jack, Rt Hon Michael

    Robathan, Andrew

    Jackson, Robert (Wantage)

    Roberts, Rt Hon Sir Wyn

    Jenkin, Bernard (Colchester N)

    Robertson, Raymond S (Ab'd'n S)

    Jessel, Toby

    Robinson, Mark (Somerton)

    75

    Roe, Mrs Marion

    Thompson, Patrick (Norwich N)

    Rowe, Andrew

    Townsend, Sir Cyril (Bexl'yh'th)

    Rumbold, Rt Hon Dame Angela

    Tracey, Richard

    Ryder, Rt Hon Richard

    Tredinnick, David

    Sackville, Tom

    Trend, Michael

    Shaw, David (Dover)

    Trotter, Neville

    Shephard, Rt Hon Mrs Gillian

    Twinn, Dr Ian

    Shersby, Sir Michael

    Vaughan, Sir Gerard

    Skeet, Sir Trevor

    Viggers, Peter

    Smith, Tim (Beaconsf'ld)

    Waldegrave, Rt Hon William

    Soames, Nicholas

    Walden, George

    Speed, Sir Keith

    Walker, Bill (N Tayside)

    Spencer, Sir Derek

    Waller, Gary

    Spicer, Sir Jim (W Dorset)

    Ward, John

    Spicer, Sir Michael (S Worcs)

    Wardle, Charles (Bexhill)

    Spink, Dr Robert

    Waterson, Nigel

    Spring, Richard

    Watts, John

    Sproat, Iain

    Wells, Bowen

    Squire, Robin (Hornchurch)

    Wheeler, Rt Hon Sir John

    Stanley, Rt Hon Sir John

    Whitney, Sir Raymond

    Steen, Anthony

    Whittingdale, John

    Stephen, Michael

    Widdecombe, Rt Hon Miss Ann

    Stem, Michael

    Wiggin, Sir Jerry

    Stewart, Allan

    Wilkinson, John

    Streeter, Gary

    Willetts, David

    Sweeney, Walter

    Wilshire, David

    Sykes, John

    Winterton, Mrs Ann (Congleton)

    Tapsell, Sir Peter

    Winterton, Nicholas (Macclesf'ld)

    Taylor, Ian (Esher)

    Wolfson, Mark

    Taylor, John M (Solihull)

    Yeo, Tim

    Taylor, Sir Teddy

    Young, Rt Hon Sir George

    Temple-Morris, Peter

    Tellers for the Noes:

    Thomason, Roy

    Mr. Timothy Wood and Mrs. Jacqui Lait.

    Thompson, Sir Donald(Calder V)

    Question accordingly negatived.
    Mr. Salmond: On a point of order, Mr. Deputy Speaker. Given that Members from Northern Ireland voted for the motion that we have just debated, can you arrange to have the seating arrangements in the House reconfigured to allow new Labour to be positioned to the right of the Ulster Unionists?
    Mr. Deputy Speaker (Sir Geoffrey Lofthouse): That is a bogus point of order, as the hon. Gentleman knows.

    Building Societies Bill
    Order for Second Reading read.
    12 pm
    Mr. Austin Mitchell: On a point of order, Mr. Deputy Speaker. The Bill changes the balance of power and the relationship between building societies that converge and those that remain mutual. Three or four major societies, including the Halifax, are in the process of conversion. That is going to mean that a lot of money will go to members of those societies. Is it not in order to ask Members speaking on the Bill, if they are going to benefit from a building society's conversion, which is going to give them free shares or money, to declare that as an interest?
    Mr. Deputy Speaker: Hon. Members are, I am sure, aware of the rules of the House.
    7.13 pm
    The Economic Secretary to the Treasury (Mrs. Angela Knight): I beg to move, That the Bill be now read a Second time.
    It gives me great and long-awaited pleasure to ask the House to give the Bill a Second Reading. I understand that the opposition parties are prepared to co-operate fully in passing it into law in good time and, if that is true, I thank them for it.
    There have been two years of consultation on the Bill. It is one of the first Bills ever to be produced in draft form. The benefits of that have been seen in changes that have been made to the Bill as a consequence of the consultation. Everyone who has been involved has been pleased by that process.
    Mr. Frank Field: The Minister says that there has been extensive consultation. With whom has the consultation taken place? Is there not a problem in that some building societies have wanted to convert from their mutual status so that the directors can receive share options? That has been one of the big driving forces. Whom has she consulted other than those who will make a considerable amount of money out of selling the trust that members have built up in those societies?
    Mrs. Knight: Those are points that I shall come to later, but, if I may answer the hon. Gentleman briefly, the consultation has involved all building societies and all financial institutions. I am delighted that a considerable number of others with an interest in those matters, both individuals and groups, have also given their comments on the Bill. It has not been a confined consultation in any way. It is one of the broadest-based consultations that has taken place.
    Mr. Field: I am a member of a number of building societies. I have not once been asked by the leadership of those societies what my views are. If political parties asked for or were involved in consultation and did not consult any of their members, there would be a lot of flak in a debate such as this, yet it appears that that is precisely what has happened with members of the building society elite. They have all talked to the Minister, but none of the members has.
    Mrs. Knight: That is not quite correct. We have heard from mutual building societies and from building societies

    77
    that propose to convert, but we have also heard from the associations that represent them, from the associations that represent the employees of the building societies, of which there is more than one representative group, and from a range of individuals who are members of societies—both ones that are converting and ones that are staying mutual. We have also heard from organisations such as the Consumers Association. That is why I say to the hon. Gentleman not only that this is one of the widest-ranging consultations that has taken place, but that we published at an early stage a draft Bill, which enabled individuals and all those groups to go through it in considerable detail—in far greater detail than would otherwise have been the case. We therefore have answers and comments that we would not otherwise have had. For those reasons, I believe that we have before us a Bill that is wanted by the mutual organisations, perhaps in particular, as they are seeking that level playing field in which to operate in future.
    Mr. Austin Mitchell: If the consultation has been so long, and it is certainly true that much of the review work began in January 1994, if the Bill has been ready for so long and if the societies are so interested in it, why is it being introduced now in this scuttle-like fashion in the dying days of a dying Parliament?
    Mrs. Knight: The Bill was first published in draft form in March last year. There was then, if you like, the last stage of consultation and it was published in its final form in the autumn of last year. I am sorry, too, that it was not possible to include it in the Queen's Speech, but the hon. Gentleman will know that some legislation was required, particularly that relating to the tragedy at Dunblane, which meant that something had to give way.
    I always said that, if it were possible to find a slot towards the end of this Parliament, which is when slots come up, I would introduce the Bill. A Treasury Minister and a shadow Treasury Minister are taking part in the debate. We have only just come out of the Committee that considered the Finance Bill, the last stages of which are tomorrow. It is difficult to see any earlier point at which this legislation in its final form could have been introduced.
    Mr. Tim Renton (Mid-Sussex): I whole-heartedly agree with the decision to present the Bill in this Session. Many building societies such as the Alliance and Leicester and the Halifax are about to become plcs and it is good that societies should know the precise form for doing that. The Bill makes more evident the changes in the building society world.
    Mrs. Knight: My right hon. Friend is correct. Those organisations have been involved as much as the mutual societies in the consultations not only after the Bill was published in draft form but before that.
    The Bill is strongly supported by a wide range of people. The Building Societies Association has said that societies warmly welcome its proposals and the Portman building society has said that it could not have come at a better time. The Bill will ensure that societies which choose to remain mutual can develop their business as they wish without the unnecessary constraints of the current legislation.
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    The Building Societies Act 1986 was a liberalising measure. For example, it enabled building societies to become banks if they wished to do so and it allowed mutual societies to provide more services while remaining mutual. As a consequence of that Act, societies have thrived and developed. Some have decided that their future is as banks. The 16 million people who are due to receive a windfall as a consequence of the Halifax, the Alliance and Leicester, the Woolwich and the Northern Rock building societies converting would not have been able to benefit in that way without the 1986 Act.
    My right hon. Friend the Deputy Prime Minister made some of those points quite clear in a Sunday newspaper. I was surprised to find, in that same newspaper, that my right hon. Friend's remarks—that it would enable building societies to convert to publicly quoted companies—were taken to be the Bill's prime aim. That is incorrect. My right hon. Friend made it quite clear that the 1986 Act enables that conversion to take place. Although much is made of the four converters, 72 societies will remain mutual. The 1986 Act prevents them from offering the range of financial services that their competitors, such as banks, can offer. That means that that Act unfairly restricts the mutual sector.
    The Government are not in the business of wishing societies to choose one route or another. We aim to change the legislation so that a society can make its own decisions about its future. To use that rather hackneyed expression, we seek to give societies a level playing field because, currently, it is tilted against them. The Bill will introduce permissive legislation because none of us can second guess the future, especially in the financial sector, which is a fast moving market. I expect that, as a result of the Bill becoming law, the mutual societies will flourish and develop and will continue to have close ties with home ownership and with local communities.
    The Bill will preserve the unique characteristics of building societies as mutual organisations that are owned by members and that look after savings, ranging from small amounts towards Christmas or a holiday to the larger sums built up over a long time for retirement. Their primary purpose will be to enable people to make the most important purchase in their lives—the purchase of their homes.
    As I have said, the Bill is the result of a long consultation process but its objectives are simple. It aims to increase the commercial freedom of societies and bring in increased competition and wider choice for customers. It will also update the prudential supervision of societies by the Building Societies Commission, and it will bring societies even closer to their members and underline their mutual identity.
    Building societies are renowned as safe havens for money and are rightly popular with their members. At present, even with gradual deregulation, societies are not free to plan for the medium to long term in the way that their business requires. They are constrained by legislation because they have to wait for new powers to be added. Under a permissive approach, societies do not run the risk of being shut out from new developments, such as considerable technological changes. The Bill will sweep away the qualifying assets holding which places strict limits on societies with commercial assets of £100 million or less. Further freedoms will be created by widening the scope of the lending limits and the principal

    79
    purpose so that lending to finance rented housing will, for the first time, be part of a society's core business, if it chooses.
    Preventing societies from developing their full potential and preventing customers from getting the friendly and efficient service in the wide range of retail financial services that they have come to expect from savings and mortgages does not make sense in 1997. Societies have a proven track record for prudence and performance, and should be allowed to use their financial experience and expertise to compete with other institutions to provide people with the services that they want. The Bill provides that a society can carry on any business that is set down in its memorandum, subject to keeping within the nature limits, and to the Building Societies Commission's prudential supervision.
    There will still be a few restrictions. Societies will not be permitted to trade in commodities or currencies or to be market makers in securities for transactions over £100,000. As with the lending limit, the Bill provides a power to vary those restrictions if that becomes desirable in future. The Bill makes some improvements to the ombudsman scheme. Every authorised society is required by law to belong to an ombudsman scheme that meets the requirements of the 1986 Act and the Bill. The supervisory body is the Building Societies Commission. Its functions include promoting the protection of funds that people have placed with societies and the financial stability of building societies generally.
    The framework of day-to-day supervision has stood the test of time. Under that system, the building societies are healthy, well capitalised and well managed and investor funds have been protected. No regulator can be complacent and we see scope for sharpening the commission's power to deal with problems if and when they arise. Everyone knows that a stitch in time saves nine.
    Accountability to members will also be improved. Societies are already accountable. Many customers enjoy and appreciate their position as members and the extra relationship with the society that that brings, which is more than simply being a purchaser of goods or services. However, Parliament and societies can improve on that. During the consultation, the champions of mutuality often pointed out that in a building society there is no interest apart from that of the customers: they and they alone are the people for whose benefit a society is run. Directors are the custodians of the society for its present and future members and owe no allegiance to any outside group. Improving the availability of information for members and enhancing their ability to have a say in what they think should happen will strengthen those bonds of mutuality. Borrowing members will have broadly similar rights to a say in the running of a society as investing members.
    Mr. Renton: Perhaps my hon. Friend can inform my ignorance. She is rightly talking about the importance of members in societies that continue to be mutual. What rights or possibilities have those members if, given the examples of the Alliance and Leicester and the Halifax, they would prefer their societies to convert into plcs so as
    80
    to have the sort of windfall that members of the Halifax and the Alliance and Leicester building societies will receive?
    Mrs. Knight: In terms of accountability, members of societies which wish to remain mutual will have a far greater amount of information about their societies, and that is good. Equally, it is undoubtedly correct that members will be able to make their views known to the directors of their societies. Of course, only the directors could propose to a society general meeting or annual general meeting that it should convert and become a public limited company.
    I should tell my right hon. Friend the Member for Mid—Sussex (Mr. Renton) that those are serious decisions. Some societies see their future as banks—we know their names only too well—but many others have undoubtedly served very well as mutuals. In recent articles, mutual societies have very clearly made the case for the benefits that they can offer to borrowers and savers by remaining mutual. I think that any member of any society must not only consider what might happen tomorrow but take a long-term view of their mortgage or savings with a society and attempt to attain benefits over the long term and not in the short term.
    Accountability is part of the overall package, and it was a part of the points made by my right hon. Friend. It is important that a society should not change its strategic direction without consulting its members. Any proposal to expend more than 15 per cent. of a mutual society's own funds on the acquisition or establishment of a business outside the society's core activity of mortgage lending will require members' approval.
    There are some changes to the mechanisms of conversions and of takeovers, although the broad framework and required threshold for voter turnout and support remain intact. Furthermore, if a society intends to transfer out of the sector and simultaneously to increase the remuneration of any director or other officer of the society, the members should be able to vote on that proposal separately from the main transfer resolution.
    A special and important feature of mutual organisations is that customers are the members, with the right to vote on the society's resolutions. The Bill will provide that, in future, any individual who saves with a society will have a membership account. Societies will still be able to use deposit—non-membership—accounts for corporate accounts and, if they choose to, for those who want current accounts, deposits at overseas branches, qualifying time deposits or certain other services.
    During the consultation and before the introduction of the Bill, there were calls for changes to the rules on distributions of bonuses on a conversion or takeover. The 1986 Act forbids distributions of cash bonuses to shareholding members of less than two years and to borrowers, although the courts have held that the Act does not rule out certain flat-rate distributions of free shares to members of less than two years. Societies and some others have asked that Parliament revisit and change that to rule out any bonuses for members of less than two years—which is often referred to as strengthening the two-year rule.
    The Government do not propose to make that change, and I shall say why we have taken that decision. First, a society that wishes to convert or to be taken over already

    81
    has a discretion, if it so chooses—by choosing the qualifying date for bonuses—to rule out recently arrived members. It is not for the Government to dictate to a society which members it should rule in and which it should rule out. It is for the society to make those decisions, and we have given societies the freedom to do so.
    Secondly, the law as interpreted by the courts has now stood for almost eight years. During that time, a number of societies have proposed to convert or to be taken over. In terms of member numbers, a bigger shift has already occurred than is likely to recur in future. A change made now affecting any possible future conversion or takeover would be seen as unfair and incomprehensible by a society's members. I say in all seriousness that, if the Government made a change now to rule out any future distribution to members of less than two years, and in future should another society convert or be taken over, the Government of the day would be under unstoppable pressure to reinstate the current law.
    A part of the Bill affects the position of building societies that become public limited companies by transferring their business to a specially formed company—by conversion rather than by takeover. Clause 40 abolishes the priority liquidation distribution right—the PLDR. The reason for abolishing it is that it is no longer valid, as the situation in 1986 is not the current situation.
    Clause 41 deals with the so-called "five-year protection period" for converting building societies. The 1986 Act states that, during a five-year protected period after a building society has converted to plc status, the successor company is required to prevent any one shareholder from holding more than 15 per cent. of shares, effectively protecting the company against takeover. At the time that that provision was made, the situation in financial markets was very different from that of today. Moreover, the converting societies are substantial and strongly capitalised, and three out of four converters are likely to be in the FTSE 100 index.
    I realise, however, that a converted society may need to take time to become established in its new form as a bank. We have therefore decided on a middle approach. I propose in most circumstances to leave in place the five-year protection. However, if a converted society, which is of course a new bank, wants to acquire other authorised financial institutions—such as another bank, building society, insurer, friendly society or investment business authorised under the Financial Services Act 1986—it will lose its protection. It quite clearly would be unfair on other financial institutions if one type of institution which is protected is uniquely allowed to go on the acquisition trail of another financial institution that is not protected.
    The Bill is one of the first to be published in advance as a draft, and I believe that the benefits of that practice have been shown. I thank all those who have taken an active part in contributing to it. The legislation is an endorsement of mutuality, and it will take into the next century the best elements of self-help—which were the basis for the movement in the past century. The Bill gives mutual building societies an assured future, and I commend it to the House.
    7.36 pm
    Mr. Mike O'Brien: Labour welcomes the Building Societies Bill, which is at last before the House. It will benefit millions of consumers
    82
    and building society members across the United Kingdom. For that reason, the Bill deserves—indeed, commands—widespread support, both inside and outside Parliament. Labour would not have drafted particular aspects of the Bill in the same way as the Government, and I shall outline those differences later. Overall, however, we want the Bill, amended or unamended, to become law before the general election. We will give it a fair wind in this debate on its Second Reading, and we will support its broad principle next week in Committee and in the debate on Third Reading.
    Labour's position on conversion is that it is for members to decide whether they want their building society to convert or to remain as a mutual. Many new shareholders have substantially benefited from conversion. Of course we wish them well, if that is the course that they want to take. We also wish the converted building societies well in their new endeavours as banks.
    The conversion process has also—perhaps paradoxically—helped mutuals, as it has awakened in them the need to be in close contact with their members. In recent years, the overall philosophy of mutuality has been revived—after some building societies had undoubtedly become a little remote. Therefore, the conversions, bonuses to members and changes in the market have had important benefits beyond providing a stimulus to the economy. However, there is a need for balance, and that is what the Bill is all about.
    There is a public interest in maintaining choice in the market. The great strength of the British financial services industry is its diversity and choice. It provides access to investment and savings opportunities to millions of people. That choice currently includes the option to join a mutual building society, and it would indeed be regrettable to lose that choice.
    Mutuals do not have to pay dividends to shareholders, and they therefore have an opportunity to use their assets to offer cheaper mortgages and better interest rates on savings. Some mutuals are already doing so. A recent survey in What Mortgage suggested that, of 72 building societies, the 25 best opportunities were with mutuals. One of the large mutuals—I will not advertise its name—told me that on a range of products it is offering 0.7 per cent. higher savings rates than its main high street competitors. Its standard variable mortgage rate is 0.2 per cent. below that of other market leaders.
    Many would argue that mutuals play a unique part in securing good value for the consumer as well as the opportunity to join a self-help organisation and tap into the important heritage of mutuals. Of course, converted societies have their strengths too, but mutuals can arguably play an important part despite their smaller proportion of the building society sector.
    Today, many believe that mutuality is in danger. Last week, I heard a speaker on, of all things, the "Thought for the Day" spot on Radio 4's "Today" programme graphically warn:
    "We may be selling a great cultural heritage for a mess of pottage".
    The warning was that there may be large bonuses for individuals now, but that that may reduce the choices for all savers and borrowers in the future.
    Building societies were one of the great successes of the self-help movement among working people in Victorian Britain. Indeed, the first recorded building

    83
    society, the Kettley building society, was set up in Birmingham in 1775, many decades before Queen Victoria, in what is now my locality. Like friendly societies and co-operatives, their motivation was mutual self-help rather than profit, although, of course, the profit was the way to pay good interest rates on savings. They served local communities and were accountable to their members. Most of us in the Chamber, like the vast majority of the British people, bought our homes with the help of a mutual building society. However, their success produced problems.
    As markets became competitive, societies merged to reduce overheads. In 1900, there were 2,286 building societies; by 1950, the number had fallen to 819 and, by 1990, it was down to 80. The amalgamation of societies sometimes made them more remote from members. They had huge assets but could be unadventurous in using them. Their very reliability and stability were advantages in attracting customers but, in a few cases, constrained innovation.
    Societies were also operating under a prescriptive regime, introduced initially in legislation in 1874 and then amended by the Building Societies Act 1986. That legislation restricted their operations under an out-of-date and highly restrictive regulatory framework. It prevented them from taking advantage of the new opportunities of an expanding financial services market.
    In the late 1980s, some societies began to believe that mutuality had become a straitjacket. They wanted to provide a wider range of services for their members, and conversion was seen as the only option. Two thirds of the building society sector has converted. The process began in 1989 with the Abbey National flotation. However, one third of the sector remains mutual. It has £120 billion-worth of mortgages and 17 million customers and accounts for a quarter of the mortgage market. It should be protected from predators.
    The good news is that many mutuals have risen to the new challenge. They are back in contact with members, offering competitive mortgages and savings rates. They are rediscovering the spirit of mutuality, and we should encourage that process. However, they still need greater freedom to serve their members. That means that the prescriptive regime of the 1986 Act needs to be amended.
    Three years ago, Labour warned the Government that the future of mutuals would be in doubt unless they were freed from the shackles of the 1986 Act introduced by the Conservatives. We warned that choice and diversity would be lost, but the Government prevaricated and dithered. Promises of a new Bill were broken, but let me pay tribute to the Economic Secretary who, when she took on her current role, tried to press the idea of a new Bill.
    The Government said that the Bill would be included in the Queen's Speech last November—indeed, they had promised it the previous November—but it was dropped at the last moment. Why? I suspect that someone decided that there were no votes in it and, at that point, Conservative leaders were interested only in trying to revive their sagging fortunes. However, there was always public interest in the Bill. The Economic Secretary recognised that. Labour forced the idea back on to the political agenda and demanded an explanation of why it had been dropped.
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    To her credit, the Economic Secretary also fought for the Bill. It has been revived, but why has it taken so long to get to the House? We were told that a time slot was needed, but everyone knows that the House's business has been finishing early, certainly since Christmas, so why the mysterious delay? I do not doubt that the hon. Lady wanted the Bill. We both continued to press for it and now, at last, it is with us. It is very welcome.
    The price of delay, however, has been uncertainty and the undermining of the mutual sector. One aspect has been long queues outside many building societies as speculators open accounts to bet on the next conversion. In response, some mutuals have put up their minimum account rates to £1,000 or more, thus freezing out the small investor. That cannot be satisfactory. Of course, it must be up to members to decide whether a society should convert: we would want them to have the choice, but long-term members should not have the decision made for them by mere speculators.
    The Bill has its drawbacks, but we need to get something on the statute book soon. Labour wants to free mutuals to compete in the market. We regret the delay; we want the Bill passed, but we are disappointed by the failure to discourage speculation, which is not fair to long-standing members who have stood by their societies for years. We will give broad support to the Bill, and we want it passed before the general election.
    Labour will support the Bill, but the question is, do the Government? Of course, the Economic Secretary has sponsored it—I do not doubt that she supports it—and we presume that the Government understood the inadequacies of the 1986 Act and sought to change it. Our understanding of the Bill was that it was intended to put mutuals on a level playing field with other organisations so that members would not need to vote for conversion, if only because the Building Societies Act 1986 imposed a prescriptive regime on them which denied them access to particular investment opportunities and new capital.
    The Minister told us today that the Government did not seek to encourage building societies to convert or not to convert, but yesterday, the day before the Treasury introduced the Bill to protect mutuals from takeover and to reduce the need to convert to banks, the Deputy Prime Minister announced that he supported the 1986 Act and wanted to support conversion from mutuals to banks.
    Writing in The Mail on Sunday, the Deputy Prime Minister says that it
    "makes sense to make the ownership of building societies more transparent; to give the members—the lenders and borrowers who have always owned those societies—the direct rights of ownership which shareholding offers… These have long been central tenets of Conservative philosophy."
    The Deputy Prime Minister endorses the 1986 Act, which the Minister seeks to amend. He describes the transition from mutuals to plcs as "extraordinary and exciting", despite the fact that the aim of the Bill is to make it less necessary because, presumably, the Minister wants to see diversity and choice maintained, and that includes mutual building societies.
    The Deputy Prime Minister, however, seems to be challenging the very basis of the Bill. The Mail on Sunday, hardly a Labour newspaper, calls it
    "an extraordinary rebuff to building societies on the eve of the Bill designed to protect them."

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    Perhaps we have here an answer to the mystery of why it has been such a struggle to get the Government to bring forward the Bill.
    Mrs. Angela Knight: The hon. Gentleman should stop reading headlines and read the articles. If he reads the article written by the Deputy Prime Minister, which is headed "Deregulation the way to greater financial freedom", all will become clear to him. My right hon. Friend rightly points out that 16 million people are benefiting from conversion, but he is also very much in favour of the mutual sector. The hon. Gentleman should read the article.
    Mr. O'Brien: I shall give way to the Minister again if she can tell me where in the article the Deputy Prime Minister says that he is very much in favour of mutuals.
    Mrs. Knight: Perhaps the hon. Gentleman does not realise that my right hon. Friend the Deputy Prime Minister is one of the backers of the Bill.
    Mr. O'Brien: The hon. Lady has not answered the question; nowhere in the article is there any endorsement of mutuals—quite the contrary. The hon. Lady is suggesting that I might somehow be misleading the House about what the Deputy Prime Minister says. I shall read out some more of the article so that the House can judge for itself.
    The article says:
    "the extraordinary changes now taking place in the building societies come as a direct result of the Government's deregulation initiative."
    The Deputy Prime Minister claims that the conversion process is part of the deregulation initiative. He goes on:
    "In 1986 our building societies legislation enabled building societies to convert from their mutual status to plcs—in practice, to become banks."
    I do not deny that that is a statement of fact. He says further on:
    "with today's massive availability of funds it now makes sense to make the ownership of building societies more transparent; to give the members—the lenders and borrowers who have always those societies—the direct rights of ownership which shareholding offers and to allow the societies to compete more effectively in the modern world. Hence the legislation to give the building societies the ability to convert themselves"—
    he is endorsing the 1986 Act—
    "into publicly quoted companies.
    Hence the extraordinary and exciting changes we are now seeing.
    During the conversion process a large number of people have qualified for free shares. The Abbey National flotation took place in 1989."
    I am reading Conservative propaganda. I am waiting for a reference to how important mutuals are, but it does not come. The Deputy Prime Minister tells us that
    "Now the floodgates are opening",
    but still he has not mentioned mutuals. He seems pleased with the floodgates opening to conversion. On he goes:
    "As I write, the Halifax, Alliance and Leicester, Woolwich, Norwich Union, Northern Rock and Scottish Amicable are all poised to float on the stock market."
    He goes on about the £1,000 that people are getting and how 16 million people are benefiting. He says:
    "This outcome flows directly from the Government's policies, its determination"—
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    the hon. Lady has been engaged in some sort of altercation with others on the Back Benches, but she should hear this—
    Mrs. Knight: Will the hon. Gentleman give way?
    Mr. O'Brien: In a moment. Let me just finish, then I shall give way to the hon. Lady, because she has a lot of explaining to do. The Deputy Prime Minister talks about the Government's
    "determination to deregulate business and promote competition".
    All the way through the article, he seems to be endorsing conversion. The Mail on Sunday regarded the article as extraordinary. I regard it is bizarre. The Deputy Prime Minister thinks that conversions are
    "giving people more choice, new opportunities and better service. These have long been central tenets of Conservative philosophy."
    Surely all that is an attack on mutuals and a promotion of the idea of converting.
    Mrs. Knight: The hon. Gentleman is being extraordinarily silly. He is not normally this silly, but we have seen him silly before. He is reading an article about some of the societies that have converted or are converting and the benefits that that has brought and will bring to 16 million people. The object of the Bill, of which the Deputy Prime Minister is a sponsor, is to ensure that mutuals can compete on a level playing field. It is deregulatory. The Government are in favour of societies making their own choices on which way to go. The hon. Gentleman's interpretation is silly.
    Mr. O'Brien: The hon. Lady cannot have read the article properly. I am not relying merely on my interpretation. The headline in The Mail on Sunday—normally a Conservative-supporting newspaper—calls it "Heseltine's snub for die-hard mutuals". If the Deputy Prime Minister did not understand the Bill, one might appreciate his comments, but he appears not to want to reduce the need to convert. He does not want to preserve for the consumer the choice of mutual status. He wants all building societies to be converted. That is what the article is all about. He says that conversions came about as a direct result of the Government's deregulation initiative.
    Mr. Douglas French: Will the hon. Gentleman give way?
    Mr. O'Brien: Let me answer the hon. Lady first.
    The Deputy Prime Minister advocates conversion. That is what the article is all about. The timing and the tone of the article, on the eve of a debate on the Bill, are a slap in the face for the Bill and, in many ways, for the hon. Lady. Why are the Government sponsoring a Bill of which the main purpose is to reduce the need for what the Deputy Prime Minister thinks that the Government want done? Why did he choose to launch his plea for more conversions yesterday, unless he intended to dissociate himself from the Bill? Why did he attack the core objective of the Bill? The truth is that, like rats in a sack, the Tories are at each other's throats again.
    Mr. French: I am not sure whether it is worth intervening, because the hon. Gentleman has clearly made up his mind and put his own construction on the article.

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    While he has been speaking, I have re-read the article. The Deputy Prime Minister is clearly writing about societies that are choosing to convert. It is an article about conversion, not about mutuality. If it were about mutuality, he would be saying something quite different.
    Mr. O'Brien: The hon. Gentleman has made my case. The Deputy Prime Minister does not mention mutuals. He endorses conversion, claiming that the move away from mutuality is part of the central tenets of Conservative philosophy. I give credit to the Economic Secretary. She understands what mutuals are doing and wants the Bill passed, but I do not think that the Deputy Prime Minister has the same view.
    Mr. John Butterfill: Will the hon. Gentleman give way?
    Mr. O'Brien: Not at the moment.
    That explains the mystery of why it took two years to bring the Bill forward. Why, despite promises, was it dropped from the 1995 legislative agenda and from the Queen's Speech last year? Why was there such resistance to the Bill? I know that the hon. Lady supported it, but why has it taken until now, since her announcement last November, for the Bill to be reintroduced? There has been more than enough time. Parliament has hardly been overburdened with work. Members of Parliament have been going home early. The reason is now exposed; the Deputy Prime Minister does not support the Bill.
    Mr. Butterfill: The hon. Gentleman is being a little disingenuous. He knows perfectly well why the Bill has taken a long time, as does anyone who takes an interest in the matter, including all the members of the all-party building societies group. There has been a delay, because various people who were consulted were not able to agree. The mutuals have not all been able to agree; nor have the converting societies. Other financial institutions, such as banks and insurance companies, have taken different views. It has been necessary to reconcile all those views to get a Bill that everybody can support. That is what has taken time, as the hon. Gentleman knows well.
    Mr. O'Brien: Three years? It takes three years to consult? It takes three years to find out what people think? That is nonsense. The consultation period has lasted much too long. Enormous pressure has been put on mutuals to convert, which has been damaging. The hon. Gentleman's excuses do not stand up. There has been so much delay because there have been internal rows in the Conservative party. We have seen that on Europe and on bovine spongiform encephalopathy. On all aspects of Tory policies, there are internal rows and public attacks on each other. Now the splits have been exposed on the Building Societies Bill.
    Let me defend the Economic Secretary and the Bill against the Deputy Prime Minister. The right hon. Gentleman was wrong not to endorse mutuality. It must be left to members to decide whether to convert. That is what the Bill is supposed to be all about. There is a public interest in keeping choice and diversity in the market. That requires a healthy building society industry that includes mutuals. Ten million people remain satisfied
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    mutual members. That figure rises to 17 million counting all those with links to mutual building societies. The Deputy Prime Minister seems to want to let that vital mutual sector wither on the vine. As well as demonstrating further Tory disorder, that also explains why the Bill was delayed for so many years. Let us get on with the Bill and get it through with no more prevarication. It is good for mutuals and good for the consumer and will strengthen Britain's financial services industry.
    7.58 pm
    Mr. John Butterfill: I pay tribute to my hon. Friend the Economic Secretary for the assiduous and vigorous way in which she has promoted the Bill and brought it before the House. The House owes her a debt of gratitude. The task has not been easy. There have been considerable divergences of view throughout the financial services industry. We have all been subject to the lobbying of the various interest groups that have taken different views. The hon. Member for North Warwickshire (Mr. O'Brien) knows that perfectly well. That is why it has taken longer than I would have liked to bring the measure before the House. Nevertheless, my hon. Friend the Economic Secretary has done a splendid job, and I hope that the Bill speedily becomes law.
    The origins of the building society movement demonstrate that it is a uniquely valuable British institution. The hon. Member for North Warwickshire was quite right to say that it developed out of the self-help that working people created to enable them to own their own homes and to save and borrow money on a mutual basis. It is a uniquely valuable asset and I am quite confident that we would all be sad if it were ever to disappear.
    It was, however, quite right that, when we decided to liberalise the movement in 1986, significant restrictions were placed on the activities of building societies. At the time, many of us who supported a degree of liberalisation were quite nervous about going too far because of the nature of the societies. They had been constrained into a narrow sector of activity: accepting deposits from savers and lending them on to those who were purchasing their homes. That did not give them much experience in the wider range of financial services. I shared the fear that was expressed in the House that, if they were allowed to go too far, problems might arise and that management expertise was not always adequate and there might be ill-advised lending. That is why, quite properly, restrictions were imposed on the amount of unsecured borrowing that societies could undertake among other activities.
    Since then, however, the world has moved on. There have been significant changes in the way in which building societies are run. Most of them are now managed extremely professionally and are eager to offer a much wider range of services, and it is quite right that the Bill should allow them to do so.
    On the other hand, it is worth remembering that, even under the Bill, building societies are still not permitted to engage in all the activities that banks and other financial institutions can undertake. Indeed, part I of the Bill imposes severe restrictions on them. Primarily, they can lend only on residential property and, quite advisedly, they are not allowed to engage in some of the more sophisticated financial instruments that have brought problems to more sophisticated institutions. So the balance is right.

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    The 1986 Act also provided the two-year rule. Frankly, I am sorry that it is not included in the Bill. It would be a valuable power for building societies to possess, because there is undoubtedly rather undesirable speculation in building societies at the moment. The fact that some societies found it necessary to raise the threshold of deposits before conveying membership rights is undesirable, because it undermines a principle that building societies will take the widow's mite and provide a savings vehicle that quite poor people find useful. It would be a sad day if that principle were undermined.
    Similarly, the 1986 Act gave protection to societies that, having built up their businesses, decided that they wished to convert. It is known as the five-year rule. That was absolutely proper too. As many societies were quite unsophisticated in the world of financial services, it was quite clear that they could be vulnerable to more sophisticated institutions. The need for that rule has diminished over the years. As my hon. Friend the Economic Secretary said, many converting societies are quite large businesses in their own right. Nevertheless, the need for that protection has not disappeared altogether. I am slightly disappointed that my hon. Friend has not included an element of protection in the Bill. It would be quite wrong if converting societies could then be predators on other mutual building societies. None of us would wish to see that happen, as we all want mutual societies to continue to prosper.
    I would have preferred an arrangement whereby any converting society that took over a mutual society—whether by hostile bid or by consent as we all know that consent sometimes involves an element of coercion—would lose its protection under the five-year rule. However, to say that to take over any other financial services business, or almost any such business, will lead to the loss of that protection is going much too far. It means that converting societies will be limited in the sectors in which they can expand their businesses without risking losing that protection.
    I know that my hon. Friend will say that it would be unfair to insurance companies and banks who will not be under the same constraints. However, the five-year rule never applied to them as they were never building societies. It was never designed to cater for their circumstances, so that would be something of a non sequitur. Far more important, they are not subject to the constraints that have applied historically to building societies. Before the 1986 Act, since then and even under the Bill, there have been significant constraints on the activities of building societies. Therefore, it is still appropriate that some degree of transitional protection should be available to converting societies, otherwise there is a danger that we shall end up with a two-tier market: we shall have very large banks and other financial institutions, a much smaller group of smaller bodies—the mutual societies—because everything in between will have been gobbled up by the big boys. We shall end up with four or five major lenders for those who wish to buy their homes or make a deposit and a dwindling band of mutual societies which will be very much at the small end of the market.
    That would be entirely undesirable. Some means by which we can have a middle layer of converting societies that are temporarily protected from predation seems to be desirable in providing the maximum choice to the consumer. I very much hope that, as the Bill progresses,
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    my hon. Friend the Economic Secretary will go some way towards my point of view on that and on the two-year rule. I very much look forward to the Bill proceeding and succeeding, as it is an admirable measure.
    8.8 pm
    Mr. Alan Keen: I am pleased to have the opportunity to support the Bill, particularly in my role as chair of the Co-operative group of Members of Parliament. I shall be brief as others are waiting to speak and I shall concentrate purely on the mutualities.
    The co-operative movement understands mutuality better than most as it was founded by people who needed to band together to protect themselves against the difficult circumstances that they faced in the 19th century. In many cases, the monopoly suppliers—often their own employers—insisted that they bought their basic supplies from them. The building societies came later, but helped the same people. They provided a solid base of reliability and trust that enabled people with small savings—a small excess of income over expenditure—to invest and save with security. They of course also provided capital for the purchase of houses which was so necessary in those days, as it is today.
    As a young person, I tended not to trust banks. In saying that, I have not forgotten the contribution that the clearing banks have made to the functioning of Britain's financial industry and to industry and commerce itself. We were probably all misled by that famous "bank manager in your cupboard" television advert of 20 or so years ago. It did not take the public long to realise that that bank manager was not necessarily their friend and was beginning to be controlled from head office by computers and faceless people. People also began to realise that the bank manager had a different incentive—he was being pushed and pressed to produce profits early, quite often losing the good will of his own bank in the medium and long term.
    Despite the fact that I was very sad over the loss of mutuality, the movement of some of the mutuals into the banking sector gave well-needed competition to the clearing banks in an area where there had been little real competition. I am not being critical of the banks in a destructive way. I am mentioning them to try to highlight the difference between mutuals and the banks, with shareholders to satisfy. It is quite enjoyable to attack the banks, but that is not what I want to do in this debate.
    The contribution that the building societies have made can be understood fully only by those who have lived in working-class communities, where the surplus of income over expenditure was very small and people searched to find somewhere that could be trusted to put their money. Building societies provided such small investors with that trust. There is no doubt that those investing in building societies were greatly affected and influenced by mutuality. It gave them the feeling that they were among people who cared for each other. At the same time, they had the satisfaction of knowing that they were helping to put a roof over other people's heads. It was probably an example of a do-good factor as well as a feel-good factor.
    As my hon. Friend the Member for North Warwickshire (Mr. O'Brien) said, even after the current conversions, building societies will have assets of £120 billion and serve 10 million customers, which is quite an achievement for any organisation. Although I agree that mutuality

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    gained trust, the ability to compete in the open market has enabled building societies to continue to flourish. Mutuality does not mean the loss of the ability to compete.
    I shall not repeat the detailed arguments in support of the Bill—I support it very strongly. We want to get the Bill through the House as quickly as possible. I follow my hon. Friend the Member for North Warwickshire in praising the Economic Secretary for her efforts. Let us get the Bill through. Let us allow building societies to compete on equal legislative terms with other corporate organisations in the market. The British people need building societies and the British economy certainly needs a flourishing building society mutual sector to look after the small savers and draw money in with trust as they always have done.
    8.13 pm
    Mr. Douglas French: In the spirit of the intervention of the hon. Member for Great Grimsby (Mr. Mitchell), I declare an interest as a modest customer of several building societies and as the chairman of the all-party building societies group, which is of course unremunerated.
    I greatly welcome the Bill, which is very important for the future of the building society sector. I greatly hope that it will pass through the House without delay. I also congratulate my hon. Friend the Economic Secretary on her persistence in bringing forward the Bill. I certainly dissociate myself totally from the conspiratorial interpretation of the hon. Member for North Warwickshire (Mr. O'Brien). I assure him that, had my right hon. Friend the Deputy Prime Minister been against the Bill, there is absolutely no doubt that we would not be here trying to give it a Second Reading because he would have made certain that his views had been properly heard.
    I regard the Bill as a natural and logical step in building societies legislation. The original Building Societies Act 1962 prohibited building societies from offering almost any service unless it was a savings scheme or a mortgage. The legislation was developed in the Building Societies Act 1986, which introduced partial deregulation—allowing diversification into many other services including current accounts, credit cards, life assurance and unit trusts—and paved the way for societies to convert to public limited company status, without which the public would not be about to enjoy share distributions and would not already have received bonus distributions from societies' conversions.
    Now that we are ready for a further tranche of deregulation, it is perfectly natural to get away from the still rather prescriptive nature of the 1986 Act and adopt the principle that a society can do more or less what it wishes—apart from that which is specifically excluded by the Bill. That is why, quite correctly, the Bill prohibits societies from trading in commodities, making markets in securities and involving themselves in derivatives—all of which we know are very risky, likely to lose money, likely to place depositors' assets at risk, and therefore not appropriate for a building society to engage in.
    I very much welcome the retention of the special operating characteristics of some societies. It is perfectly right that they should still have to raise at least
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    50 per cent. of their funds from individual retail investors; it is perfectly correct that 75 per cent. of their assets will still have to be invested in loans on housing—although not necessarily for owner-occupation. That opens the way for more building society funding of the rented sector, which is a very sound judgment. The remaining 25 per cent. of their assets can be invested anywhere that they choose, subject to the overseeing of the Building Societies Commission—to ensure that the management of a building society has the necessary skills and financial expertise to make competent decisions and to ensure that it keeps out of areas in which it ought not to be because it does not have the skills.
    I also welcome the fact that, to accompany the wider powers, there will be greater accountability of societies to their members. I noticed that, in the recent experience of building society conversions, there was much confusion among building society customers about the rights of those who had a proper share account and those who simply had a deposit account. It is desirable that that confusion should be cleared up. I am also pleased that there is confirmation in the Bill that, in future, borrowing members will have broadly the same voting rights as investing members. That helps to bring legislation into line with public expectation.
    Another point about accountability which I welcome was made by my hon. Friend the Economic Secretary. If a society transfers its business to a public limited company, the proposals for enhanced remuneration of the society's directors will be subject to a separate resolution for members' approval. That will address the concerns of those who felt that to accept conversion to plc status, it was necessary to accept the whole package, including what some people might regard as robust consideration for the directors of the society when they become directors of the plc.
    The most controversial provision in the Bill is the five-year protection from takeover, which my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) mentioned. I have thought carefully about the subject. Some people believe that the potential loss of the protection if a newly converted society embarks on a takeover is unfair. I cannot come to the same conclusion. Newly converted societies do not need the same protection as when the 1986 Act was passed. Such protection would create two classes of public limited companies—those that enjoyed the five-year protection after conversion and those that did not. My hon. Friend would argue that it is necessary to provide some transitional relief because building societies would be going out into the big wide world without having had long enough to establish their services on a level footing with the banks. However, protection from takeover for five years would place the newly converted building societies in a different position from banks that have not been through the process, and would add a new unevenness between newly converted societies, some of which are large and substantial, and banks that could not claim the same protection.
    Mr. Butterfill: Can my hon. Friend name a bank or major insurance company that has been subject, in the

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    past few years, to the constraints that we imposed on building societies' activities by the 1986 Act and will impose in the Bill?
    Mr. French: I cannot, but that is all part and parcel of the risks that a society has to weigh up when making the decision to convert. If societies that may convert believe that the competition that they will encounter as plcs is greater than they can cope with, they should not convert. I cannot agree with my hon. Friend on that point.
    It is not right if that conversion gives societies a protection that is not available to other institutions. A building society that does not enjoy the protection could be taken over by a predator, such as a former building society, which does enjoy the protection. That creates an uneven playing field between the newly converted building society, now a bank, and building societies that have not converted. In an extreme case—although I admit this is a theoretical example—the abandonment of mutual status could be a way to fend off a takeover. That is not acceptable.
    The Alliance and Leicester has argued that protection should be lost only after a takeover of another building society, and not in the case of a takeover of any other financial institution. I have discussed the issue with the Alliance and Leicester, and I cannot see that such a halfway house would provide a satisfactory formula. The company that wishes to make a takeover bid, of a mutual or other institution, should not be immune from receiving a takeover bid itself. Again, that would create an uneven playing field. It would also mean that the business that was being acquired attracted immunity from takeover by yet another institution, because it came under the umbrella of a new bank that already enjoyed the protection. However one approaches the issue, it creates an uneven playing field and an illogical situation.
    Mr. William O'Brien: The Halifax building society, which will shortly become a plc, has accepted that it will not enter into a takeover of a mutual building society on the principle of the five-year rule. In its application, the Halifax says that it would be wrong to have the right to take over a mutual building society after becoming a plc. Does that influence the hon. Gentleman's views?
    Mr. French: No. The Halifax building society is in a unique position because of its size. It is easy for the Halifax to choose voluntarily not to avail itself of the protection for five years because the number of institutions that would have the resources to take over the Halifax could be counted on one finger. The Halifax has not given up a practical protection that it would otherwise have enjoyed.
    The Alliance and Leicester seems to be arguing that it would be retrospective to make the protection for five years conditional on not taking over another institution, but it should accept that the possibility has been under discussion for a long time. It is easy when changes are made on the introduction of new legislation—we see it with the Finance Bills—for those who are affected to jump to the conclusion that it has a retrospective element. All institutions that make significant decisions need to
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    keep their eyes and ears open and anticipate possible policy developments. They should not base their decisions on guesses that something is never likely to happen.
    Mr. Peter L. Pike: The hon. Gentleman will recall that the Alliance and Leicester acquired the Girobank. The members of the Girobank, who are now customers of the Alliance and Leicester, have not shared in the windfall payments that it has made.
    Mr. French: The hon. Gentleman makes a good point and I will come in a moment to the subject of windfall payments.
    My broad approach to the Bill is that mutuals need the legislation. It will give them greater operational flexibility. They will be better able to compete properly with the banks and will be better placed to respond to customers' needs. The Bill underlines the advantages of mutual status, which have been placed under pressure lately. Many people have expressed the view that the mutual movement is in its death throes, but the Bill will make an important contribution to ensuring that mutuality has a future. I support those who feel that the mutual movement, and building societies in particular, make a vital contribution to the financial services sector.
    Some four or five, perhaps six, major societies have converted or will convert. It is reassuring to note that the remaining large mutuals have reasserted their absolute commitment to mutuality, including the Nationwide, the Bradford and Bingley, and the slightly smaller Portman and Birmingham Midshires societies. I take those commitments not only as statements by today's chief executives, but as commitments on behalf of those societies in the future. They have all said that they cannot envisage circumstances in which they would abandon mutuality, and they are committed to it. The Nationwide, for example, is committed to demonstrating to its customers, and prospective customers, that mutuality offers customers tangible benefits through more competitive mortgage rates and better-priced savings products. It is seeking to feed the benefits of mutual status directly back to its members—exactly the way of conveying to the public and to members of societies that mutuality in practice delivers tangible results.
    The feeding back of the benefits of mutuality needs to be accompanied by a growth strategy by societies. Unless they can foresee an expansion of their business, the feeding back of benefits will in essence amount to giving back to members some of the profits that the society would otherwise have registered. The more societies dilute their profits in that way—even for sound commercial reasons— the cheaper they will be to a predator wishing to take them over. There needs to be a strengthening and a growth in the size and activities of mutual societies.
    None of the societies which have declared their commitment to mutuality has made any statement that they would not at some future stage merge, because the merging of societies may well be a necessary requirement to ensure that they are strong and able to protect themselves against future predators.
    Another benefit of the Bill is that it will make the relative attraction of plc status rather less. It gives operational freedom but makes the relative attraction of operating under banking legislation less obvious, as more can be done under the building society legislation. That is very important.

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    Issuing shares by societies which convert may be very good if one wishes to go on the acquisition trail, but it is not good if one is seeking to offer competitive mortgage and savings products. Typically, a bank pays about one third of its profits in dividends to its shareholders. In a society with a normal business profile, that is equivalent to about three quarters of a point of margin between mortgage and savings levels. That means that if a mutual society does not have to pay dividends to shareholders, it is able to offer products more competitively than might otherwise have been the case. In future, customers of mutual societies will be able to look forward to competitive deals on all products.
    Mutuality is a trading status that we should never allow to perish, and I emphasise that the Bill does a great deal to reinforce it.
    I would like to say a few words about the manner in which some building societies have chosen to convert to public companies. It is sad that some of the societies currently converting—in what seems to be a headlong rush to become plcs—seem to have forgotten the very ethos of mutuality which, for more than 150 years in some cases, has brought them commercial success and has given them their enviable image. Some societies seem to have forgotten that they started life trying to look after smaller savers, making sure that they treated all customers fairly and trying to return to members the benefits of membership of a mutual society.
    As a prime example of such an offender, I cite the Halifax building society. I very much hope that no society seeking to convert in future will approach the task as the Halifax has done in the past few months. When the Halifax prepared its flotation, it decided to leave out of the distribution several million of its customers, including people who were disabled and who could not sign their own accounts. This was a fundamentally flawed judgment. It was deeply offensive to those left out and, indeed, to some who were included, and who as a result would get more than they would otherwise have received.
    The Halifax first tried to justify its extraordinary decision by blaming the existing state of the law. That was incorrect, because nothing in the Building Societies Act 1986 would cause it to take such action. It went on to say that the disabled people—who were second-named account holders—were not members and therefore could not be included in the share distribution. That again was incorrect, because the 1986 Act gave a converting building society the power to include in a share distribution whoever it decided to include. The next excuse was that it was too difficult, administratively complex and would present practical difficulties that the society could not solve. In truth, however, there were a number of simple ways in which the dilemma could have been avoided.
    When the Halifax was asked if it felt that its formula was unfair, it replied that it regarded the scheme as perfectly fair. Incredibly, it tried to justify the formula on the grounds that no one should pick out the disabled as a group that had been left out because, in truth, the society had left out a number of other categories as well—as if that somehow justified the sad judgment. To cap the insults, the society went on to claim that many disabled
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    people had been included under the distribution formula, and any change to the arrangements would mean that some 8.5 million people would be upset by a delay.
    The Halifax then announced 97 per cent. support for the scheme—almost universal support—when the only people whose votes it was counting were those likely to be recipients of the distribution. Those not likely to be recipients did not have a vote, so it is hardly surprising that the proposal received near-unanimous support. What is so distressing about the conduct of the society was that its directors—who are doing nicely out of the conversion—seem to have forgotten that they are today's guardians of the assets of that society, which have been built up from the loyalty of customers over 150 years. The directors have a duty to pass benefits to customers and to be fair. In short, the Halifax building society has betrayed its founding fathers and the ethos of mutuality.
    Even at this stage, the Halifax could redeem itself by making a statement of intent that it will put on the agenda of the new board of the public company a resolution to allow the shareholders to decide whether they wish to make an ex gratia payment to the disabled people left out of the formula. Company law allows for that to be done now, and I very much hope that the Halifax will come to the right decision. It could follow the lead set by the Northern Rock building society and set up a charitable foundation to ensure that the very people left out of the distribution are helped via a donation to relevant charities. It is not a substitute for ensuring that all customers and members receive their rightful distribution, but it would at least go some way to making up for the appalling judgment exercised by the Halifax building society. Certainly, the Halifax directors ought to recognise that they should do something, not just maintain a stony silence. They might like to follow the example of the Alliance and Leicester, which, shortly before this evening's debate, wrote me a letter as follows:
    "It is intended that an item will be placed on the Agenda of the PLC Board after flotation, to seek approval in principle for the provision of funding for an appropriate charitable donation to disabled persons, or to a charity or charities on their behalf, subject of course to the approval of the company's shareholders."
    That shows a willingness to do the right thing which has thus far been manifestly lacking on the part of the Halifax.
    If the Halifax continues to act like a hard-nosed bank before it has even become one, and continues to spoil the good reputation that building societies have enjoyed for so many years, I for one hope that its customers will decide in their millions to move their accounts elsewhere, on the grounds that it is not a society in which they would wish to continue to hold their savings.
    8.40 pm
    Mrs. Diana Maddock: Like the hon. Member for Gloucester (Mr. French), I declare my interest—in my case, as vice-chairman of the all-party building society group. I also have various other interests in building societies. I certainly associate myself with the hon. Gentleman's remarks about the five-year rule and the future of mutuality.
    There may be arguments over whether we should have had a new Building Societies Bill somewhat sooner, but I begin as others have done by congratulating the Economic Secretary on getting the Bill to the Floor of the House in this form. Despite what was said earlier, hon. Members

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    know that there was consultation with a wide range of people. First, we had a draft version, then more consultation, then another draft before Christmas; finally we had the Bill as it appears today.
    That is in stark contrast with what happened to the Bill that became the Housing Act 1996. The day before we were due to discuss part of it, the people behind the security of loans for social housing suddenly discovered what was going on, faxes began to fly to and fro, and there was a great threat to the whole financing of some social housing projects. That is why I pay tribute to the Minister for her work to avoid the same happening again, and to come up with a Bill with which all parties are in broad agreement.
    Many of us were disappointed to find that the Bill, contrary to expectations, was not mooted in last autumn's Queen's Speech. Thereafter, however, the Minister promised to do all that she could to find time for the Bill—if she could get agreement on its contents. She has been as good as her word, on which I congratulate her. We may not know the whole truth, but I suspect that she may have had some difficulties with the Deputy Prime Minister. At least she won—that is the main thing.
    My one objection is to dealing with the final stages of the Bill all at one time next Monday. There should be a gap between the Committee and Report stages, however well the Bill's contents have been dealt with. There ought to be more time for consideration on a Bill as large as this.
    Why do we need another Bill 10 years on from the last one? If we examine the role of the building society movement, and what has happened in the financial world in recent years, we can see part of the answer. That movement has tremendous strengths and brings great strengths to our economy. Its traditional function—matching savings to housing finance—remains predominant: it does the job very well. For millions of savers and home buyers, building societies are the trusted one-stop shop.
    Over the years, the building society movement has taken care to protect its customers from the effects of society failures, which have been extremely rare. Building societies are also of great importance to the regional economies of Britain, not just because of the employment in their branch networks but because their headquarters, like those of the major insurance companies, are to be found not in London but in our provincial cities and towns. They act as a welcome counterbalance to the centralisation of financial affairs in London.
    Shortly after I entered this House three years ago, my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), at that time financial affairs spokesman for the Liberal Democrats, was asked to address the annual lunch of the Building Societies Association.
    Mr. Austin Mitchell: Exciting stuff.
    Mrs. Maddock: In fact, we did create some excitement at the meeting. Anyhow, my right hon. Friend described some of the problems to which the Bill today offers some solutions. For instance, he mentioned the problem, during the recession, of the over-promotion of credit which led to a lot of people ending up with negative equity. Some of them still have it.
    My right hon. Friend also said that building societies often help first-time buyers instead of looking after their current members' interests. He also raised the
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    accountability of building societies to their members—an element of the Bill that we all welcome. My right hon. Friend ended by saying:
    "The British people have invested a lot of their money and a lot of their trust in the building societies, and the results have included wider home ownership than in many other countries and a building society movement which is without equal. It is time for some public reflection on how the industry can build on these strengths."
    That reflection has continued in recent years.
    I was particularly struck by Will Hutton's comments in The Guardian in July 1995, when he stated even more forthrightly:
    "One of the great bequests of the last century to the modern world is withering before our eyes. British building societies, owned and run for the mutual benefit of their members, were a tangible expression of a form of common ownership. Now they are being cannibalised into becoming the latest standard bearers of the public limited company, complete with stock options and a lord on the board— and a credulous public is being offered a sweetener of some hundreds of pounds to offer its assent."
    Listening to the hon. Member for Gloucester saying how he thought building societies should think carefully before becoming public limited companies, with the attendant large payouts, I pondered Will Hutton's comments. I must tell the hon. Gentleman, though, that some of his Conservative colleagues are hoping that many people will get their feel-good factor before the general election, in the form of the massive payouts coming their way later this month.
    Mr. Butterfill: The payouts are likely to happen after the general election, not before it.
    Mrs. Maddock: There is some dispute about that.
    As I was saying, many of the concerns expressed in recent years about mutuality have been dealt with in the Bill.
    The Building Societies Association welcomes the Bill, as do many of us who are in favour of mutuality. It will preserve the unique characteristics of building societies and ensure that their record of safety continues. All of us welcome the fact that the legislation is to be permissive rather than prescriptive.
    The new legislation will place building societies on the same footing as other organisations, in that they will be able to do many more things that will be of interest to their members. However, many us believe that their concentration on the requirements of personal savers and on housing is important. I welcome the fact that they will be able to invest in rented housing. The need to do something to make lending for renting stack up has become obvious to me in my time as housing spokesman for my party. We have a problem in trying to expand the private rented sector, because the different tenures are so concentrated in one form.
    I especially welcome the measures designed to approve societies' accountability to their members. Election to the board will be more transparent, borrowers will have votes and, for many societies, fewer people will be required to nominate members for election. There will be a legal requirement to hold special general meetings at request, members will have to vote in favour if a society wants to make significant acquisitions of business not related to mortgages and savings, and if a society decides to transfer to plc status, it will have to ballot its members and have

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    an additional advisory vote on any proposed enhanced remuneration packages for directors. I welcome all those measures on behalf of my party.
    We want to enact the legislation quickly, partly because we are about to embark on a general election. Because of the problems that we have had in the rapidly changing financial world and because so many building societies have started to move towards plc status, we must move as quickly as possible to safeguard the mutuals that many of us want to flourish. That is why my party is happy for the Bill to proceed.
    At the same time, I hope that the private Member's Bill to which the hon. Member for Gloucester referred will reach the statute book. All of us have received many letters in recent years about people who were named second or not included for one reason or another. That is one reason why many people will be in favour of the Bill. I associate myself entirely with the hon. Gentleman's comments about the sad situation of disabled people being left out, and my party and I fully support the Bill.
    8.53 pm
    Mr. Peter L. Pike: I hope that the Bill will receive Royal Assent before the general election, because it represents the best way of preserving the building society movement and the concept of mutuality.
    I declare an interest as a member, but not an officer, of the all-party group on building societies. I am also a member of several building societies. I voted no to the National and Provincial takeover by the Abbey National and to the Leeds takeover by the Halifax, and I was one of the 3 per cent. who voted no to the conversion.
    At the appropriate stage, I shall take the advice of the hon. Member for Gloucester (Mr. French) and remove my custom, but, if the shares are to come, I may as well take them first; I make no bones about that. I have been a Halifax customer for many years and I feel that I may as well take the shares even though I disagree with what has been done.
    The hon. Member for Bournemouth, West (Mr. Butterfill) referred to the Building Societies Act 1986. He underlined the view of those of us who were in the House when that legislation was passed: we thought that it was a bold step forward and a challenge to the general concept of building societies at that time. Indeed, I remember saying that I was conservative on building societies and wanted them to remain as they were, because they had a good record over many years of service to both lenders and investors. I wanted banks to be banks, and estate agents to be estate agents.
    Times have moved on rapidly, however, and I accept that we are in a different world, so I fully support the view that we must change and that, if building societies are to be able to compete and indeed to remain as mutuals as we move forward to the 21st century, we must enact the Bill.
    I share many of the views and concerns about the Halifax expressed by the hon. Member for Gloucester. According to its figures, 3.5 million of its customers are not entitled to a handout as a result of its conversion, and I have heard that it could be as many as 4.5 million. Even 3.5 million is far from an insignificant number.
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    In 1986, the Halifax gave various briefings to Members of Parliament, and there was no doubt that, if we had had to bet on which building society would be the last to consider conversion, we would have chosen the Halifax: no society was more committed at that time to the spirit of mutuality. I do not know whether the board is guilty or whether it is Mike Blackburn, whom I criticised for leaving the Leeds and then taking it over in a so-called merger while at the same time recommending conversion, but, at the end of the day, the chief executive cannot act alone and must secure the board's approval. I greatly regret what has happened.
    The Bradford and Bingley building society rightly says:
    "The legislation will create a more permissive regulatory regime and is welcomed by those societies which, like the Bradford and
    Bingley, intend to continue operating as mutual organisations. It will provide societies with greater operational flexibility and enable them to compete on a more equal footing, as mutual organisations, with banks and other institutions."
    The briefing also mentions that there are 13 million building society members, 2,500 branches and that many staff are employed, especially in the provinces.
    It has been rightly said that the Building Societies Act made the banks more competitive and responsive to customer needs. The hours that banks open may have been influenced by the fact that they have to compete with building societies; they have had to change their approach. Some building societies were complacent, sat back and assumed that things were all right. The 1986 Act, what is happening now and the way that things have moved, may also have made building societies shake off the dust and recognise that, if they are to survive, they must be competitive in the marketplace. No harm has been done from that point of view.
    The Building Societies Association states that it and the
    "remaining 72 building societies have welcomed the introduction of the Bill."
    The association makes an important point on competition and notes:
    "A survey in the March edition of What Mortgage found that out of 72 lenders, the top 25 in terms of offering best value for money to customers were all mutuals."
    It is significant that the mutuals led the way with better deals for mortgages and for investors.
    I regret that the Bill does not, as several hon. Members, have said, deal with the two-year rule. It is not unreasonable that people should have been members for two years before they can benefit from a conversion. The Nationwide says:
    "Although, in principle, we would support a move to amend the Bill by inserting a two year clause to protect societies against speculators, our over-riding concern is for the Bill's passage to be eased so late in the parliamentary session."
    We all recognise that time is short and that the Bill must get through the other place if it is to get Royal Assent before the general election. I hope that an attempt will be made next Monday when we debate its remaining stages to introduce the two-year rule. I would support that. If such an attempt fails, I, like the Nationwide, would accept the Bill as it stands.
    Clause 41 deals with protection, the 15 per cent. rule and the five-year rule. If societies convert and become predators, they should lose protection. The protection is not dissimilar to that which existed for the Trustee Savings bank. Share dealing in that commenced on

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    10 October 1986. The Trustee Savings Bank Act was passed in 1985. The initial threshold imposed a maximum holding restriction of 5 per cent. of the company's equity. After 29 September 1991, that was allowed to rise to 15 per cent. There are parallels. There were originally many small shareholders, but, when protection went, that changed rapidly. As soon as the 15 per cent. rule came in, it was not a question of when it would be taken over, but of who would take it over. Ultimately, it became part of the Lloyds group, which had already taken over the Cheltenham and Gloucester building society.
    The biggest predator to date must be the Abbey National building society, which made an unfriendly bid for the National and Provincial building society. I know that society well because it was formed by the merger of the Burnley building society and the Provincial building society. It was supposed to be a merger, but it was more like a take-over, because everything was cleared out from Burnley in only a few years.
    The National and Provincial society rather lost its way. At one stage, it was going for conversion; then it was to merge with the Leeds—funny that the Leeds should come into it yet again. Finally, it said that it was committed to mutuality. It sent its customers many documents about mutuality. It held a meeting across the road for Members of Parliament so that Alistair Lyons and Lord Shuttleworth could brief us on its commitment to mutuality.
    Then, suddenly, out of the blue, came the bid from Abbey National. The National and Provincial did not want to accept that bid and said that it wanted to consider other bids. Nobody ever got to know what those other bids were and, ultimately, the Abbey National was allowed to take that building society over. It is funny, is it not, that Alistair Lyons is now the executive director of Abbey National and chief executive of its subsidiary, Scottish Mutual Life, while Lord Shuttleworth is the deputy chairman? They did all right out of it, but was it what the customers wanted?
    I said at the time of that vote that it was bound to go through. The hon. Member for Gloucester hit the nail on the head, because when so many people face the chance of getting £1,000 or whatever it happens to be, it is only realistic to accept that they will vote yes. At the time of the Abbey National takeover, more than 46,000 of my constituents were entitled to a pay-out in cash or in shares because of the Burnley building society connection. I have no doubt that they voted yes for obvious reasons.
    I believe that we want to see building societies remain mutual. I believe that the Bill represents a fair balance, which allows building societies the freedom to move into the markets in which they need to compete in order to survive. I recognise that they must provide customers with the services that they want and must be able to compete with others who are already able to provide such services. I believe that the Bill will enable those societies to remain mutual if they so wish, and I hope that the 72 which are mutual will choose to remain so.
    I support the Bill. As I said earlier, I hope that we shall amend it to bring in the two-year protection, because it is totally wrong that people should travel around the country and invest money in societies here, there and everywhere, when their only interest is in trying to get a windfall payment. They have no interest in the respective building societies and what they do.
    9.6 pm
    Mr. Austin Mitchell: I should begin with a declaration of interest, although given that it concerns a building society, I calculate that the rate will be fairly low.
    I tried to raise a serious point at the start of the debate, Madam Deputy Speaker, when I asked your predecessor in the Chair whether hon. Members about to benefit from distributions should declare that in their speeches. He replied that hon. Members know the rules of the House. It is not a rule of the House to declare building society accounts. Nor is there a rule about declaring distributions that hon. Members have not yet got, but they could have a vital bearing on the debate.
    The Alliance and Leicester, for example, wants clause 41 to be modified so that it can be protected if it takes over anything but a building society. That building society is about to embark on a major distribution from which many hon. Members will benefit. I suspect that more Labour Members than Conservative ones will, because we are more likely to put our money in building societies than are Conservatives, who are prepared to go for the bigger returns. The distribution by the Alliance and Leicester could have a bearing on hon. Members' judgment about whether clause 41 should be modified. I therefore think that it is right to declare such an interest, especially as the total distribution is estimated at about £18 billion. It is so big that, at one time, the Conservatives hoped that it could be expedited because they believed that it could influence their election chances. It will obviously influence hon. Members' views on the Bill.
    I should like to declare my interest in the Halifax building society. My parents came from Halifax, so it was a tradition that their children should be given a Halifax share account, as it was called then. I have had that account ever since. I will now benefit from that local association. However, in common with my hon. Friend the Member for Burnley (Mr. Pike), I voted against demutualisation, and voted against merger with the Leeds.
    It was a sad day when I saw all those solid Yorkshire folk shuffling into the meeting, looking like people at the "Antiques Roadshow" who had just been told that their antique was worth a thousand quid. They had all been bought by the lure of the money. The ancient Halifax cry, first popularised by Wilfred Pickles, went up: "Give us the money, Barney." Their desire to get their hands on the distribution coloured their judgment. It did not colour mine. I shall keep my account in the Halifax until I get the money; I shall then transfer all the money in the account to the Bradford and Bingley building society, which will stay mutual and which is doing far more to provide an effective service to the benefit of its customers. That is my declaration of interest.
    I hope that my withdrawal of the Mitchell millions from the Halifax will bring that building society to its knees to punish it for betraying the mutual principle. Like my hon. Friend the Member for Burnley, I deplore the rush to demutualisation. I should have liked the Bill to do more about that and to retard and penalise the rush to abandon mutual status because the mutual principle is good. I am one of only two people in the Chamber to have survived the Standing Committee on the 1986 Bill, where the principle was described as "socialism in action". It might have been old Labour in action, but it is a good principle—a principle of local self-help and of support for members to purchase houses.

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    The strength of building societies was built on those roots—the involvement of members and local self-help—and that strength remains. It has been built up over the years—100 or, in some cases, 150 years—by the investment of previous generations of members and it is simply being dissipated as shareholders are effectively being bribed with their own money to accept the principle of demutualisation. They are encouraged by the example of the gains made by people who bought shares in privatised utilities. That has produced a culture of shareholder greed in which shareholders have no loyalty to the building society or company but "Give us the money, Barney" becomes the universal cry.
    That culture is encouraged by the top brass of building societies— the directors and top management—who see light at the end of the tunnel. They see that they can do well for themselves: they can become survivors in a merged organisation and, more important, they can put up their own salaries to levels in other enterprises. They feel that mutual status is a drag, especially on their salaries. They want that drag eased, so they encourage the move to demutualise. That move is also encouraged by the example of the directors and top management of privatised utilities. The greed that stems from that privatisation procedure has permeated and undermined the culture of the mutuals.
    No good can come of this. Good can come to the City, which takes huge fees for advising on the process of demutualisation and the launch of shares, but no good can come of it from the point of view of building society customers, who will have to pay higher rates—albeit only slightly higher—for their mortgages. Moreover, those who invest in demutualised societies, as is the tradition in the Halifax, will receive slightly lower rates of return on their investments. The dividend drain that will now be embarked on by those companies must be financed. It is a steady and remorseless drain on all British companies. In order to buy support from the market and increase the value of their shares, building societies will be forced to embark on a dividend drain from which mutuals are free.
    The Nationwide says that it is committed to
    "passing on to its customers the money that would otherwise be used to pay dividends to shareholders".
    If the money is used for that purpose, customers will get a better deal from a mutual society than they will from a demutualised company.
    As my hon. Friend the Member for North Warwickshire (Mr. O'Brien) said, it is important to note that the top 25 of the 72 companies that, according to a What Mortgage? survey, offer better value, are mutual companies. Their customers—members, shareholders and people taking out mortgages—get a better deal, and demutualisation undermines that. It means new status, new dangers.
    Building societies that have demutualised are wandering away from what they are good at, what made them strong and what they know well: the housing market. I agree with the hon. Member for Christchurch (Mrs. Maddock) that building societies should provide support for rented accommodation, because they know the housing market. They are good at that, and if it ain't broke, don't fix it.
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    There is a remorseless drive towards diversification. Diversification is a risky business. The 1993 research by McKillop and Ferguson showed that societies that diversified the most had the lowest return in profits, because diversification was a drain. It has led to several disastrous mistakes, which could have been avoided by sticking to the principles of mutuality and the business that building societies are good at, rather than trying to play big bankers.
    I agree with the fears that were voiced earlier. Building societies will be lured away from their provincial roots and status in places such as Halifax, Leeds, Bradford and Burnley to play bit parts in the City of London. They want financial gain and they want to be big players in that market. They will lose out, because they will be battered and skinned by the competition.
    Building societies that are considering demutualisation or have demutualised, and their shareholders who vote for it, should take what happened to the TSB as a warning of the dangers involved. It was a virtual disaster. We passed privatisation legislation in 1985 and the TSB received a huge dowry, which it promptly squandered. It was the most ruinous process, because it tried to play a game that it was not used to, was not equipped for and had no skills in, and the bank and its shareholders lost out disastrously. The Bill should have done more to protect mutual status.
    I was inclined to object to the speed with which we are passing the Bill, because I hate rushed legislation. When the pressure groups, as well as the spokesmen for the three main parties, say that we must pass the legislation with speed, I get suspicious and think, "Hang on, what's at issue?" However, I have been persuaded by my hon. Friend the Member for North Warwickshire that the Bill should be supported, because it will slightly ease the pressure to demutualise, which is now so strong in the movement.
    Building societies that are considering demutualisation will think twice if, once they are demutualised, they will be deprived of the ability to be protected if they take over another financial organisation. A building society that is thinking of demutualising will be a plc and will be a small player in the new market, so it will need to merge with others. Even then, it will still not have the critical mass and will be vulnerable to takeover, especially by foreign banks and financial institutions that are trying to get a foothold in this country. I think that clause 41 will be a deterrent. The Halifax, of course, is too large to be worried, but the provisions will weigh with some of the building societies that are currently considering demutualisation. It certainly weighed with the Alliance and Leicester, which is now trying to amend clause 41 in a way favourable to its interests.
    Because of that, I feel that—somewhat reluctantly—we should support the Bill. I would have liked us to devote more consideration to it: I would have liked us to consider what could be done to protect mutual status. Like my hon. Friend the Member for Burnley, I would have liked a two-year rule to act as a deterrent to those who wished to take advantage of the tides of money that are currently washing around looking for accounts in companies that might demutualise where there is a quick profit to be made. The essence of investment should involve a wish to stay and work with the company involved, rather than just rushing in and out to get a quick buck. I think that two years' membership should be the minimum requirement before people benefit from the distribution.

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    Unfortunately, the deepest instinct of British shareholders is to take the money and run. The two-year rule would check that tendency, and we should bear that in mind in our consideration on Monday. I favour that modification above all because it would help the mutual societies to compete by allowing them more flexibility. It will provide a slight deterrent to demutualisation, and I believe that we should encourage building societies to believe that the mutual principle is vital. That is why I am delighted that 70 building societies are determined to remain mutual. I hope that they will be encouraged. That system is crucial to a diversified, pluralistic lending sector and to competition in the market from all kinds of institution.
    I think that mutual building societies can give their customers a better deal—including those who take mortgages—and, above all, conserve the interests of their members, including the smaller members in their locality, far better than huge, impersonal institutions that try to play at being banks.
    9.21 pm
    Mr. Jon Trickett: Like a number of other hon. Members, I shall speak in defence of the principle of mutuality, for a number of reasons. First, let me pay tribute to the Economic Secretary to the Treasury who, I believe, firmly intends to restore the balance—or, at least, to establish a level playing field between the mutual building societies and public limited companies.
    I wish to speak—even if I do so only for a few minutes—for a number of reasons. First and most important, as a putative Yorkshire nationalist, I must point out—as my hon. Friend the Member for Great Grimsby (Mr. Mitchell) might have done—that many building societies were born in Yorkshire and developed great financial strength there, particularly in my home sub-county of the West Riding. I still insist on using that term. Building societies such as the Leeds Permanent, the Halifax, the Bradford and Bingley and the Leeds and Holbeck—there are a number of others—provided much-needed support for working-class people living in difficult circumstances, and enabled them to acquire their own homes. They also provided a significant amount of employment in large cities in the West Riding. That is much appreciated, especially nowadays, when many of the more traditional industries are dying.
    My second reason for speaking is that, in a sense, the building societies represent a peculiarly British solution to the problems involved in home ownership, and I think that every hon. Member would applaud that. About two thirds of people in Britain today own their homes: I am told that about 15.9 million homes are either owned or in the process of being acquired. As a society, we can take pride in that, and I think that we are well advanced relative to countries in Europe and elsewhere.
    The building society movement and, above all, the principle of mutuality, allowed our people to make significant gains over the decades in acquiring their own homes. Building societies were the people's solution to the problem of how to acquire their own homes, and possibly to escape from some of the worst excesses of slum landlordism, particularly before the first world war.
    My third reason for rising to defend mutuality is the principle of mutuality itself. Much has been said about it. I do not wish to add to what has been said about the
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    co-operative principle—that each account holder and customer in a building society shared, through the mutual principle, in the direction of that society—save perhaps to claim, or to lay stake to the claim, that that perhaps was one of the first examples of the stakeholder society in practice. I shall return to the principle of mutuality or stakeholding in what I say about the Deputy Prime Minister's recent tirade, which has already been referred to.
    The fourth matter I wish to raise can be demonstrated with some precision: the financial advantage that mutuality offers to people who own accounts. Examples have already been mentioned this evening. A What Mortgage? survey demonstrated that the top 25 of 72 surveyed mortgages were offered by mutual societies—a significant factor. The Mail on Sunday was able to demonstrate even more graphically the significant differential that is offered by a mutual society relative to a plc. There was a £200 benefit to be gained from taking out a £50,000 mortgage in the past year with the Yorkshire building society—as a Yorkshire nationalist, I probably should refer to a Yorkshire building society—relative, for example, to the National Westminster bank. That is not an insignificant amount of money. The difference in price must be to do with the fact that plcs must provide for dividends to be remitted to shareholders. The mutual principle demonstrates, even today, the advantages that our forefathers and foremothers probably were able to identify when they created building societies.
    I worry, too, about the mutual ethos to which many of the mutual societies have declared they will remain attached when they move to plc status. Some hon. Members have said that they wish to conserve the mutual ethos that has been so important to the building society movement over the decades. Every customer is a stakeholder in a mutualised building society; ultimately, the driving force behind a plc is the shareholder. When a building society is demutualised, every stakeholder is given shares but, significantly, there is a rapid, almost cataclysmic, diminution in the number of stakeholders immediately after the shares have been issued.
    We have discussed the Abbey National building society. At the date of conversion, there were 5.5 million shareholders. Every stakeholder was given shares and put on the register. In February, their number had effectively halved to 2.7 million. That was a rapid diminution in the number of people able to give direction to that building society.
    Financial institutions are looking to the accretion of larger and larger shareholdings. My office was in contact with the Alliance and Leicester today. It estimates that 25 per cent.—a quarter—of all the stakeholders who receive shares will dispose of them immediately. The word immediately is being used from day one. That means that 2.4 million people with a stake in that building society and the ability to give it direction and secure its objectives will immediately dispose of their shares. That constitutes significant disinvestment.
    Mr. Pike: Under clause 41, which replaces a section of the 1986 Act, 15 per cent. of those shares can immediately be acquired by institutions, which will look to the future potential of converted societies.
    Mr. Trickett: My hon. Friend makes a telling point. I am worried that institutions are already circling over

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    the no doubt juicy prospect of demutualisation. I am also worried that our generation, the so-called me generation, is able to dispose of assets that were built up over many generations and which were supposed to be passed to future generations.
    The Minister says that she wants to establish a level playing field and to restore the balance between the mutual societies and the plcs. I take her at her word.
    I am as worried as my hon. Friend the Member for North Warwickshire (Mr. O'Brien) about the article by the Deputy Prime Minister in The Mail on Sunday. The right hon. Gentleman is supposed to be the great communicator. I understand that part of his job description states that he is to co-ordinate presentation of Government policy. He is the great presenter, the great communicator. On the eve of the Second Reading of a Bill that is supposed to defend the mutual principle, how can he write an article lauding the process of demutualisation and not mention the mutual principle, its defence or the Bill? That is quite extraordinary. There is either a clear conflict in the Government, which would explain precisely why the Bill has been significantly delayed, or the great presenter, the magnificent communicator, has somehow failed to communicate precisely what the Government are doing.
    I have said that mutuality is a prime example of stakeholding. I draw the attention of hon. Members to a sentence, which has not been read to the House, from the article by the Deputy Prime Minister. He states:
    "We don't have to put up with phoney Left-wing jargon about stakeholders."
    That is a direct attack on the principle of mutuality and building societies. How else could that article be represented and how could the delays be explained other than by tension and possible conflict within the Government?
    Despite the reservations that I have described, I have no doubt that the Bill, timid as it is, is worth supporting and that, on Monday, we can have detailed discussions in Committee.
    9.33 pm
    Mr. William O'Brien: I had not intended to take part in the debate; I have listened to the contributions and support much of what has been said and I hope that the Bill has a smooth passage. However, a couple of issues give rise to concern.
    Almost every hon. Member who spoke referred to the five-year protection period. The Minister said that there has been extensive consultation on that matter. Many people have been involved in the consultations or have been approached for their views on how the Bill should proceed. I imagine that the five-year rule was one of the most controversial matters to be debated. In meetings of the all-party building societies group, we have heard speakers from building societies and twice from the Economic Secretary to the Treasury, and the issue of the five-year protection period has always featured high on the agenda. We must consider that matter.
    I hope that sufficient time will be allowed to examine the five-year protection period in greater detail when we consider amendments dealing with it. Some hon.
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    Members fear that, once we reach the later stages in the Bill's passage, either the guillotine will come down or the Government will use steamroller tactics to push through their proposals without allowing a fair opportunity to debate any amendments.
    In its briefing material, the Building Societies Association states that the fate of the five-year protection period is one of the most important issues. I think that the association is more aware than many others of the causes of and remedies for the problems dealt with in the Bill. I therefore take great note of its briefing material.
    The two-year rule is another controversial issue. It has been discussed widely, and views on it were expressed during the consultation period. I hope that we will also be allowed sufficient time to consider the implications of any amendments tabled on that matter. I think that the rule should be continued, to obviate the progression of carpetbaggers—who have gone from one building society to another to make a quick buck and windfall—should more societies lose their mutuality, as has happened more than once.
    We should be fair to those who are genuine members of building societies and who believe in mutuality. My colleague, the hon. Member for Gloucester (Mr. French), who is chairman of the all-party group, explained the importance of mutual association in building societies. I believe that the two-year rule will give comfort to those who, like me, believe in building societies. I also believe that it will ensure that we are not taken for a ride, and that the 72 remaining building societies are not used to extract easy money should future demutualisation occur.
    I hope that the Minister will take note of the concerns expressed in this debate by hon. Members from all parties, and that sufficient time will be allowed in Committee to consider the two key issues in depth: the five-year protection period and the two-year rule.
    9.39 pm
    Mr. Nick Raynsford: We have had an extremely good and interesting debate on issues of importance to the future of building societies and, indeed, mortgage lending. I add my voice to all those who have paid tribute to the important contribution that building societies have made over the past 150 years or so to enhancing opportunities for people to obtain houses and finance for those houses, thus supporting the extension of home ownership to a level approaching 70 per cent. of the population.
    That important contribution has made it possible for people of modest means in all parts of the country to obtain the advantages of owner-occupation which would otherwise not have been available to them. That particular contribution grew out of the commitment of building societies to meet the needs of people in their area when those societies were small, local organisations representative of their small communities. Gradually, over the years, the building societies have grown in size and inevitably their role has changed. Nevertheless, there has been that consistent commitment to meet the needs of the population, which has found its expression in the principle of mutuality. Tonight, we have heard hon. Members express their strong support for that principle and its maintenance. I think we can all echo that belief in the importance of mutuality.
    We are especially concerned that societies that are seeking to change from mutual status to, essentially, the status of a bank should be free to do so, but not on terms

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    that give them an unfair advantage over societies that remain mutual. One of the important changes proposed in the Bill is in clause 41. It is an amendment to the five-year rule which creates a proper and fair balance between the interests of societies that have chosen to convert and those that have chosen to remain mutual. It is clearly insupportable for societies that have chosen to remain mutual to find that they can be picked off by societies that convert and seek to defend their interests by acquiring mutual societies during the five-year period in which they themselves cannot be challenged.
    Mr. Butterfill: I do not think that that has been suggested by any of the converting societies. They are happy to concede that they would lose that status if they were to bid for a mutual society, on either a contested or an uncontested basis. Will the hon. Gentleman explain why the five-year rule, which was thought to be very important in 1986, is no longer relevant and, indeed, no longer desired by his party?
    Mr. Raynsford: The hon. Gentleman knows full well that the situation has changed considerably in the intervening 10 years. During that time, the number of societies considering conversion has increased, while the number that might choose to remain mutual has decreased significantly. The hon. Gentleman is familiar with the subject, so he will know that many societies are clear about the fact that, if the five-year rule were not to be amended as proposed, there would be a serious erosion in the number of societies, which would be picked off for precisely the reasons that I outlined. I hope that the hon. Gentleman will give his full support to clause 41 which, in its current form, will ensure fairness so that societies that choose to remain mutual may do so and those that choose to convert may also do so, but without obtaining an unfair advantage during the transitional period. The provisions of clause 41 create that framework. I hope that the hon. Gentleman will support them.
    During the debate, we have heard some interesting conjecture about the Deputy Prime Minister. Why he chose the opportunity of a column in The Mail on Sunday the day before the Bill was due to have its Second Reading to set out a straightforward paean of praise for the act of conversion is a curious mystery that only he can answer. It has not gone unremarked, and cannot have been unnoticed by the Economic Secretary who, just when she is presenting a Bill to ensure proper protection and support for mutual societies, suddenly finds the ground cut from under her feet by her deputy leader.
    I remind the Economic Secretary of the Deputy Prime Minister's language in the article, talking about the windfall gains from conversion. He says:
    "16 million people will benefit from these windfall gains. This outcome flows directly from the Government's policies, its determination to deregulate business and promote competition".
    The Deputy Prime Minister is unquestionably setting out a prospectus for conversion. Nowhere in the article is there the slightest reference to the virtues and merits of mutuality.
    The hon. Member for Gloucester (Mr. French) said that, if the Deputy Prime Minister had really opposed the Bill, it would not be before the House. The Deputy Prime Minister has proposed a number of measures in the past that he no longer proposes so enthusiastically. He used to
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    propose the use of capital receipts to get more housing investment: he urged that councils should plough back their capital receipts into building more houses; he has changed his tune on that. We have heard of his support for Europe and his enthusiasm for a move towards a single currency; he has changed his tune on that, as well.
    I do not know the explanation for his curious antics, but what is set out in The Mail on Sunday is very poor fare for the Bill's advocates. The defence of mutuality is in far safer hands with the Economic Secretary than with the Deputy Prime Minister, who, in an article published the day before the Second Reading debate, could not bring himself even to mention the word "mutuality", let alone to praise it.
    We have had a useful and valuable debate, with excellent contributions from a number of hon. Members. I single out in particular the contributions of my hon. Friends the Members for Feltham and Heston (Mr. Keen), for Great Grimsby (Mr. Mitchell), for Hemsworth (Mr. Trickett) and for Burnley (Mr. Pike), as well as those of the hon. Members for Christchurch (Mrs. Maddock), for Bournemouth, West (Mr. Butterfill) and for Gloucester.
    The Bill is necessary and timely. It is unfortunate that it is being rushed through in the last minutes of this Parliament, but it is necessary to ensure the future of mutual building societies. It sends a powerful message that the principle of mutuality is too important to be sacrificed in the interests of the Deputy Prime Minister. We must defend mutuality. The passage of the Bill will be an important statement of the House's commitment to that principle.
    9.47 pm
    Mrs. Angela Knight: With the leave of the House, I should like to speak a second time in this important debate.
    I congratulate all hon. Members who have taken part in the debate. I am pleased that they all support the Bill. I should like to pick up on some of the points raised, starting with the speech of the hon. Member for North Warwickshire (Mr. O'Brien), who made a number of extraordinary comments. After giving us a history lesson, he waxed lyrical on a subject on which other Opposition Members have concentrated—the article in The Mail on Sunday by my right hon. Friend the Deputy Prime Minister.
    I can only presume that Opposition Members concentrated on the article because they had nothing decent to say about such an important Bill. They should read the article because, quite frankly, their interpretation of it, or their spin, in the modern parlance, is misleading. I can only conclude from the points that they have made that they are against the decision to convert by the members of converting societies. Therefore, they are against 16 million people receiving shares in converted societies.
    I can only say that the message that has come loud and clear on a number of occasions from the hon. Members for North Warwickshire and for Greenwich (Mr. Raynsford) is that the Labour party is clearly against 16 million people receiving a windfall.
    Mr. Mike O'Brien rose—
    Mrs. Knight: On a number of occasions, I have heard from the hon. Gentleman and from Opposition Back

    111
    Benchers those exact comments misinterpreting the contents of the article by my right hon. Friend the Deputy Prime Minister.
    Mr. O'Brien: I am grateful to the Minister for giving way, as I would not want her to misrepresent our position. In no way have we criticised those who have decided that their building societies should convert. That is a matter for them. We have always adopted that position and we wish them well in that conversion. The hon. Lady should stop throwing around little bits of abuse, as she did earlier, and deal with the points in the article, which was an attack on mutuals. It was a call for conversion and the Minister must deal with it.
    Mrs. Knight: The article was not an attack on mutuals. If the hon. Gentleman maintains that position, he is misleading the House and the country.
    I found it surprising that that was all the hon. Gentleman had to say on the subject, except that apparently the Government have taken too long in bringing the Bill to the House. We have carried out a first-stage consultation and made changes accordingly under the powers in the 1986 Act. We have continued listening to the societies in order to make the changes that they want in the Bill. The Bill was introduced the day after it became clear that the Opposition parties would co-operate. We have moved very speedily and I look forward to continuing co-operation in Committee.
    My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) made his usual useful speech on a subject of which he is a well-known master. We have one or two disagreements which we have discussed before. Let me expand briefly on the two-year rule and the five-year protection that were mentioned by most hon. Members who spoke in the debate.
    Let me turn first to the two-year rule. At present, converting societies can distribute shares to members of less than two years, but they do not have to do so: the choice is theirs. The Act operates in that way not because Parliament passed it that way but because it was changed as a consequence of cases taken by societies themselves. That is why the two-year rule exists in its current form.
    The key issue is how best to help societies with the problem of speculation and carpetbaggers. I am sure that no hon. Members are in favour of carpetbagging, which results in the societies feeling destabilised in some respects and overcome by the number of people queuing up outside their doors. However, one chief executive recently told me that the influx of customers was the best free advertising that the society had ever had.
    At present, societies have powers to react and many have taken a range of measures to minimise the disruption of business caused by a flurry of new customers. They can take two principal actions against speculation: first, they can say loud and clear that they plan to remain mutual and, secondly, they can take the simple steps available to them to prevent speculation from continuing.
    Mr. Austin Mitchell: The third method that the hon. Lady did not outline is to up the level at which people can invest. Some societies are demanding minimum investments of £1,000. Why is it not possible to put an overall rule in the Bill that people can participate, decide and vote on such issues only on the condition of two years' membership?
    Mrs. Knight: I shall answer the hon. Gentleman briefly, as he will be aware that time is ticking away rather quickly. It is quite correct that, when societies have been faced with speculation, some have increased the limit that an individual has to subscribe in order to become a member. They have then dropped the limit back down. They have also restricted membership in some instances to a very localised basis, but then relieved those restrictions. That is the normal operation of the marketplace. I do not want to interfere in their business practices.
    Mr. Butterfill: How can a mutual society protect itself—whatever it does—from a hostile bid via shares?
    Mrs. Knight: If my hon. Friend will bear with me a moment, I shall come to that point. At this point, I want to answer his earlier questions relating to five-year protection, which was raised by several hon. Members.
    A converting society does not automatically lose its five-year protection. It loses such protection only if it takes certain specific steps. Thus, if it feels that it requires time to stabilise itself in its new form as a public limited company, it is protected for up to five years. If, however, it feels that it is strong enough and wants to go on the acquisition trail of another authorised financial institution, it is only fair on it, and indeed other participants in the marketplace, that it should lose its protection. The question relates not only to other mutual societies but to insurers and banks. The converting societies are big organisations. The Halifax will be the fourth largest bank in this country. Indeed, the Alliance and Leicester and the Woolwich would both be larger than the Royal Bank of Scotland and Guardian Royal Exchange, a well-known insurance company.
    The key proposals in the Bill will allow societies to develop their financial services in the way they want while staying mutual. There will be more competition in the high street, which means better rates for savers and borrowers. Building societies will still have the unique close relationship with home owners and local people. I commend the Bill to the House.
    Question put and agreed to.
    Bill accordingly read a Second time.
    Motion made, and Question put forthwith, pursuant to Standing Order No. 61 (Committal of Bills),
    That the Bill be committed to a Committee of the whole House.—[Mrs. Angela Knight.]
    Question agreed to.
    Committee tomorrow.

    Building Societies Bill

      BUILDING SOCIETIES BILL [MONEY]
      Queen's recommendation having been signified—
      Motion made, and Question put forthwith, pursuant to Standing Order No. 50A(1)(a),
      That, for the purposes of any Act resulting from the Building Societies Bill, it is expedient to authorise—

      (a) the payment out of money provided by Parliament of any increase attributable to that Act in the sums payable out of money so provided under the Building Societies Act 1986; and

      (b) the payment of any amounts into the Consolidated Fund.—[Mr. Knapman.]

      Question agreed to.

      POLICE AND FIREMEN'S PENSIONS BILL
      Order for Second Reading read.
      Motion made, and Question put forthwith, pursuant to Standing Order No. 90(6) (Second Reading Committees), That the Bill be now read a Second time.
      Question agreed to.
      Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).

      POLICE AND FIREMEN'S PENSIONS BILL [MONEY]
      Queen's recommendation having been signified—
      Motion made, and Question put forthwith, pursuant to Standing Order No. 50A(1)(a),
      That, for the purposes of any Act resulting from the Police and Firemen's Pensions Bill, it is expedient to authorise—(a) the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable out of such money under any other act; and (b) any increase attributable to the Act in the sums payable into the Consolidated Fund under any other Act.—[Mr. Knapman.]
      Question agreed to.

      DELEGATED LEGISLATION
      Madam Speaker: With the leave of the House, I shall take motions Nos. 6 to 9 together.
      Motions made, and Questions put forthwith, pursuant to Standing Order No. 101 (6) (Standing Committees on Delegated Legislation),

      DELEGATED LEGISLATION
        LOCAL GOVERNMENT FINANCE (ENGLAND)
        That the Special Grant Report (No. 24): Special Grant for Asylum Seekers' Accommodation (HC 257), which was laid before this House on 11th February, be approved.

        GOVERNMENT TRADING FUNDS
        That the draft Driving Standards Agency Trading Fund Order 1997, which was laid before this House on 13th February, be approved.
        That the draft The Queen Elizabeth II Conference Centre Trading Fund Order 1997, which was laid before this House on 17th February, be approved.

        TOWN AND COUNTRY PLANNING
        That the draft Town and Country Planning (Compensation for Restrictions on Mineral Working and Mineral Waste Depositing) Regulations 1997, which were laid before this House on 19th February, be approved.—[Mr. Knapman.]
        Questions agreed to.

      EUROPEAN COMMUNITY DOCUMENTS
      Motion made, and Question put forthwith, pursuant to Standing Order No. 102(9) (European Standing Committees),
      EUROPEAN COMMUNITY DOCUMENTS

        COURT OF AUDITORS
        That this House takes note of Official Journal No. C340 of 12th November 1996, the Annual Report of the European Court of Auditors concerning the financial year 1995, together with the institutions' replies, and Official Journal No. C395 of 31st December 1996, the Court of Auditors Statements of Assurance concerning activities financed from the general budget for the financial year 1995 and of the sixth and seventh European Development Funds for 1995, together with the associated special reports and the institutions' replies; and supports the Government's continuing efforts to improve financial management and control within the European Community.—[Mr. Knapman.]
        Question agreed to.

      DELEGATED LEGISLATION
      Motion made, and Question put forthwith, pursuant to Standing Order No. 101(6) (Standing Committees on Delegated Legislation),
      DELEGATED LEGISLATION

        GOVERNMENT TRADING FUNDS
        That the draft Medicines Control Agency Trading Fund (Variation) Order 1997, which was laid before this House on 12th February, be approved.—[Mr. Knapman.]
        Question agreed to.

      WASTE PREVENTION BILL [MONEY]
      Queen's recommendation having been signified—
      Resolved,
      That, for the purposes of any Act resulting from the Waste Prevention Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums which under any other enactment are payable out of money so provided.—[Mr. Knapman.]

    PETITION

      Health Care (Cambridgeshire)
      9.59 pm
      Mrs. Anne Campbell: I beg leave to present a petition which has been sent to me by some of my constituents. The petition is from the community practitioners and health visitors associations of Huntingdon and Cambridgeshire and residents of the area. The petition has more than 3,000 signatures, collected in a short time, and it declares:
      That the proposals of the Cambridge and Huntingdon health authority to reduce the budget for health visitors and school nurses by £300,000 in 1997–98 are deplorable and will result in a marked deterioration in the standard of services that could be offered by health visitors and school nurses, frustrating their ability to fulfil their responsibilities to deliver primary preventive care and health promotion throughout the community.
      The petitioners therefore request that the House of Commons urge the Prime Minister and Secretary of State for Health to review the proposals of Cambridge and Huntingdon health authority to reduce its expenditure on health visitors and school nurses by £300,000 for 1997–98 and to take any necessary steps to ensure that the provision of primary preventive care and health promotion in Huntingdon and Cambridgeshire remains at least at current levels.
      And the Petitioners remain etc.
      To lie upon the Table.

    Street Children
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ottaway]
    10 pm
    Mrs. Gwyneth Dunwoody: Those hon. Members who have left the Chamber are, almost without exception, on their way to a warm house and—usually—to their own beds. Those of us who have that privilege do not always understand the completely different lives led by the street children of the world.
    Those children have been abandoned or have run away, and are at risk of suffering the most appalling individual disasters. They are always at risk of theft or exploitation, both sexual and commercial, and many of them live in conditions that we in this so-called compassionate country would not accept for animals. It is therefore important that countries such as our own, which have access to large sums of money and influence in international organisations, should use both to affect the lives of children.
    It is a sad fact that it took a long time, even in the House, for people to accept that women are an important focus for overseas development aid. It is even more depressing that we are in the same situation with regard to children. Children are not at the forefront of our decision-making processes. We sit here and talk in detail about legislation that affects our constituents, but we sometimes forget that we have an impact on the lives of children across the world.
    I am privileged to represent a constituency in which the railway was an important industry. A railway town was created from a green-field site, and the men and women who work in the railway industry have some important traits. They care desperately about the railway system, and they are committed to providing a service. They also understand the need to care for others. It is therefore not an accident that my constituency is home to a charity called the Railway Children.
    The project grew from the response from various railwaymen and women—particularly a remarkable man called David Maidment, who spent his working life with British Rail working on safety. In his capacity as a qualified engineer, he travelled the world and saw to his considerable dismay children living on railway stations. Some were sleeping on luggage carts or in corners, while some were begging, stealing and doing anything they could to stay alive. Some of these children were as young as five.
    It is only when one translates that into one's own life that one understands. I am a happy, if poor, grandmother of 10—some of whom are quite tiny. I have only to think of those children being abandoned by their parents and being left to the vagaries of this bitterly cruel world to realise the circumstances in which those railway children live. David Maidment came to the House of Commons to talk to me about helping to create a charity to provide support for those children. He was particularly concerned with the children of India, as he had seen large numbers of them in Calcutta and elsewhere.
    As soon as Mr. Maidment began to talk to other railwaymen and women, he realised that they too were concerned about the problem. They brought to the matter not only a strong commitment to human rights, but

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    compassion and a desire to change those intolerable circumstances. So the Railway Children was born as a useful and important charity. We are still aiming to have an exhibition in the House of Commons, showing some of the more poignant pictures taken by a photographer who had travelled throughout India to see those children. We have not yet come up in the ballot, but I am hopeful that we shall in the future. The Railway Children then grew and became part of a greater consortium of charities concerned with the children of the streets.
    One reads case histories of children on Mexican or Indian stations, or children abducted in time of war in Africa and incorporated into an army they neither understand nor wish to be a part of and forced to follow a large number of armed men and women to survive. No matter what kind of circumstances those children live in, every one of them needs help urgently—they need it today and tonight. Therefore, why do the Government tell us that there are a number of important measures, but never give us the specifics?
    I feel that it would be useful for the House to know some of the statistics. Obviously, some are the result of informed guesswork because, after all, no one knows how many children are in these situations. In Lima, the capital of Peru, there are 850 children living on stations, and possibly 2,000 nationwide. In Mexico City, the figure is 11,000 children. In Guatemala, it is 5,200. In Romania, Albania and Bulgaria, it is 12,000. In Manila, there are 50,000 children living in stations and perhaps 75,000 living on the streets, often working in slave conditions. There are 20,000 such children in Bombay, 10,000 in Dhaka and more than 5,000 in Khartoum. These are appalling figures, demonstrating world misery and unhappiness that we should be doing something about.
    I want to ask the Government a simple set of questions. First, can they tell me how many special projects they can identify within their vote are targeted towards children? I would like to call such a programme "Children First". Any number of marvellous social service terms could be used, but what projects can the Minister tell us about that are directed specifically at children and make sure that children receive the money?
    How many NGOs, when they approach the FCO or the ODA, are given special help? How much support do bodies that help children receive? How much of our money, outside the direct support that we give via the European Community, goes into child-based subjects? How often does this country demand transparent child-based priorities in these forums? We want action this year, not next year or the year after. We want to tell those carrying out the good work with tiny amounts of support that we share their sense of urgency and want to do something about the problem.
    The Minister may say, of course, that the Department has been involved. There seems to have been an unfortunate incident when one of his colleagues gave the House the impression that the Government had come to the conclusion that there should be special child-based projects and that they were already working on them. I will not go into detail, save to say that a letter from the hon. Member for Woodspring (Dr. Fox) to my hon. Friend the Member for Swansea, East (Mr. Anderson) offered a long explanation, as follows:
    "You asked whether the Oral answer, as recorded in Hansard of 27 February 1995, reproduced the advice of officials or whether it was a freelance offer by the then Minister… It was neither."
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    The Minister
    "made a mistake when he said that ODA was providing financial support over a five year period to the Consortium. In answering a question on ODA help to street children in Kenya,"
    the Minister
    "inadvertently confused support to the Consortium with support of a Joint Funding Scheme project which had been approved for a five year cycle. I agree entirely that this was a most unfortunate error."
    It most certainly was—most unfortunate for the children who could immediately gain from the support of the child consortium if the Minister were prepared to accept that that should be one of his priorities.
    The Minister could do several things this evening. He could come to the Box and say that he will designate within the FCO and the ODA certain desk officers with responsibility, in particular regions, for child-based projects. That might include Africa and Asia, where the enormous growth in numbers of these children is taking place. It could also include other parts of the world that desperately need help. The Minister could say that he has set priorities and targets for those officers, and that he will ask them at the end of the year to report to him.
    Norway decided that it was not doing enough; the Government initiated an assessment; after five years they looked at what had been done and at what needed changing. Why cannot we do the same? We are quite capable of it, and we should be prepared to do it.
    Above all, the Minister knows how easy it is for us all to go away to a warm and comfortable room and close the door, forgetting what is happening on the streets—and not just in the third world, either. Part of the consortium's money goes to the Suzy Lamplugh trust to support a telephone service in one of the mainline stations of our capital city. Let us not therefore think that it is only other countries that have the problem. Every time we close the door and forget these children, saying that tomorrow will do, we contribute almost as much to their doom as do those who are abusing them. This very night children will be getting off trains at our larger stations, and they will need support and help.
    We must understand that, unless such help comes from the British Government, there will he very few people to care about what happens to these unfortunate young ones.
    10.13 pm
    Mr. Ian Bruce: I am most grateful to the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) for allowing me a couple of moments of her well won time to discuss this important subject and to say a few words on behalf of the all-party street children group.
    I have been amazed by the influence that a small number of Members of the British Parliament can have in trying to prick the conscience of countries throughout the world and to encourage them to solve the problems. Our friendship and advice are valued, and the small number of people working on the issue in the various countries are extremely grateful for our support.
    I know that the Government have been very active in many issues of this nature, and I believe that, the more they can use their enormous influence in international bodies, the better it will be. I do not want in any way to detract from the appeals that the hon. Member for Crewe and Nantwich has made, and I am sure that the Minister

    119
    will respond to those, but I know that many people are keen for a special place to be created in the United Nations for dealing with the problems of street children. I appreciate that that is often a wide definition of the types of children who need help, and I would not want to understate the needs and difficulties of children living in poverty within families.
    I urge the Minister to consider the possibility of appointing a rapporteur in the UN specifically for street children, or finding another way to reinforce the voice of street children within the UN and all its agencies.
    10.15 pm
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Dr. Liam Fox): First, I thank the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) for bringing this subject to the notice of the House. It is a distressing and upsetting subject that too many people, sadly, would rather not know about.
    I know from my own recent visits to some of the places that the hon. Lady mentioned, especially India, how distressing it can be. I do not know how many hon. Members read the article in the Observer recently about street children in Madagascar, which painted a distressing picture of some of the horrors that may await tourists in some parts of the world.
    I had an unfortunate experience that will have been shared by many hon. Members. I was confronted with children who had had limbs amputated, and I wondered whether to give money to the parents; having given them money, I wondered for the rest of the day whether they might have another limb amputated simply to increase their ability to get money. It is a most distressing subject.
    The needs of children have always been at the heart of the United Kingdom's development assistance programme. As the hon. Lady correctly said, street children face particular problems, finding difficulties in gaining access to health and education, and suffering sexual abuse and a lack of human rights. Even so, for some, the sad reality is that life on the streets may be more attractive than life elsewhere.
    The hon. Lady asked at the outset the total number of programmes targeted at children. We adopt an integrated approach to children's needs in our development assistance programme, so we cannot specify the number of projects of benefit to poor children, but I should like to answer some of the specific points about some of the projects that can be identified.
    Street children's needs vary. Some live entirely on the streets, while others work on the streets but go home to their families. In responding to their needs, we must ensure that children are given a voice in decisions that affect them. that is why we support several relevant non-governmental organisations through our joint funding scheme in Brazil, Ecuador, Guatemala, Peru, Kenya, India and the Philippines.
    While some of the projects provide safe havens for the children, the main common thread throughout is access to health care and education. Skills training to give the children the opportunity for a better future is particularly important.
    Some of the larger NGOs that receive block grant support from the Overseas Development Administration, including Save the Children Fund, also respond to the
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    needs of street children in their country programmes: for example, in Brazil, Angola, India, Bangladesh and the Philippines. We have also supported various initiatives of the Consortium for Street Children UK.
    We gave £30,000 in 1994–95 and 1995–96 for the production of a resource directory; £16,000 for a pilot project on girl street children; and £12,000 for a legal handbook. At the international level, the United Kingdom has taken a prominent role in promoting the rights of street children.
    In 1992, we produced a resolution on the plight of street children to the United Nations General Assembly. We followed that up at the UN Commission on Human Rights in March 1993, and we continue to take every opportunity to ensure that children's rights are at the forefront of the international agenda. In particular, we have encouraged all countries to ratify the UN convention on the rights of the child.
    I regard this issue as very important, and I raise it at every meeting that I can in the countries I visit. As the hon. Lady and my hon. Friend the Member for South Dorset (Mr. Bruce) said, the issues must be raised by western politicians to keep them up the agenda of developing countries, and to make it clear that we have not forgotten about them.
    Perhaps I can clarify the situation relating to the inadvertent mistake of my hon. Friend the Member for Banbury (Mr. Baldry). My officials have discussed the matter at length with the director of the consortium, and she accepted that it was a genuine mistake. The consortium knows that we do not provide core support. As a general principle, the ODA does not provide funds for core activities such as staff salaries and overheads for non-governmental organisations in the UK. We consider the funding of specific projects with time-bound activities that complement the ODA's policy and programmes. We believe that that is a more appropriate and worthwhile use of development assistance.
    On future support to the consortium, the ODA remains happy to consider project proposals from it. The outline proposals for 1997–98 are already being seriously considered by my officials. Individual members of the consortium can make proposals for consideration under the ODA's joint funding scheme.
    We have already provided comments on the consortium's briefing paper to its director. I have read the paper in depth, and have much sympathy with the issues raised. Many of its proposals cover areas in which the ODA is already active; others involve actors and organisations outside the scope of the ODA's day-to-day work. We agree that the needs of children, including street children, must be addressed in an integrated way in our aid activities. The ODA's policy on children in development is evolving in the light of growing experience in the field, and it will continue to do so.
    The ODA already has a strong commitment to a strategic, integrated policy on children, which regards them as positive actors in development and not only as passive recipients of aid. We support several NGO initiatives through our joint funding scheme. They include two ChildHope projects in Brazil. The one at Casa de Passagem aims to strengthen and develop various educational mechanisms to improve local NGO activities that provide information on health, reproductive health, gender and human rights to young girls on the streets.

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    In Salvador province, ChildHope is working with the Ibeji management committee to provide street children with a safe haven, where they receive shelter, medical attention and skills training. The aim is to provide children with income-earning opportunities for the future.
    We are also tackling the problems of street children through our main bilateral programmes. Our urban poverty project in Kenya involves specific support to street children. Another urban poverty project in Kingston, Jamaica, will help street children more generally by improving livelihoods and living conditions in deprived, inner-city areas. Young people are encouraged to become involved in discussions on community planning, reducing conflict and violence, and the provision of better access to leisure and informal education services. In our poverty reduction project in Cochin, India, the provision of safe havens for street children in poor areas is a priority for this identified vulnerable group.
    Several specific recommendations were made in the consortium's briefing paper. I should like to deal with them, because both the hon. Lady and my hon. Friend the Member for South Dorset raised them. First, there is the question of a special rapporteur for street children. The idea of creating one has been raised in the past. It is important to consider existing mechanisms to avoid duplication. Sadly, in too many aid programmes, there is still too much international duplication.
    The UN Committee on the Rights of the Child monitors the progress of states parties in implementing their obligations under the convention on the rights of the child. The convention has near-universal ratification, so the committee's monitoring role has wide application. In considering states party reports, it can examine problems such as street children and make recommendations. The United Nations Children's Fund, UNICEF, is also active in that area. The UN special rapporteur on the sale of children, child prostitution and child pornography addresses issues of direct relevance to street children. The most recent report makes recommendations at local, national and international level.
    Countries seeking practical help can approach the UN Centre for Human Rights in Geneva, which runs a technical assistance programme. In addition, since 1992, the European Union has sponsored resolutions in the General Assembly and the United Nations Commission on Human Rights that call on all countries to seek comprehensive ways to address the root causes of street children and to bring to justice those responsible for acts of abuse. Sadly, as the hon. Lady said, we are not even aware of scale of such abuses. The more information we can get on that, the better. I am grateful to her for bringing the matter to the attention of the House.
    It is worth pointing out that such resolutions were originally a United Kingdom initiative. We continue to take a prominent role among our partners on the issue. Therefore, the plight of street children will be more effectively addressed using a combination of the mechanisms, rather than concentrating functions in a single individual. That is our current belief.
    The hon. Lady also alluded to the proportion of aid allocated specifically to children's issues. As I said earlier, most ODA projects cover the wider population, and it is not possible to isolate expenditure on specific target groups within it. Although the data may be readily
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    available for those projects that are designed specifically for children, given the expenditure on all areas that impinge on children, and given what I said about different projects, such a number is involved that they cannot be separated from the more general expenditure. I shall look at the figures to see whether I can provide the hon. Lady with better and more particular information.
    My hon. Friend the Member for South Dorset also mentioned the possibility of a children's desk officer in the ODA. The ODA now has about 30 social development advisers based overseas and in London with specific responsibility for carrying out social appraisal in project design, monitoring and evaluation to ensure that the needs of people, including children, are taken into account in aid activities. All countries where we have a development assistance programme are covered from a social development angle. I believe that, in that broad sense, we are covering the need for such a desk officer.
    I should like to touch on two issues which the hon. Lady mentioned briefly—child labour and sexual exploitation of children.
    A recent International Labour Organisation conference in Amsterdam on child labour has played a significant part in furthering international consensus on the issue of combating the most intolerable forms of child labour. Those are seen as comprising slavery and slave-like practices; forced or compulsory labour, including debt bondage and serfdom; the use of children in prostitution, pornography and the drugs trade; and their employment in an type of work that is dangerous, harmful, or hazardous, or which interferes with their education. When I read the briefing provided by the Department, frankly, I found it hard, as does everyone in this country, to imagine that children are subject to child labour anywhere in the world in 1997.
    It is also important that we differentiate between the abuse of children in child labour and the child labour that occurs in many poorer parts of a country, which acts as a supplement to low-income families and does not fall into the category of child labour. I am pleased that that definition has been understood more widely in the world debate on the matter.
    The conference was hosted by the Dutch Government as a contribution to the ILO's programme to develop a new convention to deal with combating the most intolerable forms of child labour. It is hoped that that will be ready for submission to the ILO's annual conference in 1999. The United Kingdom supports the intention to develop such a convention, and we will be a full and willing partner in the preparatory discussions.
    It is worth stating that poverty is a root cause of child commercial sexual exploitation in developing countries. Income from child sex work is often seen as a way out of poverty for many families. Therefore, it is extremely important to tackle poverty. Children, particularly girls, are often completely powerless in such situations.
    The ODA funds a number of projects, including support through NGOs, which help to provide alternative income opportunities, education and improved health care for children who have been forced into prostitution. I was involved in discussions on child prostitution in Thailand just a few weeks ago. We also provide funding to UNAIDS and to UNICEF. Support is also given to programmes that address the sexual needs of commercial sex workers—for example, in India, where I also had recent discussions.

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    In the follow-up to the World Congress Against Commercial Exploitation, which was held in Stockholm in August 1996, the ODA organised a meeting with NGOs working in the United Kingdom and developing countries. We have invited the Coalition on Child Prostitution and Tourism to let us have a proposal for data collection and information gathering.
    There are many factors which force children on to the streets throughout the developing world—for example, poverty caused by population growth and increased numbers of people seeking a new life in urban centres. The hon. Lady mentioned Calcutta and Dhaka. I recently visited those cities, and saw children on the streets, which is a distressing sight.
    Other causes that force children on to the streets include conflicts and war, which cause loss of family or separation. Poor education and health provision are also factors, as well as the need for children to make money
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    to support themselves and their families. Another simple fact could be that home life may be so difficult and terrible that street life is preferable.
    In many developing countries, the issue of street children can be very sensitive. We need to support ways in which to promote changes in public attitudes towards children to show that they have rights and the ability to play an active role in their communities. Health education programmes are also important for street children, especially in relation to HIV-AIDS, sexually transmitted diseases and drug abuse. The ODA addresses all those issues in our development assistance programme. We have a strong commitment to a strategic and integrated policy on children, which sees them as positive actors in development, and not just passive recipients of aid.
    This is an extremely important subject, and I am sorry that more hon. Members were not present to hear such an important debate. I am grateful to the hon. Lady for raising it.
    Question put and agreed to.
    Adjourned accordingly at half-past Ten o'clock.