Commons Sitting of 9 December 1998

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

Road Traffic Reduction
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Betts.]
9.33 am
Mr. Tom Brake: I am pleased to have secured this debate and to have the chance to question the Government closely on the aims of their transport policies. Everyone recognises the need to do something about congestion and traffic. The Government's recent White Paper, "A New Deal for Transport: Better for Everyone", and their consultation paper, "Breaking the Logjam", are welcome, and make constructive suggestions about how to improve public transport, increase cycling and achieve a modal switch. However, "Breaking the Logjam" has introduced an element of confusion about whether the proceeds from road user charging will be entirely given over to transport projects. To underline that point, I shall quote the document, which says that the Secretary of State will be given powers
"to require a proportion of the revenue to be paid to central government."
That does not sound as though all proceeds will be spent on public transport schemes.
I hope that there will soon be an opportunity—perhaps by way of another Adjournment debate—to discuss the most practical ways of cutting car use. Indeed, hon. Members may refer to such measures during the debate. I am seeking to establish the degree of the Government's commitment to achieving road traffic reduction. I want to ask crucial questions and, to ensure that the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Greenwich and Woolwich (Mr. Raynsford), is able to respond to them in detail, I faxed them to his office yesterday. I look forward to his comprehensive responses.
Labour fought the election promising that it would reduce traffic levels. Its promise—which appeared in its policy handbook, on the election website and in policy briefings—was that it would
"reduce and then reverse traffic growth."
It was clearly a two-stage promise: first to reduce traffic growth, and then to reverse it. The second stage of that promise was crystal clear.
Labour's White Paper was also crystal clear, if somewhat unsatisfactory. It referred to setting the framework to reduce road traffic growth. That does not deliver on the second stage of Labour's election promise.
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It is true that the Government have promised to reduce traffic in specific areas. Paragraph 1.35 of the White Paper says:
"We also want to see an absolute reduction in traffic in those places … where its environmental damage is worst."
That is welcome, but it still forgets the earlier, clear promise to cut the total level of traffic.
Further impetus has been given to the need for traffic reduction by the findings of Sir Donald Acheson, the former chief medical officer, who has just completed his inquiry into inequalities in health. Sir Donald recommended further measures to reduce the use of motor cars so as to lessen health inequalities and social exclusion in three areas. He said that reducing traffic would
"decrease air pollution and probably also reduce road traffic accidents. The benefit of the decreases is likely to be gained most by people experiencing disadvantage."
That is true, and those suffering most disadvantage are the poor and the socially excluded. Sir Donald went on to say that reducing road traffic would also reduce deaths in young men, and would improve the health of ethnic minorities. He found that areas
"with high proportions of ethnic residents … are associated with a high rate of traffic accidents amongst children from some minority ethnic groups."
Will Labour keep both parts of the promise that it made before the election and reverse traffic growth? Will it heed Sir Donald's advice and reduce traffic, and put health first and cars second? I should also like the Under-Secretary to clarify statements made by the Deputy Prime Minister, and to explain apparent contradictions between those statements and others released by his Department. The Deputy Prime Minister has been admirably clear about his intentions in his current job. Shortly after coming to power, he told The Guardian:
"I will have failed if in five years time there are … not far fewer journeys by car. It's a tall order but I urge you to hold me to it."
After the publication of the White Paper, in the House, I challenged the Deputy Prime Minister specifically on his words in The Guardian and on Labour's promise to reverse traffic growth. He said:
"I agree to keep to that commitment: judge my performance in five years."—[Official Report, 20 October 1998; Vol. 317, c. 1071.]
I was pleased to hear him confirm his promises. However, since then, others in his Department have undermined that promise. Fourteen days later, the Minister for Transport in London in answer to a parliamentary question, said:
"in order to tackle the congestion and pollution that is caused by road traffic, we need to reduce the rate of road traffic growth."— [Official Report, 3 November 1998; Vol. 318, c. 458.]
On 13 November, she wrote to me ostensibly to clarify what the Deputy Prime Minister had so clearly told me. However, the letter did not clarify it—it changed it completely, saying that Labour intended to reduce the rate of growth in traffic, although it stated that there would be an absolute reduction in traffic in those areas where the most environmental damage is done.
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Nick Raynsford)indicated assent.
Mr. Brake: The Minister is nodding his head, but the letter failed to restate the crucial second stage of Labour's election promise to reverse traffic growth so as to reduce

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the overall level of traffic. On 3 December, Lord Whitty, the Minister for Roads and Road Safety, publicised a speech that he was making at the Chartered Institute of Transport. His press release yet again failed to confirm Labour's pre-election promise to reverse traffic growth. It did promise traffic reduction in some areas—again—but, as I have said, that does not deliver Labour's promises.
At the end of his press release, Lord Whitty introduced a new phrase. He promised:
"The New Deal for Transport and the two Road Traffic Reduction Acts will help to provide the framework for the Government's commitment to deliver a real reduction in road traffic."
The contradictions in his speech continued. In the third paragraph, he restated the formula that there would be a reduction in traffic growth, and an absolute reduction, but only in some areas; in the fourth paragraph, he confirmed that the Deputy Prime Minister's promise in regard to reducing car journeys had not changed.
Cynical people have suggested that that could be setting the stage for a ridiculous U-turn: that the Deputy Prime Minister aims to cut the number of journeys made, but will allow those that remain to become twice as long. If that is the case, the Deputy Prime Minister will not only look ridiculous, but still be breaking the promises that Labour made before the election, and the personal assurance that he gave me in the House on 20 October that he would keep both those promises.
Let me ask the Under-Secretary some more questions. Do the Government still intend to keep the promises given by the Deputy Prime Minister—in the House, and to The Guardian—to reduce traffic, or does the so-called clarification in the letter that I received from the Minister for Transport in London mean that those promises have been abandoned? Can the Under-Secretary confirm that—as the Deputy Prime Minister made clear in answering my question—the Government intend to reduce absolute traffic levels in the United Kingdom, and not just to cut the number of journeys without ensuring that that results in an absolute reduction in traffic? Can he confirm that real traffic reduction, as described in his Department's press release, means that there will be less traffic on our roads?
Let me list some pledges of support for traffic reduction given by other Ministers. I shall begin with the Under-Secretary himself. On 30 October 1996, he wrote to a constituent in order to
"just reiterate my support for traffic reduction, both locally and nationally."
After the election, in August 1997, he wrote to his local newspaper—the Greenwich Mercury, of which I have a copy here—
"I have always made my views clear … our overriding priority must be to reduce the total volume of traffic".
I stress the words "total volume of traffic." The Under-Secretary's position certainly was clear, but, as the White Paper has confused the issue somewhat, I ask him to confirm that that is still the case.
The Minister for Transport in London has also made her position clear, and, because of her particular responsibilities, has had far more opportunities to put her views on record. In Hampstead high street, during the run-up to the general election, she made it plain to
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her constituents that she supported traffic reduction; during the same period, she also signed early-day motion 289. Both declarations went further than what has been said by the Under-Secretary, as they expressed support for a target of a 10 per cent. traffic reduction by 2010.
Since taking her current job, the Minister for Transport in London has repeatedly stated her support for traffic reduction. During the passage of the Road Traffic Reduction (National Targets) Bill earlier this year, she restated that commitment no fewer than seven times. On Third Reading, she said:
"The country cannot continue as it is—there must be a reduction in road traffic."—[Official Report, 24 April 1998; Vol. 310, c. 1119.]
Will the Under-Secretary confirm that his colleague will keep those promises, and will go further than she did in her letter to me, which states merely that the Government will reduce the rate of traffic growth?
The Minister for the Environment told the "Today" programme in December last year that Labour would deliver
"a major change in the use of transport and the reduced use of cars and vehicles on the road."
He had previously told his constituents that he supported the same 10 per cent. targets as the Minister for Transport in London—and her early-day motion—although, unlike her, he had not signed the early-day motion, because of his position on the Front Bench.
Can the Under-Secretary confirm that the Government will deliver on those promises? As a Back Bencher in opposition, he was able to sign early-day motions, and did so—again, making his position very clear, and supporting a reduction in traffic.
The newest arrival at the Department of the Environment, Transport and the Regions, the hon. Member for Mansfield (Mr. Meale), also supports traffic reduction. Just two days before the general election, he wrote to a constituent who had asked for his views on a Bill to set 10 per cent. national traffic reduction targets:
"Many thanks for your letter … I would support such a Bill."
I have the hon. Gentleman's letter here. As a Back Bencher, he stuck to that promise, and, in further letters written in July and September, he told constituents that he had signed early-day motion 18 and assured them that he would support the national targets Bill on Second Reading. I have those letters as well. In the event, there was no vote, but the hon. Gentleman's intentions are clearly set out in letters to constituents. Will Labour deliver on his promises, and all those of other Ministers in the Department?
In the Labour party overall, more than 40 Ministers have declared their support for 10 per cent. traffic reduction targets. Eighty per cent. of Labour Members have supported those targets, and even more have declared support for traffic reduction without specifying a figure. Will the Government keep the promises made by all those Members of Parliament, or will they be abandoned by a policy that, rather feebly, aims only to reduce traffic growth?
Those questions are crucial. According to the very first paragraph of Labour's White Paper:
"the way we travel is damaging our towns and cities and harming our countryside."

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That refers to current traffic volumes, not the even-greater volumes that we shall experience in future if the Government merely reduce traffic growth and ignore the damage that traffic is causing to our children, our industry, our health and our economy.
There is enormous support for traffic reduction. Support has been expressed by, among other organisations, the Townswomens Guild, the Womens Institute, the British Medical Association, the British Lung Foundation, the Royal Society for the Protection of Birds, the National Asthma Campaign and the Childrens Play Council. The list goes on and on. The Government know that, because they received 7,300 replies to their consultation document on transport policy. Page 12 of "The Government's Consultation on Developing an Integrated Transport Policy: A Report" states:
"Almost everyone wanted to see a reduction in road traffic."
We need traffic reduction. In the wealth of statements that the Government have issued since the White Paper, we have seen endless variations on phrases using the words "traffic" and "reduction", almost always spoilt by the addition of words such as "growth" and "in some areas". However, the Department's press release of 3 December introduced a new word: "real". It stated:
"The New Deal for Transport and the two Road Traffic Reduction Acts will help to provide the framework for the Government's commitment to deliver a real reduction in road traffic."
My final question to the Under-Secretary is this. Does "real" traffic reduction mean an increase or a decrease in the amount of traffic on the roads in the United Kingdom? He ought to tell the people of Britain exactly what his Government are planning, and not hide behind even more ingenious and tortuous phrases that avoid making their plans clear. He should answer this question, yes or no: does the Government's "real reduction in road traffic" mean fewer cars on our roads?
9.48 am
Mr. David Chaytor: I congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on the eloquence with which he has put his case for traffic reduction, which is the crucial environmental issue of our time. However, his case was undermined by his all-pervasive cynicism about the motivation of every Minister, past and present. I am sure that the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) will put him right in regard to the Government's motivation.
I also think that the Liberal Democrats would help their case more if they were consistent across the country. One of the major planks of Government policy—a policy instigated by the last Government—to secure traffic reduction is the fuel price escalator. Liberal Democrats in certain parts of the country are always saying that that is fine for urban areas, but not acceptable for rural areas. I feel that, if the Liberal Democrats wish to present a consistent policy nationally, they should not only put the case for their own areas—as they do, quite legitimately—but start talking to their colleagues who represent rural areas, and who do not yet seem convinced of the argument for the fuel price escalator.
Mr. Bernard Jenkin: Can the hon. Gentleman produce any evidence at all showing that increasing fuel prices affects the way in which people use their cars?
Mr. Chaytor: If the hon. Gentleman looked at work by the transport studies unit at Oxford university, he would find considerable evidence.
The real issue in rural areas is rural poverty. Not applying the fuel price escalator to rural areas does little about the core problem of rural poverty, which is far better addressed by wider economic policies and by the adjustment of standard spending assessments in the local government settlement to give an advantage to low-income families in rural areas and to compensate for the effect of any fuel price increase.
I shall be brief because I know that other hon. Members want to speak. I want to reiterate the arguments for road traffic reduction, however we define the precise means by which road traffic is reduced. First, it is critical that we reduce road traffic for reasons of mitigating pollution. We have accepted stringent targets following the Kyoto protocol. As a Government, we have put forward even more stringent targets voluntarily to meet targets on reducing greenhouse gas emissions. Cutting the use of the private car is one of the crucial means of reaching those targets.
Secondly, we have to reduce congestion to improve the quality of life for people in urban areas. The most recent report about traffic speeds in London tells us that, in some parts, the average speed of the private car is 10 miles an hour. That is no different from the average speed of vehicles 100 years ago. What is the purpose of developing the technology and that vast industry if all we are doing is clogging up the roads and turning our motorways into moving car packs?
Thirdly, we have to reduce traffic for reasons of health. Everyone is now aware of the chronic rise in asthma cases, particularly in urban areas. There is a direct relationship between the rise in road traffic and the rise in asthma and other respiratory diseases. Fourthly, we have to reduce road traffic for reasons of efficiency. It is not economically efficient to move people around the country in the way that we do, with such domination of the private car and with the consequent traffic jams, delays, missed appointments and additional expense.
I congratulate the Government on their latest statement, yesterday's Green Paper, which fulfils their promise to introduce action specifically on business parking in town centres and city centres and which gives local authorities the power to introduce congestion charging. Those are two admirable policies that further progress the Government's action, although there is more to do. There are three points particularly that I should like the Government to take on board. I am sure that many hon. Members would agree with me on those.
First, it is regrettable that, as yet, we have not extended the principle of taxation on town and city centre car parking spaces to out-of-town supermarkets. One of the most disastrous social and economic developments of recent years has been the rapid growth of huge out-of-town hypermarkets, which destroy the lifeblood of many of our small town centres and shopping centres. The point is that we do not have a level playing field because, in most small town centres, there is a car parking charge,

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but there is no car parking charge in the huge out-ofcentre hypermarkets. The overwhelming majority of hon. Members would argue for a level playing field to give town centres a chance of survival, particularly small traders in town centres.
Secondly, I urge the Government to look again at the company car tax regime. Everyone knows that the way in which the system operates provides incentives for company car owners to do more mileage. The system has to be changed. The thresholds have to be adjusted to provide an incentive to do less mileage.
Thirdly, I ask the Government to look again at the fuel tax escalator. It was brought in at 5 per cent. a year by the previous Government. It was increased to 6 per cent. a year by the present Government. Since then, oil prices have fallen to their lowest level since 1970. Is the 6 per cent. a year rise having sufficient effect, given the fall in oil prices, and the increased fuel efficiency that enables motorists to get more miles per gallon out of modern vehicles? The level of the fuel tax escalator needs to be kept under constant review.
An additional point relating to the fuel tax escalator is that it is a progressive tax, the reason being that 30 per cent. of the population are not affected by it. Thirty per cent. of the population do not own vehicles. By and large—there are some non-car owning families among the professional and managerial classes, but not many—it is the poorest third of the population who do not own vehicles. Therefore, they are not affected by the rise in petrol prices.
Wealth can be defined by not only the ownership and usage of vehicles, but the miles travelled by the vehicle. The richer a person is, the more likely it is that that person will own one or more cars and travel large distances in those cars. Therefore, the application of the fuel price escalator is a progressive measure in taxation terms. I appreciate that progressive taxation is not attractive to all hon. Members, but it should be to Labour Members.
For 100 years, we have defined the growing wealth of society in terms largely of the growth in material possessions and the motor car is the central material possession. We have defined our gross domestic product according to the number of motor cars produced. Our GDP increases the more cars we produce. It also increases the more car alarms and anti-theft devices we produce.
Is the dominance of, and reliance on, the motor car as a central economic indicator a sensible way in which to define the wealth and prosperity of society? That is not an issue for this debate, but it should be taken up in another debate. The time has come to review the way in which we define GDP. It is time that we considered other things in measuring the wealth and prosperity of a nation, the level of crime and the quality of the environment being two prime indicators that should be included.
I welcome the debate. The hon. Member for Carshalton and Wallington has raised important points and asked important questions. I congratulate the Government on their achievements to date, but there is much more work to do.
9.58 am
Mr. Alan Clark (Kensington and Chelsea): I had some sympathy with the Under-Secretary of State for the Environment, Transport and the Regions, the hon.
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Member for Greenwich and Woolwich (Mr. Raynsford), as he listened to the past two speeches, as the Government are in a tangle because of manifesto commitments somewhat recklessly dispersed. I can understand the Minister for Transport in London, on the pavement, according to the hon. Member for Carshalton and Wallington (Mr. Brake), saying those things. As someone who went to that constituency in the last general election, I know that Hampstead high street is completely jammed seven hours a day. As people came up to her, complained and said, "What are you going to do about it?" she would say, "Oh yes. We are committed to traffic reduction," just as Labour was committed to reducing animal experiments in laboratories. It is having a bit of a problem on that commitment, too.
I will tell hon. Members how to reduce traffic: engineer a recession. That will reduce it fast enough. The first indicator of economic recovery is always a rise in traffic volumes. Traffic can be reduced in the same way as cash flow into supermarkets or holiday bookings with tour operators can be reduced: ensure that less money is circulating.
Of course, hon. Members do not really mean that they want to reduce traffic. They do not want to stop people moving about; certainly the Government could not possibly want to stop people moving about. What they mean is that they want to reduce use of cars because, for various atavistic reasons, socialists and interventionist liberals do not like the motor car. They want public transport, and what is public transport? It is assembling a group of total strangers, putting them in a metal container, making them start from a starting point that was not their choice and conveying them to a destination that is inconvenient.
There was something to be said for trying to improve public transport and raise standards while it was genuinely public but, thanks to measures taken by the Conservative party—but not when I was in this place—there is no longer any such thing as genuine public transport anywhere. It is simply a monopoly that is determined to extract as much profit as possible from those who use it. As a result, quality has not improved. If anything, it has fallen because, instead of a monopoly dominated by the trade union movement, so one could not complain, and run for its convenience, there is now a monopoly run to enhance the profit of shareholders—those who own so-called public transport, by which I mean the metal containers that convey total strangers from destination to destination. Therefore, public transport is as dirty, squalid, inefficient and unreliable as it was in the old days. Public transport is a complete chimera.
I have read with great anxiety that some of the taxes that are to be levied on cars will be hypothecated to local authorities, which will be directed to use the money for public transport. In other words, it will be used to enhance the profits of Stagecoach, Branson and so forth, at the expense of imposing great inconvenience on the car owner and private individuals who like to get about under their own power, according to their choice and at their convenience by making the best use of technology.
The hon. Member for Bury, North (Mr. Chaytor) mentioned pollution, and his argument was valid. The pollution generated by old cars is probably high. The Morris Minor, which is the most favoured transport of the sandal-wearing brigade, generates far more

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pollution than a modern Audi and is also extremely difficult to drive while wearing sandals—I have tried it and it is dangerous.
I shall listen with care to the Under-Secretary's reply, as he has quite a juggling act to perform. Everyone wants to reduce traffic in their immediate vicinity, naturally. All our constituents want to "reduce traffic" in particular locations within the constituency boundaries. However, people do not face up to the principal element of the argument, which is that traffic volumes are an indicator of economic prosperity. The argument is used as a cover for getting at the car.
The fact is that car use emphasises everything that is congenial and acceptable in today's political climate. It has elements of freedom, choice, mobility, convenience, technology and, I admit, elements of a certain competitive consumerism, which is highly economically generative, as the hon. Member for Bury, North said.
Naturally, hon. Members have every interest in ensuring that car use is responsible. We are here to legislate for that. However, we cannot legislate it out of existence, or even attempt to do so. If the Government do, they will not only add enormously to the economic burdens felt by practically every citizen, but—as the Under-Secretary and his colleague the Whip are probably aware—in the long run, they will make themselves electorally extremely unpopular.
10.4 am
Mrs. Teresa Gorman: Far be it from me to try to elaborate on the description that my right hon. Friend the Member for Kensington and Chelsea (Mr. Clark) gave of public transport, but another inconvenience of travelling by that means is the chance that one has in winter of catching a nasty cold or some other disease. That always happens to me when I use public transport.
I am amazed at the sanctimonious humbug talked on these occasions and I think of the old adage, "Make me pure, O God, but not just yet." If we ask people who speak against the motor car how many their family owns, they usually um and ah, but admit finally that they have one for themselves, of course they use it only occasionally, one for the wife, who only goes shopping in it, and one for the other grown-up members of the family, who use it only in the evening.
It is true that this country has a large number of private cars, but when I have discussed the subject with, for example, Ford and have asked, "How can you possibly sell all those new cars?" I am told that people buy them not merely to drive but as status symbols. The car sits on the front drive, the neighbours admire it and everyone knows that one is going up in the world. That is part of the joy of owning a car.
Although there are, apparently, 20 million cars on our roads, they are not all on the road at the same time—far from it, some hardly leave the garage except once a year for a visit to relatives at Christmas, for example. The number of cars owned is irrelevant to the amount of use to which they are put. Everyone knows that one can buy a good used car, which someone has owned for a year but which has only 90 miles on the clock—a bargain, I believe.
An awful lot of nonsense is talked on the subject and there are a lot of myths. First, on the pollution myth, particulates—the little bits of stuff that come out of
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the exhaust—emitted by modern motor cars have been reduced by about 90 per cent. Modern technology is such that motor cars will soon not pump much out of their rear ends apart from fresh air. Of course, there will be some products of combustion but, as I have said so many times in the House that I feel I am almost becoming boring, carbon dioxide in the atmosphere amounts to such a tiny quantity that it is not a great threat to our atmosphere and environment.
Mr. Chaytor: If the hon. Lady really believes that carbon dioxide levels in the environment are no threat, can she explain why all nations are conscious of the need to act against greenhouse gas emissions? Why did they meet 12 months ago in Kyoto to negotiate a difficult programme of action and two months ago in Buenos Aires to negotiate the further details of means by which they can reduce emissions? Does she completely reject the argument that greenhouse gas emissions cause an unacceptable build-up of carbon dioxide and impact on global warming and climate change? Who else in the world shares her view?
Mrs. Gorman: A great many scientists share that view. There are about 300 parts of carbon dioxide to 1 million in the atmosphere, which is the equivalent of throwing a sugar cube in Loch Lomond. Carbon dioxide has been targeted because it is a product of certain industrial activities that people dislike, so it is an easy substance to blame. Water vapour is far more important as a so-called greenhouse gas, but no one complains about that as it is obviously foolish to try to do anything about it because water covers three quarters of the globe. Perhaps we should have the science lesson on another day.
We talk about our streets being congested, but everyone knows that it is easy to get around at certain times of day. It is not congestion but congestion of use that is the problem. During the school holidays, we can all drive much more freely because mothers are not taking their children to school. We must devise ways to spread traffic and one way is road pricing—an idea that never seems to be taken up because it is deemed to be difficult to implement. I know people who will not cross the Dartford bridge because they have to pay £1. They would rather go all the way round to save £1, which tells us that drivers are price sensitive. If they were required to pay for the amount of road used on a journey, it would make them decide whether that journey was necessary.
I shall briefly describe the experience in other parts of the world, as I have lived in the United States, Canada, Mexico and Australia and I often travel to the continent, for example to Germany, and have taken an interest in traffic problems for years. For example, New York did away with parking meters in the heart of the city, which meant that traffic could flow freely. Anybody travelling through Soho or Mayfair or the centre of any city in the day will see narrow roads with parking meters on both sides, reducing access to a narrow central lane. They must think that we are crazy because we are blocking our arteries for the sake of a few measly pounds. I know that Westminster city council regards the revenue from parking meters as a nice little extra, but it is not necessary or sensible to allow parking on our streets.
Most people who live in New York do not own cars. They use public transport during the week—mostly taxis—and hire cars at the weekends. That is the way of life of the well-to-do in some big cities.

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Many cities in Germany do not allow lorries to stop between 7 am and 7 pm. There is no parking, no long-term deliveries and no stopping for five hours while builders put up scaffolding. All that has to take place during times when roads are less busy. Staggering the use of the roads reduces the problem. That is another sensible example. Instead of using the roads on an ad hoc basis, we should spread their use over different times of the day.
The lorry industry is having a bad time at the moment because of the fuel tax here. Fuel is very much cheaper on the continent and we are pricing our lorry drivers out of business. There are something like 250,000 lorries in British ownership, but far more come from the continent every day bringing large quantities of consumer goods, food and so on.
I use the M2, which runs from Dover to London and is crowded with lorries travelling nose to tail, all going into central London in the middle of the day. Although lorries are relatively few compared with cars, they are huge. I made some inquiries of the lorry owners and the big companies that use them. They told me that, because the great new lorries that are part of the EU requirements are so enormous, it is now cheaper to keep the goods on the lorries and keep them moving around our roadways 24 hours a day. In the old days, they took the stuff to a warehouse where it was unloaded on to smaller vehicles and taken to delivery points. We have created a position where lorries are moving around our main highways 24 hours a day because it is cheaper than stopping and unloading the cargo for distribution in small vans, perhaps at more convenient times.
We are not using our roads sensibly, so we can reasonably complain that congestion is difficult to manage at certain times of the day. I congratulate the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Greenwich and Woolwich (Mr. Raynsford), on the number of red routes in his constituency. I have written to him to congratulate him on the one from Blackheath to New Cross. I hope that it is extended. Many of the main arteries into the centre of London become congested during the day because they have only single yellow lines. Taxi hire firms keep all their vehicles waiting along the road, half a dozen people are loading and unloading, somebody is putting up scaffolding and somebody else has popped down to the corner shop for a packet of tea. All that traffic is allowed to congest and disturb our roads, so it is not surprising that we have these debates from time to time.
Finally, our country is not covered with roads. If all the towns and streets were whacked together, they would represent only 15 per cent of the land mass of the United Kingdom. Therefore, we are a country that is largely rural and there is still plenty of space. The hysteria that we hear whenever anybody wants to improve the roads in Britain should be dealt with sensibly by setting out the facts.
We should have more and better roads. The lunatics in some Labour boroughs who widen the pavements for no good reason, and just reduce the space for motorists, ought to be curbed. We should come to terms with the fact that, these days, people prize their freedom and independence which, as my right hon. Friend the Member for Kensington and Chelsea said, is represented by their ability to jump in the car and take the family out for a
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nice day in the sun, or, for women, by the convenience of not having to drag bags of shopping from the local high street home on the bus. I remember doing that as a young woman and I would not want to go back to it. I use the out-of-town hypermarket precisely because it is so convenient and I hope to goodness that none of these curmudgeons are ever allowed to stop those developments. I hope that the Under-Secretary, who has the powers to make good and sensible use of our roads, will apply common sense and not the hysteria and humbug that we hear in attacks on the motorist.
10.16 am
Mr. Matthew Taylor (Truro and St. Austell): We have heard some interesting speeches being made with genuine feeling, although I disagree with some of them. The hon. Member for Bury, North (Mr. Chaytor) said that the Liberal Democrats had not consistently supported the fuel price escalator. We have always taken the position that as the fuel price escalator produces more income, it will provide the opportunity to cut other taxes. I have always used that equation. We have argued that vehicle excise duty should be abolished for two thirds of vehicles—all small-engined vehicles. The Government decided to increase the fuel price escalator, although they could well have argued that they did not have sufficient room to manoeuvre as the existing fuel price escalator plans had been budgeted in for forward spending. In increasing the fuel price escalator, they could have applied a joint equation, but they did not. I consider that to be a failure because of my wider concern about environmental taxation becoming unpopular if it is used simply as a way to increase taxes.
I agree with the hon. Member for Bury, North about charging for parking at out-of-town shopping centres. I regret that that proposal was removed from the White Paper at a very late stage. I represent some rural market towns that suffer considerably as a result of out-of-town developments that were allowed by the previous Government, on appeal, against the wishes of the local community. They have had an enormous impact on town centres, particularly St. Austell which is now very run down.
I also agree with the hon. Gentleman that we need to keep the fuel price escalator under review. Although the Conservatives now kick up a lot of fuss about it—despite the fact that they introduced it in the first place—it has not had a measurably large impact at the pump, simply because the raw material price has been falling. If the price of the raw material rises and there are sharp increases at the pump, there will be strong public opposition to that and to the tax. Perhaps we should consider an escalator system that ties into the fuel prices at the pump rather than a simple percentage. It may be easier for the Treasury and the Government in terms of forward planning, but it may not produce the outcome that they seek in either direction. It may not lever up fuel prices gradually as intended; they may go up too fast or not at all, depending on the raw material costs.
The right hon. Member for Kensington and Chelsea (Mr. Clark) suggested that socialists and interventionist Liberals were anti-car. I am not. I like cars and I like driving, but I do not like traffic jams, congestion and pollution. If we are honest, we all know that we sometimes use the car when we do not need to, but perhaps more often we are forced to do so when we do

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not want to. Out-of-town shopping is a good example, as is the lack of public transport in some areas for getting to work.
The hon. Member for Billericay (Mrs. Gorman) referred to the number of cars which is a real problem in urban areas. In towns such as Truro, traditional terraced streets do not have the capacity for people to park outside their homes. The problem will get worse and will change the way in which people use cars. Quite irrespective of Government policy, the convenience of the car is considerably diminished if people cannot park outside their homes, and that is already causing fights. People put bollards outside their homes to stop people parking and neighbourhood disputes break out, yet the current level of car ownership is relatively low compared with the number of adults who could potentially own cars and say that they would like to in future. However, for the most part this is a debate about car ownership, not about car use. The hon. Member for Billericay acknowledged that.
Mrs. Gorman: Will the hon. Gentleman give way?
Mr. Taylor: I will not, because the hon. Lady spoke a moment ago. I have not said anything with which she would disagree and I am conscious of the time. She mentioned road pricing, which I will come to.
I want to anticipate an attack that we have heard previously from the Conservative Front Bench, although we have not heard it, interestingly enough, from the Back Benches today. The Conservative Front-Bench team has swung around entirely on its previous course and now puts itself up as the great opponent of the road fuel price escalator. When challenged on that, spokesmen say that it is the 1 per cent. that Labour has added that makes the difference, but in all their propaganda, they talk about the fuel price escalator as a whole. For the record, over 18 years, the Conservatives increased excise duty on fuel by 600 per cent. Between 1992 and 1996 alone, they raised £58 billion from fuel tax, of which £25 billion directly resulted from the imposition of the escalator.
In addition, the Conservatives sold off public transport services, took no action to stop the loss of rural bus routes and cut the money for transport packages for local authorities. They introduced deregulation of bus services, which has been an abject failure in improving rural bus services, which continue to decline. Privatisation of the railways has brought increased fares, massive increases in the number of complaints, massively increased overcrowding and, as the regulators themselves say, deteriorating services in many areas. The fuel price increases were not used to improve public transport services. Rail fares increased by 50 per cent. and bus fares increased by 40 per cent.
Mr. Jenkin: Will the hon. Gentleman acknowledge that during most of the period when we were increasing fuel excise duties, road fuels in this country were cheaper than on the continent, whereas now they are significantly more expensive, which is beginning to create market distortions? I should have thought that the hon. Gentleman's party was in favour of harmonisation of this sort of thing, being a pro-federalist party. When does the hon. Gentleman think that the fuel escalator ought to come
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to an end? No other country in the EU has a fuel escalator and if we keep it indefinitely, it will create more and more of a distortion.
Mr. Taylor: The previous Government did not give a timetable for ending the road fuel price escalator. It was budgeted in for the whole of the current period under Conservative plans. If it is now the policy of the Conservatives to stop it, perhaps they should say why it was not their policy before the general election and how they would make up the huge budget deficit that would result. I presume that they would do so by cutting the health and education improvements that have been made, which is, of course, what they have said they would do. However, they have said that they would do it to meet an existing tax deficit, not a new one.
The fundamental answer is that all countries, especially European countries, are now committed through the Kyoto agreement substantially to reduce carbon dioxide emission increases in Europe. Countries will have to follow paths that lead to reductions in fuel use. I congratulate the Conservatives on pioneering the road fuel price escalator. It is rather pathetic that they have reversed their position to court popularity now that they are out of office. I believe that they will find that the policy will be adopted by other countries.
Road traffic reduction has overwhelming support in this place, as has already been said. It has overwhelming support among Labour Members, let alone support from the Labour Front-Bench team in the past. I trust that if a road traffic reduction Bill with national targets was introduced, the Minister would not use his offices or the offices of the Labour Whips to prevent its being passed. No doubt there would be negotiations about the detail. There might even be negotiation about the target, but there should be no negotiation about the principle of road traffic reduction because it was a specific commitment in Labour's manifesto.
The arguments in the House have moved on a long way from when road traffic reduction was first proposed by the hon. Member for Ceredigion (Mr. Dafis) in 1994. We then saw local targets introduced by my hon. Friend the Member for Bath (Mr. Foster). The House is now far more in agreement on such issues, but the remaining areas of concern—economic damage, unrealistic targets and the possible regressive nature of traffic reduction—are still spoken about. It is our job to present the counter-arguments.
We have to remember that almost one third of households in Britain do not own a car. The majority of those people are poor, sick, disabled or elderly. The process of cutting unnecessary traffic growth and investing in public transport directly benefits those very poor people. In rural areas, we see some of the highest levels of dependency on cars and some of the highest levels of inability to afford them and of people without a car. The policies that have promoted the car have a direct and materially devastating impact on people in rural areas. If we introduce measures to make it less necessary to travel, such as more support for local schools and shops, and better planning so that road use is not built in as estates and shops are developed, we make it easier for people in both rural and urban areas to drive less. However, the main target of road traffic reduction will be urban areas.

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I welcome the fact that the Government have built road traffic reduction into the London government Bill. It is crucial that that works; it will be a pioneering effort. If it is done right, it will show that more can be done across the rest of the country, so we give that measure support and we look for more. We hope to see a Bill for the rest of the country soon, but above all, we hope that the Government will stand by their manifesto pledge and back national road traffic reduction, not simply a reduction in the growth of road traffic.
10.26 am
Mr. Peter Bottomley: I apologise to the House for not being here at the beginning of the debate. I declare an interest in the Register of Members' Interests. I am chairman of a small Irish medium-tech company that counts cars going in and out of car parks. That is not relevant to the debate, but it is worth putting on the record. The hon. Member for Truro and St. Austell (Mr. Taylor) spoke about the railways. One of my brothers-in-law runs a railway company.
It is worth noting that the increase in the use of the railways has not come from the provision of extra railway lines. We are going to have more railway lines. We have had many more stations opened in the past 10 years than probably at any time in the past 80 years, but it is worth noting that it is possible to achieve greater transport use without creating more infrastructure. The people who have looked on the roads debate as one that suggests that the increase in the number of roads has led to an increase in the amount of traffic have got it completely wrong. Growth in traffic and in movement comes in the main from prosperity and from emancipation.
In the 1930s, the people who had cars were white, middle-aged men in full-time occupations. As soon as pensioners, students, ethnic minorities and women start to have their own car, people start to say, "Let us bring in a system of road pricing." Such a system would cut out the pensioners, the students, the poor, women and ethnic minorities. We are left with white, middle-class men in full-time occupations with a fistful of fivers in their back pocket who can continue driving. That is one of the reasons why direct charging in a conventional sense is wrong.
The debate today is not about road pricing; it is about road traffic reduction. I am one of those who has supported road traffic reduction Bills from the beginning, in part because it is the kind of thing that I supported when I was a Minister at the Department of Transport 13 years ago. This Government go around sloganising and saying that the previous Government went in for predict and provide. We did not. We built only some of the roads, which were essential. We did not go around building roads that were merely convenient.
For example, anyone who claimed that the Okehampton bypass was just a desirable thing did not understand what the problems were there. In some of the London boroughs, town centre bypass schemes, often strongly desired by local authorities, help to provide civilisation for people who otherwise have to compete, when they are shopping, going to school, going to church and living, with through traffic. Traffic, whether on railways or roads, should be, in effect, in traffic canals. That helps to reduce risk and improve the environment.
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How can we sensibly reduce road traffic? Let us assume that Britain continues to grow at 2 per cent. a year for the next 100 years. That implies a material standard of living seven and a half times greater than now. Keynes told us that in his piece "Economic Possibilities for our Grandchildren", published in "Essays in Persuasion". We ought always to remember that, even at 2 per cent. growth, which I argue is slightly below trend, many more people will be provided with the opportunity to own many more things. They will be able to own more homes and more cars, go on more holidays and do all sorts of things that are denied to many of them now. But I am talking about them not about us. We have a five-storey car park in the House of Commons. I am talking about the people whom we represent, who are among those who make 60 per cent. of their journeys on foot. My hon. Friend the Member for Billericay (Mrs. Gorman) asks why we widen the pavements; it is probably to make it more convenient for those who use them.
When people start talking about benefits from congestion charging, they should remember the example of the City of London. What level of road pricing would have been needed to achieve what sensible traffic planning achieved in the City with the so-called plastic bollard approach, which would have been implemented even without the IRA bomb? What level of charging would have excluded private traffic from Oxford street where, even now that there are only taxis and buses, pedestrians can move faster than traffic? The answer is not simply to charge.
One of the biggest changes since I became a Member of Parliament in 1975 is that most teachers then did not drive to school, whereas now most teachers do; then, most pupils were not driven to school, whereas now most are. Instead of telling pupils that they should not be driven to school, we should ask how we can identify the proportion of teachers, governors and pupils who come to school in ways other than by car and so have the figures, year by year. Then, we can start thinking about incentives: for example, if we go on improving schools, more people will go to the school that is nearer to them, instead of to one that is further away.
Perhaps we should do as the all-party cycling group suggested last evening and, instead of making pupils who go home by bike wait for 10 minutes until all the cars have gone, let pupils on bikes go 10 minutes early and hold back the pupils who will be collected by car. We can use small market signals such as that. It would certainly be worth putting on the national news the impact of the cycling provision in Oxford, which has led to almost a 40 per cent. reduction in cyclist casualties even before the extra benefits of having cycling helmets and reasonably well-maintained bikes are taken into account. In all those ways, we can begin to make a difference.
I have proposed before that the gates of the House of Commons car park should be locked, at least for one day a year and preferably for a week a year.
Mr. Chaytor: Will the hon. Gentleman give way?
Mr. Bottomley: I think that the hon. Gentleman must have his car parked here.
Mr. Chaytor: To pick up on the hon. Gentleman's point about the House of Commons car park, does he

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agree with me and a small number of other Members of Parliament that it would be entirely consistent with Government policy if a charge were imposed on car parking spaces in the House of Commons car park?
Mr. Bottomley: Perhaps, but I suspect that hon. Members would find some way of including the charge in their office cost expenses.
We have done one good thing in getting rid of the crazy system, which I opposed when it was first introduced, under which the bigger a Member of Parliament's car, the greater the mileage allowance given. We must remember that, if we point a finger at someone else, three fingers will point back at us, so we should first try the measures ourselves. For example, rather than ask the Fees Office to disclose the exact mileage claimed by each Member of Parliament, it might be a good idea to publicise the number of miles that Members of Parliament as a group claim each year, and then try to ensure that that figure decreases. It would be marvellous if the Deputy Prime Minister, instead of getting publicity for stopping to help elderly couples who break down on the motorway, got publicity for helping pensioners with suitcases to get down from a train. There are all sorts of individual measures we could take, but we should try them out ourselves first. As my right hon. Friend the Member for Kensington and Chelsea (Mr. Clark) said, people like cars. I have nothing against cars—indeed, our household has two.
Unless we recognise the need for mobility of those who do not have access to a car, we shall not achieve our underlying goal of increasing people's well-being, which is a mixture of wealth and welfare, and helping them to have choices. In the City of London are some of the better-paid people in this country, yet 80 per cent. of them come to work by public transport, not because they cannot afford to drive—indeed, they are more likely than other people to own a car—but because it is not in their interests to drive. The option they take is a better option than driving. We must fix on that, for if our aim is to aid the mobility of those to whom choice is currently denied, we are far more likely to develop an attractive alternative for individuals who currently have a choice, but who too often choose to use their car.
I would caution the House against swallowing measures that are merely a passing fashion. An example of that is the Greater London lorry ban, which was introduced in the mid-1980s. As my hon. Friend the Member for Billericay said, in a rather perverse way people were told that they could not use the roads 24 hours a day and make their deliveries at suitable times. To be exempt from the lorry ban, a firm had to fill in a 10-page document; 20,000 firms did so, so 200,000 pages were filled in. Those documents had to be read by the checking authority and, if approved, the firm got an exemption. Two thousand signs were put up; the scheme cost £250,000 to begin with and, by its end, was costing £750,000.
The number of lorries that were denied an exemption was four. The Greater London council did not even bother to discover that until I got someone to ask the question. In the last month of the life of the GLC, it gave out the information that the number of lorries that did not get an exemption was four. I would not accuse the Government of putting on such a gloss, because they have not been in office for long enough, but if they start doing that sort of thing, they will be subjected to the same sort of inquisition. They must find better ways to make progress.
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In my view, we can make progress in reducing the growth in traffic and, in many cases, we can reduce the amount of traffic. However, we shall achieve that only by introducing sensible measures that work, not by doing things to get a short-term round of applause.
10.36 am
Mr. Bernard Jenkin: I hope that I do not start my speech by embarrassing my hon. Friend the Member for Worthing, West (Mr. Bottomley) with a piece of one-upmanship, but my family is only a one-car family and I have taken to cycling around London. Doing so saves quite a lot in taxi fares and allows me to feel that I am doing my bit to improve conditions in central London.
The hon. Member for Truro and St. Austell (Mr. Taylor) balanced the ticket for the Liberal Democrats in the usual way, by saying that he was pro-car when their policy is obviously anti-car. I do not recommend that he sends his speech to A-level students in his constituency, because they might spot some of the inconsistencies in his answer to my question.
I congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on obtaining the debate. I thank him for sending his questions in advance to the Minister, if only because it will be interesting to see how the Minister starts the process of getting out of some of the more ridiculous commitments that the Labour party made in opposition. It underlines the cynicism of new Labour that its leaders were prepared to make manifesto commitments to achieve utterly ludicrous objectives, when any sensible person would have known that it is unrealistic to aim for overall reductions in traffic volumes nationally.
The flexibility of the United Kingdom labour market has a great deal to do with people's being able to travel longer distances to work. The lifeblood of the economy is the ability to transport goods: whatever one's prejudices about the high street versus the out-of-town shopping centre, there is nothing one can buy in either a high street shop or a hypermarket that has not arrived by truck. It is ludicrous to suggest that we can return to buying local produce in local markets, because that would significantly reduce the quality of what was available. No Government will choke off economic growth by simply legislating for a reduction in traffic, and it is difficult to imagine how that aim would be achieved even if they did so.
The Government are having a go at gesticulating in front of their original objectives, but the fuel duty escalator, which they have increased, will not deliver. Research produced by the Centre for Economic and Business Research suggests that it would be necessary to increase the cost of petrol to £17 per gallon before it started to have any significant impact on traffic volumes. In the meantime, it would be the most vulnerable road users who were driven off the road, such as women in second cars and pensioners, who are one of the fastest-growing road user groups. The last thing pensioner couples in particular want to give up is their car. Low-paid people—particularly those in rural areas—who need to use their cars will be driven off the roads. They will lose their jobs and end up on benefit. Other groups, such as the disabled, who have no alternative but to use their cars will have to pay the excess fuel duties that the Government have levied.
The previous Government had to introduce the fuel escalator, but this Government have imposed substantial new taxes elsewhere—such as the £5 billion a year

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pensions tax. The Government's first two Budgets have imposed the largest peacetime taxation increases seen in this country. It is ludicrous to plead that those increases were necessary: the Government have simply lost control of public expenditure.
In their manifesto, the Government spell out the legitimate and beneficial objective—which we support—of cutting congestion and pollution. That should be achievable, but the problem requires proper analysis. There has been virtually no growth in inner-urban traffic. The hon. Member for Bury, North (Mr. Chaytor) has pointed out that road traffic speeds in central London are virtually the same as 100 years ago, and the same probably applies to the volume of traffic in inner London. The growth of inner-urban traffic in London is not the problem. By aiming at relatively small market segments in their transport policy—such as the school run and the journey to work—the Government are not tackling the real problem of traffic growth.
The document published yesterday by the Government, entitled "Breaking the Log Jam", starts from the completely wrong premise. It is introduced with a totally dishonest prospectus. Let us analyse the sequence of events properly. The first document produced as part of the Government's great transport policy was the comprehensive spending review. The Secretary of State was prevented from issuing his White Paper until the Chancellor had had his say and got his way in the spending review, which cut transport investment. The previous Conservative Government spent an average of £1 billion a year over five years on motorway and trunk road infrastructure improvements. This Government have cut that sum by two thirds, to only £300,000 a year. Only one bypass will be started in this financial year when there are all sorts of very good environmental reasons for building bypasses all over the country.
Mr. Alan Clark: That is a very interesting—and absolutely disgraceful—statistic. As a consequence of the Government's policy, more people will be killed on the roads. It has been established by every relevant statistic that one could encounter that motorway journeys are the safest mode of travel. By restricting the growth of motorways, the Government will ultimately and indirectly raise the number of road deaths.
Mr. Jenkin: My right hon. Friend makes an extremely valid point. The Government are also benefiting from reduced rail subsidies—one of the dividends of privatisation. In addition, they are phasing out Treasury support for the tube.
Those measures were announced in the spending review. The Government then released the White Paper and recently published the Greater London Authority Bill, which contains skeleton provisions regarding congestion charging. They have also delivered a consultation paper—yet another one—on that issue. Even though the Government assume in the comprehensive spending review that they will collect revenue of £1 billion a year by 2005, that consultation paper asks who will pay congestion charges and how they will be collected. It is no surprise that Friends of the Earth has described the Government's transport policy as a case of "carry on consulting".
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The Secretary of State has clearly been rolled over by the Treasury. The congestion and car parking charges will not mean extra money for transport. [Interruption.] I have clearly excited the Minister—I must have touched a raw nerve. That extra revenue will not mean extra money for transport; it will merely make up for the cuts. The tube cannot survive without a degree of subsidy. The Conservatives subsidised the tube to the tune of £400 million a year. The extra charges will simply transfer the tax burden for subsidising the tube from the Treasury to the motorist.
There will come a point when motorists—who already contribute more than £30 billion a year in taxation through fuel duties, value added tax and so on when less than one fifth of that money goes to transport—will begin to question whether the Government have produced a fair and proper transport policy. The Government are using the urban congestion argument as an excuse for collecting more taxes—the revenue will not go to transport—because they have lost control of the social security bill and have no welfare reform programme. That was evidenced last night with the introduction of the Road Traffic (NHS Charges) Bill.
As if finally to give the lie to the assurance that the extra money from the new charges and taxes will go to transport, paragraph 6.30 of the paper to which the hon. Member for Carshalton and Wallington referred says:
"the legislation will not restrict expenditure entirely to transport related matters".
The objective should be not so much reducing traffic overall, but cutting congestion and pollution, which was Labour's manifesto commitment. That makes sense, and we will seek to hold the Government to that commitment. We do not have excessive traffic overall, but too much of the wrong traffic in the wrong place. There is unsuitable traffic on unsuitable roads. While traffic growth in inner-urban areas is virtually nil and the volume of traffic is growing in suburban areas by 2 or 3 per cent. a year, there is real growth in inter-urban traffic. Yet the Government have not produced a single policy item to deal with or reduce that growth in traffic.
Where is the long-awaited consultation paper on land use planning that was promised in the White Paper and foreshadowed originally before the election? Labour has been in office for 20 months and we still have no guidance as to how to improve land use planning. I put it to the Minister that that is the hardest nut to crack. We will look positively at any proposals that he might produce—but, as yet, there are none.
How is improved land use planning consistent with the Government's strategy to build 2 million new homes on green-field sites by 2016—each one a pretty little box with a double garage? It is ridiculous to suggest that so much green-field development is consistent with reducing traffic growth. We need to divert traffic to more suitable places. I recently drove down the A3 to Winchester.
Mr. Peter Bottomley: Portsmouth.
Mr. Jenkin: I beg your pardon—I did reach the correct destination. There is a dual carriageway virtually all the way to Hindhead, a single carriageway through Hindhead and then a dual carriageway again. It is not rational to have no bypass around Hindhead, but the Government do

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not have the money to build one. They are presenting their transport policy as rational when it has clearly been screwed by the Treasury.
Privatisation presented huge opportunities to develop alternatives to the car, such as rail transport. For example, English, Welsh and Scottish Railway Ltd. plans to treble the number of rail freight movements in the next 10 years. There is huge investment in Railtrack. However, we need new investment in roads as well, and the roads system must be managed better.
The environment must be a prime concern when formulating transport policy. If we are to protect the environment, we must also protect economic growth. The White Paper raised great hopes, which have now been dashed. Those involved in commenting on and formulating transport policy—that is a great many people—are extremely disappointed by the dithering, delay and endless consultation that is the Government's excuse for inaction.
The Government have no authority. There is no transport legislation in the Queen's Speech. All we have had are cuts in the roads programme which will increase congestion and pollution, and at the next general election, voters will judge the Government's transport policy on whether it achieves cuts in pollution and congestion.
10.50 am
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Nick Raynsford): The debate initiated by the hon. Member for Carshalton and Wallington (Mr. Brake) has addressed an issue that is at the heart of the Government's policies to tackle traffic congestion and pollution. His concerns that the Government are backtracking on our commitments are completely unfounded. I wish that he would spend more time considering all the actions that the Government are taking rather than resorting to extraordinarily detailed textual analysis designed to try to prove that there might be some possibility of backtracking. I assure him that there is not. Our objectives are unchanged.
The Government's recent White Paper, "A New Deal for Transport", makes it clear that we need to do more than just reduce the rate of traffic growth. Where the problems of pollution and congestion are greatest, we need to achieve an absolute reduction in traffic levels. More importantly, we are making good progress in implementing the policies necessary to deliver on our promises.
Mr. Brake: I want to be absolutely clear on this point. I want the Minister to put on record whether the Government's policy is to achieve an overall, absolute reduction in traffic. Yes or no?
Mr. Raynsford: The hon. Gentleman ought to contain himself. I am trying to answer several questions that he gave me notice of and asked in his speech. I have just said clearly that we do not regard a reduction in the growth of traffic as sufficient. I have stressed that in areas that have serious congestion and pollution problems, we must achieve traffic reduction.
I put it to the hon. Gentleman that in other areas of the country—some of them are represented by his hon. Friends—there is no need to achieve traffic reduction because vehicles are not causing serious pollution.
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There are rural areas where that is the case, where the motor car is a lifeline and where there is no great environmental or other reason for pursuing traffic reduction. There is a need to tackle the serious congestion and pollution problems in cities, and that will be at the forefront of the Government's policy.
It is right to have regional and local strategies rather than blanket policies at a national level which are not sensitive to local considerations. I should have thought that the hon. Gentleman would be the first to recognise the importance of well-developed local transport plans, worked out by local authorities and local communities in response to the specific needs of their area. That is precisely what we are seeking to encourage.
In our first 18 months in office, we have published and taken significant steps to implement the first comprehensive White Paper on transport policy for more than 20 years. It is the first White Paper to integrate transport policies with other key related policies on the environment, land use planning and health. The hon. Member for North Essex (Mr. Jenkin) complained, on the one hand, about us producing too many consultation papers and, on the other, that we have not yet published a consultation paper on the changes to PPG3. I have to tell him that changes to PPG3 will be announced shortly. The Government take that matter seriously and recognise the need for integration of land use, transport and environmental policies. We created the Department of the Environment, Transport and the Regions to achieve that integration.
We have also secured in the comprehensive spending review the means to deliver our integrated transport strategy with an extra £1.8 billion over three years for public transport, traffic management and road maintenance.
The Deputy Prime Minister has made it clear that doing nothing is not an option. Congestion is costing our country billions of pounds a year. The Department's 1997 road traffic forecasts made clear the scale of the future challenges that we would face without the Government's policy changes. Traffic was forecast to increase by more than a third over the next 20 years. That would seriously undermine our ability to achieve our legally binding Kyoto targets on CO, reduction. It would also set back action to tackle local air quality and the adverse impacts on people's health of the way in which we travel. It would lead to significant worsening in congestion.
We must not forget the three in 10 households that have no access to a car. They are totally reliant on other forms of transport such as public transport, cycling and walking.
Our policies aim to encourage more responsible car use and to extend the choices available to all groups in society. The White Paper sets out how we will achieve that.
The Deputy Prime Minister said last year that we want to be held to account for our achievements in reducing car journeys. That position has not changed. The White Paper promises that we will report on the success of the new deal. The two recent road traffic reduction Acts provide a specific framework for reporting progress in tackling road traffic and its impacts at local and national level.
Our policies will encourage people to drive less and to walk, cycle and use public transport more. They fully address all the recommendations of Sir Donald Acheson

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on mobility, transport and pollution, to which the hon. Member for Carshalton and Wallington referred. Our approach is based on integrated policies with action at national, regional, local and individual level to deliver the reductions in traffic that we need.
I want briefly to highlight some of the key policies that we are implementing which will make a difference. The first is local transport plans. Delivery of our objectives depends, to a large extent, on action at a local level to tackle local needs. That is why the new five-year local authority local transport plans are at the heart of the new deal. They will be comprehensive, integrated transport strategies. They will contain measures to co-ordinate and improve local transport provision to tackle congestion and pollution, and support economic development in urban and rural areas.
London boroughs will have to produce local implementation plans giving effect to the mayor's integrated transport strategy for London. Production of the strategy will be a key priority for the mayor in his or her first few months in office.
We are providing authorities with the additional resources to do the job. We have secured an additional £700 million over the next three years for the implementation of local transport plans. We are removing unnecessary constraints on how local authorities can spend the money allocated to them.
We published draft guidance on local transport plans on 12 November. We are encouraging authorities to set targets so that we and they can judge performance. Clearly, if targets for road traffic reduction are to have any meaning, they need to be considered in the context of local transport strategies setting out how traffic growth can be tackled. We are, therefore, implementing the Road Traffic Reduction Act 1997 in step with implementation of local transport plans.
We have listened to the concerns of local authorities about the time scale for the preparation of robust plans. We have asked for provisional plans by the end of next July and full five-year plans in 2000. Authorities will submit their statutory traffic reduction reports as part of the first full local transport plans in 2000 and produce non-statutory interim reports as part of their provisional plans. That phased implementation will enable a greater degree of standardisation to be achieved in the local measurement of existing traffic levels and forecasts so
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that the national implications can be assessed. As I am sure the hon. Member for Carshalton and Wallington will recognise, it is critical that there is a standard approach so that we do not have varying figures for different areas which are difficult to co-ordinate.
We shall give local authorities important new powers to allow them to charge road users or to introduce new charges on workplace parking as part of the package of measures in their local transport plan. In London, it will be for the mayor to consider the role of such measures as part of the integrated transport strategy. We propose to give powers to the boroughs as well as the mayor, but borough powers would need to be exercised in line with the mayor's strategy.
The Greater London Authority Bill, published last week, includes the necessary powers to enable such charges to be introduced in London. We are committed to the introduction of those powers nationwide. Yesterday, we published a consultation document seeking views on the details of how such schemes might operate.
Revenues raised will be used locally to benefit transport serving the area where charges apply. Investment in improving the alternatives will be critical to the success of schemes in reducing traffic.
To tackle road traffic growth, we need to widen the choices available for those who have a car and those who do not, so we are improving the alternatives to the car. Public transport is crucial but so, too, is the need to encourage walking and cycling, and that is on the Government's agenda.
I want to address the question of national road traffic targets. The Road Traffic Reduction (National Targets) Act 1998, which became law in July, requires the Government to report on the case for national targets for road traffic. The Government must also publish further reports on progress in reducing the impact of road traffic and towards any targets set. We have said repeatedly that we will produce our first report on the case for targets by the end of next year. That is an entirely reasonable time scale given the analysis that we need to undertake. I referred to the preparation and co-ordination of local plans. We need that analysis to assess the impact of the new deal's measures on traffic.
We have also set challenging targets on, for example, CO, emissions, air quality, cycling and road safety—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order.

North-West Region
11 am
Ms Hazel Blears: I am delighted to have been successful in the ballot for today's debates and to see so many colleagues here. We are about to debate a subject that is of tremendous importance not only to those of us who represent the north-west in Parliament but to the country as a whole, because the north-west is such an important region, economically and culturally.
The north-west has the second largest economy in the United Kingdom. It is one of the most densely populated areas—5.5 million people live in Lancashire, Cheshire, Cumbria, Greater Manchester and Merseyside. We have 140,000 businesses and currently benefit from £370 million from the European structural funds, which we would like very much to keep. We also have £375 million from the single regeneration budget challenge fund.
Although manufacturing has declined in recent years, it is still a major source of output and jobs in the north-west. It accounts for 27 per cent. of the north-west's output and 22 per cent. of its employment. Our manufacturing is concentrated in four main sectors: chemicals, textiles and clothing, food products and engineering and, of course, the very important aerospace industry.
Manufacturing has been hard hit in recent months, which is why it is so important that the regional development agency should begin its work of drawing investment into the region, preparing its business plan, setting up strategic sites, and working with the regional chamber of commerce and all the local authorities.
Time and again, it has been shown that partnership is the key to economic success and to social regeneration. In the north-west, we have a tremendous record of working together to achieve results. In Greater Manchester, the city pride project involves Manchester, Salford, Trafford and Tameside working together to regenerate the city-centre core. MIDAS, the new Manchester investment development agency service, is drawing jobs and opportunities into the area. We are all working together to bring the Commonwealth games to the region, which would be of enormous benefit economically.
Some regions say that they do not feel close-knit or that they do not have a real affinity with their neighbours. That is certainly not the case in the north-west, where we share our history, language, literature, geography and, I believe, our sense of humour. That is why the north-west needs a voice as a region. I want a democratically elected regional government to shape and focus our growth and development, bringing decision making closer to the people and the communities that we serve.
Mr. Nigel Evans: How many letters has the hon. Lady received asking for an elected authority for the north-west?
Ms Blears: We have been consulting the communities, and many say that they want decisions to be made at a local level. The hon. Gentleman might be in favour of remote government, but I am sure that that is not popular in his area.
I was talking about being closer to the people, and I want to say a little more about what is happening to regenerate my city of Salford, which is becoming more
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exciting by the day. The past 20 years have not been especially happy for Salford and its people. We based our economy to a large extent on manufacturing and full-time, high-quality jobs, but the Tories put paid to all that.
We had two devastating recessions which decimated manufacturing and knocked the heart out of many local people. However, in the 18 months since the Labour Government were elected, we have begun to see a revival in the city's fortunes—a new beginning. I hesitate to say that there is a Salford renaissance, but that is how it is beginning to feel.
We have an education action zone and a health action zone, and we have pathway status for our regeneration projects. I shall give a couple of examples of local partnerships working on the ground—real regeneration from the bottom up. Just last week, we submitted the action plan for the regeneration of Seedley and Langworthy, one of the most difficult communities in Salford. The bid was for £25 million for the city as a whole but focused on that particular area. The bid contains some genuine innovations which could inform regeneration projects on a wider scale.
One proposal is for a community housing company, whereby local people decide on the design, management and lettings of property and have a stake in the growth of the community. Another proposal is for a community trust, again led by local people, which will be an agent to draw in funds and resources from the new deal, Europe and elsewhere to provide jobs and opportunities.
Most exciting of all, there is to be a community financial institution. Banks and building societies have withdrawn completely from the inner cities, so there is very little access to financial services in those areas. We are to have our own community financial institution—a people's bank, if you like—which will provide loans and start-up grants to local businesses and bring financial opportunities back to the inner city. That is what sustainable improvement is all about. It is not about being here today and gone tomorrow; it means improvement, week by week and month by month, changing and growing, so that once again the community becomes strong, self-confident, vibrant and caring—somewhere where people are proud to live and where they want to bring up their families.
We need to tackle the problems of private rented property and absentee landlords who do not have a stake in the community. I want the Government to examine the regulation and licensing of private landlords to make sure that they meet their social responsibilities to the communities in which they have property.
We have to invest in community capacity. We have various regeneration projects, but we are asking the same group of local people to get involved. People have their own lives, families and jobs, which makes it difficult for them to participate in a range of projects, so we need to glean the necessary skills and talents from a wider group of people.
We need real, joined-up government. We have all the various initiatives, but we cannot have people spending time on administration and bureaucracy only to find that they are bidding against each other for funds. We have to ensure that the different initiatives mesh and integrate. We shall then have the opportunity to show that we can provide the best value for the extra money that we invest and can renew the fabric of the communities forgotten by the Tories.

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I shall highlight a couple of other local projects, the first being the development of the Lowry centre in Salford. It is the national landmark millennium project for the arts, involving £127 million of investment. It is unique in bringing together funding from the national lottery, the Millennium Commission and Europe—a real partnership which, in 2000, will deliver the most wonderful, breathtaking cultural centre anywhere in Britain.
Just last week, my right hon. Friend the Secretary of State for Culture, Media and Sport topped out the centre with the final golden bolt. He was awe-struck, not only by the building itself, but by the concept of bringing together a performance space for large productions—there is seating for 1,750 people—a flexible studio theatre, galleries for Lowry's paintings, a digital world centre, and a centre for virtual reality linked with the university. The final accolade was the receipt of £2 million in sponsorship from Electronic Data Services, a major information technology employer. That is initiative and enterprise.
I pay tribute to Salford city council, which had the ability and vision and was prepared to risk taking the project forward. The best return on that risk will be the fact that local people, especially children and the young, will be able to take part in, enjoy and appreciate performance and art. Salford is packed with creativity and talent. At long last, we have a Government who recognise that and want it to flourish.
Our examples of regeneration are quite breathtaking. Salford Quays now employs more than 7,000 people, more than when the docks were operating at their height in the 1950s and 1960s. The latest development is Century 105, the north-west's newest commercial radio station, which is investing £2.5 million in a high-tech studio and creating more than 50 jobs. The metrolink extension goes through Salford Quays into Eccles. There is a major project with English Partnerships to regenerate Chapel street, which is the main A6 corridor into the city.
Only last week, we announced the building of the only five-star hotel in the region, which will bring jobs for local people. We are also examining the possibility of a popular music centre in the Chapel street area to build on the creativity and talent of local people. There is also a housing and leisure development at the old hospital site. There is a huge development at Chapel wharf with the Calatrava bridge, which has won international awards, and 2,200 staff are based at the new Inland Revenue headquarters.
In fact, some £875 million of capital investment, public and private, is planned for Salford over the next five years. That could support up to 35,000 local jobs. To cap it all, there is an application to build a snowdome in Salford—who would have thought there would be skiing in Salford? It is hard to believe, but it is true. That, too, will provide jobs and opportunities for local people.
A few weeks ago, some out-of-date research was published. It compared Salford to the Titanic, alleging that people were leaving the city and abandoning ship. That research is nine years old—from the depths of the third Tory term, when our city was at its lowest. Today, nothing could be further from the truth. The city is becoming an exciting and vibrant place in which to live and work.
I do not have time to say everything that I want because many colleagues want to speak, but I shall say this: north-west Members are a force to be reckoned with.
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We shall be working together for our region and the people whom we are here to represent. We shall be ensuring that the north-west's voice is heard at the very heart of government. We know that our Government want to encourage regeneration; we have made a wonderful start. We will be watching very closely to ensure that that regeneration continues, for the benefit of north-west people.
11.11 am
Mr. Michael Jack: I am grateful to be called so early in this debate. I congratulate the hon. Member for Salford (Ms Blears) on the enthusiastic way in which she gave a one-person commercial for Manchester and Salford. Judging by the number of her hon. Friends who surround her, I am sure that she would be the first to admit that the north-west does not comprise only Manchester and Salford. Although she is brimming with the natural enthusiasm of a new Member under a new Government, I respectfully remind her that the development in Salford Quays, together with many regeneration projects in Liverpool, Trafford Park, other parts of Manchester and all over the north-west, began under the previous Conservative Government.
I must also remind the hon. Lady that the previous Conservative Government introduced a broad-scale scheme known as city challenge, in which we provided money on a co-ordinated basis to places such as Blackburn. Her rather selective retailing of what is happening now does not properly reflect some of the measures that we undertook when in government. I would be the first to admit that I wish that we had done more. I do not think that there is a party difference between us on the need to invest more resources in dealing with the many problems in inner cities and urban parts of the north-west, although the hon. Lady perhaps gave the impression that the previous Government did nothing.
It is a little rich for the hon. Lady to talk about economic and industrial matters without mentioning the burdens with which north-west industry has had to cope since this Government came to power: high interest rates, a high pound, pressures on manufacturing industry, the advent of things such as the social charter, and so on. I shall not dwell too long on those matters. Suffice it to say that the idea that the north-west and its business suddenly hit calm, tranquil waters on 1 May 1997 is a travesty.
I would not necessarily have expected the hon. Lady, who advocated the benefits of Manchester and Salford, to mention the north-west's most important industry: aerospace. [Horn. MEMBERS: "She did."] I apologise if she did; perhaps she did not go into it in quite as much detail as I should like to. Aerospace is one of this country's most dynamic industries. It underwent a difficult period in the early 1990s, but is now working positively for the future.
The hon. Lady will be aware of British Aerospace, the importance of civil aviation to the north-west's economy and the generation and development of civil aviation through new technology. When I asked the Minister for Energy and Industry at Question Time last week for a straightforward answer to a question about the civil aviation research and demonstration programme, which brings £20 million to bear on seedcorn development, all I heard was rubbish. So interested was the Minister in giving me a sensible answer that all he could say was, "We are doing more than you were doing."

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I wanted an answer to that question because the programme represented the seedcorn funding for much of the work that developed the airbus wing. The hon. Member for Salford will know the importance of the airbus wing to British Aerospace's work. I hope that the Minister will give a straightforward answer on the Government's intentions. Without such technological development and such a lead, many of the hon. Lady aspirations for the north-west economy will not be fulfilled. I should like assurances on the matter.
Mr. Phil Woolas (Oldham, East and Saddleworth): In the light of the right hon. Gentleman's comments on the north-west business community, does he recognise the strong—indeed, unanimous—support among north-west businesses for the region's submission on regional government? Have not businesses throughout our region been strongly supportive of the creation of a regional development agency because they recognise the role that such an agency can play in the regeneration of our communities?
Mr. Jack: From the companies to which I have talked, I do not sense a great deal of enthusiasm about this issue—but then business is pragmatic: it would not turn up its nose at new channels through which resources can be directed for the benefit of the north-west. The proof of the pudding will be in the eating—when RDAs start their work. There are some problems on the horizon. There will be tremendous competition between RDAs for every one to be a winner and a success. They will also face competition from a Scottish Parliament and a Welsh Assembly. They will be hard pressed to match some of the successes of regional appeals which the previous Government were able to deliver.
Will the Minister reassure me that one of the most crucial factors in ensuring that technologies in the north-west aerospace industry remain at the forefront for the benefit of its regeneration is FOAS—future offensive air systems? A great deal of work is being undertaken in some new technology development at the margin—unique in this country, and, in fact, in Europe. Without continuing Government support for such programmes, which the UK and French aerospace industries are exploring, our north-west industry will not be able to remain at the forefront of technology. It is important that the Government reassure us that they recognise that, because the north-west aerospace industry accounts for 40,000 jobs.
Last week, there was a debate on seaside towns, of which the north-west has quite a few. One of the most important is Blackpool. Since we are debating matters connected with regeneration, I should like an answer from the Minister to a question that has been bothering me.
One factor that might be inhibiting further development of the Blackpool and Fylde coast is the blight that has hung over the area for some time as a result of North West Water's inability to achieve recognition of its meeting the European Community bathing water directive standards.
In late September, the Minister for the Environment made some pretty strong comments, amplifying some of the problems and ignoring work to be undertaken as a result of the investment of a further £100 million by North West Water in projects approved by the Environment Agency to enable the waters to meet the bathing water
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standards, so removing a blight from the Fylde coast and sending the signal that it is a good place for a family holiday. Which schemes does the Minister for the Regions, Regeneration and Planning support and believe will do the business for the north-west's principal tourist location? It is easy for the Minister for the Environment to rubbish the Fylde coast at the Labour party conference. The damage to a very important part of the north-west economy caused by such ill-considered comment is serious and must be addressed in today's debate.
Mr. Graham Brady (Altrincham and Sale, West): My right hon. Friend will doubtless recall how keen the Labour party was to stop holding its party conferences in Blackpool, which has had a serious effect on Blackpool.
Mr. Jack: Indeed. My hon. Friend will be aware that a new private sector partner has bought the facilities, including the Winter Gardens. The fact that more money will be invested will be a testimony to private enterprise, but it will also be a test of the Labour party—will it be prepared to back Blackpool again when the new facilities are installed?
Mrs. Louise Ellman (Liverpool, Riverside): Does the right hon. Gentleman recall that, at the end of the 1980s, when North West Water said that it did not consider further treatment of sewage on the Fylde coast necessary, and said that it would simply build a longer outfall pipe to put still-polluted sewage into the sea, Lancashire county council fought a major campaign, supported by the European Commission? As a result, treatment is starting to be implemented on the Fylde coast. That programme is not yet complete, and tertiary treatment may be required, but does the right hon. Gentleman recall that he, and the Government of whom he was a member, refused to accept that any further treatment of sewage was necessary on the Blackpool coast?
Mr. Jack: In a spirit of reckless generosity, I was hoping to agree with some of what the hon. Lady said, because, as leader of Lancashire county council, she was a doughty fighter for an important development on the Fylde coast. I would fall out with her only on the last part of her intervention, because she is right, in a sense. All of us, on both sides of the political spectrum, had to battle with North West Water to persuade it that the long sewage outfall was not the answer. I remember that we won that battle, but that progress could not have been made had we not privatised the water industry. We occasioned £500 million of investment—now £600 million—to deliver the systems which, I hope, will lead to a solution for the Fylde coast.
Mr. Peter L. Pike: In fact, the Select Committee on the Environment went to Fleetwood to consider the argument made by Lancashire county council, and held an evidence session on that at Rossall point. The Government changed their opinion on long sea outfalls for the whole country as a result of that inquiry and the campaign that had been fought.
Mr. Jack: The hon. Gentleman bears out my point that the success in getting that investment made was the sum total of the parts. The former leader of Lancashire county council may be distorting history slightly in taking all the credit.

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I shall now talk about the transport infrastructure in the north-west of England. Although it is absolutely right to explore every opportunity to make the best use of all modes of transport and, whenever possible, to move freight on to the rail system and to develop our rail system, all that the hon. Member for Salford hoped for for the north-west may be more difficult to achieve if the Government do not seriously consider the condition of the M6. To suggest that the Birmingham northern relief road will solve all the problems of that vital transport corridor is to ignore reality.
Some people suppose that our position on the western side of the United Kingdom, when the majority of our export business goes to Europe, puts us at the wrong side of the country. We must not give the impression abroad that we are in any way cut off because the M6 is becoming an almost intolerable route. That would be the worst thing that we could do. The Minister for the Regions, Regeneration and Planning smiles, but those who use that motorway know that it is a nightmare road at times. I hate to think of the environmental damage being done by vehicles stuck in endless queues on that motorway, and of the loss of business time because the capacity of the system is not big enough and there are no plans to develop relief for some of the pinch points.
Mr. Andrew Miller (Ellesmere Port and Neston): I could not agree more with the thrust of the right hon. Gentleman's argument, but why, under the Administration of whom he was a member, was there no investment in the west coast main line or—more important, and more relevant to the specific point that he is making—in rolling stock for the freight industry? Ludicrously, we are still in the situation that we inherited from his Administration: V6 engines leaving a very successful Vauxhall plant in Ellesmere Port are being exported to Europe by road because his Administration left no rolling stock for the freight industry.
Mr. Jack: In reply to the first part of the hon. Gentleman's intervention, sadly, the investment that should have been made in the west coast main line depended on the tilting train working, and it did not. [HON. MEMBERS: "Oh."] I always try to be fair. If there is a fault, those of us who were part of the previous Government should acknowledge that. However, because the tilting train did not work, all the railway investment went to the east coast main line.
Yes, there may well have been a dearth of investment in freight, but we should consider the progress that English, Welsh and Scottish Railway, the new freight company, is making in its purchase of 300 locomotives and new specialist facilities. Had freight services remained nationalised, none of that investment would have been possible. It is a pity that the hon. Gentleman is not prepared to acknowledge the benefits that have already flowed to the north-west economy—its routeways and roads—as a result of the transfers to rail freight that EWS is making. The Conservatives set the industry free.
I do not want to go into details, but I hope that, when the Minister reflects on the debate, he will not forget the Importance to the region of agriculture, especially horticulture. The horticulture industry still employs a
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large number of people. If the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, Lord Donoughue, read the comments regularly made in Grower magazine, he would understand why the Government have a poor reputation in the horticulture industry. It is time that the Government developed a proper strategy for the development of the industry, because it is vital to the north-west.
I close on a point about the human capital of the north-west—its people, whose ability or otherwise to make an economic contribution reflects the condition of our health services. At present, a small group of people is inhibited from making its contribution to the economy because of the poor state of renal services in the Royal Preston hospital. I should like the Minister to convey to his friends in the Department of Health my earnest wish that the work being undertaken by the Department of Health and by Sir Leslie Turnberg in a review of regional services—including renal services—in Lancashire, will gel together to enable an early decision to be taken on the need to expand renal services in Preston. The people who are affected by the current pressures on those services might be able to make a better contribution to the north-west economy if decisions were taken on the expansion of those services.
I hope that I have been able to paint a broader picture of the north-west economy, drawing attention to some of the challenges that must be met by hon. Members and Ministers if we are all to ensure that the north-west region, which we represent in the House, prospers in future.
11.28 am
Mr. Colin Pickthall: I congratulate my hon. Friend the Member for Salford (Ms Blears) on securing the debate. I shall persuade my wife to read her speech in Hansard. Perhaps she will then stop pestering me to take her to Paris, and instead we shall nip down the East Lancashire road and visit Salford. It would be an awful lot cheaper.
Undoubtedly, after years of neglect of the north-west, there is now a steady overall improvement, which is continuing, despite the trading difficulties experienced by much of manufacturing industry. I welcome the strides that the Government have taken, but I shall draw attention to many issues that should be addressed to allow the momentum of economic improvements to gather pace.
One of the things that most irritates me as I look back on the past 20 years is the tendency of Government in London to regard deprivation and social exclusion as primarily a matter to be addressed in the inner cities. Deprivation and social exclusion also exist in smaller towns—those that have lost traditional industries, such as textiles, or suffer from levels of disadvantage similar to those of inner Liverpool or inner Manchester.
Towns such as Barrow, Burnley, Preston, Rochdale, no doubt Ellesmere Port, and Skelmersdale in my constituency do not receive the automatic attention that they deserve. It is true also, as the right hon. Member for Fylde (Mr. Jack) said, that the incidence of social exclusion and economic failure in rural areas is not negligible. Systems to tackle that difficulty are only just being devised.
It is important to remember that Cheshire, Lancashire and Cumbria are predominantly rural areas and that they are about to lose their objective 5b status. Skelmersdale

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is a town of about 45,000 people. It experienced some of the most violent effects of recession during the Tory years. In recent months, the tide seems to have turned for the town. Unemployment, which was more than 13 per cent. when the Tories left office, is now down to 8.7 per cent. However, that is still twice the national figure.
The economy in Skelmersdale is becoming more exciting and stimulating. New businesses are moving in to the extent that we have run out of industrial and commercial business land. Investment in Skelmersdale is growing rapidly and that is due to three factors. First, it is due to regional selective assistance and assisted area status. Secondly, the local partnerships that have been formed have been tremendously successful, largely thanks to the energy and intelligence of West Lancashire district council, in this context at least. These are the partnerships between businesses, public agencies, community groups and the county council. Thirdly, there is the expansionist mood of several key industries in the town, to which I shall refer.
Assisted area status as we know it is up for significant change, and Skelmersdale is in danger of losing it. Most of west Lancashire is in the Liverpool travel-to-work area; it is on the northern edge of Merseyside. Many workers move in and out of Merseyside and Skelmersdale for their work, which makes more sense as their travel-to-work area than a Lancashire countywide area would. To use different criteria for designating assisted area status for Skelmersdale would damage a town that has, as I have said, twice the national rate of unemployment. It would damage also the local partnerships which have hitherto been very successful in attracting continuing investment into the new town.
Other problems have been created by the way in which Department of Trade and Industry grants have been used to underpin foreign investments in some new plant in the region. We all welcome such new investment in the region, but it seems foolish to put taxpayers' money into, for example, a new paper mill in Trafford Park. I wish no harm to Trafford Park and its development. However, A and M Paper in Skelmersdale has invested huge amounts of its own money in expansion in the town, and Kimberly-Clark has similarly put massive investment into a paper mill in Barrow, and each of those indigenous firms will find themselves in regional competition from heavily subsidised rivals.
The same is true of a firm called Europanel in my constituency, which makes Contiboard. It faces competition from a Portuguese firm, Sonae, which has been subsidised to move an identical factory in Kirkby, about four miles away. It will operate in a sector of production in the country that is already oversupplied. I know that the DTI is not the responsibility of my hon. Friend the Minister for the Regions, Regeneration and Planning, but in my view the DTI should tighten up on those investments, and I hope that that will be a function of the regional development agency in the near future.
The north-west is one of the country's premier agricultural areas. Two thirds of the region is rural. It is the region that was most damaged by the BSE tragedy. Cheshire and Cumbria—particularly Cumbria—were hard hit by it. Similarly, Lancashire has many pig, poultry and egg producers. They are again in deep recession. My right hon. Friend the Minister of Agriculture, Fisheries and Food has had some remarkable successes in Europe and in his negotiations with British retailers, all of which have
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been deeply appreciated by the agricultural community in the north-west. However, the depression in the industry is still with us. It spreads outwards to have an effect on rural life generally in the region and it is unlikely to be resolved for some months.
Each of the factors to which I have referred adds up to a compelling case for the RDAs to get cracking as soon as possible and for the Government to start planning for full-blown regional elected government. The RDA must get a grip, perhaps sector by sector rather than area by area, of the strategic planning for the north-west. That would help us avoid unhelpful decisions about the assisted area map or about DTI grants, which can damp down regeneration in the north-west's most disadvantaged areas.
Equally, the RDA must, as a matter of urgency, tackle the region's transport infrastructure. I agree absolutely with what the right hon. Member for Fylde said about the M6, through Lancashire particularly, and about the west coast main line. It is clear that the mixture of private rail and coach companies is entirely unable to sort out transport in the region. That must be a job for the RDA.
In my view, the RDA must impose on itself a rural filter. A rural representative on the board is not enough—indeed, it might be counter-productive. Every decision that the RDA makes should be viewed in the context of how it enhances or diminishes the lives of people on low incomes, especially those living in rural areas, as well as how it enhances or diminishes the rural environment.
Above all, the RDA must reflect all the region. It will be too easy for it to be dominated by Manchester. I say that with all due respect to Manchester, which has a lot of muscle. I accept that it would be strange if it did not use that muscle. I hope that my hon. Friend the Minister will consider closely the composition of the board to ensure that it properly reflects the entire region. I hope also that in the not-too-distant future we shall start examining regional representation in the new House of Lords, further to strengthen the north-west in that place.
Finally, I suggest to the Minister, who I know has his heart in the regions and in regional development, that he will receive huge support from the 64 Members of the north-west parliamentary Labour party in his work towards the development of RDAs and regional government. The Opposition have been making many noises recently about the terrors of our moving towards a Europe of the regions. Speaking for myself, I would positively welcome such a move. I think that there are tremendous advantages in the regional structures that our European partners have and of which we are deprived. I look forward to the strengthening of those structures in the not-too-distant future.
11.38 am
Mr. Andrew Stunell: I am grateful to be able to contribute to the debate. I must offer congratulations to the hon. Member for Salford (Ms Blears). The hon. Lady has not quite persuaded me that Salford is a tourist destination, but she has done very well as a start.
My constituency is tucked in the extreme south-east corner of the north-west region. However, I assure the House that there is a strong sense of identity and community over the issues that affect the whole region.
It is perhaps worth emphasising briefly the context in which the region finds itself and what has happened to it over the past two decades. If we are considering the coal

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industry, the steel industry, the textile industry or even investment in the rail industry, we must recognise some of the difficulties that have had to be overcome and some of the wounds and bruises that have been left on the regional economy. It is perhaps no surprise that within that context, there have been major population shifts and changes. A recent estimate is that the population of Merseyside is set to decline by about 10 per cent. and that of Greater Manchester by 2 per cent. in the next census period.
At the same time, as the hon. Member for West Lancashire (Mr. Pickthall) has said, our connection to Europe has become more and more important. Therefore, I shall devote the rest of my contribution to examining how we might exploit and develop that connection and how we might heal the wounds and bruises to which I have referred. The hon. Member for Ribble Valley (Mr. Evans) intervened to ask how many letters had been received about an elected regional development agency. I have received the same number of letters about that as I have about the setting up of single regeneration budgets. Stockport council has sought vigorously to participate in the SRB process, but—like many other public bodies and institutions in the north-west—has become snagged in a nightmare bidding regime. That is an inheritance from the previous Government that I hope that this Government will get rid of as quickly as possible.
Stockport made bids in three consecutive years and spent more than £100,000 on bids that were unsuccessful. We have now got some single regeneration budget money and we are grateful for it. However, when the council submitted in priority order the 27 projects for the reduction of class sizes that it believed should be supported by the Department for Education and Employment, the Department took no notice of the council, its education experts and the head teachers, allotting the money apparently on the random rolling of the dice. That is another example of the bidding system failing to support investment in the north-west in the most appropriate and targeted way.
The citizens of Stockport contribute £30 million a year to the national lottery, but they do not receive anything like that—
Mr. Simon Burns: It's a lottery.
Mr. Stunell: They do not receive that amount in prizes or projects. The national lottery receives 20 bids for every one that is successful. We should end the bid culture and bring back to our region the responsibility for taking decisions about spending resources.
The Liberal Democrats are very pleased that we are to have a single regional development agency for the north-west. Regional accountability is important, and we want to see the development of an overall economic strategy for the north-west. Is the Minister yet able to announce the membership of the RDA? We expected to learn that in October, but we have not yet done so. The RDA must swing quickly into action, but how will it be linked to the training and enterprise councils? We need to consider carefully how to develop training in the north-west. I remind the Government that if we seek successful models of regional development, both Spain
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and Germany provide excellent examples. Strong, democratic and locally accountable regional bodies are the source and the essence of their success. Will the Government think again about democratic accountability for the RDA?
We need two sorts of infrastructure for success in the north-west. We need what I call software infrastructure, including democracy and devolution on the one hand and enhanced training and education on the other. Investment on a grand scale in the hardware infrastructure is important, but so is investment in the software infrastructure. In other European countries, democracy and devolution enhance the value of spending and investment in the public and private sectors. Training and education are also important and the north-west has an enviable reputation for the development of engineering skills. Indeed, Hazel Grove is the birthplace of Fred Williams, the co-inventor of the first functioning computer in the world, which was developed 50 years ago at Manchester university. Despite our innovative engineering skills, Microsoft and Sanyo are not based in this country, let alone in the north-west. We are not good at exploiting our assets.
We also need investment in hardware infrastructure. I support what other hon. Members have said about investment in the west coast main line, but I go further and ask the Minister for a quick decision on the application to start the Eurostar service from Manchester. The trains are sitting in the sidings and the company is ready to operate, but the Government decision remains long awaited. We also need confirmation that the channel tunnel rail link connection will be made on time, because rail freight and rail passenger services from the north-west to Europe will be crucial in the next decade. We also need local public transport infrastructure decisions.
At the conclusion of a previous Adjournment debate, the Minister boasted about the publication of a transport White Paper, but we need transport action. In Stockport and, especially, in Hazel Grove, the issue of access to Manchester airport will become crucial with the opening of the second runway. Passenger numbers will increase from 16 million a year to 30 million, but the infrastructure to cope with that increase is not in place.
The north-west offers a high quality of life to those who live there. It offers a high quality of environment to many, but not all, who live there. It also offers a good quality of economic activity to most of us who live there. For the future, we need to ensure that those benefits are extended to all. That will need this House, the regional development agency and the local authorities and councils to work together.
11.47 am
Mrs. Louise Ellman (Liverpool, Riverside): Over the past seven years, the public, private and voluntary sectors in the north-west have developed strategies on economic development, transport, training, innovation and the environment, working through the North-West Partnership and the North-West Regional Association. Now that the Government have appointed the regional development agency with executive authority to act, supported by the North-West regional chamber, we can move from developing those strategies piecemeal to a more focused effort to bring investment to the north-west. That will help to change the situation in which the north-west has one of

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the lowest gross domestic products per head in the country and contains many urban deprived areas, including Liverpool, which ranks first for urban deprivation in England and Wales.
I wish to draw attention to a major opportunity that has arisen to develop trade in the port of Liverpool, the area that I represent, and the whole of the north-west. The Good Friday Irish peace agreement has opened up new opportunities to develop the growing trade between the Irish Republic, Northern Ireland and the north-west through the expanding port of Liverpool. It is part of an initiative to develop east-west trade, linking both parts of Ireland with the north-west and developing a corridor creating a gateway to northern and central Europe.
The development of a regional development agency, speaking for the north-west and with authority to act—working together with the north-south ministerial council to be set up in Ireland, the British-Irish Council and the Northern Ireland Assembly—means that we are now in a unique position to develop that expanding trade.
I was pleased to chair and help develop an important new trade group between the north-west and Ireland which met in the House of Commons three weeks ago. My hon. Friend the Member for Bootle (Mr. Benton) and I held a meeting with the Irish Businesses and Employers Confederation, the Northern Ireland Confederation of British Industry, the Bank of England, the North-West chamber of commerce, the Mersey Docks and Harbour Board, the Warrington Project and other industrial and commercial groupings, together with the chairman designate of the RDA.
That group was set up to develop trade between Ireland, the north-west and northern Europe. It recognises the growth in trade between both parts of Ireland and the north-west, and the fact that 30 per cent. of goods from Ireland come to the United Kingdom. It also recognises that, in 1997, 2.5 million tonnes of freight passed between Liverpool and Ireland. That is part of the development of Liverpool and the expansion of trade and the generation of wealth there.
To develop that trade link between Ireland, the northwest and northern Europe we must look for opportunities to develop exports. We need to identify new markets by researching different sectors, to identify and remove barriers to trade and to consider policies for backing small and medium enterprises, both as part of this initiative and more generally.
We must consider investment in SMEs, the need for new technology and communications, investment in the west coast main line and in the Liverpool-to-Hull rail line, and the development of the port of Liverpool. We should also consider co-operation between education institutions.
Mr. Brady: Does the hon. Lady wish to pay tribute to the vital role of the abolition of the dock labour scheme in the development of the port of Liverpool, without which it could not have gone on to expand its trade in the way that she has described?
Mrs. Ellman: I am pleased to see increased investment in the port of Liverpool and the hard work being done there by all parties. I welcome that expansion. This initiative is an important part of developing trade and wealth in Liverpool while developing trade opportunities for businesses throughout the north-west.
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The sectors already identified for the expansion of trade generate wealth and jobs and include the food and tourism sectors. In the north-west, tourism generates £1.5 billion and 200,000 jobs—6 per cent. of the north-west's work force. In Merseyside, 16,500 jobs are generated by tourism and £500 million is spent through tourism in that economy. This is a major opportunity for the expansion of tourism, as for other sectors of industry where research is required.
Mr. Jack: Does the hon. Lady agree that her last few remarks are a tribute to the work undertaken by my right hon. Friend the Member for Henley (Mr. Heseltine) when he took such a special interest in Merseyside and its problems?
Mrs. Ellman: The right hon. Member for Henley (Mr. Heseltine) made many promises, but delivered little. It is the hard work of the people of Liverpool and Merseyside, together with the investment that has been attracted, that is starting to turn the area round. We must not forget that Merseyside still has the lowest GDP per head in the whole of the United Kingdom, which signifies that we have a long way to go, despite new investment, major efforts and increasing prosperity.
The setting up of the north-west and Ireland trade group presents an excellent chance to focus on new opportunities. The North-West regional development agency provides an executive body which can support SMEs, trade and communications, and lobby for and attract further investment and training in the region.
I hope that all sectors will support this new initiative. I hope that the Minister, through his Department and in discussion with other Departments, will support it. It is about investment, communications and the generation of wealth and much-needed employment.
11.55 am
Mr. Graham Brady: I am grateful for the opportunity to speak in this important debate and I, too, congratulate the hon. Member for Salford (Ms Blears) on securing it.
Listening to the contributions of Labour Members, I was disappointed that, so far, there has been no reference to the importance of education in regenerating the north-west. That is a special interest of mine on which I would like to spend a little time this morning.
The north-west has some fine schools, both state and independent. Manchester, in particular, has excellent independent schools—Manchester grammar, Manchester high and Withington girls' school, among others. But the tragedy is that in many parts of the north-west, the state education sector fails to live up to the standards which the people there have a right to expect.
Mr. Miller: Will the hon. Gentleman acknowledge that Cheshire has delivered a higher standard of education than Kent, despite Kent being full of grammar schools? Perhaps he could explain why that is so.
Mr. Brady: You would doubtless rightly call me to account for departing as far as Kent, Mr. Deputy Speaker. However, I am happy to take the hon. Gentleman a little closer to home to my own borough of Trafford, where schools perform rather better than those in Cheshire, and

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rather better than in any other part of the north-west. Last year, we had the best A-level results in the country and our secondary modern schools—not just our grammar schools—are achieving outstanding results. The hon. Gentleman may wish to consider the Ashton-on-Mersey school in my constituency, which the Secretary of State for Education and Employment has declared a beacon school—an example of how to educate our children in the north-west; a secondary modern school which is performing better than most comprehensive schools.
The hon. Gentleman may also care to consider the Jeff Joseph college in Sale, a city technology college, which is now recognised as being the most improved state school in the country over the past year, again, in a selective system, not a grammar school but a secondary school achieving fantastic results.
Labour Members would be wise to reflect, not on the ideology, but on what it is that achieves the highest standards in education in the north west. The hon. Member for Wirral, South (Mr. Chapman) has grammar schools and the hon. Member for Wythenshawe and Sale, East (Mr. Goggins) is privileged to have Sale grammar school in his constituency. Many of us represent excellent schools which should be defended and protected. In the interests of our children in the north-west, we should be looking to spread that example, not only by maintaining the excellent schools that we already have in some parts of the north-west, but by trying to learn something from them.
One of the great missed opportunities of the early days of the new Government in the education sphere was that they tended to focus their activities on undermining the very best schools rather than trying to build up the bad schools which are letting down our children in many parts of the north west.
I come now to the economy and industrial relations. The hon. Member for Liverpool, Riverside (Mrs. Ellman) was gracious in her tribute to the previous Government for the abolition of the dock labour scheme. I think that the import of her remarks in reply to my intervention was that she recognised that the port of Liverpool could not have achieved any of the growth and expansion to which she alluded had the dock labour scheme still been in place.
Mrs. Ellman: The hon. Gentleman is mistaken. He draws the wrong inference from my comments.
Mr. Brady: I am grateful to the hon. Lady for pointing that out. I am deeply sorry to hear that I have drawn the wrong inference. Perhaps I was being too charitable to her. Apparently, she has missed the fact that the port of Liverpool could not have developed in the way in which it has without the abolition of the dock labour scheme. I hope that she will talk to those who run the port and ask them their views on that. I suspect that she will find that they agree with the inference that I chose to draw from her remarks.
Liverpool has been dogged by bad industrial relations performance—more, perhaps, by the perception of bad industrial relations on Merseyside—and that has to be tackled. My hon. Friend the Member for Ribble Valley (Mr. Evans) suggested that there is a battle between Manchester and Liverpool. I would not want that,
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although one thing that the regional development agency will have to address is long-standing rivalry between, not only those two great cities, but the other parts of the north-west. Cumbria, which never considered itself to be part of the north-west, has been brought into the same RDA zone, which will cause problems for the RDA.
It was slightly unfortunate that no hon. Member representing Liverpool gave true praise to my right hon. Friend the Member for Henley (Mr. Heseltine).
Mr. Lindsay Hoyle: He is a pro-European.
Mr. Brady: My right hon. Friend is certainly a great supporter of the city of Liverpool and of Merseyside. If the hon. Gentleman visits Merseyside as often as I do, he will know that its people retain great affection for my right hon. Friend.
Mr. Jack: They talk of little else.
Mr. Brady: Very little else; my right hon. Friend is right to point that out. The people of Merseyside feel that there has been a void in the past 18 months, and they might like someone to fill that role.
The role that has been performed so ably by the development corporation—in Liverpool, as in other parts of the country—also deserves a mention. There was a rather sad aspect to the speech by the hon. Member for Salford. I have great affection for her, as she knows, and she spoke with great enthusiasm about Salford, Manchester and the north-west, but she was wrong to suggest that the investment to which she alluded—at some length—was all achieved by the new Government and to give so little credit to the previous Government for their important role in building the economy of the north-west so effectively.
In the same vein, reference was made to why investment in the west coast main line did not happen sooner. Labour Members should reflect on the fact that the massive investment in that line—and in trains, in which Virgin Trains is taking part—would not have happened had it not been for the privatisation of the rail network. Modernisation started some time ago, but, sadly, it will take a little while to achieve the benefits. I hope that the hon. Member for Salford, and her hon. and right hon. Friends, will not take all the credit when that happens. Investment by private companies, and achieved because of the freedoms that the previous Government gave to them, will bring enormous benefits to the north-west.
The north-west is a land of enormous opportunities. My constituency perhaps has greater good fortune than some other parts of the region. We have excellent education, a nice environment in which to live and a vibrant small-industry sector. I am also privileged to represent many of the people who make businesses work across much of Manchester and much of the north-west. They perform an important role.
What concerns me about the new Government's policies, proposals and approach to business and the economy is that, sadly, the whole thrust of their economic and employment policies will make the work of the people who I represent more difficult. It will make it harder for businesses to justify investment in their operations and to make a profit, increase the costs of

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employing people and discourage investment and the creation of jobs. I fear that, in the coming years, the result will be more lost jobs and less investment in the region.
12.4 pm
Mr. Lindsay Hoyle: I congratulate my hon. Friend the Member for Salford (Ms Blears) on ensuring that the debate has taken place. It is funny that the Opposition do not seem to remember the 1980s for the decline of the north-west and the complete destruction of jobs and industry. The way of life in the north-west was totally threatened by the previous Government. We must look to the new millennium and to the new Government to ensure that the fortunes of the north-west are redressed and that the balance comes back to the north from the south.
The north-west has always been the engine room of the country and of the economy. It has stimulated the country and has always responded, as it will continue to do, but we must ensure that the north-west has a strong voice. That will come through the regional development agency. Some of us believe that it should be elected; that will come, when we have seen its worth.
The north-west will have to compete against the Welsh Assembly and the Scottish Parliament. It has to stand together and be united, and there is no better place to look than Lancashire, and what it has to offer. In Chorley, we have a former Royal Ordnance site with 800 acres of brown-field land ready for redevelopment and ready to play a crucial role. What better place is there than Chorley to host the headquarters of the new RDA'? It would be an ideal position, because it is central to the north-west.
We must not lose sight of that, and we must also remember that we have farming in Lancashire. Thankfully, the Government are addressing farming issues and ensuring that farmers will continue to farm in the north-west, which was the second most affected region because of bad management by the previous Government. The Government are addressing that. They will continue to do so, and they will continue to be supported.
The north-west Members of Parliament stood together against the decision to move to Wales the headquarters of 101 Battalion, the Royal Electrical and Mechanical Engineers. We will continue to fight that, because it would mean redundancies in the north-west. That is not acceptable.
We should be pleased that we have an important role to play in ensuring that the north-west has a main line link to Europe. We must not lose sight of that and we must stand together to ensure that we get a direct link—it is crucial. We want further investment in the west coast main line. Would not it be nice to see the InterCity trains that we lost in the early 1990s going back into Blackpool regularly? We do not want one-offs, but regular journeys that start at Blackpool.
We also want further investment. That will come from my hon. Friend the Minister, who believes in the north-west. He will support it and continue to ensure that we get a fair crack of the whip, which we failed to get under the previous Government.
Health is important, and there have been new challenges with the link-up of Chorley and South Ribble district general and Royal Preston hospitals in clinical services. That will create a better response and better
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ability to treat people's needs. We must also remember that renal services are important. They were failed in the 18 years of the previous Government, but I believe that the Government will address that and will continue to do so quickly. Thank you, Mr. Deputy Speaker, for allowing this debate.
12.8 pm
Mr. Nigel Evans: I am grateful for the opportunity to take part in the brief debate. I am not sure whether Walt Disney has heard of the hon. Member for Chorley (Mr. Hoyle)—some of the stuff that came from him was complete fantasy. We should start concentrating on the great potential and opportunities that exist in the north-west, although there are distinct problems as well.
I refer the hon. Member for Chorley to the latest Confederation of British Industry report, which says that "considerable pessimism" still exists in the north-west. We rely a lot on manufacturing, and manufacturing jobs have declined in the past 18 months. My right hon. Friend the Member for Fylde (Mr. Jack) talked about British Aerospace, which is vital as an engine for skilled defence jobs in the north-west. Hundreds of small businesses throughout the north-west feed into British Aerospace. There are skills in British Aerospace at Warton in my right hon. Friend's constituency and at Salmesbury in mine, and at Royal Ordnance in Chorley. There is a tremendous skill base, and we want it to increase.
The hon. Member for Liverpool, Riverside (Mrs. Ellman) spoke about manufacturing jobs and the need to export, but we have high interest rates compared to the rest of Europe and a strong pound because of that. It is difficult for manufacturing industry in the north-west to get those new markets about which she spoke, because it has to compete with industries in the rest of Europe. It is a great shame that she does not take such opportunities to lobby Ministers and persuade them to produce different economic policies. I do not think that anyone would dispute the fact that we are in a recession created by Downing street. The problems faced by industries in the north-west are the Government's responsibility, because of their economic policies.
The hon. Lady's answer to the problem is an elected regional chamber. Does she really believe that the people of the north-west are clamouring for yet another elected body? Where will it all end? We have elections to Westminster, European parliamentary elections, county council elections, borough elections and parish elections, but she wants yet more elections. The Labour Government understand bureaucracy and red tape, but they do not understand business.
Mr. Woolas: When we have elections in the north-west, my side wins and the hon. Gentleman's side loses. That is why we like elections.
Mr. Evans: At least all the Lancashire Conservative MPs have turned up for the debate. After the next election, when we have another debate on the north-west,

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many more Lancashire Conservative MPs will be sitting on the Government Benches, and the hon. Gentleman and his hon. Friends will be sitting on the Opposition Benches.
Mr. Brady: Has it occurred to my hon. Friend that only 10 out of the 64 Labour MPs who represent the north-west are present? That is not a good performance.
Mr. Evans: I suspect that the others are busy putting advertisements in next year's Yellow Pages, so that they, too, can get another job.
Tourism is vital. As has been said, it is important for Manchester and Liverpool. I represent a rural constituency, 75 per cent. of which is an area of outstanding natural beauty. We want more tourism in the north-west, which could feed into Blackpool. It is a great shame that the new Labour Government's attitude to Blackpool is so snobbish. That seaside resort attracts many millions of people, and instead of slamming Blackpool, the north-west Labour MPs should have spoken up on its behalf.
I invited the Minister for the Environment to come swimming with me in the sea at Blackpool, such is my confidence. I make the same offer to the Minister for the Regions, Regeneration and Planning, who may take it up when he winds up the debate. He could come up to Blackpool and we could have a nice little dip. The hon. Member for Salford (Ms Blears) referred to the Titanic. I do not know whether the Minister will float or sink, but I assure him that no harm will come to him from what is in the sea at Blackpool. That is proved time and again by the many millions of people who are not as snobbish as the new Labour Government and come to Blackpool in their droves.
Millions of pounds have been spent on the pleasure beach, which attracts tourists from Britain and Europe. Granada studios are in the north-west, so that will ensure that this clip is not on "North Westminster" on Sunday. We also have Alton towers. Many tourists come to the north-west, and we want tourism in the region to develop further.
Transport infrastructure has been mentioned time and again. We want new investment to alleviate the clogs and jams on the M6. Hon. Members who travel back to their constituency by road know that there is a problem. Publicity during the Labour party conference highlighted the severe problems with the trains. One of my constituents has written to me about her experiences. She travels every week between Preston and Euston, and told me that the majority of the trains are late. We need new investment in infrastructure to ensure that the north-west will survive and, as a result of regeneration, prosper into the future.
12.14 pm
Mr. Simon Burns: I welcome the debate. I am pleased to see my right hon. Friend the Member for Fylde (Mr. Jack), my hon. Friends the Members for Altrincham and Sale, West (Mr. Brady), for Ribble Valley (Mr. Evans) and for Westmorland and Lonsdale (Mr. Collins), and, for a time, my hon. Friend the Member for Congleton (Mrs. Winterton), who have listened to all or part of the debate.
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I congratulate the hon. Member for Salford (Ms Blears) on her enthusiastic opening speech, and on her obvious pride in the city of Salford. I enjoyed listening to her as she took us on a Cook's tour of the achievements in her constituency. I do not want to enter a sour note, but I thought that she was a trifle churlish in suggesting that this new Jerusalem began in the early hours of 2 May 1997. As my right hon. Friend the Member for Fylde aptly pointed out, many of the measures that have led to the regeneration of Salford were introduced by the previous Government, but one would not expect to get that message from the comments of Labour Members.
Between 1979 and 1997, the previous Government's policies helped to secure record inward investment, not least in the north-west. During that period, inward investment in the north-west helped to create or to safeguard more than 80,000 jobs. Conservative policies brought Sony to Merseyside. In the teeth of opposition from the Labour party, our policies enabled BNFL to flourish: it is a major contributor to the economy of the north-west. The current Government's economic policies jeopardise the progress that has been made.
The Conservative regeneration strategy helped town and country alike. The hon. Member for West Lancashire (Mr. Pickthall) referred to rural and agricultural life. The single regeneration budget combined into one pot 20 separate programmes previously operated by five different Departments, and provided a flexible fund for local regeneration. In the three years from 1995, the SRB provided some £4 billion, with more than £800 million from the challenge fund for new regeneration projects. The emphasis on competitive bidding ensured that funds were targeted on the schemes most likely to produce tangible results.
In 1994–99, the Merseyside objective 1 area has received more than £350 million in funding from the European regional development fund. Meanwhile, the Rural Development Commission and our rural challenge scheme promoted a range of programmes supporting economic and social regeneration in rural areas. We established the 230 business links across England, which provided one-stop training, advice and information centres for business. I hope that that puts the position into perspective, because these measures did not begin on 2 May 1997.
I do not have long, and I do not want to eat into the Minister's time, but I must pay tribute to my right hon. Friend the Member for Fylde. He referred to the numerous regeneration projects in the region, and brought up the important subject of British Aerospace and the aerospace industry. I congratulate my hon. Friend the Member for Altrincham and Sale, West, who described the crucial role of education, which is a fundamental part of the regeneration of our cities, towns and rural areas. It is vital for people to have the proper education and training to be able to compete in and contribute to a highly competitive economic environment.
I am not sure how the Minister will respond to the challenge of my hon. Friend the Member for Ribble Valley, tempting as some people may find it. My hon. Friend raised the important issue of tourism in the region. He also made a valid point, which I know Labour Members do not like hearing. Given that Labour Members have paid lip service to Blackpool, which featured prominently in the debate, why did their party kick the town in the teeth by deciding that it was not good enough

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to host its conference every other year—although, presumably, it is good enough for other people to visit for their holidays? Clearly, Labour is not the servant of the people but the overclass, and the hotel and tourism facilities that Blackpool has to offer are not good enough for new Labour.
I fear that the threat posed by the Government's current economic policies—by relatively high interest rates, and the level of sterling—to manufacturing and other industry will hinder, rather than help, the further development of the north-west.
12.21 pm
The Minister for the Regions, Regeneration and Planning (Mr. Richard Caborn): I thank my hon. Friend the Member for Salford (Ms Blears) for initiating the debate. She is a great champion of the north-west, and of Salford in particular. As many speakers observed today, she does justice to the region, and I have no doubt that, in the not too distant future, she will become a great agent for tourism.
The debate has featured a notable contrast between the constructive and the destructive. Hon. Members have suggested that we should adopt a constructive approach to the problems that we inherited from the last Government, implying that, during their 18 years in office, that Government did no damage to our economy. Other genuinely constructive suggestions have been made, however. My hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman), for example, described efforts to promote trade with Ireland. I know that the chairman-elect of the regional development agency has been involved in those efforts. Others have referred to the need to ensure that the economy of the north-west is handled in the way that should be expected of a Labour Government, and to deal with the economic deficit that is the legacy of the last Government.
The right hon. Member for Fylde (Mr. Jack) mentioned the aerospace industry. There is no doubt that the industry is a jewel in the crown of British manufacturing, and the north-west has played its role. In the early 1990s, I chaired the Select Committee on Trade and Industry for four or five years. We produced two reports on aerospace, in which we pleaded with the Administration of the day to provide launch aid similar to that provided by our continental partners and by the National Aeronautics and Space Administration in America; but we did not get a dime out of that Administration. As the right hon. Gentleman will see from column 1036 of Hansard, he was told in a parliamentary answer on 3 December that the Government were investing up to £323 million in launch aid for the British aerospace industry.
Mr. Jack: Will the Minister give way?
Mr. Caborn: No.
That is in marked contrast to what was done by the last Administration. The same applies to economic regeneration. The last Administration dealt only with the symptoms, not with the cause. A classic example is provided by an interview with the right hon. Member for Henley (Mr. Heseltine) about development corporations in the Financial Times. When the right hon. Gentleman, then President of the Board of Trade, was asked how he would control the corporations, he replied, "It is
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very easy. For as long as I have a pot of gold on my desk, they will beat a path to my door." That is an example of the arrogance of centralised government—the wish not to devolve power to people so that they can find real, sustainable solutions to their problems, but to ensure that everything is dictated from the centre.
Throughout their 18 years in government, the Conservatives took powers from local authorities and partnerships, and domiciled them in Whitehall. This Government are dealing not just with the symptoms, but with the underlying problems that we have inherited. We are bringing together regional development agencies—which will be business led—and other partners, in the hope that they can deal with the fact that not one English region is now performing, in terms of gross domestic product per capita, as well as the European regions are on average. When it comes to wealth creation, that is the legacy of the last Administration.
We intend to tackle the problem. We shall do so by devolving real powers and resources to the regions, so that they can take a strategic overview of local problems—in this context, the problems of the north-west. The initiative has got off to a flying start with the appointment of Lord Thomas as chairman of the regional development agency in the north-west, and the appointment of a chief executive. We shall announce the membership of the boards in the next few days. The hon. Member for Hazel Grove (Mr. Stunell) suggested that we had said we would do so in October, but we did not have an Act of Parliament until November.
We want the partnership that we are establishing not just to address the economic deficit in the regions, but to develop further strategies with the regional chambers. Most of that will happen in the public sector, but we hope to build on partnerships in every region, particularly the north-west. The north-west has blazed a trail in establishing a partnership between the regional development agency and the regional chamber. At its inaugural meeting on 3 July, the chamber announced the constitution that would govern the partnership, which I understand has been signed by all those involved.
The regional chambers will play a role in strategic thinking that has not existed in the past, in regard to land use planning, spatial planning and the transport planning that was outlined in the White Paper announced some weeks ago by my right hon. Friend the Deputy Prime Minister. They will try to deal with, for instance, the problems of the west coast main line and the conurbations surrounding Birmingham, which will have a major impact on the ability of the north-west to transport, and import, goods and people. Such problems will be dealt with in a much more strategic way.
I assure Opposition Members that the proposals have been welcomed by all the stakeholders in the north-west. They may deride the role of the CBI, the chambers of commerce, regional branches of the TUC, local authorities and the community; but such derision explains why we have so many more Members of Parliament than the Opposition. We have listened to all those people.
My hon. Friend the Member for Salford mentioned the regeneration initiatives that have been used so effectively in Salford, which will no doubt continue to bring about sustainable development. This Government take seriously the need to provide resources and develop policies in a more holistic way to tackle regeneration problems in

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the regions. Our new deal for communities commits £800 million over the next three years to dealing with some of the worst problems in 17 English estates. I acknowledge that, as has been pointed out, it was an advance on the part of the last Government to combine the spending power of four Departments, and make it effective in terms of delivery.
We have committed some £3.8 billion to regeneration, the bulk of which will be provided through the single regeneration budget. Eighty per cent. will be targeted on urban areas, and 20 per cent. on, in particular, rural areas. As some of my hon. Friends pointed out, two-thirds of the north-west is rural.
We will co-ordinate most of those policies in the middle of next year, when we publish our urban White Paper—the first for 20-odd years—and the rural White Paper, which will clarify the links between urban and rural areas. We believe that we are tackling the real, underlying problems of the north-west by launching partnerships. Again, I thank my hon. Friend the Member for Salford for instigating today's debate.

Housing Policy
12.29 pm
Mr. Anthony Steen: I am glad to have an opportunity to raise a matter that causes much concern throughout the country. It is a pleasure to see the Minister for London and Construction in his place. I hope that he will be as helpful as he normally is when answering in debates.
The public just do not believe that 4.4 million new houses need to be built between 1991 and 2016. They distrust the science of prediction. The Office for National Statistics says that it makes sensible predictions based on the facts that are available to it. The problem is that its estimates become a self-fulfilling prophesy. It is wrong to take the 4.4 million figure and assume that everyone will want to live in the same place as before or, indeed, that all those people should live in the same place as before.
More than 90,000 units were handed down to Devon by the region. Devon cannot trade with, for example, Cornwall, which has to build only 48,000 houses. Even if the statisticians predict correctly nationally, the Government parcel out the regional allocations using calculations that have been set by historical precedent. The figures are based on past demographic and housing trends. The inability of the regions to trade outside or within themselves means that the historical housing numbers continue unchallenged.
On the basis that we cannot change the figures—they are set in concrete—the task is to accommodate those new housing units throughout the nation without destroying the countryside any further.
Mr. David Drew: I appreciate the hon. Gentleman giving me the chance to make a short intervention. Does he agree that there is a need to look at alternative methodologies, in particular ones that take account of the regional dimension, which can completely change the way in which the figures are calculated?
Mr. Steen: That is a helpful intervention. I thank the hon. Gentleman for the courtesy of letting me know that he wanted to intervene. The whole science is questionable. The statisticians have been getting away with a historical perspective that has allowed them to predict and provide year after year, without challenging the science.
Mr. John Burnett: I have much sympathy with what the hon. Gentleman says. Does he agree that another flaw in that bogus science is the fact that huge allowance is made for, say, divorcing couples, but no allowance is made for the fact that divorced couples team up with other people thereafter?
Mr. Steen: This is a debate about housing, but the hon. Gentleman is right. Divorce is part of the problem with the housing allocation figures, because the statisticians presume that people are going to go on divorcing at the present rate and living with partners at the present rate. The statisticians go on predicting and providing down that ugly path, which is usually incorrect.
Why do housing projections continue to follow the predict-and-provide model when the Government say that they are ignoring it and another type of planning, which is used for road planning, abandoned the model a long

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time ago? We have found out that, if we predict traffic levels and build the roads to accommodate them, traffic volume increases above and beyond the projected levels; the M25 is a classic example.
Why should we build more roads if the effect is simply to increase traffic and gridlock? Infinite car usage is not financially, environmentally or socially sustainable; building 90,000 new houses in Devon is not sustainable either. Why on earth do housing planners and statisticians not realise that? No one can stop the planning juggernaut, except the Minister. He alone has access to the brake pedal.
If we build 4.4 million units of housing, they will be occupied sooner or later. What about the effect on the housing market of all that building? Will it not erode the value of existing properties, again creating negative equity for some householders?
The statisticians believe that many of those additional housing units will be used to accommodate the fall-out from family break-ups, which the hon. Member for Torridge and West Devon (Mr. Burnett) mentioned. Divorce accounts for about a third of the 4.4 million units of new housing required. Again, we are told that 30 per cent. of those new housing units are intended for occupation by an increasing number of single people and by elderly people who are living longer. In addition, there is the movement of people taking or seeking work in another region.
There is also another reason. Statistics from South Hams, which is part of my constituency, show a massive in-migration from outside the county. Between 1981 and 1997, the population of South Hams increased by 15 per cent. By contrast, that of the whole county of Devon increased by only 5 per cent. Therefore, the population increase in South Hams has been out of all proportion to the increase in the county as a whole.
In the three months ending March 1998, 8,233 additional people moved into Devon, and about that number have moved in nearly every quarter since 1988. There is massive in-migration to Devon of 35,000 people a year. Current policy makes provision for all those people and is based on a liberalism and permissiveness that make some feel obliged to respond automatically to all social demands, regardless of the devastation that it wreaks on existing communities.
Having predicted, should we provide? South Hams has among the highest number of designated beauty and conservation areas of anywhere in England and Wales. On being told that it must build 12,000 new units by 2016, South Hams will have to build the equivalent of three or four new towns, all on green-field sites. Even Dartmoor national park, which is also partly in my constituency, has to find room for 800 more houses.
We are faced with the fact that the number of units that are planned for the principal conurbations in Devon—Plymouth and Torbay—is just a fraction more than the number for the countryside of South Hams. Torbay is having 6,300 new houses built, Plymouth 7,000. Between them, Exeter and Plymouth are to build the same number of houses as those planned for the South Hams countryside. If we build houses in one of the most beautiful areas of the United Kingdom, there will always be a queue of people to live in them—until the buildings destroy the beauty of the area.
Mr. Nigel Evans: Does my hon. Friend accept that it is the same in the north-west, in my
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constituency? The ridiculous predictive figures mean that Whittingham will have to provide for an extra 1,000 houses, when only 500 houses exist in the village, and Calderstones and Grimsargh several hundred extra houses. Those small villages will be dwarfed by the new developments.
Mr. Steen: My hon. Friend puts it in his normal lucid and imaginative way. Villages will be swamped and destroyed. That is what the Government have to face.
It is town versus countryside. Even if it is too late to stop the 90,000 units being built in Devon, it is not too late to ensure that housing units are contained within existing urban areas. Cheap and pleasant housing should be made available in our principal cities: Plymouth, Exeter and Torbay. We should rebuild the inner cities to include single-person flats. Young people living in them will help to rejuvenate our city centres.
Mrs. Linda Gilroy: Does the hon. Gentleman agree that it is important that, to make our cities attractive, they should be able to keep open spaces for use as parks, and so on? May I take the opportunity to assure him that Plymouth has been doing everything to look at where it can build houses or find new houses? Is he also aware of the structure plan working party of elected Members from our areas, which has looked at the figures? Far from their being handed top down, as the hon. Gentleman has suggested, the working party has agreed that, with some modest adjustments, it will be able and will have to provide for the number of houses that are planned. It is a case of plan and manage, rather than predict and provide.
Mr. Steen: It is all very well the hon. Lady saying that Plymouth can absorb all the extra houses. Of course it can, because the figures for Plymouth and Torbay together are only slightly more than the number for the countryside of South Hams. Plymouth does not have a large number.
Mrs. Gilroy: Will the hon. Gentleman give way?
Mr. Steen: I will not give way any more.
Mrs. Gilroy rose—
Mr. Steen: I will not give way to the hon. Lady. Plymouth does not have a large number of houses. The houses that are going to damage Devon are the houses that have been allocated to the district councils; they will destroy the countryside. I apologise, but I must get on.
Mrs. Gilroy: Will the hon. Gentleman give way?
Mr. Steen: I am not giving way again.
Mrs. Gilroy: On a point of order, Mr. Deputy Speaker.
Mr. Deputy Speaker (Mr. Michael J. Martin): I do not think that the hon. Lady really has a point of order. She has made a little speech and I think that she has done very well.
Mrs. Gilroy: Indeed, but the hon. Member for Totnes (Mr. Steen) said that I had said something that I did not say—that Plymouth could cope with providing the houses. It will have great difficulty in doing so.
Mr. Deputy Speaker: Order. There is no right of reply. It has to be remembered that this is an Adjournment debate,

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where a Back Bencher brings a case to the House to allow a Minister to reply. There may be another occasion when the hon. Lady can put the record straight.
Mr. Steen: I hope that I will be given an extra minute, Mr. Deputy Speaker. The intervention by the hon. Member for Plymouth, Sutton (Mrs. Gilroy) took a minute and delayed the progress of an excellent and important speech.
City centres have been emptying into and on to the suburbs since the 1960s, with green-field sites taking the strain. Nottingham and Liverpool illustrate that trend. Inner-city schools are closing down because of lack of demand, while rural and suburban schools try to cope with increasingly unwieldy class sizes. Many built-on sites are under-utilised. The approach roads to Plymouth are lined with one-storey shops—something should be done there.
In Devon, why not concentrate on building the 90,000 new units in the cities? Enough land is left to accommodate those units, whether it be unused, underused, vacant, dormant or derelict. It is all there, but no one will take the lead. Of course, it is easier and cheaper for developers to build on green-field sites, but we must not let builders concrete over green-field land simply because it is cheaper for them to do so than to rehabilitate brown-field urban land. We need to increase the tax on green-field building and give tax incentives for brown-field site development. The present projections are that nearly 1.5 per cent. of England's total land area will be swallowed up by urbanisation by 2016. That means 2,750 acres of the countryside being built on each year.
As for infrastructure, the 90,000 new housing units in Devon will place strains on the sewerage system, water supply, schools, hospitals and so forth. Even where houses are not being built, the ripple effect will impact throughout the county. There will be more cars, schoolchildren and recreational requirements. More general practitioners will be needed, more water will be consumed and more sewage treatment will be needed.
Even the airwaves are already full—so much so that south Devon cannot receive Channel 5, although that may be a blessing in disguise. We simply do not have the environmental capacity to accommodate in Devon everyone who may like to live there. The effect on the environment and the damage to well-established and happy communities would simply be too great.
Predict and provide is a top-down approach and does untold damage. The Government must reverse that policy, which is based on the premise that what has gone before is the yardstick for what should happen. The Government must review the way in which their central housing figures are distributed among the regions. The districts, counties and regions must be prepared to object to the housing figures that are handed down to them when they have the opportunity to do so. It is no good doing what the Liberals did in Devon last July. They voted for 90,000 new units and the very same evening launched a campaign claiming that, if the houses for which they had voted that afternoon were built, untold damage would result and much of the countryside would be suburbanised. That was the action of not merely Liberals at the county level but the Torbay Liberals, the South Hams district council Liberals and the North Devon Liberals, who all voted for
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the housing figures that they were given, which they admit would destroy the countryside. They vote and then they weep crocodile tears. I see the hon. Member for Torbay (Mr. Sanders) rising and I will give way to him if he will make his intervention short.
Mr. Adrian Sanders: I will make it as short as possible, but I do not understand how Liberals in Torbay, a unitary authority, could have voted on those figures for the county. The figures that they chose were below those that the Secretary of State said he had rejected. He is imposing a higher figure and so the hon. Gentleman should address his remarks to the Secretary of State, not to councillors. Also, the right hon. Member for Suffolk, Coastal (Mr. Gummer) introduced predict and provide when he was Secretary of State in a Conservative Government.
Mr. Steen: I am delighted that the hon. Gentleman will join me in campaigning against the Secretary of State, as the figures are disastrous for Devon.
The Government should review all county structure plan figures. They should create tax incentives for brown-field building and tax green-field developments. Our priority must be to rebuild the cities and save the countryside. As it is, many of our cities resemble doughnuts with no jam left in the middle. Regions should be able to trade housing numbers with other regions and, within them, counties should be able to do the same.
The Government may predict, but they must not automatically provide. If they do, they should allocate housing units to the less populated areas and should not allow the south-east and the south-west to bear the brunt of the housing explosion. The Government must heed a warning from all parts of the country that the countryside is in peril. There is widespread discontent about the housing figures and their allocation. The Government must listen—as the Conservative party is listening—because the people have spoken.
12.44 pm
Mr. Kenneth Clarke: I congratulate my hon. Friend the Member for Totnes (Mr. Steen) on raising this subject and I am grateful to him for asking me to take one minute of his time to endorse what he has said. I do not think that he has left me a full minute, so I will be as quick as I can.
First, I agree with everything that he said about predict and provide. I also agree with most of his conclusions, apart from having some reservations about his passing reference to tax. I rely on my hon. Friend's judgments on matters that affect Devon and will not debate them with Liberal Members, although they endorsed what he said about the methodology of predict and provide, and I think that we all agree about that.
Similar consequences have occurred in Nottinghamshire. One can substitute different place names in the analysis, but similar problems arise. I hope that, in his reply, the Minister will show that flexibility for which he is sometimes known and will say that the policy will change.
My district of Rushcliffe is having 14,400 new dwellings imposed on it by a county structure plan that predates the general election. Nothing has changed since then, except that all the road building has been cancelled and the new Government policy is that 65 per cent. of

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new homes should, where possible, be built on brown-field sites, although our area has only a minuscule number of those. I hope that the Minister will endorse my hon. Friend's suggestion that districts should be allowed to revisit the figures.
The city of Nottingham wants more dwellings than it has been allocated; Rushcliffe wants fewer dwellings. Several of the districts could come to an agreement. The Minister for the Regions, Regeneration and Planning has already said that he may be flexible if the county council is flexible. I hope that we will have a helpful response from the Minister.
12.47 pm
Sir Peter Emery: I also thank my hon. Friend the Member for Totnes (Mr. Steen) for allowing me a minute. As a colleague from Devon, I congratulate him because, as he knows, I have fought for more than 20 years to stop the spread of the concrete jungle into the countryside, in particular in Devon.
The projected figures for Devon would mean an increase of more than 30 per cent. in its population. Does the Minister believe that we can do that without ruining much of the environment of the area? My constituency is a prime example. When I fought the 1967 general election, the electorate was 63,000. Since then, the size of my constituency has been cut three times, but if I had now the same parishes that I had then, the electorate would be 122,000. That is the sort of increase that we have already had to put up with. The projected increase would have a terrifying effect on the environment and the countryside—it is not possible. I absolutely support what my hon. Friend has said and I am delighted that he has been able to instigate this debate. The Government must listen. They must revise the figures that they are making the countryside bear.
12.48 pm
The Minister for London and Construction (Mr. Nick Raynsford): I am grateful to the hon. Member for Totnes (Mr. Steen) for raising those issues. A number of other hon. Members have also expressed concerns about household growth. The hon. Gentleman also raised this matter in the recent debate on the report on planning for housing by the Select Committee on the Environment, Transport and Regional Affairs. He knows from that debate that the Select Committee has carefully considered the validity of the household projections not merely once, but twice. It looked into projections methodology in 1995 and again this year. I cannot do better than to quote the hon. Gentleman's hon. Friend, the Member for North Wiltshire (Mr. Gray), who is a member of that Committee. He said:
"On the number of houses that we will require between now and 2016, I do not agree with my hon. Friend the Member for Totnes (Mr. Steen), who went to great lengths to rubbish …the figures. In Committee, I went to some length to try to find holes in the figures produced by my former colleagues, the excellent civil servants in the Department of the Environment, but no amount of effort on my part could produce an argument to show that 4.4 million was necessarily wrong."—[Official Report, 22 October 1998; Vol. 317, c. 1426.]
The hon. Member for North Wiltshire served on the Select Committee and looked at the figures critically and carefully. Given the implication of the figures, his view is not surprising—4.4 million sounds a horrendously large
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figure, but as an annual rate of housing provision it works out at about 175,000 homes a year, which is about half the housing that was provided in the 1960s and is below the trend for the post-war period. It is a relatively low level of new housing provision compared with what occurred previously. That is why it is important to put it in perspective, as the Select Committee has done.
Mr. Burnett: On the methodology point, the demographic pattern is falling as is the number of people living in Britain. There are also other phenomena to which I referred in my intervention on the hon. Member for Totnes (Mr. Steen). For example, divorcing couples do not necessarily produce two households. In addition, the area does not have the infrastructure to cope with vastly increased numbers.
Mr. Raynsford: I am rather sorry that I gave way to the hon. Gentleman, as it is clear that he has not looked carefully at the methodology. The demographics are not falling, the population is not falling and a trend of household increase has persisted throughout most of the post-war period. If the hon. Gentleman had done his homework, he would know that most previous housing forecasts have underestimated, not overestimated, the extent of household formation. Hon. Members who have examined the issue carefully—as the Select Committee has done—have reached that conclusion, although some of them did not want to do so. I urge the hon. Gentleman and others who are suspicious of the figures to do their homework; they will then know why so many people have reached that conclusion.
Mr. Steen: Let us accept the figures. Will the Minister now address how we should deal with them?
Mr. Raynsford: That is exactly what I intend to do.
The household numbers are not something that the Government simply dream up. They were not even produced by the present Government, but were produced by the previous Administration. We would have no reason to support them if we did not consider them to be soundly based. We have no reason to change them, and nor does the Select Committee.
People continue to form households almost regardless of the prevailing economic situation and we ignore trends at our peril. We are not talking about speculation. All the people who are considered in need of housing by 2016 have already been born. Are we to deny them decent housing?
The hon. Gentleman referred to migration. I accept entirely that it is a difficult issue for Devon, but as we do not live in a Maoist society that can ban migration, it cannot be ignored. The hon. Gentleman himself migrated to Devon some years ago when he decided that South Hams was more congenial than Liverpool, Wavertree, his previous constituency. Responsible government means that we have to manage population movements as best we can.
Mr. Sanders: Will the Minister give way?
Mr. Raynsford: No. I have already given way more than enough and I am running out of time.
Pulling up the drawbridge or pretending that the problem does not exist is not responsible government. Providing fewer homes would create difficulties. It could

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worsen housing conditions such as overcrowding, increase homelessness and contribute to house-price inflation. It could also work against the interests of local people with modest incomes, as incomers with large disposable incomes would probably bid up house prices and squeeze out local people. We have to address the issue.
For that reason, we have proposed moving away from the traditional approach of predict and provide, which we did not regard as a satisfactory basis, towards a more bottom-up approach with local authorities playing a key role through regional planning conferences on the principle of plan, manage and monitor rather than predict and provide.
The fundamental point is that the new approach is being developed through the new round of regional planning guidance which will provide the first opportunity to take account of the household projections published in 1995. The draft guidance will set new figures for the region, as well as for the counties and unitary authorities. The figures will also be tested in a public examination, exposing them to considerable public scrutiny, which is obviously sensible. Each region will develop a comprehensive monitoring arrangement to scrutinise the effects of the eventual level of housing which is agreed. Each region of England is currently engaged in the process and in the south-west the regional conference of local authorities is already well advanced with its draft. We need to work together in ensuring that the new approach is developed in as constructive a context as possible, and I hope that the hon. Gentleman will join us in developing the new approach.
I now turn to the hon. Gentleman's points about the Devon structure plan and the proposed new settlements adjoining Exeter and Plymouth. As I have mentioned already, household growth is a fact and it is for the local authorities in each area to produce the best solutions they can to manage the growth in the most sustainable way. The structure plan with which the hon. Gentleman is concerned is based on existing regional planning guidance containing housing figures agreed by the authorities in the region back in 1994. That is the guidance to which the structure plan must therefore have regard.
As the hon. Gentleman will no doubt know, the Government have made their concerns clear about the Devon structure plan and it is now for the authorities to decide what action to take in the light of those concerns. The Government wish authorities to be realistic and responsible in allocating land for housing. The main aim of our new approach is to ensure that as much new housing as possible is located on previously developed land. That is why we increased the national target to 60 per cent., although what can be achieved will vary from region to region. In the south-west, only a third of all land used for housing was previously developed. Although I acknowledge that there are particular difficulties in parts of the south-west, nevertheless we will expect a more ambitious target in the new regional planning guidance from the south-west region.
If authorities suggest quite radical approaches such as new settlements, the Government expect the proposals to
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be sustainable. We have as much interest as anyone in maintaining and enhancing the countryside—especially in beautiful parts of the country such as Devon. We have stressed that the need for any new settlements must be thoroughly justified.
The way forward lies in building on the consensus that lies at the heart of the debate. There is far more common ground than there are differences of views. Everyone wants as much land recycling as possible. Everyone wants more sustainable patterns of development. Everyone wants to protect the countryside and regenerate our urban areas, and I think that everyone wants to ensure that people are adequately housed and not left homeless or in bad housing conditions.
Mr. Steen: I do not mind too much what the Minister is saying, but he has said nothing about how we can stop 12,000 new housing units being built. According to the Library, South Hams is one of the most beautiful constituencies in England and Wales. How does he propose to stop 12,000 houses being built there when the same number is expected to be built in Plymouth and Torbay? How can he switch it so that the countryside is not ruined by too many houses?
Mr. Raynsford: As I have said already, we have made observations in our response to the Devon structure plan and it is now for the county to reach its conclusions before submitting proposals to us. I hope that the hon. Gentleman recognises that in the circumstances I cannot make any further comment. However, I have stressed the importance of maximising the amount of development on previously developed land.
The Government are trying to develop that agenda—which I believe is shared—as fast as possible. We made it clear in "Planning for the Communities of the Future" that our first choice for new development is that it should be on previously developed land, preferably within urban areas. We believe that a sequential approach is long overdue and we want authorities fully to explore that option before they propose urban extensions or the release of other green-field sites. The Select Committee supported our national land recycling target of 60 per cent. There is much work to be done to help authorities develop the agenda. We have set up the urban task force, under the guidance of Lord Rogers, to examine the practical issues involved in making better use of brown-field sites.
Work is progressing on the national land use database—the equivalent of a Domesday book for the 21st century—to identify previously developed sites that are available for new housing and we will soon have a much clearer picture of the opportunities to take forward that higher target for recycling.
We have a full programme of revising the relevant planning policy guidance notes. We are currently updating the guidance on planning for housing—PPG3—which will be published for consultation early in the new year. We are also preparing an urban White Paper, which will be published next year. It will set out the most comprehensive and far-sighted programme for urban renewal since our last White Paper in the 1970s.

Supermarkets (Prices)
1 pm
Mr. Eric Martlew: I am delighted to have been given a slot on a Wednesday morning, although I am a little concerned that the original title of the debate—competitiveness in the retail sector—was vague. I have had journalists and lobbyists ringing me up and asking me what the debate was about, and I think that the Minister was a little confused initially about what my concern was.
Apparently the confusion was caused by a problem of the House. I put in for a debate on the growing power of the supermarkets and the threat that that poses to the consumer. Unfortunately, the Table Office said that the rules of the House would not allow that. Perhaps the Modernisation Committee could look into that at some time in the future.
Overcharging by British supermarkets is nothing new. As far back as 1991, when I was a member of the Agriculture Select Committee, I was part of a high-profile campaign to reduce the price of food in British supermarkets. The campaign was led by The Sunday Times, and both sides of the Chamber were involved in the debate. We had some success: soon after our campaign began, a price war broke out. But then, as these things happen, peace was soon declared.
Seven years ago, we had the highest prices for food in western Europe. Today, we have the highest prices for food in western Europe. So nothing has changed. In reality, things have got worse. The supermarkets try to bamboozle people by introducing gimmicks such as loyalty cards. They charge customers inflated prices, then give them back a pittance in tokens that have to be spent in the supermarket. As a spin-off from loyalty cards, the supermarkets obtain great knowledge of the buying pattern of customers, and people get junk mail through their doors as a result.
I was pleased that, on 30 July this year, the Office of Fair Trading announced that it would look into food prices. I am sure that they will endorse my claim that supermarket companies are not playing fair with the consumer or the supplier. I was led to believe that the report would be out by the end of this year, but I understand that, as a result of public pressure about a detailed report, it is not likely to be available then. Perhaps the Minister can clarify when we are likely to receive the report.
May we now examine the situation in which we find ourselves, especially here in England? There are 3,200 supermarkets. One in three are called superstores, which are premises of more than 25,000 sq ft of selling space. Four companies dominate the market. They have 60 per cent. of the market and 83 per cent. of the superstores. The companies are Tesco, Sainsbury, Asda and Safeway. The development of supermarkets in the 1960s and 1970s killed off the smaller shops, and in the 1980s and 1990s the supermarkets are giving way to the superstores, many of them in out-of-town locations.
The concentration of power in a small number of retailers has given rise to exploitation in various ways. They have a dominance in the market which enables the retailers to negotiate large discounts from the food manufacturers and suppliers. No food company in Britain can afford not to do business with the big chains. As the British farmers know to their cost, the discounts are often not passed on to the customer.
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The supermarkets use special offers, whereby they sell products at a very cheap price. By the time the customers have been round the supermarket, they have paid for the cheap price two and three times over. Superstores tend to be on their own site. There is no competition on that site, so people buy the product in that superstore or not at all.
Supermarkets have now developed their own-label brands, which many people think is fair enough. However, they are not all a plus factor. They mean that the retailers have a conflict of interest. They are agents for a manufacturer, yet they are competitors to the manufacturer as well. That has led in many areas to fairly well-known secondary brands not finding a place on the supermarket shelves and disappearing altogether, thereby reducing customer choice. To quote a publication from the British Brands Group:
"the strength of private label has altered the trading relationship between the manufacturer and the retailer—the trading relationship is no longer equal—the retailers possessing a significant competitive edge".
The British Brands Group is made up of many very successful, very large companies, including Unilever, Procter and Gamble, Mars, Nestle and Kellogg. If they are saying that the retailers have an edge over them, the customer has a real problem.
There is also the problem of look-alikes. This is where own-label products masquerade as a product very similar to a well-known brand. The customer may take it by mistake or believe that it is produced by the same manufacturer and therefore that it is good but a few pence cheaper. In reality, few look-alikes are produced by the manufacturer of the branded goods. Again, customers are being misled. In the long term, customer choice will be reduced. Companies will not invest in new products if they believe that their ideas will be copied and they will not receive the payback.
There is limited competition between the supermarkets. There is undisputed evidence that, while the big four have seen off the smaller competitor, they will not engage in true price competition among themselves. In a recent survey by The Grocer magazine of 33 articles, half were identically priced in all the shops. The rest differed by only a few pence.
Dan Norris: Will my hon. Friend explain why he believes that there is no competition between the big four companies? Is it profiteering? It is greed? What is the motive?
Mr. Martlew: My hon. Friend will have to listen to the rest of my speech for the answer.
The price of a popular brand, Heinz tomato ketchup, was identical in Asda, Tesco, Sainsbury's and Safeway. There is no competition whatever.
Not only is there little competition among the British supermarkets, but the consumer is paying over the odds in comparison with Europe. A recent survey by The Sunday Times compared Tesco prices to those in Europe. The figures do not make happy reading. There were 22 items in the shopping basket. In the United Kingdom, the cost was £81.59. In Holland it was £49.55, in Belgium it was £50.67, and in Italy it was £60.20. The survey showed that the prices of many popular foodstuffs were at least 40 per cent. higher in the United Kingdom

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than in America or on the continent. Even when Tesco did its own survey, the prices were still higher than in the majority of European countries.
It is interesting to note that, while prices to farmers and food manufacturers have fallen in the past 12 months, the price of food in British shops has risen by 1.6 per cent. So food costs are higher in the United Kingdom, and supermarket profits are higher. Supermarket profits are about 6 per cent. in the United Kingdom, about 2.6 per cent. in France, and about 2 per cent. in America. So profits in the United States are a third of those in the United Kingdom. Charging higher prices to consumers and paying lower prices to the supplier means that there is only one winner. The statistics prove that both consumer and supplier are being systematically exploited.
The crisis in British farming is well documented, but I want to draw the House's attention to one or two points. Andrew Dare of Milk Marque told me yesterday that, four years ago, 68 per cent. of the price of a pinta went to the farmer; now, that percentage is down to 56 per cent. The problems are similar in respect of pig meat: prices paid to farmers have plummeted, yet supermarket prices have hardly decreased. The prices paid to sheep farmers are at their lowest for 20 years, but supermarket shoppers would hardly notice the difference.
The supermarkets are not passing on cost reductions to the consumer, and the price differential between consumer and supplier is huge. I accept that there are middle-man costs—for example, transport, abattoir and butchering costs—which must be paid, but the chief suspects for capitalising on and exploiting the situation must be the supermarkets. I was pleased when the Office of Fair Trading decided to investigate the excessive profits of the big four, but already a report commissioned by the OFT has highlighted the fact that the big four are using their dominance to extract discounts from suppliers that are used to swell their coffers, instead of being passed on to the consumer in the form of savings.
The case I have made today means that the Government must take action. The supermarkets' immense economic power is a growing threat to the consumer, not a benefit. People talk about the price of petrol, but the proportion of the family budget spent in supermarkets is probably second only to housing costs.
The fear is that supermarkets will increase their stranglehold by expanding in other sectors, such as pharmaceuticals, banking and insurance—I understand that Tesco might even start to sell new cars. What is to be done? We cannot expect the supermarkets to curb their own appetites, because that is not in the nature of the beasts: they are profit-making organisations, and they will exploit their position as best they can. Therefore, the Government must act.
There must be no more mergers or takeovers by the big four. I understand that a merger between Safeway and Asda is being considered. The Government should tell them that that is not on—we do not want any increase in the dominant market share of the big four.
Next, we must consider the problem as it affects regions or cities. If a particular supermarket chain has several stores in an area, to the extent that it dominates the area, we should follow the example set by the Monopolies and Mergers Commission when it investigated the brewers.
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When it was decided that one chain had too many pubs in an area, it was told to sell off some to a competitor. That is what needs to be done with some supermarket outlets.
Certain supermarket practices described in the recent "Panorama" programme should be outlawed. I shall give only one example, so that the Minister has time to reply. A supermarket company tells a manufacturer that it must buy its packaging material from company X, or the supermarket will not take the product. The manufacturer could probably buy cheaper packaging from company Y, but company X gives a kickback to the supermarket. That cannot be right, and must be stopped.
The main challenge facing the Government is to ensure that the supermarket companies compete on price, even though, in an ideal world, we would not start with four big companies whose growth we were trying to restrict. The companies set up a price watch system to check prices in other supermarkets, but not so that prices can be kept low; instead, they price their goods similarly to other supermarkets in the area, so that there is no competition or price war. That cannot be right.
We must find a way of monitoring prices, so that we can tell when something is wrong and step in to ensure free competition. The supermarket bosses are too clever to go into a big room and hammer out a cartel agreement; instead, they use the price watch procedure to achieve the same results. We have to represent the customer. The Department of Trade and Industry has to tell supermarkets that there must be true and fair competition, so that the housewives of the United Kingdom can benefit from cheaper prices.
Mr. Colin Breed: Does the hon. Gentleman agree that the four supermarket companies to which he refers are complex monopolies? Each company consists of a huge number of single-store local monopolies, and therein lies the problem: each supermarket is, in itself, a local monopoly—a fact that is not recognised under current OFT rules.
Mr. Martlew: I covered that point when I spoke about superstores. They are the sole occupants of a site, to which the consumer has driven three or four miles. There is no competition nearby—probably the nearest competitor store is on the other side of the city—so the consumer buys from the superstore. The DTI must now give some guidance to the companies, and tell them, "The game is up. We know what you are doing, and it is going to stop."
1.17 pm
The Minister for Competition and Consumer Affairs (Dr. Kim Howells): I congratulate my hon. Friend the Member for Carlisle (Mr. Martlew) on having raised an important subject. It currently occupies a great deal of space in our newspapers, and rightly so, because it has an impact on every family in the country.
I find it amazing that, until the hon. Member for South Holland and The Deepings (Mr. Hayes) arrived a few minutes ago, there was not a single Conservative Member, Plaid Cymru Member, or Scottish National party Member in the Chamber, despite the fact that they all paint themselves as the farmers' friends. I do not know about theirs, but my front room in Pontypridd has been full of farmers complaining about the buying power

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of supermarkets. If Opposition Members were that concerned about the issue, they would have turned up for a debate on a subject that we rarely have the opportunity to discuss.
Mr. John Hayes: That is why I am here.
Dr. Howells: I am glad that one Conservative Member is here—that is more than usually show up for debates such as these.
In no uncertain terms, my hon. Friend has emphasised the image of supermarket chains as market tyrants. I shall try to deal with the subject from the point of view of the Department of Trade and Industry. He has described how the big four—Tesco, Sainsbury, Asda and Safeway—have been able to dominate the buying market, especially the market for farm and primary products, and how they have moved into other areas.
My hon. Friend knows as well as I do that others would paint the supermarkets, especially the big four, as market heroes, citing as evidence their ventures into selling designer goods at low prices. Recently, the chief executive of one chain asked me, "Where is the sense in my being able to go to New York and buy a pair of top-range Levi Strauss jeans for $30 or $40, when they are sold in the high-street specialist outlets in this country for £55 a pair? There is something wrong with that." His chain is now selling those designer jeans at £30 a pair, and I am glad about that.
I glad that the supermarkets are pushing the edges of the envelope by exploiting the possibilities offered by so-called parallel or grey imports—terrible phrases, but unavoidable. They are introducing real competition into the markets for such goods. The high streets are no nirvana for shoppers. I am sure that an enormous amount of careful price calculation goes on—I was going to refer to price fixing, but as a Minister I can no longer use such terms.
Retailers are looking carefully at what the market can bear. Companies trading in well-known branded images and products can make a good profit in countries such as Bulgaria. However, those of us who are very naive and have simple views about these matters wonder why UK companies can buy those products in Bulgaria and sell them in this country—whether in the supermarkets or on the high street—at prices lower than those in retail outlets, and still make a profit. One wonders about the profit margin of those retailers that pitch the original price in this country. We must ask some serious questions, and my hon. Friend can rest assured that, as the new Minister for Competition and Consumer Affairs, I shall ask those questions every day. I want to uncover the real situation.
My hon. Friend asked about comparisons between United Kingdom prices and those across Europe and the United States. The DTI does not have a section that deals with pricing issues. I was amazed—I suppose I should not say that as a Minister who speaks on behalf of the DTI. I was told that such matters were too complex to examine, but I think it is about time that we had that information. I open newspapers every day and see price comparisons, some of which my hon. Friend mentioned. Where is my database that will allow me, as a Minister, to say what is and is not true?
The excellent officials in my Department are beginning to construct a prices database so that we will know where we are. Price information is very important for families in
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this country. I have seen articles and editorials in the Sunday Times that refer to "rip-off Britain". I am very glad that those reports have been published. Someone should try to compare the prices of goods in the United States, France or Canada with those in this country. That is an excellent policy for newspapers to adopt, and I shall respond as best I can.
My hon. Friend and the hon. Member for South-East Cornwall (Mr. Breed) have raised some interesting and important points in this debate. The definition of the boundary or extent of a market is vital. My hon. Friend's constituency of Carlisle is very much like many constituencies in Wales: it is a mix of urban and rural areas. It is easy for supermarkets to dominate a particular region or locality without having a dominant share of the UK market. We must examine that situation carefully, because dominance can easily distort markets, in terms of prices or selling power and so on.
I am extraordinarily glad that the right hon. Member for Kensington and Chelsea (Mr. Clark), and the hon. Members for Salisbury (Mr. Key) and for Mid-Norfolk (Mr. Simpson)—three very distinguished members of the Conservative party—have just entered the Chamber. It is excellent to see the hon. Member for Salisbury, for whom I have great regard, on the Front Bench. That is welcome news, because this is an important debate.
We are determined to ensure that there is transparency of pricing for all, whether it is the farmer trying to sell his farm produce to supermarket chains or the shopper trying to secure the best bargain. I think that that is what my hon. Friend is seeking. There are many variables involved in the selling equation. There is no question that supermarkets have revolutionised retailing. I will admit from the Dispatch Box that I quite enjoy shopping at my local Tesco. I like the fact that I can drive there and do my shopping for the week or the fortnight. There is wide choice inside the supermarket, and it is convenient. Unfortunately, the appalling car parking situation in my home town makes it difficult to shop in the town centre.
Mr. Breed: Does the Minister accept that, although dominance in the marketplace is not illegal as such, the abuse of that dominance is a concern? Companies may dominate the market, so long as they trade fairly.
Dr. Howells: The hon. Gentleman has put his finger on the problem. We must discover whether this country's great supermarket chains are abusing their dominant positions.
My hon. Friend mentioned that the Director General of Fair Trading, Mr. John Bridgeman, is currently examining this matter. His team at the Office of Fair Trading is investigating the profitability of the major supermarkets in the grocery sector, focusing on whether competition between the majors has been distorted to the detriment of consumers. Mr. Bridgeman is due to report early in the new year, and I am sure that all hon. Members are looking forward to those findings.
In the meantime, what evidence do we have of abuses of market power? It depends where we look. The farmers who were in my front room complaining about the situation will tell us that, yes, the market is being distorted and abused. We approached Tesco and pointed out that, although the current market price of a steer is £490, the shelf prices of the products derived from that steer total £1,124. We asked where that extra cost had come from.

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The supermarket told me that it costs £634 to process the steer into saleable meat. It gave us a breakdown of that sum. It said that 63 per cent. of the steer is waste and must be thrown away, and that the remaining 37 per cent. of the steer must sell for an average of £5.13 per kilogram—or £2.33 per pound for those of us who still use the imperial system—in order to cover costs. Tesco also told us that £4.83 per kilogram is its average selling price, so it is making a 30p per kilogram loss on beef sales. [Interruption.] Hon. Members are groaning—and I can understand why. Those figures should be examined in light of the declared profits of some supermarket chains, and the OFT, under John Bridgeman, will do just that.
I do not think that it is easy to compare the profitability of United Kingdom supermarket companies. A report published this week by Verdict Research claims that there is no easy way of making that comparison. The report states:
"Verdict does not believe that Britain's grocers are overcharging … the market is too highly competitive for that to happen and competition is intensifying. The average operating profit margin of the four leading grocers has fallen by nearly one fifth, from 7.2 per cent. in 1992/93 to 6 per cent. in 1997/98. British grocers are not more profitable than their Continental counterparts once factors like longer European supplier payment terms, and the preponderance of leasehold property, are taken into account. UK retailers are all quoted and have traditionally sought to maximise their profitability to attract investors. Most Continental retailers are privately owned and minimise their reported profits in order to pay as little tax as possible. This helps give the impression that they are giving customers a much better deal than British companies."
My hon. Friend raised many issues in his short and very pertinent speech. Although we recognise the extra choice, convenience and lower prices that supermarkets have provided for consumers in the past 20 years, and although we welcome the entry of supermarkets into the retailing of non-food goods such as clothing and electrical products—which will strengthen competition in those sectors—I stress that, as Minister for Competition and Consumer Affairs, I shall continue to champion the rights of consumers. I welcome the OFT inquiry into the profitability of major supermarkets in the grocery sector. We will ensure that, at long last, the DTI becomes the consumers' champion.

Major Eric Joyce
1.30 pm
Mr. Keith Simpson: I am grateful for the opportunity to have this Adjournment debate concerning Major Joyce. I requested the debate because, over the past 16 months, my hon. Friends and I have failed to gain satisfactory answers from Ministers about the Major's future and because his case strikes at the heart of the important principle that our armed forces do not actively participate in party politics.
As the House will recall, in August 1997, Major Eric Joyce of the Adjutant-General's Corps published a Fabian Society pamphlet under the heading, "Labour in Action", entitled, "Arms and the Man—Renewing the armed services". He did so without first seeking permission from the Ministry of Defence, as is required by a serving officer under Queen's regulations. As Major Joyce said in an interview in The Times on 4 August 1997:
"you can't get radical ideas like this into the public domain if you go through the chain of command".
The Ministry of Defence was rightly concerned about what Major Joyce had done, and Members of Parliament should also be concerned. Much was made at the time by Major Joyce, through media interviews, of the fact that he was criticising senior Army officers as being class-ridden public school products.
I read his pamphlet with great interest. He touched on many issues, including recruitment, training, ethnic minorities and civil liberties. Much of what he said was controversial; some of it was interesting; some of it was obviously plain wrong and some of it was eccentric. It was really a political polemic.
We should ask two questions. Why was it necessary for Major Joyce, a serving Army officer, to publish his views in a Labour party publication? Why not use, for example, one of the in-house Ministry of Defence journals or one of many academic journals? The Major's action meant that the issue immediately became party political.
In the few months leading up to autumn 1997, we heard more from Major Joyce about his case and the possibility that he would face disciplinary charges. His wife was reported in The Sunday Telegraph on 12 October 1997 as saying that, if he was threatened with court martial, he would take the Army to the European Court of Human Rights. What emerged from those exchanges—it seemed that Major Joyce was hardly out of the media—was the fact, that despite being repeatedly warned not to speak to the media about his views, Major Joyce continued to do so.
I understand that Major Joyce believes that he has a basic right to air his views and that the Army was being old-fashioned and restrictive, but he is not living in the real world. Most public and private organisations maintain official and unofficial codes of conduct for their employees or members. Major Joyce continued to criticise senior officers and expected to have the right to do so. I put it to the House that most organisations, after giving warnings, would tell an employee that, if he continued his actions, they would reluctantly have to "let him go", to use the current management jargon.
In late October 1997, we learned through the press that Major Joyce could keep his job, provided that he did not again breach disciplinary codes, and was to keep his views

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on the state of the Army to himself. He was given permission—for which he had urged very strongly in his pamphlet—to publish a journal called "The Armed Services Forum".
Why did the Army and the Ministry of Defence make that decision? We learned, once again through the press, that the Lord Chancellor had written to the Secretary of State for Defence advising him not to take action against Major Joyce because of the fear that, if the officer took his case to the European Court of Human Rights, any ruling would come up in the run-up to the next election, which
"would not be good timing".
Whatever right the Lord Chancellor has to involve himself across the board in departmental matters concerning the law, the letter has, to say the least, a party political spin, which is totally objectionable.
Ministers appeared to back Major Joyce when the Secretary of State for Defence said at a Fabian Society seminar—some coincidence there—on 13 November 1997 that he wanted to increase the number of officers from state schools. The Daily Telegraph on 14 November said:
"Mr. Robertson and other ministers are known to be sympathetic to Major Joyce's views."
There is an irony about the background of officers, MPs and Ministers and what kind of school they attended. Given Major Joyce's criticism that senior officers were out of touch with people because so many of them went to public schools, it is ironic that the Under-Secretary of State for Defence and the Minister for Defence Procurement—50 per cent. of the Ministers in the MOD—attended public schools. So what? We judge Ministers on how competent they are, not by their background, and it seems ironic that Major Joyce should not have taken that into account.
By the end of 1997, Major Joyce had successfully and repeatedly contravened Queen's regulations, but the Lord Chancellor had intervened on his behalf, there had been sympathetic noises from the Secretary of State for Defence and the Major had been told that he could continue his career and publish a journal but that he had to refrain from further public utterances. A number of his friends would have said that that was a reasonable compromise and, in many respects, from his perspective, he had won a political victory.
At that point in the case, party politics raised its head. When Major Joyce published his Labour party pamphlet in August 1997, he was already known by many Army friends at Upavon as a supporter of the Labour party. Indeed, he had helped the party during the general election. He told people at Upavon that he had thought about standing as a Labour parliamentary candidate in Scotland. In response to a question, the then Minister for the Armed Forces admitted that he had met Major Joyce twice before the general election.
From the new year onwards, Major Joyce's activities became less covert and more overtly party political. Despite being told not to speak to the media, he was quoted in The Sunday Times on 1 February 1998 as saying that he was definitely new Labour. On 14 June 1998, The Sunday Times told us that Major Joyce had been selected for a shortlist of Labour candidates for the Scottish Parliament. Through parliamentary questions in the summer, I learned that, despite blatantly breaking Queen's regulations, which state that service personnel should not take an active part
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in party politics and should resign if they want to stand as parliamentary candidates, no application to resign had been received from Major Joyce.
In November, Major Joyce appeared on Scottish television, where he was named as speaking on behalf of the Scottish Labour party. We learned in The Times on 25 November 1998 that Major Joyce is to be summoned before the Army Board and might face administrative discharge. On 29 November, in The Sunday Times, a rather emotional Major Joyce said that he might well take his case to the European Court of Human Rights. At that point, he lost not only his script, but any support or sympathy that he might have received from service personnel.
I suspect that Major Joyce would like to portray himself as the "Upavon one" or a latter-day Captain Alfred Dreyfus. He is neither. Even when given the benefit of the doubt when he published his pamphlet, he had his own political agenda. As a serving officer, he has openly been a Labour party supporter and, for the past four months, he has been actively seeking to become a parliamentary candidate. Not only has he repeatedly and blatantly broken every agreement that he has ever made, but he has become party politically partisan. He is honour bound to leave the Army and pursue his political career.
The case not only raises fundamental questions about the armed services not becoming involved in party politics, but casts serious doubts on ministerial judgment. My hon. Friend the Member for Stratford-on-Avon (Mr. Maples) has written to the Secretary of State for Defence asking why Major Joyce has been able to flout the rules and regulations and openly participate in party politics. I know that the Minister took up his appointment only in the summer of this year, but I emphasise to him that many members of the armed services believe that Major Joyce has had "political top cover". That may not be true, but that is the impression among many service personnel.
I ask the House to consider what would have happened last year if a serving Army officer who had openly talked about becoming a Scottish National party candidate for the Scottish Parliament had written an article in a Scottish newspaper questioning the relevance of our nuclear deterrent. I suggest that he would have been out of the Army forthwith.
What would have happened this summer to a serving Army officer who intended being a Conservative Euro-candidate but who wrote an article for The Spectator criticising cuts in the Territorial Army? He would have been out. We know that for a fact because, in November, General Sir Michael Walker, Commander-in-Chief Land Command, wrote a letter warning all service men that, if they were caught leaking any information about the TA, they would be court-martialled. It seems that there is one rule for one act of indiscipline, and perhaps none for Major Joyce.
Ministers have got themselves into a mess. Service men are now somewhat bewildered about what they can and cannot do. There has been political interference in the Army by the Lord Chancellor. The Government are in danger of losing—
Mr. Harry Cohen: Will the hon. Gentleman give way?
Mr. Simpson: I am sorry; I am winding up my comments.

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The Government are in danger of losing the confidence of our service personnel. All hon. Members should support the principle that serving service personnel do not involve themselves in party or partisan politics.
I assure the House that, if any serving officer who intended becoming a Conservative candidate wished to criticise the Army, I would advise him immediately to leave the Army and pursue his point as far as he could in a political career. That is now a well-established tradition. In the past, serving personnel were allowed to sit in Parliament. That was to the detriment of the services, and it caused all kinds of disruption and, indeed, some disloyalty. It also threatened civil-military relations.
This case is about not only Major Joyce—he will do what he wants to do—but a very important principle. Service men are entitled to hold political beliefs. They express them very strongly to us, as it is right and proper that they should, but we should defend the principle, set out in Queen's regulations, that, if a serving member of the armed forces wishes actively to join a political party or to pursue a parliamentary career, he should resign. That is what Major Joyce should have done.
1.43 pm
The Minister for the Armed Forces (Mr. Doug Henderson): I am grateful to the hon. Member for Mid-Norfolk (Mr. Simpson), who has allowed us the opportunity to explain the Army's handling of the Major Joyce case and to reiterate the Government's position on the issue. The hon. Gentleman mentioned the letter from the hon. Member for Stratford-on-Avon (Mr. Maples) to my right hon. Friend the Secretary of State for Defence. I hope to deal with some of the points covered in that letter, in addition to those raised by the hon. Gentleman.
I must say at the outset that I reject absolutely any suggestion that there has been any "political top cover" in this case. I shall cover some of the principles involved in the case and then give a brief account of the events of the Joyce case.
Major Joyce is a serving officer of the British Army. He is the author of a discussion paper from the Fabian Society—a society, which, incidentally, is not a Labour party body—published in August 1997 and entitled "Arms and the Man—Renewing the Armed Services". The personal views contained in that paper are, in a number of respects, critical of the present management of the Army.
The action being taken by the Army against Major Joyce is of an administrative rather than a disciplinary nature. I am sure that the House will understand that, in my comments today, I must take care not to prejudice the outcome of that management action.
Major Joyce's actions were of concern to the Army not because of the content of his article, or, indeed, of his subsequent articles, but because the manner of its release showed complete disregard of Queen's regulations and of his commanding officer.
Mr. Cohen: Will my hon. Friend confirm that a consultation process on the strategic defence review was about to begin at the time in question and that that consultation process itself was still under discussion? I recall going to a meeting with his predecessor and
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commenting on how it could be improved. In those circumstances, was it not reasonable for an officer to put his views in the way that Major Joyce did?
Mr. Henderson: There is a clear distinction between the responsibilities of an Army officer in discharging his duties, expressing his views, being consistent with Army policy and seeking approval for the expression of those views in any form, and the privileges that a citizen of this country has in being able to express views on any subject that he wishes. An Army officer, like any citizen of this country, has the right to free expression, but he must be able to draw that distinction. It is an important distinction, which I hope that all our Army personnel would recognise. It is certainly one that I confirm as crucial in the execution of the Army's responsibilities.
The Army is, after all, a part of society, and its values must reflect those of society. However, it is a cohesive and disciplined force. Its effectiveness—and, ultimately, the safety of every individual soldier in it—depends on individual and collective respect for that discipline.
The sort of requirements imposed by Queen's regulations on serving personnel are not novel. They mirror those that apply throughout the civil service and elsewhere in the public sector. They require that anyone wishing to publish views and opinions seek permission in advance. The regulations pertaining to political activities by serving members of the armed forces have been clearly explained to Major Joyce, and it is therefore disappointing that he has chosen not to act in accordance with them.
The decision to investigate the authorship by Major Joyce of a publication and some newspaper articles which were critical of aspects of defence policy and recruitment was taken by the Army chain of command. Such action simply followed established Army procedures. Ministers were not at any time involved in either the decision to investigate Major Joyce's actions or in the course that the inquiry took. The temporary suspension of Major Joyce in August 1997, while an investigation was conducted, was not a disciplinary action, and was not recorded as suh.
The completed investigation report was forwarded by Major Joyce's chain of command to the Army prosecuting authority for consideration. The report was not copied to, or seen by, Ministers. I should like to reassure the House that the Army prosecuting authority is independent of, and cannot be directed by, the military chain of command or, indeed, Ministers on any cases that it is asked to consider. It is subject only to legal oversight by the Attorney-General.
Mr. Crispin Blunt: Will the Minister give way?
Mr. Henderson: I shall give way, but the hon. Gentleman is taking up some of the time that I need to explain the background to the case.
Mr. Blunt: Will the Minister confirm that the Lord Chancellor's letter was seen by the Army prosecuting authority before it came to its decision?
Mr. Henderson: I cannot confirm that because I do not know what information the Army prosecuting authority had in examining whether there was a case against Major Joyce. It is quite rightly a matter for the authority, not for Ministers.

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The decision whether to prosecute a case referred to the Army prosecuting authority is based on the realistic prospect of obtaining a conviction based on the evidence, and on whether a prosecution is in the interests of the public and the service. It will depend on an assessment of all pertinent legal, evidential and procedural issues. The tests are essentially the same as those applied to the Crown Prosecution Service. I hope that the hon. Member for Mid-Norfolk agrees that it would not be appropriate to disclose the basis on which the Army prosecuting authority reached its decision not to court-martial Major Joyce. Indeed, it would not be appropriate for Ministers to be aware of that basis, let alone disclose it.
Major Joyce returned to work in September 1997, when he was posted to a job appropriate to his rank in the Adjutant-General's Corps at Worthy Down. That move was deemed necessary because Major Joyce had irrevocably undermined the confidence of his former employing officer. Major Joyce continued to seek and receive media attention in continued disregard for Queen's regulations. That behaviour led, in October 1997, to a formal warning.
In February 1998, Major Joyce was formally interviewed by his commanding officer, in which he was informed of his commanding officer's recommendation to the military secretary that he should not be employed further in the Army. Major Joyce was then sent home. He has remained away from work since that time. He has made no application to resign or retire from the Army. The recommendations made by Major Joyce's commanding officer to the Army chain of command concerning his future in the Army should be properly confidential between the two parties. However, I would reassure the House that Ministers have played no part whatever, either formally or informally, in the process, which is on-going.
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The time taken to conclude the review of Major Joyce's future in the Army is regretted, but not without explanation. The procedure is considered and measured, and gives the individual the fullest opportunity to make representation at every stage of the process. Until the process is complete, an officer properly continues to be paid, and his terms and conditions of service remain extant.
The matter is being considered at Army board level by two non-ministerial members of the board who have not previously been involved in handling the case. Major Joyce has seen, and had the opportunity to comment on, all material before the board, save only for legal advice. He has been offered the opportunity of an oral hearing with the board later this month, at which his solicitor may be present if he so wishes. The decision on Major Joyce's future in the Army will be taken exclusively by those Army board members. Ministers have no involvement in the process unless Major Joyce is dissatisfied with the Army board's decision in respect of redress of a complaint and petitions the sovereign. In that case, the Army's submission would be forwarded to the Palace through the Secretary of State.
Many things can be said on this issue. I want to make it clear that I reject entirely any suggestion of a political cover-up or of any inappropriate ministerial involvement. Inevitably, there have been discussions between Ministers and between Ministers and officials on the handling of the public and parliamentary aspects that have arisen in the case, but in no other regard has there been any involvement, as has been suggested. The treatment of Major Joyce by the Army chain of command has been entirely fair and reasonable.
It being before Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.

Oral Answers to Questions
  WALES
  The Secretary of State was asked—
  WALES

    National Assembly
    Mr. James Gray: If he will make a statement on the (a) construction and (b) cost of the National Assembly. [61559]
    The Secretary of State for Wales (Mr. Alun Michael): Anyone who has experience of a major public building project will know that we are at an early stage in the design process. I want to involve a wide range of interested groups in the process, including political party leaders in Wales, disabled people, young people and, as matters progress, Assembly Members. The capital cost was identified, during the legislative process, as £17 million, and that figure is not expected to increase. Running costs were identified as between £15 million and £20 million, and I have no reason to differ with those figures.
    Mr. Gray: I am grateful to the Secretary of State for his answer, and I am glad that he has taken such care in making detailed plans for the location and cost of the Assembly. However, would it not have been better for a party that is overwhelmingly committed to devolution of decisions to wait until the Assembly was up and running—only months from now—and allow Assembly Members to take their own decisions about the Assembly's location, cost and design?
    Mr. Michael: Obviously, the hon. Gentleman knows as much about major building projects as he does about devolution. The planning and the building—[Interruption.] If the hon. Gentleman were listening to the answer to his question, I might think that he had come into the Chamber with a real question, not simply to try to score points. Any major building project takes time to develop, and people need to be involved in that process in order to ensure that we have a building for the Assembly of which Wales will be proud, and which will demonstrate to the world outside the confidence with which the Assembly is being established. I hope that the hon. Gentleman will look on with interest as that happens.
    Mr. Ron Davies: This is my first opportunity in the House to congratulate my right hon. Friend on his appointment as Secretary of State. May I therefore take the opportunity to convey to him my good wishes and support over the coming months? They will be very exciting for Wales, and they will be very challenging and demanding for everyone at the Welsh Office. I send my best wishes to all who will be involved in the coming period.
    On the subject of the Assembly, my right hon. Friend will know of my gratitude to his constituency predecessor, now Lord Callaghan, and a very distinguished panel of judges who have brought forward the Richard Rogers design concept. Can my right hon. Friend confirm that that is the concept that he is now developing for the
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    Assembly building, and will he tell the House whether he has any proposals for developing that design in a way that embraces the express wishes of the people of Wales?
    Mr. Michael: I thank my right hon. Friend for his remarks. May I return the compliment by congratulating him on his bearing throughout what has been an extremely difficult time for him personally? I am also grateful to him for giving me the opportunity to join him in thanking my predecessor, Lord Callaghan, who has brought enormous experience and wisdom to bear on the project of considering the potential designs.
    I am happy to confirm that I feel that the process is moving forward very well indeed; it is on a sound basis. One or two people seem to have thought that there might be some doubt about the process going forward. I have never said anything that was intended to encourage that idea. The one thing that I did say initially was that I would look to be fully briefed before making any comment. Having been briefed, and having looked with the architects at the design concept, I believe that it is very exciting, but it is only a concept at this stage, and it needs to develop in a way that respects the nature of the Assembly that we are trying to create, and that is as inclusive as possible. I believe that it has the potential to be developed in that way.
    Mr. Nigel Evans: Can the Secretary of State for Wales confirm that the budget for advertising the elections to the Welsh Assembly is in the region of £2 million? If that is the case, can he confirm that the people of Wales will be astonished to learn that that is the figure, and that they will believe that the money could be far better spent on hospitals in Wales, on schools in Wales or on law and order in Wales?
    Will the Secretary of State also take on board the fact that the advertising campaign should be conducted on an all-party basis? Will he be inviting representatives of the political parties in Wales to discuss the campaign for the elections to the Welsh Assembly?
    Mr. Michael: I am not sure that the hon. Gentleman's choice of words is accurate. We are talking about information being available so that people understand the elections in which they have an opportunity to take part as distinct from campaigns, which are for the individual political parties to run. The hon. Gentleman knows as well as I do that I wish to be inclusive in the way in which we debate these matters, which is why I have met the leaders of the political parties in Wales to discuss their concerns. Opposition parties have a place in the political process, as does the majority party, which Labour intends to continue to be.
    I welcome the hon. Gentleman's interest in education, schools and law and order in Wales. It will be something of a surprise to the people of Wales. A specific budget has not been set aside at this stage. We shall enter into those matters in due course.

    EU Structural Funds
    Mr. John Wilkinson: If he will meet the Commission of the European Union to discuss the Principality's eligibility for EU structural funds under the EU financial perspective for the years 2000 to 2006. [61560]
    The Parliamentary Under-Secretary of State for Wales (Mr. Peter Hain): Over the past year, Ministers have been fully involved in discussions at the United Kingdom level and in Brussels, and will continue to be so in the new year.
    Mr. Wilkinson: Is it not the case that west Wales and the valleys have a gross domestic product per head of 72 per cent. of the national average? That is significantly below the threshold of 75 per cent., which is eligibility for objective 1 status for structural funds. How is it that it seems likely that that eligibility will not lead to any award of structural funds for this region, which is the second poorest after Cornwall? How is it that huge tracts of the country will not have objective 2 status? Is it not the case that the people of Wales would be much better off if they gave less of their money to Brussels, because they get so little back?
    Mr. Hain: I have always known that the hon. Gentleman is bonkers on Europe; however, this question has taken the biscuit. The hon. Gentleman has it wrong. The proportion of European average gross domestic product of west Wales and the valleys is 71 per cent., which will mean that the region will qualify for structural funds under objective 1 status. We shall be negotiating with the European Commission and with our European partners through the British Government, who strongly support Wales's bid, to ensure that we achieve the maximum possible benefit.
    Mr. Alan W. Williams: Will my hon. Friend give some account of the work of the task force that was set up to gain objective 1 status and to make good use of the money? Does he agree that local authorities have a critical role to play in developing a raft of schemes that will qualify for objective 1 funding so that we shall be off to a flying start if the funds come through in 2000?
    Mr. Hain: Yes. I strongly agree with my hon. Friend that the work of the task force will be critical in mobilising maximum resources from public funds and from the private sector working with local authorities. He makes a good point. The task force should be working now to ensure that Wales is well able to take the maximum opportunity available to it when the funds come in from 1 January 2000. We can learn from Ireland, which has been extraordinarily successful in this respect. Wales can emulate Ireland and regenerate the whole of west Wales and the valleys, which have been so badly decimated by nearly 20 years of Tory rule.
    Mr. Richard Livsey: With reference to new structural funding, is the Minister able to reassure us that agricultural decline and sparsity of population in areas such as Powys will be considered fully in relation to their attaining objective 2 status in future, at the same time as other parts of Wales attain objective 1 status?
    Mr. Hain: The hon. Gentleman makes a very good point. The Government are seeking to persuade the European Commission to alter the eligibility criteria for objective 2 funding in particular, which focuses far too narrowly on unemployment rates. A variety of additional
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    factors should be taken into account, including the one to which the hon. Gentleman refers, and Powys's situation is of particular concern to us.
    Mr. Denzil Davies: First, will my hon. Friend confirm—there have been many newspaper reports about this—that the valleys and west Wales have now been designated for objective 1 status? Has that been decided? Secondly, we read in the newspapers about the sum of £2 billion. Over the six years, will that sum be available to south Wales, the valleys and west Wales?
    Mr. Hain: My right hon. Friend raises some important points both for his constituency in Llanelli and for the whole of the designated NUTS 2 area, which has been accepted by Eurostat as qualifying for objective 1 status. As it meets the below 75 per cent. of GDP criterion, it will qualify, but we must negotiate with our European partners. The negotiations will take place in March to ensure that the status is confirmed and to agree the figure that my right hon. Friend mentions. We hope to get the maximum benefit, and it has been suggested that west Wales and the valleys could be entitled to some £1.5 billion to £2 billion.

    Public Transport
    Mr. Norman Baker: What steps he is taking to encourage better co-ordination between train and bus services within the Principality. [61561]
    The Parliamentary Under-Secretary of State for Wales (Mr. Peter Hain): Our policy statement "Transporting Wales into the Future" will deliver more through ticketing, improved interchange facilities, better connections between services and improved availability of passenger information.
    Mr. Baker: Although I accept that the Government have done what they can to solve the problem of poor train connections, will the Minister seriously address the problem of poor train and bus connections? In Machynlleth, in the constituency of my hon. Friend the Member for Montgomeryshire (Mr. öpik), one can arrive on a train to find that the bus departed moments earlier and the next bus leaves hours later. What will the Minister do to address that consequence of Tory privatisation?
    Mr. Hain: I am pleased that the hon. Gentleman is so well briefed on Machynlleth's problems and I share with him and the hon. Member for Montgomeryshire (Mr. Öpik) the desire to improve its bus and train interconnections. We have already made considerable progress, particularly on the Cardiff valley line, which now has bus interconnections with many of the valley towns on its route. Unlike our Tory predecessors, we are injecting extra resources into integrated transport packages which promote public transport to the maximum possible extent.

    Unemployment
    Mr. Dafydd Wigley: If he will make a statement on unemployment levels in (a) Gwynedd and (b) Wales. [61562]
    The Secretary of State for Wales (Mr. Alun Michael): Seasonally adjusted figures show that, in October, there were 67,800 people unemployed in Wales. That represents 5.4 per cent. of the labour force. On an unadjusted basis, the rate was 5.3 per cent. Figures for unitary authorities are available only on an unadjusted basis. In Gwynedd, there were 3,540 people unemployed on that basis, a rate of 6.4 per cent.
    Mr. Wigley: Does the Secretary of State accept that the level of unemployment in Gwynedd is unacceptably high and that something must be done about it as a matter of urgency? In that context, what is happening in the review of the regional assistance maps under the Industry Acts, and will the right hon. Gentleman bear in mind the need to ensure a correlation between areas of high unemployment and those designated for the highest level of regional development?
    Mr. Michael: The right hon. Gentleman says that something must be done, and I agree with him. However, on the unadjusted figures, Gwynedd had 9 per cent. unemployment in October 1996 and that is down to 5.3 per cent this year, as I said. That represents real progress. The impact of objective I status will be considerable, but the right hon. Gentleman is right to point to the need also to promote assisted area status in Wales. In the past few weeks, I have announced the financial package for farmers in Wales; I have been to Newtown to ram home the priority of helping west and mid-Wales with the Welsh Development Agency; we have come to the brink of achieving objective 1 status; and we are making clear our intention to help areas such as Gwynedd in a variety of ways.
    Mr. Ted Rowlands: Given that the jobs problem may worsen in the coming months, shall we not be more and more dependent on the new deal? In that context, will my right hon. Friend comment on the failure of many of the quangos in Wales—training and enterprise councils, health trusts and health authorities—to employ anyone under the new arrangements? Are not those organisations letting Wales and the Government down?
    Mr. Michael: I am pleased to tell my hon. Friend that we have taken up that issue. The Under-Secretary, my hon. Friend the Member for Neath (Mr. Hain), has written to those bodies expressing the wish that they should provide opportunities through the new deal.
    We want the new deal to bring people into jobs and employability, so it is important that we should continue to grow jobs in Wales as well as attracting jobs into Wales. As my hon. Friend says, there have been job losses but, in recent weeks, there have also been job gains in many parts of Wales, both in north and south Wales. However, we need to keep the pressure up through the new deal and with long-term sustainable jobs.
    Dr. Liam Fox: Does the Secretary of State expect unemployment in Wales to be higher or lower at the time of the Welsh Assembly elections?
    Mr. Michael: To some extent, that depends on how the economy develops. It would be interesting to know what the hon. Gentleman expects. I rather think that, at the time
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    of the general election, he did not expect to see unemployment coming down, as it has under this Government.
    Dr. Fox: It is extraordinary that the Secretary of State is not confident that unemployment will continue to fall, as it did under the Conservatives in a way that has benefited Wales so much. It is a little ironic that the Secretary of State is putting the most energy into his own job search. He wants to represent his own constituency, to represent a totally different constituency in another part of Wales, to remain Secretary of State for Wales and to lead Labour in the Welsh Assembly. As others are beginning to lose their jobs, the right hon. Gentleman wants not one, two or three jobs, but four jobs. Is that what the new deal means to the Secretary of State in Wales?
    Mr. Michael: It is kind of the hon. Gentleman to expose to the House the fact that neither he nor his party has the slightest interest in the people on whom unemployment in Wales bears down. He is interested in scoring cheap points. Labour Members are interested in helping those in jobs to keep them, and in finding jobs for the unemployed. The hon. Gentleman has marked out the difference between us.
    Mr. Barry Jones: In the past four months, my constituency has lost more than 400 jobs—for example, 200 at the Optical Fibres plant, 150 at Shotton steelworks and 100 with the closure of the Kimberly-Clark factory. In addition, I, my constituents and my county council fear that the Commission in Brussels may well plan to strip my constituency of its assisted area status. I look to my right hon. Friend and the Government to tell the Commission that that should not happen in a constituency which only recently suffered the largest redundancy ever in Europe when we lost 8,000 jobs at Shotton.
    Mr. Michael: I have sympathy with my hon. Friend. I referred earlier to the fact that there have been job losses and gains in various parts of Wales. The immediate situation has led to some problems for my hon. Friend. There are some things that will help, such as the power station announcement for Shotton Paper. However, I take on board my hon. Friend's points, and I look forward to spending some time with him in his constituency in the coming weeks to discuss with employers, trade unionists and others the problems and aspirations that he shares with them in his constituency.

    Drug Abuse
    Mr. Peter Viggers: If he will make a statement about drug abuse in rural Wales. [61563]
    The Parliamentary Under-Secretary of State for Wales (Mr. Jon Owen Jones): Drug misuse is a threat to all our communities, whether rural or otherwise. We are determined to tackle this very serious problem.
    Mr. Viggers: Does the Minister believe that people who are convicted of drug supply offences should be deprived of public housing and, if so, should that happen in rural Wales or in the whole of the United Kingdom?
    Mr. Jones: How best to deal with drugabuse and the housing problems suffered not just by the drug abusers but by their families is a difficult problem which must be considered in an holistic way.
    Mr. Elfyn Llwyd: The Minister refers to an holistic way. How precisely will the drugs problem in rural Wales be tackled? A few years ago, there was no problem in rural areas, but now there is a huge problem. What approach will be adopted, which agencies will be involved and what will be done?
    Mr. Jones: In Wales, we have embarked on a strategy of having five drug and alcohol action teams, which help to co-ordinate all the important agencies—social services, education, the police, the Prison Service and the probation service. That is what I mean by an holistic approach to the problem, which is complex, not single-issue. We need to bring in all the agencies that will be involved in trying to help with this difficult and growing problem.

    NHS Trusts
    Mr. John Smith: If he will make a statement on the reconfiguration of NHS trusts in Wales. [61564]
    The Secretary of State for Wales (Mr. Alun Michael): On 3 December, I announced decisions to reconfigure NHS trusts in Wales. Details were circulated to hon. Members representing Welsh constituencies on that day. Waiting list figures have been announced today by the Under—Secretary, my hon. Friend the Member for Cardiff, Central (Mr. Jones). Figures are going down, which is another step towards delivering another of our manifesto promises. I accept that we have a long way to go, but we are on the way.
    Mr. Smith: May I congratulate my right hon. Friend on the leadership skills that he has displayed in handling and dealing with that difficult issue in Wales? He has managed to strike a balance between the genuine concerns of local people—in my constituency in particular—and the need to make bold decisions to meet our future health needs. Can he give me an assurance that the quality of services at Llandough hospital and community health services in the Vale of Glamorgan will not be reduced as a result of these proposals? Will he meet my community health council to discuss its future, in view of the reconfiguration?
    Mr. Michael: I am happy to meet representatives of the Vale of Glamorgan community health council, as my hon. Friend requests. I assure him that the service provided at Llandough hospital and in community services in the Vale of Glamorgan will remain integrated. I hope that services will continue to be of a high standard and, indeed, improve. I also assure him that the statement last week was the beginning, not the conclusion, of the job of improving health services in every locality in Wales. [Interruption.]
    Madam Speaker: Order. The House must settle down. It is rather noisy.
    Mr. Cynog Dafis: Is it not the case that the reconfiguration exercise has been a half-hearted
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    business, and that it will cause more disruption than gains through administrative savings? Is it not also the case that, as long as there are health authorities and trusts, there is an internal market? Do Ministers now accept that there should be an internal market in the NHS? If not, would they not be better abolishing all the trusts and moving to the kind of integrated system of health care and commissioning that is appropriate to Wales, and that would be cost-effective and acceptable in Wales?
    Mr. Michael: The hon. Gentleman's question is rather odd, but I shall try to respond. We are certainly ending the fruitless competition between different parts of the health service in Wales. That is the purpose of creating trusts that are large enough and contain the three elements—acute, community and mental health services—to provide a single health service for the people of Wales. We have tried to recognise the unusual circumstances in his area—and in Powys, for example—which need to be dealt with by respecting local need. The example of health savings that we have is those achieved by the Pembrokeshire and Derwen merger, which exceeded what was anticipated.
    Savings from that merger alone are £750,000. I am, therefore, confident that significant savings—perhaps larger than we have predicted—can be made and delivered back into patient care. I repeat my undertaking to meet the hon. Gentleman, and representatives of the health services and people who depend on them, in Ceredigion to discuss the specific circumstances there, which I know are difficult.
    Mr. Win Griffiths: Can my right hon. Friend tell me whether he intends to set individual efficiency targets for each of the trusts, whether they are new or have been left untouched by the changes? Can he foresee even greater savings and improvements in the delivery of health services in Wales coming out of that?
    Mr. Michael: We expect the health service, including trusts, to meet efficiency targets. New trusts should present to us their plans for creating an effective, integrated health service for their areas. They should set targets and explain their intentions. I hope that we can make improvements in the health service together, and that trusts will achieve the targets that they have helped to set and which go beyond those set nationally. I pay tribute to my hon. Friend because, when he was a Minister, he did a great deal of the spadework required to achieve the improvements that we seek.
    Madam Speaker: Order. If the Minister does not speak into the microphone, his words will not be recorded.

    Livestock Industry
    Mr. Owen Paterson: If he will make a statement on the Welsh livestock industry. [61565]
    The Parliamentary Under-Secretary of State for Wales (Mr. Jon Owen Jones): The Department is working with the Welsh Development Agency and the industry to develop an action plan for the lamb and beef sectors, which will be published in the new year. Coupled with the lifting of the beef export ban, it will provide a basis for the Welsh livestock industry to strengthen its competitiveness and adapt to meet the challenges facing it.
    Mr. Paterson: I do not want to be churlish, but the lifting of the beef ban 10 days ago was only a partial

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    success. [HON. MEMBERS: "Oh!"] If hon. Members would listen, they would learn that one of Britain's premier exporters of quality beef told me 10 days ago that the beef that is most in demand by high-quality restaurants and distributors is beef on the bone for large roasts and T-bone steaks. When will the ban on beef on the bone be lifted, so that abattoirs can take the substantial commercial risk of dedicating a whole plant to export business?
    Mr. Jones: The hon. Gentleman is being churlish. The Conservative Government were responsible for the total failure that resulted in the imposition of a beef ban.
    Mr. Huw Edwards: Does my hon. Friend agree that the livestock industry in Wales has greatly welcomed the lifting of the beef export ban, which was negotiated by my right hon. Friend the Minister of Agriculture? Does not that show that the interests of Welsh farmers will be much better served by the Government's positive approach to Europe, as opposed to the anti-European posturing of the Conservative party?
    Mr. Jones: I agree with my hon. Friend, who makes a very good point. To secure its future, our industry must regain the markets in Europe that it has lost. That will be difficult, but it can be done. The industry must increase confidence. Confidence will return but, unfortunately, Conservative Members continue to run down the industry that they pretend to champion.
    Mr. Ieuan Wyn Jones: Does the Minister accept that there is widespread dismay among the agricultural community in Wales about the level of support that the Welsh Office is able to give to the tir gofal scheme? Does he realise that that is an important instrument of social economic policy in Wales? Will he make it clear that the Government are committed to the scheme and will ensure that it is properly funded?
    Mr. Jones: The Government are committed to the scheme. The initial funding may not be as great as the hon. Gentleman would like, but it will increase year on year. It must be borne in mind that that funding is in addition to the £21 million-worth of aid that the farming package has released for Welsh farmers. The hon. Gentleman, if he represents people in the industry, should be thankful for the Government's support for Welsh farmers.

    Special Advisers
    Mr. Desmond Swayne: If he will list the special advisers he has appointed. [61566]
    The Secretary of State for Wales (Mr. Alun Michael): The Prime Minister has approved the appointment as special advisers of Mr. Gareth Williams, who has extensive experience in government at European and local level, and Ms Julie Crowley, who, I must make it clear, has been appointed for her communication skills, although she is also a fanatical supporter of Neath rugby club.
    Mr. Swayne: What advice will the right hon. Gentleman receive from those individuals? Would they
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    have been able to advise him on the wisdom of seeking election to the House in one constituency and to the Welsh Assembly in a different one?
    Mr. Michael: I am glad to say that both appointees are working on policy issues. They are working to deliver the Labour Government's election promises in Wales: to improve health, to create jobs, to increase opportunity, to improve education standards and to create safer communities. If the hon. Gentleman were interested in such issues, he would have asked about them, rather than simply trying to score points.

  The Prime Minister was asked—
  PRIME MINISTER

    Engagements
    Sir Peter Tapsell: If he will list his official engagements for Wednesday 9 December.
    The Prime Minister (Mr. Tony Blair): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Throughout the day, I have been kept informed of developments in the efforts to establish the facts in the tragic and horrifying killing of the hostages in Chechnya. I am sure that the whole House will join me in expressing condolences to the families and friends of the victims.
    Sir Peter Tapsell: Is the right hon. Gentleman content with the ever-growing prospect of his being remembered as the Prime Minister who destroyed the United Kingdom and subjected England to foreign tax collectors?
    The Prime Minister: There speaks the authentic voice of today's Conservative party. No: we believe in the policies of devolution, we believe in a constructive attitude in Europe—and, actually, I would prefer to be remembered for having destroyed the Conservative party.
    Mr. David Chaytor: Is my right hon. Friend aware of a recent case at Bury general hospital, involving deaths following alleged misdiagnoses of cancer sufferers and the recall of 40 women for a review of their test results? Does he share my concern about the fact that, in such instances, the medical profession has an unfortunate habit of closing ranks? Does he agree that the case shows how important it is that nurses should be confident enough to report their anxieties to senior management, and also shows the importance of improved quality control in regard to consultants' records? Can he assure us that the Government are committed to improving that quality control?
    The Prime Minister: As well as putting extra money into cancer services in the NHS, we shall introduce a new system in the national health service Bill. The aim of that system will be to monitor the quality of decisions, to offer advice, and to give us the best chance of ensuring that the tragic events to which my hon. Friend has referred are not

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    repeated. It is important for us to introduce those proper quality controls, so that people can have faith in their diagnoses.
    Mr. William Hague: After all the bluster that we have heard from the Government about harmonising European taxes, is it not amazing that the letter that the Prime Minister signed this morning, along with the German Chancellor, fails to rule out the harmonising of capital taxes, fails to rule out the harmonisation of savings taxes, fails to rule out the harmonisation of value-added taxes and calls explicitly for more harmonisation of corporate taxes? Is this not the latest attempt to cover up the threat of tax harmonisation with meaningless reassurances and waffle?
    The Prime Minister: In the matter of bluster, I recognise when I have met my match. As for taxes, we have made our position clear. We will oppose any measure that is against Britain's national interests, in taxes or in any other regard. What we will not do is return to the years of Conservative diplomacy that left this country without influence at the margins of Europe. We will not do that, because it is not in the British national interest.
    Mr. Hague: Has the Prime Minister seen what the German Government have been saying to the French press over recent hours? A Bonn official, who asked not to be named, said that Germany was also hoping in Vienna for progress towards harmonising taxes, as Germany is a high-tax, high-regulatory state, while countries such as Britain can be more attractive to businesses because they have lower taxes and fewer regulations. Where is the Prime Minister's diplomacy when that is the actual agenda of the German Government? Will the right hon. Gentleman therefore come clean and tell the House the Commons which British tax reliefs the Financial Secretary is now negotiating to harmonise away?
    The Prime Minister: The only Government who agreed to harmonise taxes in the UK were the last Conservative Government, just as they agreed more qualified majority voting than any Government have done before or since. I repeat: we will judge every issue according to the British national interest. We have no intention of agreeing to raise taxes across Europe. We want a lower tax burden on our people, but the way in which to get that argument through is to win the argument by staying firm and engaged, not by glorying in it, as the Conservative party is doing as an excuse to indulge its anti-Europeanism.
    Mr. Hague: Nothing that the Prime Minister has done remotely resembles standing firm. If he will not tell the House what is actually being negotiated, we will, because we have the list here: the shipping tax relief that he voted for; the film tax relief that he introduced; the enterprise zones that his constituents work in. Those are currently being negotiated. No wonder the European tax Commissioner says that the Government are "fully on board" with tax harmonisation. Is not the Prime Minister's endless habit of saying one thing to one audience and another to another finally catching up with him? Is not the truth that, however much he protests, no one believes him on that subject any more?
    The Prime Minister: First, the issues that the right hon. Gentleman raises are from the code of conduct
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    working party on tax. The code of conduct working party was established under the previous Government. Secondly, as for what the rest of Europe thinks, let me give him just a sample of what the rest of Europe is saying. The French Prime Minister said:
    "Neither the French nor the British have any thought about unifying taxes. Harmonisation does not mean uniform tax. Nobody wants somebody else to choose for his country corporation tax or income tax."
    The Irish Deputy Prime Minister said:
    "Instead of calling for what would effectively be higher corporate taxes, European leaders should be concentrating on bringing corporate and other taxes down."
    The Spanish Prime Minister said that higher taxes
    "would be a recipe for inefficiency and higher costs."
    The Italian Finance Minister said that the harmonisation of corporation tax
    "would be untimely, questionable and above all hardly feasible".
    The European employers said:
    "Tax competition is the only counterweight against the constant upward pressure on Government revenues."
    There is a debate going on in the European Union, but what is important is not to exercise the old Tory tactic of using the debate as an excuse to get out of Europe. We should use it rather as an opportunity to make the case for a sensible Europe for all our futures.
    Mr. Hague: What does our Prime Minister say? One thing in one place—in the House of Commons—and another thing in the Council of Ministers. The people who are driving tax harmonisation are the European socialist politicians whom he has encouraged for years. We have only to look at the Foreign Secretary's biography:
    "Cook finished his long day"—
    Labour Members will be interested in this—
    "with a visit to Oskar Lafontaine at the headquarters of the SPD. Lafontaine"
    is
    "an old friend from the Socialist International … The two gave each other a bear hug, for old times' sake."
    Anyone who is prepared to give the Foreign Secretary a bear hug is capable of harmonising the taxes of the United Kingdom.
    Can the right hon. Gentleman confirm that, in the words of Oskar Lafontaine,
    "our British colleagues have asked us not to use the word harmonisation, but co-ordination"?
    Is it not clear from that remark that harmonisation and co-ordination mean exactly the same?
    The Prime Minister: The moment the right hon. Gentleman gets back to his debating points, he reckons he is on strong ground. As he is quoting, perhaps it would be best if I quoted to him the former Chancellor of the Exchequer, who said:
    "The next time that I have a discussion with William, I shall seek to reassure him that the views of Oskar Lafontaine are not likely to be the views of the European Union."
    That is what the Conservative former Chancellor said.
    The truth of the matter—and the strategic error that the right hon. Gentleman has made—is that the shadow Secretary of State for Trade and Industry is running Conservative European policy. That is where the

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    Conservative party is today. It has decided that it wants to be an anti-European party, and it will get support from certain quarters for that.
    The Conservatives can have that support. I will defend the British national interest—that is the difference between us—because it requires this country to be part of Europe. It is important that we are a part of Europe. Whatever smart debating points the Leader of the Opposition makes in this debate, the truth is that his position would return us to the years of Conservative isolation. There is no better example of that than the beef war. Two years of Conservative diplomacy; a declared war on Europe; no result. Eighteen months of Labour Government; the ban lifted. End of story.
    Mr. Hague rose—
    Hon. Members: Oh!
    Madam Speaker: Order.
    Mr. Hague: Whenever the Prime Minister mentions smart debating points, we know that he has none of his own, and he has just shown that again. There is nothing anti-European about believing that we should decide our taxes here in the House of Commons. The truth is that the right hon. Gentleman now has to ask the Germans to use a different word. He has become the Basil Fawlty of Europe. Every time he meets a German, he goes around saying, "Don't mention the tax harmonisation." The letter that I have here is yet another example of his giving one impression in Europe and another in the United Kingdom. We have no guarantees that any commitment that he makes in the House he will keep in the Council of Ministers; that any principle to which he was attached last week is a principle to which he is attached this week; or that we can be confident that any promise he makes now he will stand by tomorrow.
    The Prime Minister: I do not think that the right hon. Gentleman is getting very far on this matter. I simply repeat that there is a debate in Europe about the future direction of Europe. There is a debate about economic reform, and tax is a part of it. We will win that debate if we stay firm but stay engaged. The choice is between two different approaches to Europe. The only Government who agreed to tax harmonisation were a Conservative Government. For example, at the Vienna summit this week, we will ask that the duty free issue be reopened. Why do we have to ask that? Because the Conservative Government agreed to harmonisation and the abolition of duty free. We will try to get our way by staying firm to the British national interest, but staying engaged in Europe. The right hon. Gentleman has given in to the Euro-sceptic wing of his party, which is running his policy. He wants to glory in every obstacle in Europe because it is an excuse to be anti-European. We see those obstacles as things to be overcome because it is in this country's interests to be part of Europe. That is the difference between us.
    Mr. Ivan Lewis: Will my right hon. Friend consider asking his right hon. Friend the Secretary of State for Trade and Industry whether he will incorporate a new clause into the fairness at work legislation—the right of hereditary peers to claim unfair
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    dismissal when they are sacked simply for pursuing the objectives of their employer? Furthermore, will he ensure that in such cases the compensation cap is withdrawn?
    The Prime Minister: Lord Cranborne said to the Leader of the Opposition, "Back me or sack me", and the right hon. Gentleman succeeded in doing both.
    Mr. Paddy Ashdown: I hate to change the subject, but is the Prime Minister aware that more than 300,000 pensioners whose incomes are too low for them to pay tax are still waiting for the Treasury to decide whether, as promised, there will be a rethink on the Budget decision to remove from them a tax refund worth on average £75 to each of them? Is the Paymaster General still dealing with the matter?
    The Prime Minister: No. My right hon. Friend the Chancellor has already made it clear that we shall let those pensioners know as soon as a decision has been reached, but a whole series of issues has to be decided alongside that and we shall deal with the matter as soon as we possibly can.
    Mr. Ashdown: I am surprised to hear the Prime Minister say that, as I have a letter from the Treasury less than two months old indicating that the Paymaster General is still dealing with the matter. Indeed, six months ago the Paymaster General himself promised that it would be dealt with "as soon as possible". Is it not clear that there is confusion over the matter and that the price of the Prime Minister's desire to preserve a lame-duck Minister is now being paid out of some of the poorest pockets in the land? For their sake if for no other, is it not now time to resolve the matter?
    The Prime Minister: We shall make the decision as soon as we possibly can. We have said that and we shall keep to it.
    Miss Anne Begg: As a young person struggling to walk, I had cause to be grateful to the Motability scheme for supplying me with a car, which transformed my life. Will my right hon. Friend join me in congratulating the previous Labour Government, and Alf Morris in particular, on introducing the Motability scheme and Motability, which will hand over its millionth car this week? Can he assure me that the present Labour Government will continue to pursue policies that will make it easier for disabled people to play a full part in society?
    The Prime Minister: I am delighted to participate in the events surrounding the 21st anniversary of Motability. I am happy to pay tribute to the previous Labour Government, and Lord Morris in particular. As my hon. Friend will know, the extra money provided under the new deal to help disabled people to work—almost £200 million—will be well used. The disability rights commission, on which we intend to legislate in the coming Session, will also make sure that the barriers to disabled people playing a full part in society are removed.
    Mr. Richard Page: The Prime Minister will be aware of the distress and hurt felt by Maxwell pensioners, hundreds of whom live in my constituency, when they learned that

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    Robert Maxwell had stolen their pension funds. As more of Robert Maxwell's activities are revealed—and bearing in mind that he was a former Labour Member and an enthusiastic Labour supporter—can the Prime Minister assure the House that all the Administration have clean hands as regards dealing with that crook?
    The Prime Minister: Yes, and if the hon. Gentleman has any evidence to the contrary, he should supply it.
    Fiona Mactaggart: Does my right hon. Friend agree that, as people await the decision of the Bank of England Monetary Policy Committee, it is worth reflecting on the difference that the independence of that body has made and comparing the present position with that of 10 years ago, at the same point in the economic cycle, when there were 1 million more people unemployed than today, when inflation was twice what it is today, when interest rates were 13 per cent. and when we had a Tory Government?
    The Prime Minister: We are, of course, hitting the inflation target, and long-term interest rates are at their lowest level for more than 30 years. The reason why we are able to achieve that is that we have in place Bank of England independence and proper controls on spending that allow us to keep public finances under control and put an extra £40 billion into our schools and hospitals. As the deputy leader of the Conservative party repeated just a few days ago, the Conservatives are against Bank of England independence, and we know that they are against our spending proposals. We are in a better position this economic cycle precisely because we have pursued the policies that they oppose.
    Mr. Edward Garnier: Can the Prime Minister give me three good reasons why the Paymaster General should remain in office?
    The Prime Minister: I have always said, first, that anybody who is guilty of serious wrongdoing will be dismissed. I have secondly, however, made it clear that I will always, with any Minister, go on the basis of evidence, not on the basis of what the media say or what the Conservative Opposition say.
    Angela Smith: Is my right hon. Friend aware that the independent panel for special educational needs has branded Essex county council one of the worst in the country for supporting pupils with special needs? Is he further aware that one of the worst problems that that causes is delays in assessment which mean that children cannot reach their full potential? Can he assure the House that the Government will provide that all children, especially the most vulnerable—even those in the Tory-led Essex county council area—will be given full support by the Government to help them reach their potential? What action can he take to ensure that Essex county council fulfils its obligations?
    The Prime Minister: The Government expect all local authorities to meet the needs of young people with special educational needs. We have given Essex county council an extra £29 million for education—an increase of almost 6 per cent. The Government have launched a £60 million action plan for pupils with special educational needs—
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    a doubling of the central funding available. There is no reason at all why the needs of those children should not be properly looked after. I stress to my hon. Friend that it is an investment when we pay that money over to councils and they use it properly. Those children have abilities and, if we give them the right support, those abilities can flourish. I expect and hope that all councils will follow the Government's lead.
    Mr. Malcolm Moss: Does the Prime Minister have any regrets about the clumsy and arrogant way in which his Government lectured Oskar Lafontaine, the German Finance Minister, about how best he might present European tax plans? Does he realise that that will not be allowed to hide the truth from the British people—that what our European partners really intend is tax rises for this country?
    The Prime Minister: The only way in which we shall get a serious debate on this issue is on the basis of fact. I have read out to the hon. Gentleman a list of leaders of other European countries who have made it clear that they do not support increasing taxes across Europe. On the contrary, they want to get taxes down. The hon. Gentleman has to come to terms with the psychology of the Conservative party today. Every time there is a problem in Europe or someone makes a remark in Europe, the Conservatives are desperate to use that as an excuse for their policy. It is not in the British national interest to adopt that attitude. It is in the British national interest to make sure that we win arguments in Europe, not use arguments as an excuse for turning our back on Europe.
    Mrs. Rosemary McKenna: Yesterday I visited the showroom of the Scottish Apparel Group here in London. I was told by the managing director of Traditional Weatherwear, manufacturers of high-quality waterproof clothing in my constituency, that the company had increased turnover by 30 per cent. and exports by 40 per cent. in the past six months. It has taken on 12 apprentices. Will not the attitude of the Opposition in talking down the economy damage the prospects of those young people and of hard-working manufacturers throughout the country?
    The Prime Minister: I congratulate the company to which my hon. Friend refers. The best way of dealing with whatever economic difficulties we face over the next year is to hold firm to the key policies that the Government set out: proper Bank of England independence, proper rules on public spending, extra investment in our future—particularly in education, skills and apprenticeships, as she rightly says—and making sure through the new deal and the working families tax credit that people have incentives to work. That is the best policy to weather any storm that comes.
    Mr. Nick St. Aubyn: Since 1985, Britain has saved tens of billions of pounds thanks to the hard-won rebate from the European Union. Under the previous Government, the EU rebate was not negotiable. Is the EU rebate still not negotiable, and how long will it remain so under this Government?
    The Prime Minister: Even in France—to deal with the point that was made earlier—I made it quite clear that

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    the British rebate will stay. It will stay because it is right and because, even after we take account of all the changes in Europe over the past few years, we are a net contributor above countries with higher incomes than ours. That is why it is right. I do not doubt that all sorts of other countries in Europe will put all sorts of things on the table and raise all sorts of issues. We shall raise some of our own issues as well, but I repeat that the best way to get the result that we want is to stay engaged in the debate, not to walk away from it.
    Ms Claire Ward: Is my right hon. Friend aware that, in the first decade of the new millennium, for the first time in our history, the over-60s will begin to outnumber the under-18s? Does he agree that that will require a new policy approach to matters such as health, welfare, housing and work? Does he welcome the debate of the age campaign, which is holding an exhibition in the Upper Waiting Hall of the House and which will raise public awareness of that demographic shift and ensure that we start to make plans for the future?
    The Prime Minister: I welcome Age Concern's debate of the age—indeed, I have participated in it. It is excellent that we are looking at how the senior citizens of this country can play a part in all the various work of this country. As my hon. Friend will know, I make particular reference not only to the additional money that we are giving to the poorest pensioners, but to the free eye tests, concessionary travel and winter fuel payments that help some of the elderly. However, the importance of the debate of the age is that it can enable us to get the very best from senior citizens, who have an immense amount to contribute to this country, if they are given the chance to do so.

    Independent Nuclear Deterrent
    Dr. Julian Lewis: If it is his policy to maintain an independent nuclear deterrent until it is possible to verify the permanent abolition of all other countries' mass destruction weapons.
    The Prime Minister: We made it clear in the strategic defence review that, while large nuclear arsenals and the risk of proliferation exist, our minimum deterrent will remain a necessary element of our security.
    Dr. Lewis: May I congratulate the Prime Minister on his belated conversion to the cause of nuclear deterrence, now that the danger has largely receded? Does he recall that, on a previous occasion when I asked him a question, he evaded it by referring back 20 years, to my past membership of an extremely dodgy organisation—the Labour party—in the 1970s? Will he now clear up a mystery about his membership of an even more dodgy organisation in the 1980s? Will he tell the House, once
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    and for all, why, at the height of the cold war, he belonged to the Campaign for—unilateral—Nuclear Disarmament; when he finally decided to leave it; and why, as recently as 1994, he allowed his office repeatedly and wrongly to deny that he had ever even been a member of it?
    The Prime Minister: We can see why they are such an effective Opposition. I thank the hon. Gentleman for his congratulations to me, but all I can say is that my congratulations go to the Labour party for having had the sense to get rid of him.

    Engagements
    Mr. David Borrow: Has my right hon. Friend had an opportunity to read the report of the Trade and Industry Committee on car prices paid in the United Kingdom, which are excessive compared with those in the rest of the European Union? Will he assure me that he will take every opportunity to ensure that UK car purchasers will no longer be ripped off and that they will pay the same price as purchasers in the rest of the EU?
    The Prime Minister: The Government welcome the Trade and Industry Committee's report. We are particularly interested in its proposals that would enable car buyers in this country to have access to lower prices such as those currently available on the continent. Under the new Competition Act 1998, there will be financial penalties of up to 10 per cent. of UK turnover for firms that infringe the prohibitions. I am confident that those new powers will be effective. I believe that, with the new powers in the Competition Act, we shall be able to take action in the interests of Britain's consumers.
    Mr. Dafydd Wigley: Is the Prime Minister aware of the anger and dismay felt in Wales at the way in which he and his colleagues are trying to place a centralist straitjacket on almost every aspect of the National Assembly for Wales? If the membership, leadership and policies of the National Assembly are subject to a London veto, what on earth is the point of setting it up in the first place?
    The Prime Minister: First of all, they are not. Secondly, the right hon. Gentleman has been campaigning for years and years for an Assembly in Wales. We give him an Assembly in Wales, and he still complains. It will be for the people of Wales to decide which party should run the Assembly in Wales. However, given the extra support that we are managing to give schools and hospitals and given what we can do for jobs and industry in Wales, I believe that the Welsh people will back us. It would be good once in a while to get a bit of gratitude from the right hon. Gentleman for having delivered what he has wanted for so very long.

Chechnya
3.31 pm
Mr. Paul Keetch(by private notice): To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the tragic killings of three Britons yesterday in Chechnya.
The Minister of State, Foreign and Commonwealth Office (Mr. Tony Lloyd): It is my sad duty to inform the House that Russian Interior Minister Stepashin confirmed to our ambassador in Moscow last night that, as we had feared, the remains found in Chechnya on 8 December were those of Darren Hickey, Peter Kennedy, Rudolf Petschi and Stanley Shaw, the four kidnap victims abducted in Grozny on 3 October. Three of the victims were British nationals and one was from New Zealand. We express our condolences to all the families and to the New Zealand Government.
We are deeply saddened and angered by these barbaric and senseless murders. My right hon. Friend the Foreign Secretary this morning met Russian Foreign Minister Ivanov, who passed on the condolences of the Russian Government. During that meeting, the Foreign Secretary asked Foreign Minister Ivanov to speak directly with President Maskhadov, the Chechen President, so that we can find out exactly what happened to the hostages and ensure that the perpetrators of that wicked crime are pursued and brought to justice.
The victims were innocent people who were working to help to rebuild Chechnya's war-ravaged infrastructure. Our first thoughts must be for the families of the victims. We can only begin to imagine the anguish that they must be suffering at this devastating news. The Foreign Office, the police and the victims' employers are in close contact with the families to provide whatever help and advice they can at this most traumatic time. My noble Friend Baroness Symons, who has responsibility for consular affairs in the Foreign Office, will speak to the families later today. We are also in close contact with the New Zealand Government, who share our grief at this appalling act, and with the employers of the victims, whom I met at the Foreign Office earlier today.
The precise details of the incidents leading up to the tragic murders remain unclear. It seems likely that the victims were killed as a consequence of fighting between rival Chechen forces. However, I would not wish to, and cannot, speculate any further until the facts are known properly. I believe that it is right that the families of the victims should be the first to know, as soon as we are able to establish, what happened. I assure the House that every effort is being made to get to the truth.
The unstable and confused situation in Chechnya will not make that task easy. The Russian authorities admit that their writ does not run into Chechnya and the Chechen authorities are not in control of the situation. Chechnya remains extremely unsafe for British officials and it would be irresponsible to endanger any more British lives by sending our officials to that area. However, we are working closely with the Russian authorities through our embassy in Moscow and through high-level contacts with senior members of the Russian Government. Our ambassador in Moscow met Russian Interior Minister Stepashin earlier today.
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Since the kidnapping took place, the Foreign Office has been active in seeking the release of the hostages. We sought to make progress particularly through our contacts with both the Russian and Chechen authorities. We have also kept in close touch with the company and the families. Granger Telecom took the lead on the ground in accordance with the wishes of the families and in recognition of its strong links, through commercial contacts, in Chechnya. In the light of these tragic and brutal murders, we shall still co-operate with all concerned, but our first priority is to have the remains of the deceased returned to their families.
We have made it clear that we need to know what happened and what is being done to bring to justice those who committed these repugnant murders. The Government will not rest until the perpetrators of this monstrous crime have been punished.
In conclusion, it is right and proper that I should repeat the FCO's earlier pleas to all British companies, non-governmental organisations and individuals not to go to Chechnya. It is not safe. The British, Russian and Chechen authorities cannot guarantee the safety of foreigners. British citizens should not go there under any circumstances.
Mr. Keetch: I thank the Minister and Prime Minister for sending their condolences to the families, and I am sure that the whole House will join them in that. It is the families' urgent wish that the hostages' remains should be returned as soon as possible for Christian burial. I support the Minister's efforts to achieve that through the Russian Government and the Chechen authorities.
Now that the Chechen authorities have today confirmed that the killings were part of a bungled rescue attempt, will the Minister assure the House that at no stage in the future will he support the sending of British nationals to Chechnya? Does he agree that any company wishing to send its employees to such a troubled zone should be dissuaded from doing so?
Is the Minister aware that Granger Telecom, the employer of the deceased, has said that it received unclear advice from the Foreign Office? Will he tell the House what that advice was and assure us that the advice was given to the employees? Will he also tell the House what security was provided for the employees while they were in Chechnya? Will he again stress that no British citizen should go to that God-forsaken country?
Mr. Lloyd: I thank the hon. Gentleman for his remarks. I am sure that all hon. Members would want to convey their condolences to the families.
The advice that the Foreign Office has given consistently to all concerned, including Granger Telecom, is clear and unambiguous. It is simply that to operate in Chechnya is to put British lives at risk and that British citizens should not travel in that region. Tragically, these events bear out the wisdom of that advice.
We do not know the exact details of the circumstances in which the lives were taken. We know of rumours but, unfortunately, rumours abound in Chechnya. We had no notice of any attempt to rescue the hostages and we would not have advised such an attempt, given the danger that

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would inevitably be involved. Our priority was always the safety of the four individuals. Our advice, which is still consistent, is that no Briton should travel to that region.
Mr. Philip Hammond: On behalf of Mrs. Lilly Shaw, I too thank the Minister for his expression of sympathy and thank the Foreign and Commonwealth Office for taking the lead in the case of Mr. Stanley Shaw, who, although a constituent of mine, is a citizen of New Zealand.
This is not a time for recrimination or blame. Granger Telecom is based in my constituency and I ask the Minister to acknowledge the active, key role taken by the company over the past couple of months in seeking to secure the hostages' release.
Will the Minister confirm that the advice to which he referred, which was given to the company, principally consisted of drawing the company's attention to the published advice to travellers? As of today, that advice lists 16 countries, including Sudan, Algeria and Sri Lanka, to which travellers are advised not to travel under any circumstances. British companies are doing business in many of those countries. Has the Minister reviewed all the internal correspondence at the Foreign and Commonwealth Office and all the records of conversations between his Department and the company? Is he absolutely sure that the company was sent an unambiguous message from the British Government about its presence in Chechnya? I have visited the company since the tragic events took place, and I formed the impression that the message sent from the Foreign and Commonwealth Office was not in totality as unambiguous as the Minister would have the House believe.
Mr. Lloyd: I associate myself with the hon. Gentleman's message to his constituents and their family.
I stick by the information that I have given the hon. Gentleman previously. The advice was unambiguous. I must point out that Granger Telecom met Foreign Office officials directly and did not come to talk about other countries such as Sudan. I do not want to get into a slanging match across the Dispatch Box, but I repeat that I am absolutely of the view that the advice given was specific and could not have been misinterpreted.
Mrs. Cheryl Gillan: On behalf of the Opposition, I join the Minister in expressing anger and outrage at the brutal, cold-blooded murders of Darren Hickey, Peter Kennedy, Rudolf Petschi, and Stanley Shaw. I agree with the Minister that the House's thoughts and sympathy must go first and foremost to their families who are having to come to terms with these senseless killings in the war-torn region that the men were helping to rebuild.
I thank the Minister for the details that he has given of the discussions that his Department is having with the authorities in Moscow, but will he give us a better idea of what British resources he expects to put at the Russian authorities's disposal to establish who was responsible for this atrocity? Will he also tell us, perhaps in an effort to clarify what was known by the Foreign Office, when he knew that there were separate negotiations over the release of these men, and whether the Foreign Office was consulted about them?
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Will the Minister confirm reports that the company advising on negotiations with the kidnappers was Control Risks and say whether he had any contact with that company? Will he further confirm, as my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) asked him to, that his Department really did provide clear and unambiguous advice to Granger Telecom and that the Department of Trade and Industry was also providing advice to companies operating in Chechnya? If so, could copies of that advice be made available?
Will the Minister say how, in the advice that he gives to companies, he distinguishes between countries that are dangerous and countries that are potentially lethal? Are there any other British or Commonwealth citizens in the Chechen Republic? If so, what advice have they been given, and are there any plans to help them leave the republic safely? Will he comment on reports that 10 people are still being held in captivity in Chechnya?
Finally, in the light of these tragic deaths, what lessons can be learned? Will the Minister be changing the Foreign Office procedures for informing companies about the dangers of operating in hostile regions?
Mr. Lloyd: Let me say once again as forcefully as I can that I have absolutely no doubt that the advice given was unambiguous and clear and could lead only to the conclusion that Chechnya was too dangerous a place in which to operate and that British citizens should not have been there. There is no question of reviewing the nature of that advice. It is already very clear and still stands for anyone who seeks our advice and, indeed, for anyone who ignores it.
We are aware of, I think, two other British citizens still in Chechnya. Our advice to them and those working with them has again been clear and direct, especially in the light of the taking of the hostages. Our advice to that organisation was clear and continues to be clear.
On resources offered to the Russians, I repeat that it is a matter of practical reality that the writ of the Russian authorities does not easily run in Chechnya. That is why my right hon. Friend the Foreign Secretary asked Foreign Minister lvanov to communicate with Chechen President Maskhadov in order that the Chechen authorities should begin to pursue the question of what happened and to bring those responsible for it to justice. We shall seek to bring our influence to bear at that level.
The British Government's position on the question of hostages and ransom demands has always been very clear. We do not pay ransoms. The Government confirmed that policy, which obtained under the previous Government, at an early stage. In the interests of British citizens, that is right. Nor do we advise others to pay ransom. As a Government, we were not involved in any negotiations.
Granger Telecom communicated with those responsible for taking the hostages and has been active in seeking the release of such hostages. As the issue must initially be one for the company, I am not in a position to provide any details of the process of those negotiations. At this stage, it is right and proper that information should be made available to the families before it comes into the public domain. The company has agreed with me that the families are entitled to the utmost frankness in the provision of whatever information they need to cope with their almost insupportable loss.
Mrs. Angela Browning: May I thank the Minister for his condolences to Rudi Petschi and his family, who lived in my constituency? The Minister said that he will investigate the matter. These callous and tragic deaths deserve a thorough investigation that will assist us should we ever need to go through anything similar again.
I draw the Minister's attention to a specific piece of information which deserves scrutiny. He said that the Foreign Office had no warning that an attempt was to be made to rescue the hostages. I know how difficult it is to unscramble messages about what happened. However, yesterday, the Russian section of the BBC monitoring service in Caversham supplied me with a statement that it released at 0615 hours on Sunday from the head of the Chechen security services, which identifies that they knew where the hostages were—in a hamlet on Russian soil close to the Chechen border—and anticipated that Russian forces were likely to mount a rescue. Clearly, that needs to be investigated. Given that that information was in the public domain at 6.15 am on Sunday, will the Minister investigate why the Foreign Office did not know about the threat until the news broke yesterday?
Mr. Lloyd: I thank the hon. Lady, too, for her opening remarks. I recognise that for her, as for others with a constituency interest, this is a difficult time. The four Members of Parliament who are most directly involved saw me some weeks ago precisely because they wanted to express their concern.
The hon. Lady must accept that Chechnya is a region where there is almost daily rumour, claim and counterclaim. Rather sadly, there is nothing unusual about the report that she read out. Such a report does not necessarily lead immediately to any practical action. I am aware of such statements, and certainly undertake to get to the bottom of the matter in order to piece together a proper picture of what happened and to see whether there are lessons to be learned.
In the context of the Chechnya of today, we are not dealing with a state organised in the way that we would expect elsewhere. We are dealing with a situation where banditry is the rule of law; unfortunately, our citizens were murdered by precisely that banditry.
Mr. Ian Taylor: The Minister will be aware that the parents of Darren Hickey work and live in my constituency, and I am grateful to the Minister for his condolences, which I obviously share. The Hickeys have been through a very difficult time, as have the families of the other hostages, and no news was easily available. I appreciate the fact that the Minister explained the difficulty that our embassy in Moscow has in contacting people in Chechnya.
First, will the Minister—without again going into the details of what form of notice might have been given to the company—accept that the contract was a very substantial contract to a very serious company, Granger Telecom, which it was carrying out in association with a BT engineer; and that, therefore, the Government must have at least been aware of its significance, in the middle of Chechnya, bearing in mind its situation vis-a-vis Russia?
Secondly, was any guidance or advice given to the Chechen authorities as they started their search for these four people? Were any military offers of assistance given
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in terms of advice? It would not be the first time that that had happened, but it is something that it would be good for the House—and for the parents—to understand.
Finally, is there any way that we can achieve better communications with Chechnya? What is the current situation with Russia? What lessons do we need to learn? Some other parts of the former Soviet Union are in considerable disarray; I believe that the Foreign Office must now clarify its guidance to workers on key contracts won by British companies, if there is any thought that those workers might be at risk elsewhere in that region.
Mr. Lloyd: While I recognise the importance of the contract for those companies involved, I must again repeat the clear, unambiguous advice offered by the Foreign Office—that British citizens should not operate in that area. In the end, as a Government of a free society, we have no power to compel our citizens, beyond offering such advice. Clearly, I have taken the opportunity, and will take the opportunity, to repeat to all concerned that Chechnya is a dangerous place; British citizens simply should not be there. However, I would also tell the House that it was not simply a matter of the exchange of notes. Granger Telecom did meet Foreign Office officials, who gave that advice in those very clear terms. There is no ambiguity in all this. I believe that I have now said that a significant number of times, and I hope that the House will accept that.
The hon. Gentleman asked about our relations with the Chechen authorities. No, we did not offer any military support. We had no easy way on the ground of knowing where the four hostages were. The flow of information was almost non-existent; in those circumstances, our advice would have availed but little.
Obviously, in any situation, we shall always consider the best way of releasing our citizens, and different circumstances may well offer different possibilities. However, in this specific case, a British military intervention would have been extremely dangerous, and would have placed further British lives at risk. Moreover, I do not believe that I could have guaranteed that the result would have been what those advocating that course sought.
Mr. Douglas Hogg: This is a dreadful crime. It puts one in mind of the hostage-taking that took place in the middle east a decade or so ago. Does the Minister agree—he has said so, really—that hostage-taking is encouraged by the payment of ransoms? Will he therefore accept our very strong support for his statement that no ransoms should be paid; and will he accept that the British Government will never be party to the payment of ransoms? Will he do his utmost to encourage Governments of other countries to adopt the same policy, and will he do his best to discourage all parties from even considering the payment of ransoms?
Mr. Lloyd: I am genuinely grateful for that intervention because it raises a matter of the utmost importance, which is that there is no advantage in a system where hostages are taken and ransom is systematically paid. That simply encourages the taking of hostages. All experience throughout the world demonstrates the proof of that. The continuation of a policy that makes it clear to all the parties that, as a Government, we will not pay or sanction the payment of

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ransoms is important, and it is important that it be clear and understood. Yes, of course, we seek, and will continue to seek, the co-operation of other Governments in pursuing exactly that same policy.
Dr. Julian Lewis: I am sure that the whole House is grateful to the Minister for the sensitive and sombre way in which he has been answering questions. Would he join me in urging right hon. and hon. Members to have some sympathy for the position in which the leadership in Chechnya finds itself? It is under threat from Chechen bandits, Muslim fundamentalists and the Russians, whose terrible bombardment of their country led to the chaos that is there. Will the Minister agree with me that it is understandable that the leadership in Chechnya is desperate to have help from the west to rebuild the country, and that we should pay tribute to those men who were brave enough to try to help it?
Mr. Lloyd: There is no doubt that the hon. Gentleman's comments about the difficulties facing the ordinary citizen of Chechnya and the Chechen Government have much merit. The situation of the Chechen Government is indeed far from normal governance.
We would draw strongly to the attention of the Chechen authorities the fact that, if they want assistance in the reconstruction of their country, it is vital that such horrific murders be brought to a conclusion by the successful arrest and prosecution of those concerned. Without that, countries like Britain, and Britain itself, will not be confident that the situation in Chechnya will ever be one where we are able practically to assist.

Point of Order
3.57 pm
Mr. Ted Rowlands: On a point of order, Madam Speaker. I apologise for bothering you, but may I seek your advice on the position of Welsh, Scottish and Northern Ireland Members which arises from an interesting memorandum submitted by my right hon. Friend the Leader of the House, entitled "Procedural Consequences of Devolution"? Paragraph 5 states:
"To assist the House to become more familiar with matters which will no longer be the responsibility of the relevant Secretaries of State, it is proposed that from the start of the 1998–99 Session Ministers will, where practical, indicate in their answers to questions and in debate when they are dealing with subjects they will not be responsible for after devolution."
I make no complaint, but I understand that this advice was not followed in Scottish questions yesterday or in Welsh questions today. I wondered whether, through you, Madam Speaker, we might find a way forward. I think that many Members who will be affected by these issues would like the recommendation to be acted on. I wondered whether, through you, I might find a means of encouraging Ministers to follow my right hon. Friend's recommendation.
Madam Speaker: I think that the point of order will be noted by those on the Treasury Bench, which will perhaps go some way to helping the hon. Gentleman with his query. I am sure he knows that it is entirely a matter for Ministers how they answer questions. Responses to questions have nothing to do with me. He might consider tabling a question to the President of the Council on this matter. At least that would draw the matter to the attention of the Leader of the House and the whole House, so that Members can read the document for themselves.

Opposition Day
[1ST ALLOTTED DAY]
Opposition Day

  Decommissioning and Prisoner Releases
  Madam Speaker: I have selected the amendment standing in the name of the Prime Minister.
  3.59 pm
  Mr. Andrew MacKay: I beg to move,
  That this House supports the Belfast Agreement and reasserts that the Agreement has to be implemented in all its parts; believes that several things must happen in parallel in order to build confidence, whether it be decommissioning or the release of prisoners; notes that the only organisations that can qualify to take seats in the government of Northern Ireland and can expect the early release of prisoners are those that have given up violence for good and that decommissioning is part of that; notes that since July over 200 terrorist prisoners have been released early while decommissioning of illegally held arms and explosives has yet to begin; and believes that there should be no further early releases of prisoners, and no place in the Northern Ireland Executive for their representatives in the Assembly, until there has been substantial and verifiable decommissioning.
  It is worth saying that, seven months after the signing of the historic Belfast agreement on Good Friday, it is right and proper that the House of Commons should review the progress of the agreement. This is an excellent opportunity to do so. It is clear that there is grave concern in our constituencies and in the Province about the lack of decommissioning of illegally held weapons and the fact that so many terrorist prisoners have been released early. Therefore, it is appropriate that the Opposition, on the first Supply day of the new Session, have tabled this motion.
  To pre-empt any intervention by Government Back Benchers, I wish to say that we fully recognise the huge advantages gained from a bipartisan policy on Northern Ireland wherever possible. By and large, we benefited from that bipartisan policy when we were in government, but noted that, on occasions—especially each year when we sought to renew the emergency provisions legislation—we failed to gain the support of the Opposition.
  Wherever possible, we support the Government in the bipartisan policy, but I have always maintained clearly to the Prime Minister and the Secretary of State for Northern Ireland that I cannot give them a blank cheque, and nor should I. It is our constitutional duty as the Opposition to speak out when we believe that the Government are doing something wrong, and to question further when answers are not satisfactory. That we have done, will do again this afternoon, and will continue to do.
  Dr. Norman A. Godman: I rise to intervene with some diffidence, given the right hon. Gentleman's comments about interventions by Government Back Benchers. Does he agree with the assessment by my right hon. Friend the Secretary of State that the IRA, the Ulster Defence Association and the Ulster Volunteer Force are maintaining a complete ceasefire, or does he hold a different view?
  Mr. MacKay: I will answer that point directly. The Secretary of State has the benefit of the best security advice available, and it is that those organisations are maintaining a ceasefire. I accept that, but later in my remarks I shall make the point that renunciation of violence must include—as the Prime Minister and Secretary of State have said continually—the decommissioning of illegally held arms and explosives.
  The hon. Gentleman takes a great interest in these affairs, and I am sure that he agrees that, although large-scale violence is not taking place, intimidation and so-called punishment beatings are still occurring in the Province. That is very serious, and the Secretary of State has said that, if any evidence could be passed to her, the security services and especially the Royal Ulster Constabulary would pursue it. The hon. Gentleman cannot comfortably accept that there is a total ceasefire in all forms when such intimidation takes place on certain estates on both sides of the sectarian divide.
  My party supports the Belfast agreement, because it is the extension of a process that was started by my right hon. Friend the Member for Huntingdon (Mr. Major) and Lord Mayhew during the previous Administration. It has been continued by the Secretary of State for Northern Ireland and the Prime Minister, and has led to the signing of the agreement. Without repeating what I said at the time of the agreement, I believe that it represents the best chance and opportunity for lasting peace in Northern Ireland.
  Mr. Steve McCabe: The right hon. Gentleman says that he supports the Belfast agreement, but the motion tries to create a link between prisoners and decommissioning that does not exist in the agreement. Is not the effect of the motion to undermine the agreement, even if that is not his intention?
  Mr. MacKay: The hon. Gentleman should take a bit more note of what the Secretary of State has said from the Dispatch Box. In answer to questions from me during Northern Ireland questions in October, she rightly said that prisoner release and decommissioning should go in parallel. In answer to questions from Opposition Members on 2 December, she said:
  "Let me make our position absolutely clear: decommissioning is an integral part of the agreement; it is not a precondition but an obligation."—[Official Report, 2 December 1998; Vol. 321, c. 867.]
  She is absolutely right. I support her in that respect. I wish that the hon. Gentleman had done the same.
  Mr. Andrew Robathan: The issue of linkage is fundamental, as I am sure that my right hon. Friend will agree. Was not one of the Mitchell principles that no one was allowed to take part in the peace discussions unless they had forsworn violence for good? Yet we know that, since the Good Friday agreement and beforehand, many paramilitary groups, particularly the IRA, have been involved in many beatings and, in the case of the IRA, the murder of a man called Andrew Kearney in Belfast. Is not that the linkage? It has been linkage throughout, yet some now try to deny it.
  Mr. MacKay: My hon. Friend makes a good point. I underline that point by quoting the Prime Minister at the

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  Dispatch Box in response to a question from my right hon. Friend the Leader of the Opposition. On 6 May, he said:
  "Again, I agree with the right hon. Gentleman. It is essential that organisations that want to benefit from the early release of prisoners should give up violence. Decommissioning is part of that, of course".—[Official Report, 6 May 1998; Vol. 311, c. 711.]
  I entirely agree with the Prime Minister. The renunciation of violence itself is not enough without decommissioning.
  Mr. John Gunnell: It is right for the right hon. Gentleman to seek a debate on an issue on which there is some debate to be had, but does he intend to put the matter to the vote? It seems unreasonable to put on public record a division of this sort—something which we did not do in opposition. That could be harmful to the agreement. I ask the right hon. Gentleman to think seriously about that. I would be unhappy if I had to vote on the matter.
  Mr. MacKay: I can answer the hon. Gentleman clearly. We had expected, hoped and assumed that our motion would not need a vote, but would be passed by the House. As we now see an amendment on the Order Paper, I suspect, Madam Speaker, that you might well be calling a Division at about 7 o'clock.
  The hon. Gentleman said that we should not have votes on matters concerning Northern Ireland. I wish that he and his colleagues had taken that advice when, year in and year out, they ratted on emergency provisions and prevention of terrorism legislation, when bombs were going off here on the mainland and in Northern Ireland, murdering innocent people. At best they abstained, and at worst they voted against such legislation. They were soft on terrorism. I am glad that they have now changed. I had not intended to raise this. They have chosen to do so. The facts and the votes recorded in Hansard speak for themselves.
  Mr. John Home Robertson: The right hon. Gentleman seems to want it both ways on bipartisanship, and now he seems to have an a la carte approach to the Belfast agreement. He knows perfectly well that the whole House, and certainly my right hon. Friend the Secretary of State, are completely committed to the whole agreement, including decommissioning, so why on earth does he even contemplate voting against the Government on the issue, knowing what message that will convey on the island of Ireland?
  Mr. MacKay: With the greatest respect to the hon. Gentleman, let me say that the simple truth is that the Prime Minister and the Secretary of State have always been right to say that the Belfast agreement cannot be cherry-picked. I am not cherry-picking; the paramilitaries are cherry-picking. We are backing the Belfast agreement, and anyone who does so should support our motion. As I deploy my arguments, the hon. Gentleman will see why.
  Mr. Gareth R. Thomas: Will the right hon. Gentleman give way?
  Mr. MacKay: This will be the last time for a while. No one else will be called to speak in the debate if we continue like this.
  Mr. Thomas: How many paramilitary weapons did the right hon. Gentleman's party manage to get
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  decommissioned? How many Opposition Supply day debates did we initiate on that subject? Does he not recognise that proper implementation of the Good Friday agreement—not attempting to rewrite it, as his party is seeking to do—is the best way to secure decommissioning?
  Mr. MacKay: That has confirmed my worst fears. That pathetic and irrelevant intervention is not fit for a response.
  At the time of the Belfast agreement, we were deeply uncomfortable about the early release of terrorist prisoners, as were the great majority of decent, law-abiding people in this country.
  Mr. Brian White: Will the right hon. Gentleman give way?
  Mr. MacKay: I shall proceed a little.
  With the greatest reluctance, we swallowed our concerns, because we realised that early releases were part of a wider package. As the Secretary of State and the Prime Minister said at the time, it was not to be cherry-picked, and had to be seen in the round—complete.
  It is absolutely clear under the Good Friday agreement that paramilitaries whose political associates had signed the agreement would decommission all their illegally held arms and explosives over two years, and, at the same time, the Government—starting when the Northern Ireland (Sentences) Act 1998 became law in July—would release terrorist prisoners early, providing that the Secretary of State was satisfied that they were not likely to return to violence or associate with other paramilitaries.
  What has happened? The Government—I do not quibble with this, as the Secretary of State knows—have released a number of terrorist prisoners early, to show good faith and that they were keeping their part of the Belfast agreement bargain. Seven months on, not one gun or ounce of Semtex has been handed in, but more than 200 terrorist prisoners have been released early. To say the least, that is hugely disproportionate.
  Any reasonable person looking at the scene in Northern Ireland would say that, seven months on—more than a quarter of the way through the two-year decommissioning period—some weapons should have been handed in. After a mere three months of the two-year period for early release of terrorist prisoners, half have already been released.
  Mrs. Maria Fyfe: Has the right hon. Gentleman considered whether his speech will give more aid and comfort to those who voted for the agreement or to those who voted against?
  Mr. MacKay: The best aid and comfort that I can give to those who voted yes—I campaigned for a yes vote, along with the Secretary of State—is to make sure that the Prime Minister's pledges at the Balmoral agricultural show, and subsequently at the university of Ulster at Coleraine, are met. Having returned from the Province within the past few hours, I can tell the hon. Lady that a large number of people who voted yes feel deeply disillusioned and let down by the Prime Minister, because

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  they believe that pledges that he gave in the referendum campaign and from the Dispatch Box to the House of Commons have not yet been met.
  Mr. Stephen Day: Is my right hon. Friend aware that members of the public, not only in Northern Ireland but throughout the United Kingdom, are appalled and cannot understand the logic of continuing to release terrorists without the decommissioning of arms? They are bemused and puzzled. Many of my constituents have written to me about this issue, and are delighted that my right hon. Friend has had the courage to face reality.
  Mr. MacKay: I agree with my hon. Friend that any reasonable person would be perplexed, confused and disappointed that, seven months on, no guns or Semtex have been handed in, yet well over 200 terrorist prisoners have been released early. That is grossly disproportionate, and it calls into question whether any decommissioning will take place.
  Mr. White: Is it not true that, when the previous ceasefire took place, the Conservative Government released more prisoners? Prisoners were released when violent acts were still being carried out, whereas now there is no violence.
  Mr. MacKay: I am grateful to the hon. Gentleman for raising that point. Labour Members, including the hon. Gentleman, have a very limited memory of what happened in the previous Parliament. We increased remission to 50 per cent. to bring Northern Ireland law into line with that in the rest of the United Kingdom. That did not involve decommissioning, and it did not entail the two-thirds remission that is now in prospect. Under the agreement, every terrorist prisoner will be released within two years. The two situations are not comparable, so I am afraid that the hon. Gentleman has misled the House.
  It is worth while quoting the then Secretary of State during the Second Reading debate on 30 October 1995. He said:
  "The House will be reassured to know, however, that many of those who have been sentenced for the most heinous offences would under the provisions of the Bill remain in prison until at least the end of the first decade in the next century."—[Official Report, 30 October 1995; Vol. 265, c. 26.]
  That is not happening now. I do not quibble with that, but to make such comparisons is ill advised and a mistake.
  Mr. Robert McCartney: Does the right hon. Gentleman agree that no comparison can be made, because many of the most serious criminals being released under the current scheme have been charged with murder and sentenced to life, whereas, under the previous arrangements, there was no remission for those sentenced to life imprisonment?
  Mr. MacKay: The hon. and learned Gentleman, with his considerable professional experience, is entirely right, and I concur with everything he says.
  Mr. Lembit Öpik rose—
  Mr. MacKay: I shall allow one last intervention, as the hon. Member for Montgomeryshire (Mr. Öpik) represents the Liberal Democrats on these matters.
  Mr. Öpik: Perhaps I can get the right hon. Gentleman back to his speech. Will he clarify an important point? He
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  said that many people in Northern Ireland were turning away from their decision to support the agreement. Will he confirm unequivocally that the Conservative party remains absolutely committed to the spirit and to the letter of the Good Friday agreement?
  Mr. MacKay: I am happy to confirm that, as I said at the beginning of my speech. The best way to reassure the doubters who voted yes but are now uncertain and disillusioned is to ensure that decommissioning takes place, and that the proposal in our motion is implemented. An increased number of people would then support the agreement, instead of being disillusioned.
  It would be remiss of me not to touch briefly on two other points. First, I congratulate the right hon. Member for Upper Bann (Mr. Trimble), the First Minister of the Northern Ireland Assembly, who this week collects his Nobel prize in Norway. He is absolutely right to say that he cannot, should not and will not appoint Sinn Fein Ministers to the Executive until substantial and verifiable decommissioning takes place.
  I hope that hon. Members throughout the House will agree that it is not possible to be a Minister in any part of the United Kingdom—in any free and democratic society—and run a Department and a country, or a province, while maintaining a fully armed private army. That is incompatible with democracy, and should be denounced from the House of Commons. The right hon. Member for Upper Bann will have our full support in not appointing Sinn Fein members as Ministers until there is substantial and verifiable decommissioning.
  My second point is not entirely connected with the motion, so I hope that you will bear with me, Madam Speaker. There has been further discussion in Downing street today about north-south bodies, and we naturally welcome that. I believe that resolution of the discussions on north-south bodies may well take some time, but that is not necessarily a problem: tough, hard bargaining is going on, and for my part I wish it to be left to the parties in Northern Ireland to resolve the problems. I believe that they will resolve those problems satisfactorily, but I am not so certain that the decommissioning issue will be resolved.
  It will not be a lack of resolution on north-south bodies and the setting up of institutions that brings down the process. I expect that to be achieved, albeit, perhaps, over longer than the next few days. What I fear is that, without decommissioning of weapons illegally held by the paramilitaries, not only will confidence in the process evaporate, but an Executive will not be set up, because—rightly, as I have said—the right hon. Member for Upper Bann will be unable to appoint Ministers whom, under the legislation, he would otherwise appoint from Sinn Fein.
  In the last week, the Prime Minister has replied in a letter to my right hon. Friend the Leader of the Opposition. I want to draw attention to a specific aspect of that letter. I ask the Under-Secretary of State, if he has the letter to hand, to look at the first paragraph on page 2, in which the Prime Minister writes—this is consistent, as it largely reiterates what the Secretary of State told me on the Floor of the House last week—
  "The best prospect of the completion of decommissioning within the two year period is by implementing the Agreement, and thereby removing all excuses from those in possession of arms."
  I take issue with the Prime Minister on that. It rings alarm bells. It leads me to believe that every single terrorist prisoner will be released without one ounce of

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  Semtex or one gun being handed in. Let me put this to the House. If we—heaven forbid—were Gerry Adams, or one of the Loyalist paramilitary leaders, and if all our prisoners were being released by the Government, what incentive would we have to hand in any guns or explosives?
  The last three sentences of our motion probably constitute the only part with which the Secretary of State disagrees. I hope so, because the rest consists entirely of direct quotations from the Prime Minister. The words
  "to be implemented in all its parts"
  are a quotation from what the Prime Minister said at Balmoral on 14 May. On 20 April, from the Dispatch Box, he used the words:
  "several things must happen in parallel in order to build confidence, whether it be decommissioning … the release of prisoners".— [Official Report, 20 April 1998; Vol. 310, c. 484.]
  On 6 May, from the Dispatch Box, he said:
  "The only organisations that can qualify to take seats in the government of Northern Ireland and can expect the early release of prisoners are those that have given up violence for good … Decommissioning is part of that".—[Official Report, 6 May 1998; Vol. 311, c. 711.]
  I hope that, in the interests of consistency, Labour Members will support the motion. I presume that—because it is factually correct—the Secretary of State will also support our observation
  "that since July over 200 terrorist prisoners have been released early while decommissioning of illegally held arms and explosives has yet to begin".
  That is factually correct. It is irrefutable.
  Ms Jean Corston: Will the right hon. Gentleman give way?
  Mr. MacKay: No. I am concluding my speech now.
  Where the disagreement comes in is clear from the Prime Minister's response to my right hon. Friend the Leader of the Opposition. We say:
  "there should be no further early releases of prisoners, and no place in the Northern Ireland Executive for their representatives in the Assembly, until there has been substantial and verifiable decommissioning."
  By voting against and tabling the amendment, the Government must disagree with that.
  Unless the Secretary of State and the Prime Minister draw a line in the sand and say, "No further terrorist prisoners will be released until"—
  Ms Margaret Moran: Will the right hon. Gentleman give way?
  Mr. MacKay: No. I have just said that I am concluding my speech.
  If the Secretary of State says that no further terrorist prisoners will be released until there is substantial and verifiable decommissioning, she has a real chance of getting decommissioning. If she does not do that, she will not.
  If the Secretary of State is going to say to me, "I will be in breach of the agreement," I respectfully say to her that I do not believe so. She has been more than
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  generous—as she knows, in my eyes, somewhat too generous—by already releasing more than 200 terrorist prisoners in the first three months of the two-year period in which she is entitled to do so. Their representatives have decommissioned nowt during the first seven months, so she is entitled to halt prisoner release until decommissioning takes place.
  I and my colleagues sincerely believe that the only way in which to obtain decommissioning from all the paramilitaries on both sides of the sectarian divide is to halt prisoner release. We also believe passionately that, unless there is substantial, real and viable decommissioning, the process that the Secretary of State and I support, which we started and which she has sustained, will be ruined. That would be the hugest possible pity for the people of Northern Ireland, so I call on the House to support our motion.
  4.27 pm
  The Secretary of State for Northern Ireland (Marjorie Mowlam): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
  "recognises that the Good Friday Agreement represents an historic opportunity to bring agreed government and political stability to Northern Ireland; acknowledges the progress which has been made by the British and Irish Governments and the Northern Ireland parties in reaching and implementing the Agreement; and believes the only way forward for the people of Northern Ireland to find lasting peace is for the Governments and the parties to move urgently to implement every aspect of the Agreement in full."
  I have listened carefully to the right hon. Member for Bracknell (Mr. MacKay) and I guarantee that, given the chance, I will answer every point that he has raised. Therefore, I welcome the opportunity that has been provided by the Opposition to discuss how the Good Friday agreement is being implemented.
  Like many of my colleagues—in view of the questions that they have asked—I believe that the agreement that was endorsed by the people of Northern Ireland and of the south represents the most significant development in Northern Ireland politics for a generation. By implementing it in full, there is a unique opportunity to build a peaceful future for all the people of Northern Ireland. I want to return later to what I think is the basic contradiction in the argument of the right hon. Member for Bracknell. He accepts the security advice that there is an unequivocal ceasefire involving three groups. That is the basis of the agreement. He cannot have it both ways by arguing that that ceasefire is not being maintained, but I will develop that argument later in response to his points.
  I welcome, too, the Opposition's support, in particular the help of the right hon. Member for Huntingdon (Mr. Major), the right hon. Member for Bracknell and several of their lordships during the yes campaign. I also acknowledge the important role, which the right hon. Member for Bracknell mentioned, that was played by previous Governments in making the agreement possible.
  The previous Government took risks and they were right to do so. Their role was acknowledged clearly by Senator Mitchell during last week's Dimbleby lecture when he said:
  "The Good Friday Agreement of 1998 traces its lineage to the Anglo-Irish Agreement of 1985 and the Downing Street Declaration of 1993 … Tony Blair and Bertie Ahern were brilliant in bringing the process to conclusion, but they would be the first to acknowledge that it was their predecessors who set the stage."

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  They set the stage in terms of the agreement and, particularly, of two aspects of the agreement which the right hon. Member for Bracknell mentioned—decommissioning and prisoner releases—and to which the Opposition motion refers. They made those difficult choices, which started the process of bringing us to where we are today.
  The level of remission available to terrorist prisoners in Northern Ireland has changed alongside developments in the peace process in the past decade. Remission was reduced in 1989 following a particularly horrific year, in which 91 people were killed in Northern Ireland. In 1995, the situation improved. Although punishment beatings and killings continued and no progress was made on decommissioning, the Government of the day judged that the ceasefires were being maintained and that sufficient progress had been made to enable rates of remission to be increased to one half. The Northern Ireland (Remission of Sentences) Act 1995 resulted in the accelerated release of about 240 prisoners and continued despite the breakdown of the IRA ceasefire. Therefore, the issue of the release of prisoners was not new when the parties agreed the provisions in the Good Friday agreement and remission rates were increased to two thirds in 1998.
  The desire to achieve the decommissioning of all paramilitary weapons has also been a part of that process for many years. Again, its history can be traced to previous Governments; first, to the insistence that actual decommissioning would be a pre-condition for talks between loyalists and republicans to take place; then, to the abandonment of that pre-condition following the report of the international body in 1996. Again, the previous Government took a risk—one that paved the way for the opening of talks in June that year—and we fully supported their action.
  Decommissioning is an essential part of the Good Friday agreement. Under the agreement—in paragraph 3 on page 20—all participants
  "reaffirm their commitment to the total disarmament of all paramilitary organisations. They also confirm their intention to continue to work constructively and in good faith with the Independent Commission, and to use any influence they may have, to achieve the decommissioning of all paramilitary arms within two years … in the context of the implementation of the overall settlement".
  As a Government, our attitude to decommissioning is crystal clear. We want it to take place and we want it to start now.
  Mr. Robert McCartney: Does the right hon. Lady accept that there is no comparison between those previous remissions—under which there was no remission for the most dangerous prisoners, who had been sentenced to life imprisonment—and the present scheme, which allowed the release of the murderers of the two corporals?
  Marjorie Mowlam: First, as I outlined in my introduction, what is happening is a progression from what happened with previous schemes under previous Governments. Secondly, the nature of the prisoner releases is a result of the Good Friday agreement and of the Northern Ireland (Sentences) Act 1998, which followed from it, and laid down clear regulations and rules. For example, people should be allowed out on
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  licence for a specific period and, if they broke the licence, they would go back to prison. There are both similarities and differences.
  Mr. Douglas Hogg: Does the right hon. Lady agree that, at the present rate of progress, there is a serious risk that all, or at least most, of the relevant prisoners will be released before a single weapon is decommissioned? Does that accord with her construction of the agreement? If it does not, when will she draw a line and say that no more prisoners are to be released until there has been substantial decommissioning?
  Marjorie Mowlam: As the right hon. and learned Gentleman has implied, both those issues are dimensions of the present agreement. It has always been the case that progress has to be made in all parts of the agreement for it to work. If progress is not made on all dimensions together, the agreement will not work. It is important for the right hon. and learned Gentleman to remember that much work has been done on different dimensions of the agreement in the intervening months since it was drawn up and put to a referendum and when the first meeting of the Assembly was held, in July. The right hon. and learned Gentleman is saying that he considers that there has been too much progress on one dimension and not enough on another. Of course it is uneven; anybody can see that, but it is important to remember that it takes time to implement the agreement. In the Dimbleby speech last week, Senator Mitchell said that reaching the agreement was difficult and that implementing it is also difficult. It is now important to make progress on all fronts and that will take time.
  Of course progress is faster on some aspects than on others. We have a shadow Executive, but not an Executive; we have dialogue on cross-border implementation bodies, but we do not have cross-border bodies. Progress is being made on some matters faster than on others. In my view, it is too early to call a halt on any aspect. The agreement has no preconditions and states that all aspects of it have to move in parallel. Attempts have been made to find a way forward for 12 weeks—since the summer recess. Opposition Members are too quick to attempt to call a halt to one dimension of the agreement.
  Mr. Hogg: I am grateful to the right hon. Lady. Of course I understand what she is saying to the House and that she is anxious to retain the Opposition's support for her policy. She is much more likely to retain that support if she tells the House at what point she is prepared to draw a line. The present position suggests to us that all or at least most prisoners could be released without a single weapon being decommissioned. We want to know at what stage, how soon and in what circumstances will she say that no more prisoners are to be released until there has been substantial decommissioning.
  Marjorie Mowlam: The right hon. and learned Gentleman and I approach the problem in different ways. He wants to know when I will draw a line and stop a particular aspect of the agreement. I want to see what right

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  hon. and hon. Members on both sides of the House can do to make sure that we make progress on all dimensions so that the problem that he describes no longer exists.
  Several hon. Members rose—
  Marjorie Mowlam: I shall make one more point to the right hon. and learned Gentleman and then I shall make a little more progress before taking further interventions.
  The right hon. and learned Gentleman referred to halting the accelerated release of prisoners. He well knows that that can be done under the agreement if the ceasefire is no longer unequivocal or is no longer maintained. That is the basis in the agreement and in the Northern Ireland (Sentences) Act 1998 of calling a halt to the process.
  At the beginning of his speech, the right hon. Member for Bracknell made it clear that he accepts from the security forces, the police and from the advice to me that the ceasefire is intact. Therefore, there is no basis in the agreement for me to act when the evidence—not allegations—that I receive is that the ceasefire is valid.
  Mr. MacKay: Will the Secretary of State give way?
  Marjorie Mowlam: I shall make a little more progress first before giving way to the right hon. Gentleman.
  Mr. MacKay: Will the right hon. Lady give way on that point?
  Marjorie Mowlam: I shall give way when I have made some progress.
  We made it clear at the outset that decommissioning is an obligation, not an option, under the agreement. We and the Irish Government are doing all that we can to hold the parties and the respective paramilitary organisations to that obligation. Both Governments are clear that the parties signed up to complete the decommissioning of all arms within two years—it is important that Opposition Members take note of that.
  Mr. Owen Paterson rose—
  Mr. MacKay rose—
  Marjorie Mowlam: I shall give way to the right hon. Member for Bracknell first.
  Mr. MacKay: The Secretary of State rightly quoted my response to the hon. Member for Greenock and Inverclyde (Dr. Godman) when I said that I accepted the security advice to her that there was a ceasefire, but does she accept that a ceasefire is not the same as the total renunciation of violence? Let me quote again what the Prime Minister said at the Dispatch Box:
  "Again, I agree with the right hon. Gentleman. It is essential that organisations that want to benefit from the early release of prisoners should give up violence. Decommissioning is part of that, of course"—[Official Report, 6 May 1998; Vol. 311, c. 711.]
  Her response to my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg) has given us the clear impression, I am afraid, that every
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  prisoner could be released without any decommissioning. That would be unacceptable and I cannot believe that she meant to give that impression. I give her this opportunity to correct the record.
  Marjorie Mowlam: The right hon. Gentleman must understand that peace is a process: it is not obtained by a switch that one can flip. While the process is being developed, some dimensions move quicker than others. Therefore, at the moment, we have unevenness between different dimensions. That is the nature of the difficulty of implementing an agreement, just as it was difficult to reach that agreement. I emphasise to the right hon. Gentleman that what is important is that every comment that my right hon. Friend the Prime Minister and I have made has been in line with the Good Friday agreement and its implementation.
  Mr. Robathan: The right hon. Lady says that developments must be in line with the agreement. The Prime Minister said on 14 May that one of the factors to be taken into account in clarifying whether the terms and spirit of the agreement had been met was that
  "the ceasefires are indeed complete and unequivocal; an end to … beatings".
  Is the Secretary of State satisfied that there has been an end to beatings or are there so-called punishment beatings week in and week out on the streets of west Belfast? Has the Chief Constable suggested to her or her ministerial colleagues that he has firm evidence that may or may not stand up in court that the beatings are the responsibility of paramilitary groups such as Direct Action Against Drugs, the Provisional IRA and therefore, as she has said on many occasions, Sinn Fein?
  Marjorie Mowlam: I remember being at the Opposition Dispatch Box at Christmas 1995 when nine murders had happened as a result of the activities of Direct Action Against Drugs. The Minister standing at the Government Dispatch Box said that the ceasefire was being maintained. At a difficult time, I supported the Government of the day because they needed such support when they were trying to hold the process together. It is sad that at a difficult time we do not get the same support from the Opposition.
  Punishment beatings are horrific and barbaric acts that ought not to happen. The Government are doing all that we can politically to stop them and the police are doing all that they can in terms of security. However, I must have firm evidence, not allegations, before I can act. That is not what I have received in the vast majority of cases; therefore, I have to make a judgment. In some cases, there is, as the hon. Gentleman suggests, a tenuous relationship between such acts and certain organisations—it would not stand up in court, but there is one. I have to make a judgment in the round as to whether that is sufficient to change the decision that I have made on an organisation in relation to despecifying prisoners, or whatever.
  As the hon. Member for Blaby (Mr. Robathan) will remember, in the debate on the Loyalist Volunteer Force on 17 November, the Opposition spokesman talked about the difficulties. He said that punishment beatings continued, but that in relation to the LVF there was a balanced judgment to be made. The Opposition made it in favour of the LVF. Such a judgment should be left to

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  some of us who have more information than Opposition Members. The hon. Member for Blaby accepts that that information is important.
  Mr. David Winnick: As all that has been done since the agreement was signed has been in accordance with that agreement, including the release of prisoners, and as we all want decommissioning, what sort of message does my right hon. Friend believe that the motion might send to Belfast at a time of delicate negotiations and a delicate political position? Would it not be unfortunate if the House was seen to be divided when the Opposition say that they are in agreement with what was negotiated on Good Friday?
  Marjorie Mowlam: I have a great deal of sympathy with my hon. Friend's remarks. The question is not merely one of decommissioning, but of making sure that the agreement, which says that there should be an unequivocal ceasefire and that that should be the basis for prisoner releases—
  Mr. Paterson: Will the Secretary of State give way?
  Marjorie Mowlam: Let me finish. The question is whether an unequivocal ceasefire is in place. The basis of the points made by Conservative Members is that an unequivocal ceasefire is not being maintained, yet the right hon. Member for Bracknell said that evidence provided to us suggesting that the ceasefire is being maintained is correct, so the Conservative Members' argument lacks foundation. What is important is that Opposition Members realise that the agreement has not broken down: there is still momentum and people are still talking. The best way to get the different dimensions implemented is to make sure that progress continues to be made. That is what I intend to do now.
  No previous Government have succeeded in achieving the decommissioning of paramilitary weapons. No previous Government have done as much as the current Government have to try to secure the decommissioning of all paramilitary weapons. The best way to ensure that all paramilitary weapons are decommissioned is to implement the Good Friday agreement in full. We are now at a crucial stage in Northern Ireland. The work continues on trying to reach an agreement on the ground about the nature of cross-border implementation bodies and departmental structures within Northern Ireland. A deal should be close. I wish that it had been reached earlier, but it requires confidence and leadership on all sides.
  Sir Brian Mawhinney: Does the Secretary of State accept that I think that her judgment is broadly right when she says that, in Northern Ireland, decisions have to be taken on the balance? The issues are not cut and dried: they were not when the Conservatives were in government and I was one of the people who had to make those decisions occasionally. I accept that no radical change has occurred simply because the party in government has changed. Therefore, I broadly accept what she says.
  Does the right hon. Lady also accept that those of us who understand the issues in Northern Ireland understand that there would have been no Good Friday agreement without prisoner release? She knows, because I have told her, that I deplore that and find it distasteful, as do many
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  other hon. Members on both sides of the House, but that was the reality. In the same way, it is a reality that there would have been no agreement without the commitment to decommission.
  I understand the Secretary of State's point of view: she in a difficult, tense and messy situation and I shall not criticise her for trying to implement the agreement. However, does she accept that the reason fundamental concern is arising is that historically there has never been any decommissioning in Northern Ireland, or in Ireland, at the end of periods of violence? Does she accept that, sooner or later, to help to defuse that growing anxiety, the Government will have to be a little more forthcoming about what will be the issues surrounding decommissioning or the lack of decommissioning; and the danger that that might pose to the agreement?
  Marjorie Mowlam: I thank the right hon. Gentleman for his comments and agree with him that the Good Friday agreement is a package, made up of several different dimensions, and that the agreement would not have been reached without all those dimensions being included. Prisoner release, accelerated release and decommissioning are essential elements. Like every other hon. Member, I should like decommissioning to start now, because that would help to bring much-needed confidence to the process and so enable both sides to continue to make progress on the implementation of the agreement. I agree with the general thrust of the right hon. Gentleman's comments.
  We have to look at the nature of the agreement, which says that the different dimensions are linked and that the package must be moved as a whole. In reality, that is the only practicable way in which the agreement can be implemented. Decommissioning would be a positive step, so I want it to happen sooner rather than later. However, at present, we need to make sure that progress is being made on other dimensions of the agreement. The Independent International Commission on Decommissioning is up and running, General de Chastelain is in place and modalities are being discussed with representatives of the different parties linked to paramilitary groups. There has at least been some progress—although not very much, as Opposition Members have said.
  We do not yet have an Executive: we have a shadow Executive. We need a north-south ministerial council and we are yet to appoint cross-border implementation bodies and agree the Northern Ireland Departments. We have a long way to go on several dimensions. However, I ask Opposition Members: for goodness sake, give the people of Northern Ireland and their political leaders who have shown such determination and courage up till now the time and space to find a way forward. That is what they need. Nobody wants to see any dimension of the agreement fail.
  Mr. Paterson rose—
  Marjorie Mowlam: Let me make some more progress.
  We are at a crucial stage and other aspects of the agreement must be implemented. I hope that some of the recriminations that we are hearing both here and outside

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  this place will fade and we will have a chance to reach agreement on some points before Christmas. We must do more to build confidence in the agreement.
  Mr. Paterson: I am most grateful to the Secretary of State for giving way. She mentioned the people of Northern Ireland. What confidence can they have in the agreement when there have been 400 violent attacks by terrorists in the period to October? That trend is accelerating, with 157 such attacks in November. How can the people of Northern Ireland remain confident in the situation when the Secretary of State and Labour Back Benchers are absolutely determined to turn a blind eye to that violence?
  Marjorie Mowlam: I suggest that the hon. Gentleman checks his statistics before he starts citing round numbers. It is not clear whether there were more of such incidents under his Government or ours—it depends how one collates the statistics. I agree that the punishment beatings, shootings and murders are totally unacceptable. We and the people of Northern Ireland are trying, through the Good Friday agreement, to avoid a return to violence.
  The hon. Gentleman asked about the views of the people of Northern Ireland. Many of those to whom I speak-1 am in Northern Ireland for most of the week—say that they find the situation difficult. The victims, particularly, have had a tough time in the past few months as prisoners have been released. Many families suffer terribly when they see those people exiting prison. I have no doubt that some find the situation difficult. However, many of those families say, "I don't like what you're doing; it's not easy. But if it means that other families will not have to suffer as we have suffered, it will be worth it."
  The Good Friday agreement is not perfect and the peace is not perfect—hon. Members' contributions today have shown that it is far from perfect. However, I believe that progress is being made. It is only a short time since the agreement was signed and we need space to accommodate it. We will not see change overnight: it will take days, weeks and months for people to accommodate the different dimensions of the agreement. Yes, it is taking time, but we should not say, "It's getting worse, so let's go backwards". If the Good Friday agreement breaks down, people across the divide will see it as a return to the bad times and to violence. We must do all that we can to ensure that the Good Friday agreement has a chance of success.
  Mr. Dominic Grieve rose—
  Marjorie Mowlam: I am sorry, I will not give way. I must make progress.
  Let us be clear about the Opposition motion's reference to prisoners, to which many Conservative Members have alluded. The agreement is clear on that point. It says:
  "Prisoners affiliated to organisations which have not established or are not maintaining a complete and unequivocal ceasefire will not benefit"—
  from early releases.
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  The right hon. Member for Bracknell said that he accepted our security advice as correct, but the Opposition are asking the Government to declare that the ceasefires by the IRA, the UVF and the UDA are not being maintained.
  Mr. MacKay: I repeat what the Prime Minister said, which I still accept. He said on the Floor of the House and in the referendum campaign that the renunciation of violence—which, as the right hon. Lady will agree, is linked to the early release of prisoners—must include decommissioning. As there is no sight or sign of decommissioning after seven months, the renunciation of violence that is the basis of her releasing prisoners is not in place.
  Marjorie Mowlam: The renunciation of violence is central, but the right hon. Gentleman fails to understand that, as the Prime Minister said, one decides whether there is a fundamental renunciation of violence on the basis of whether the ceasefire is maintained and there is an unequivocal commitment to it. I have said to him on several occasions that, if there is evidence to the contrary, I will seriously review it, but there is none. That means that the organisations are maintaining their ceasefire and prisoner release is in order.
  Mr. Paterson: Will the right hon. Lady give way?
  Marjorie Mowlam: No, I have been generous to the hon. Gentleman and others. I must make progress.
  Mr. Peter Robinson: Will the right hon. Lady give way?
  Marjorie Mowlam: No, I have just said that I must make progress.
  Let me return to the point about firm evidenced, I have said that the police, the Army and security advisers have argued that the ceasefires continue in the case of the IRA, UVF and UDA.
  As I said, I accept that the peace is not perfect. I acknowledge that punishment beatings have continued. They are reprehensible and must end. They continued during the time of my predecessor in the previous Government. We supported him in his efforts because there are no easy answers. Politically, we are doing all that we can, and the police are doing all that they can in security terms, to bring to justice those who are responsible for punishment beatings.
  The peace is not without risks. No peace ever is, but the benefits of peace are there for all to see. I am in no doubt that, if I were to announce today that the ceasefires are at an end, despite the fact that the advice that we are receiving proves that they are not, I would be risking the whole Good Friday agreement and its benefits. That is what the Opposition are asking us to do.
  No one who has any recent experience of Northern Ireland could fail to notice the impact that peace is having. I saw for myself on Saturday what peace means for the people of Belfast. For the first time in 30 years, people were out doing their Christmas shopping and preparing and hoping for a festive season free from violence. The peace process is slow and will not happen overnight. We must give people time to come to terms with all the changes that are happening in their lives.

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  There are, of course, still many problems and hurdles to overcome. As Senator Mitchell and others have said, the implementation of the agreement is as difficult as reaching the agreement itself. There have been difficulties over the nature of cross-border implementation bodies, the number and structure of Northern Ireland Departments, the formation of the Executive and decommissioning. We have to resolve all those problems. Alongside all the other aspects of the agreement, the commitments made under the agreement must be honoured in full. To abandon our commitments under the agreement at this stage and not act in line with the agreement, which is what the Opposition are tonight asking us to do, would be to finish any prospect of holding other parties to theirs. It would be very short sighted.
  The questions that the Opposition have been asking are valid ones. I know that because, as I said, I am asked them by people in Northern Ireland. If they are valid for the people there, they are doubly valid for those who have suffered, yet many people say that for peace we must work together to find a way forward. That, I believe, is what many of the leaders in the talks are now doing. The questions are valid, but the answers that the Opposition are offering are not.
  We cannot rewrite the agreement. It is not ours to rewrite. We cannot introduce direct linkages between one aspect of the agreement and another which were not agreed by the parties themselves; nor can we introduce new preconditions, which is what the Opposition are asking us to do. This is my judgment. It is not an easy judgment, but it is a judgment that I make based on the best information available to me from the police and the security services in Northern Ireland.
  The significance of the Good Friday agreement has been recognised not only at home but abroad. Yesterday, in Washington, the achievements of the party leaders who so courageously negotiated the agreement were recognised by the National Democratic Institute. Tomorrow, in Oslo, the right hon. Member for Upper Bann (Mr. Trimble) and the hon. Member for Foyle (Mr. Hume), representing the two main communities, will receive the Nobel peace prize—a fitting honour for them and the people whom they represent.
  Our most important focus now must be on Northern Ireland and on helping those in Northern Ireland who are trying to implement the agreement—the best way to get decommissioning. No other interest should come before that. People should look to their own conscience to ensure that they are doing all they can in the best interests of the people of Northern Ireland and are keeping those interests closest to their heart. With that in mind, I urge the House to reject the Opposition motion and to support the Government amendment.
  5.2 pm
  Mr. Tom King: Anyone who has held the position currently filled by the Secretary of State for Northern Ireland feels a certain diffidence in contributing to a debate of this kind, and I also accept that it is always the wrong time and always difficult to second-guess the Ministers and the Prime Minister who are responsible for this extremely difficult process in which they are engaged.
  The Secretary of State is always a little more correct than my right hon. Friend the Member for Bracknell (Mr. MacKay) in saying that the process did not start with the
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  Downing Street declaration. I do not claim the pride of authorship, as it started before me. Of course, the Anglo-Irish Agreement, which did not have universal support in the House, was the start of a process and a change in attitude which has led to the situation that we hope will lead to a permanent peace. It is part of a very long process which has effectively been bipartisan all the way.
  I have to say to Labour Members, some of whom are new, that I did not appreciate some of the interventions that we heard today. The fact that the process was bipartisan never meant that the House was gagged or unable to express its opinion. There are issues over which the House would not have won respect had it failed to make it clear that there were alternative points of view. The former Opposition—now the Government—did not hesitate to make their points or to vote against me and my colleagues when they felt that they needed to do so.
  This is not a very helpful aside, but it seems that some Labour Back Benchers—I do not know whether they are organised by active Parliamentary Private Secretaries—feel that there must be no criticism of the Government and that they must interrupt and intervene on Opposition spokesmen. It seems that certain Labour Back Benchers are almost trying to provoke the end of bipartisanship.
  The House should debate the motion, which deals with a serious issue. The motion will not be carried—it will not change Government policy—but I hope that no one is suggesting that it is improper for the House even to express an opinion and for us even to vote on the matter. Labour Members did not hesitate to vote and express their views on this matter when they were in opposition. We accepted that they had the right to do so. I hope that we put the arguments, the motion and the vote in the right context.
  As somebody who was a personal recipient of bipartisanship, which I appreciated, I accepted that it did not make one free of criticism. The Secretary of State can look after herself; she does not need her Back Benchers to try to intervene in such an unfortunate way on my right hon. Friend the Member for Bracknell, our Front-Bench spokesman, in order to undermine him.
  We have, without question, a common objective. Too many of us have devoted too much of our lives, including some pretty unpleasant moments, trying to get where we are today to throw the process aside lightly. That does not mean that there are not occasions on which we have worries and concerns and want to exercise our rights as Members of Parliament—Back-Bench or Front-Bench—and express our views to the Government. It is the duty of the Opposition to do so.
  As my right hon. Friend the Member for North-West Cambridgeshire (Sir B. Mawhinney) pointed out well, it has not surprised anybody, including that Secretary of State, that decommissioning is the most difficult of issues. The hon. Member for Walsall, North (Mr. Winnick) will remember that the British-Irish interparliamentary body happened to be meeting on the day of the Downing Street declaration. As we were gathered round, there was a great expression of good will when the news came that Albert Reynolds and my right hon. Friend the Member for Huntingdon (Mr. Major) had signed the declaration. That afternoon, there was a debate, in what should have been a great spirit of good will. I was one of those who said

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  that decommissioning was very important and that, if we are to have a peace process in Northern Ireland, the removal of weapons is a very important part of it.
  As the hon. Member for Walsall, North may remember, reaction from those representing the Irish side of the British-Irish parliamentary body was one of absolute horror. They saw that statement as a traditional British attempt to undermine the process. Not one of them believed that decommissioning could be achieved and that the Downing Street declaration could possibly be moving in that direction. One realised then the gap of history between the British and Irish sides on that issue. It was apparent from day one of the signing of the Downing Street declaration.
  Mr. Robert McCartney: Does the right hon. Gentleman recollect that, on the day after the meeting to which he referred, the Foreign Affairs Minister in the Dail told Sinn Fein, "This does not mean that you can get into the democratic process, take a look around and then retire if it does not suit you. It means giving up, handing in your weapons now"? That point was made from day one.
  Mr. King: I do not remember that particular reference, although I recall similar ones.
  We knew as we entered the process—we hope that the Good Friday agreement is the culmination of the achievement of the Downing Street declaration—that it would involve tough decisions on both sides. I have my own memories, all too sad and bitter. I was Secretary of State when the appalling murder of the corporals took place, before the country's eyes, on television. Yet I know that my memories are nothing compared with the suffering and pain and the price that the families and friends of those who died have had to pay.
  All this means a change of attitude. As my right hon. Friend the Member for North-West Cambridgeshire said, it means that things that are not acceptable in a normal democratic society—such as people who are guilty of crimes not having to pay the full penalty for them—must be done. We accept, with a heavy heart, that a change of attitude, concession and some compromise are necessary for the greater good of the greatest number of people—for peace in Northern Ireland. Concessions are needed from both sides. The worry is that they are not coming—at least, that impression has been given.
  I am not in the loop of whatever negotiations may be taking place between the Government, Sinn Fein representatives and others, but the perception is that, while the Government's statements are admirable—I have no quarrel with any statement that the Government have made, from the statement made by the Prime Minister on 20 April 1998, up to and including that made by the Secretary of State on 2 December 1998—nothing has happened.
  As the Secretary of State rightly said, there has been a bit of a legalistic argument. If Martin McGuinness appears on television, a phrase that seems to echo regularly is a question about a precondition. The right hon. Lady has answered that by saying that it is not a precondition but an obligation. That is what she said—yet that obligation does not seem to be being performed.
  Perhaps decommissioning is difficult to organise. Perhaps it is a very complicated process. Perhaps meetings must be held, such as the meeting of the Army
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  council which I believe was held yesterday. The real worry is that to which my right hon. Friend the Member for North—West Cambridgeshire alluded. Decommissioning is not something that will come through in the fulness of time. The real worry is that it will not come through at all. It is long established in Irish tradition that, as "when the pike is in the thatch", one does not surrender one' s weapons, and of course one does not use the word "surrender"—that word would be unacceptable.
  I understand the problems that the Government have, and I do not expect the Government to support the Opposition motion. However, given all the difficulties, I believe that the House, and Conservative Members at least, should speak up for the very many people in Northern Ireland who say, "It is not working. What will happen? Will people be allowed to keep all these weapons? Will they be allowed to keep heavy machine guns? Will they be allowed to keep sniper rifles? Will they be allowed to keep rocket launchers?" The Secretary of State knows that that is true, because she must be hearing such questions morning, noon and night.
  I do not worry so much about Semtex, because everyone knows that a good load of fertiliser, properly adapted, probably gives people all the threat that they need. Do we say, at the end of the list, that personal protection weapons remain as some residual defence against the fear of a loyalist mob and are the last element in the trust-building structure that will need to be built? There must be some approach that starts to give people confidence that there is no truth in the long-standing traditional belief that no decommissioning will ever happen.
  There must be movement—the hard choice that comes from leadership. That will have to come from the republican movement. Otherwise, I see, to my greatest sadness, and tragically for the people of Northern Ireland, the real danger that the agreement will not succeed. It deserves to succeed, and yet, in the end, if certain people are not prepared to make any movement whatever, the position of the Secretary of State in statements that she has made, and the position of the Prime Minister in statements that he has made, will become impossible.
  I am not only talking to the Secretary of State. I hope that the debate and the motion will be not unhelpful to the Government in discussions that they may be having with what I would describe as other people, in communicating the truth that, in the end, they will be unable to sustain their position; that they will be unable to be more and more understanding of other people's difficulties and problems; and that there will come a moment when they will be unable to accept what is put to them. That moment will come because the thin, small voice that comes from the Opposition side of the Chamber today will grow and grow, and more and more reasonable-minded people will say, "This simply is not acceptable".
  I say that not in an attempt to second-guess, because I understand something of the significant difficulties on this issue, but to say, through the Secretary of State to another audience, that that audience must understand that, unless there is some movement over the issue, the lack of movement threatens to destroy the whole process. That would be a tragedy for the whole United Kingdom and most particularly for all the people in the island of Ireland, whom the Secretary of State and so many others have worked so hard to help.
  5.14 pm
  Mr. Eddie McGrady: It was with something of a heavy heart that I learned that tonight's debate was taking place, at the Opposition's behest, at a time of the greatest possible sensitivity in the inter-party negotiations taking place in Belfast. The right hon. Member for Bracknell (Mr. MacKay) emphasised that the debate was not a breach of the bipartisan approach, but the tenor of the remark indicated to me that there was an element of cherry-picking—to use that hackneyed phrase—in the motion on decommissioning and prisoners.
  There are many aspects to the agreement. There is the political aspect, in terms of the inter-party negotiations and structures, north and south, east and west, and within Northern Ireland, and there are three other major elements: decommissioning, prisoner release and the reform of the Royal Ulster Constabulary. The latter three aspects are so sensitive that the parties—I think wisely—said, "The matters should be handed to independent commissions, the first on decommissioning, the second on the consequences of prisoner release, and the third, to the Patten commission on the RUC."
  I say as an important aside that it is not insignificant that the third issue was omitted from the Opposition motion. The motion does not seem to embody the concern, often expressed by Conservative Members, that all matters should move forward together. That is an indication—almost a flagging up of the danger that Conservative Members are moving into partisanship in terms of the negotiation that we are very delicately entered into. The right hon. Member for Bracknell, the Conservative party and all hon. Members know that the decommissioning issue has been addressed not as an element of the agreement but as a precondition to advancement and implementation of the agreement.
  Mr. MacKay: Let me clarify one thing. We have not mentioned policing because the commission on policing, chaired by Chris Patten, is in full process. As far as I can tell, it is making good progress. Public meetings are being held around the Province, in the hon. Gentleman's constituency and elsewhere, so there is no need for concern. That is proceeding; surely that is right and proper.
  To suggest that debating Northern Ireland matters in the House, at any time, affects the process of the negotiation is to try to gag the House, and I am sure that the hon. Gentleman does not want to do that. I do not believe that raising matters of decommissioning has an impact on the important matters that he and his colleagues are continuing to discuss in connection with north-south bodies. I mentioned those discussions, and I said that I did not wish to become directly involved in them, because I thought that it was best for the political parties that are negotiating to be involved in them. I am sure that the hon. Gentleman agrees with that.
  Mr. McGrady: The right hon. Gentleman, in an intervention, has said that those matters are progressing. So is the matter of decommissioning, in the international commission. I understand that the membership has been completed, and that various other aspects of the modalities are being processed. I am not privy to the internal workings of that commission, nor is it appropriate that I should be, because this matter, on which I have no expertise, is so delicate that it has been put in the hands of an international commission.
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  Decommissioning and prisoner release were scheduled in terms of the totality of the agreement. I understand that the decommissioning aspect of the agreement takes us up to May 2000. Let me say, initially and clearly, that I, my party and the people whom we represent want decommissioning as much as—perhaps more than—anyone else, because, unfortunately, statistics show that my community suffered more than any other from the use of weapons and explosives, and that it would be in my interests, not just that weapons and explosives be withdrawn from use, but that the paraphernalia and the structure of paramilitarism be eradicated from our society, once and for all, in the years ahead. I say "in the years ahead" because our community in Northern Ireland has suffered 30 years of intense violence, division and hatreds.
  On Second Reading of the Bill that became the Northern Ireland Act 1998 I said as strongly as I possibly could that the House could not and should not expect that, after 30 years, we could turn a key and switch off all violent activities. Unfortunately, we are seeing those words come to pass. Old debts are being settled. Mafia-type violence is being perpetrated in our society.
  If other hon. Members lived in the society in which I live, they would see a tremendous difference between where we were last year and where we are this year. That difference has already been referred to, and it does not apply only to yuletide. The difference can be seen every day and every night. We can go down our streets with our families and children and not be concerned about the bomb or bullet flying and destroying us. We can have peace of mind in social recreation. It is an enormous advance on where we were. That comes under the heading of peace, and peace has many pillars to support it. One such pillar is the political process. My party and I believe that we cannot have stable and permanent peace without a political structure, arrangement and agreement to support and back it and to ensure that the gun will never return to Irish politics.
  There is some cynicism about decommissioning. An old person in my constituency who had some experience of the past once said to me that if I were to put a gun on the table and no one touched it, it would be there in 1,000 years' time without anyone suffering the consequences of it. There is more in that statement than meets the eye. It is the use of weapons and explosives against people and property that is the problem, not that they rot in a cave or a dug-out or whatever. I hope that there will be actual and physical decommissioning. As I have also said, I hope that there will be disbandment of the paramilitary structures, which will allow that to take place.
  Unless we handle the peace process in the right way, the gun will not be taken out of Irish politics. If we fail and handle the process wrongly, the political process will be destroyed, and with it, the peace for which we have all striven. So much depends on the political process, and that is why all the matters that relate to the agreement must move forward. They will not move in unison but they have to move forward gradually. We must implement the agreement which was reached last Wednesday night into Thursday morning. It was dissipated in the dawn hours. It would give confidence and place the necessary moral and political pressures on the paramilitaries, both loyalist and republican, who are there with their weapons. They would be forced into a process of decommissioning.

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  That is what we are all trying to achieve by inter-party negotiations and the various commissions that have been set up. Unless we can have the room and the atmosphere to bring those negotiations and commissions to a conclusion, we are forfeiting the political process and the peace that we have learnt after three decades to appreciate. We now know what we were missing for so long.
  Some of my constituents have suffered the loss of their fathers, mothers, brothers and sisters and other relatives. They are grieving and they are traumatised. The political process asked them for another sacrifice over and above that which was visited upon them. We asked them to make a voluntary sacrifice for the sake of our society. We said, "Those who perpetrated those crimes on you and your family will be released within the cycle of the agreement. This will be difficult for you, and traumatic."
  Of all those to whom I have spoken, no one has said, "Do not do that." Every one of them was prepared to make this enormous and additional sacrifice for the greater good of the community. They were all willing to do so because it was for the greater good of the community. They did not want eventually the same sacrifice and trauma to be visited on yet another person or family.
  Mr. Jeffrey Donaldson: I appreciate what the hon. Gentleman says but I have to tell him that I have met some of his constituents who do not hold the view that he has described. A Mrs. Irene Cochrane from Downpatrick lost her son who was serving with the Ulster Defence Regiment. She certainly does not hold the view that it is right for the prisoners to be released.
  The hon. Gentleman talks about progress on decommissioning. The reality is that the international commission has been in place for many months, as has legislation and as have the modalities. There is no more progress to be made on these issues. Everything is now in place, and it has been for many months. But how many guns and bullets have been handed in? The hon. Gentleman knows that nothing has happened on these issues.
  The release of prisoners is a mandatory and not a voluntary process, and one that the victims have no option but to accept. If they are being asked to accept that, society surely is entitled to require the decommissioning of weapons. More than half the prisoners are now out and yet not one bullet has been handed over. Imagine the outcry that there would have been—
  Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman is repeating himself in his own intervention.
  Mr. McGrady: I take on board what the hon. Member for Lagan Valley (Mr. Donaldson) has said about members of certain families resenting the release of prisoners. I am saying that the vast majority of those whom I have met have said, with great reluctance and great difficulty, "If this sacrifice must be made yet again, for the greater good of our community and for peace for our children, we are prepared to wear this."
  Yes, there has been prisoner release and no physical decommissioning of a weapon such as a gun or Semtex. However, why do we relate one with the other when they
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  are separate issues? As I understand it, the process of prisoner release was to establish the ceasefire, thereby triggering the process by which decommissioning could take place. We must have the moral and political authority to force those who are still holding weapons, ammunition and Semtex to decommission because of the force of political and moral argument.
  The intervention of the hon. Member for Lagan Valley included the word "voluntary". In a sense—I say this at the risk of being misunderstood—at the end of the day decommissioning will be a voluntary decision. No one—neither members of the security forces nor anyone else—can force decommissioning. No one can force the surrender of even one gun. We must establish the conditions in our community where moral and political authority will demand and deliver the decommissioning process. Thirty years of the most intense security surveillance and penetration did nothing to bring about decommissioning or to stem the flow of weapons. Let us take that as another aspect of decommissioning.
  Everyone in the House knows that there could be decommissioning of whatever anyone liked tomorrow. That would leave us all standing like the emperor, politically naked. The following day the same people could re-arm and regroup quite easily. That is why we are talking not merely about physical decommissioning but about a decommissioning of the mind that requires us to ensure that the pursuance of any political objective with the use of weapons can no longer be tolerated and is no longer tolerated by any community in Ireland, north or south. The communities have already indicated that through the referendums in both north and south. Without equivocation, the people said that violence is out and weapons must not ever be used again in Ireland in pursuit of a political objective.
  Mr. Grieve: I am sure that the hon. Gentleman would agree that the obligation—as it was described by the Secretary of State—to decommission would not have been put in the agreement unless it was thought necessary to make the peace process work. Does he also agree that the process was designed to be gradual and spread out over two years? How does he envisage the time frame in which decommissioning should take place within that two-year period?
  Mr. McGrady: The Good Friday agreement does not give a timetable, except a finishing date of May 2000, as I have already said. We must create the moral thrust and the political environment that will make decommissioning imperative. We must create the additional trust that will enable—or force—the paramilitaries of either persuasion to give up their weapons as their part in a trust-building exercise with the opposite communities.
  Mr. Robert McCartney: If there is no power that will make the paramilitaries give up their weapons now, what security do we have to assure us—no matter what concessions we make—that they will give up their weapons within the two years? What are we to hope for if nothing can compel those thugs and terrorists to disarm?
  Mr. McGrady: The hon. and learned Gentleman cannot have been listening to me. I have said time and again that the only way that we can force decommissioning is by moral persuasion and political

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  structures that make it impossible for paramilitaries to continue their activities with any support from either community.
  The alternative required by the motion is to stop releasing prisoners, cut off the negotiations and bring everything to a halt until some weapons and Semtex are put on the table. If that is the logical consequence of the motion, it is a recipe for total disaster. The motion did not suggest an alternative process and nor did any of the hon. Members who have contributed so far. No doubt, we will receive the benefit of the wisdom of those hon. Members who will contribute later.
  We have a difficult and delicate political process in train at the moment and this motion is giving all the wrong signals to those people who wish to destroy the edifice of political negotiation, decommissioning and prisoner release that has been so delicately brought together in one package. That process did not happen in a year or two: it took three decades to put it together. Three months could destroy it. Opposition Members who will presumably push the motion to a vote tonight are saying that we must halt all the processes until a gun or pound of Semtex is put on the table. That is putting a political weapon into the hands of those who say no to the Belfast agreement—Opposition Members are aligning themselves with that political attitude—and giving an additional weapon to the likes of the Provisional IRA and the UVF to use for further bargaining. We are trying to achieve a moral and political authority that will force the paramilitaries to decommission and I therefore hope that the Opposition will not press the motion to a vote.
  5.35 pm
  Mr. Lembit Öpik: This is a difficult time in Northern Irish politics and a difficult process is under way. The stakes are enormously high and I hope that we can all agree that the last thing that we need is to use the issue as a party political opportunity instead of an opportunity to secure peace in Northern Ireland.
  I shall assume in my speech that the Conservatives' intention is not to try to score party political points, because to do so would be in contravention of the spirit of the bipartisan agreement. In that context, I am surprised that the Conservatives have chosen to debate the issue in this form. It is not clear that this debate will make it easier for those who are trying so hard to negotiate, on decommissioning and in so many other areas, to achieve the results that we all want. Clearly, the right hon. Member for Bracknell (Mr. MacKay) feels differently and he is entitled to do so, but we need to recognise the difference between legitimate concerns and the impact that a debate such as this may have in the longer term on what we are trying to achieve.
  I was encouraged when the right hon. Member for Bracknell reaffirmed the Conservatives' commitment in spirit and in word to the Good Friday agreement. That is at the core of this debate. Technically, the Good Friday agreement has not been breached in any way. The hon. Member for South Down (Mr. McGrady) made it clear that the agreement contains an objective and unarguable two-year time frame. No staging posts have been written into the agreement, for good and pragmatic reasons. However, I am sure that all hon. Members wish to see
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  progress on decommissioning soon, because a pressure is welling up in various bodies in Northern Ireland, political and non-political, and nervousness is growing.
  Mr. Donaldson: Is the hon. Gentleman aware of a timetable for the release of prisoners in the Belfast agreement, or is the situation the same as for decommissioning—with no specific timetable, only a target date? Does he accept that we have had much progress on prisoner releases and no progress on decommissioning?
  Mr. Öpik: The target date in the Good Friday agreement for prisoner releases is June 1999, so prisoner releases need to be completed ahead of decommissioning. To that extent, while we have talked about a parallel time frame, the two matters are likely to proceed at slightly different rates. The process has to contain a degree of good will as well as an element of risk. I did not hear Conservative Members argue when prisoner releases began that they were necessarily bad, although 1 stand to be corrected. The concern about prisoner releases has evolved as a result of the apparent non-movement on decommissioning.
  Mr. Laurence Robertson: At the time, I and several of my hon. Friends asked the Government why the paramilitaries would give up their arms after all the prisoners had been released. What reason would the paramilitaries then have to give up their arms, since the Government would have played their trump card?
  Mr. Öpik: I am not here to provide a tutorial on the elements of the Good Friday agreement; indeed, there are right hon. and hon. Members present who are far more competent to do so. However, I must point out to the hon. Gentleman that there is two-way process for prisoner releases. If the conditions are breached, the opportunity for those people to remain as free individuals falls. That would apply if, for example, there were a break in the ceasefire. It might be difficult to implement that, but the hon. Gentleman must know that there is that two-way condition.
  The Conservative's apparently intransigent position, that fear of falling, seems to motivate their agenda. As far as I can tell from the motion, the Conservatives are effectively focusing on one aspect—an important aspect—which is decommissioning, while taking their eye off the bigger ball. The debate is not really about decommissioning and prisoner releases; it is about securing a lasting peace with which all sides in Northern Ireland can live.
  What is lacking here is a willingness to accept a degree of risk, which has probably been largely responsible for the progress that we have made so far. I would go so far as to say that, in the spirit of the Good Friday agreement, the motion operates on the assumption of a new condition. Just as we can debate the timetable, and so forth, so I point out unequivocally to the right hon. Member for Bracknell that there is nothing in the Good Friday agreement which states that prisoner releases must stop if the decommissioning process has not yet reached a specific staging post.
  I stress again that I do not say that because I disagree with the right hon. Gentleman's very reasonable nervousness with regard to the length of time that

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  decommissioning has taken. Furthermore, I agree with his past comments that Sinn Fein must not hide behind fatuous excuses in order to vacillate; nor must they use legalistic arguments in order to pretend that they do not have a moral responsibility to participate. Once again, that has been a positive contribution made by Conservative Members in many debates.
  We are all familiar with the arguments on decommissioning because we seem to have this debate once every two weeks in the House. Decommissioning has three key elements which are obstacles to its proceeding at a faster rate. One is the position of the various groups involved as they try to balance themselves between where they came from historically, briefly described by the hon. Member for South Down, and where they are heading in the future.
  The second element is one of symbolism. Let us not pretend: an enormous amount of symbolism is associated with decommissioning. It is not easy for those involved to talk about it in public because, ultimately, there are big internal frictions in the organisations themselves over decommissioning.
  The third element is one of strategy. People are engaged in tough negotiations in the Province. Decommissioning is a natural area for intense negotiations. That is not to justify the lack of progress on decommissioning, but it is to highlight the danger of putting the spotlight on decommissioning at a time when, unquestionably, there are processes and negotiations at a high level within the organisations and between the Government and those organisations in trying to secure progress. I would go as far as to say that that spotlight is rather unhelpful because it makes people take rather more intransigent positions in public than they might in private.
  Punishment beatings have been mentioned. Had the official Opposition wanted a constructive debate today on Northern Ireland in which they could secure the support of both sides of the House, they might have chosen a motion on punishment beatings. I think that all hon. Members agree that an underlying level of insidious violence continues. Punishment beatings might more accurately be called mutilation attacks. There are those who have suffered such violence despite the official ceasefire.
  Mr. David Wilshire: I find the hon. Gentleman's train of thought interesting. Is he telling the House that, if there were a motion that no more prisoners should be released until punishment beatings stopped, he and his party would vote for it?
  Mr. Öpik: No, we would not. As far as I can tell, the key issue—[Interruption.]—as the jeering from the Back Bench confirms, is that there are those, and I am not suggesting that Conservative Front-Bench spokesmen are among them, who seek to win party political points on an issue which it is profoundly important to set aside if the Conservatives are to honour the spirit of the bipartisan agreement.
  To clarify my point—I apologise if I did not make it clearly enough—had we debated mutilation attacks and pressed the Secretary of State to make some investment of time and energy to show that they were unacceptable,
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  we would certainly have voted with the Conservatives, and I should like to think that the House would not have divided on such a matter.
  I highlight that point to show that talking about decommissioning is nowhere near as helpful as talking about the processes and the issues that are causing harm to individuals, such as the mutilation beatings. I hope that we will move away from calling them punishment beatings. Anyone who believes that a punishment beating is a legitimate form of justice is living in an age which passed away hundreds of years ago.
  Let us consider the effect of the Opposition motion. What will happen if it is passed? Once again, this is an area of judgment, and clearly, my judgment is different from that of the right hon. Member for Bracknell. To pass that motion would be a gift-wrapped reason for those hard-line terrorists who want to see a resumption of violence to do exactly that. I say that because they could then turn round and say, "As you can see, the process has faltered."
  However much the right hon. Member for Bracknell believes that he could explain it otherwise to the public, if the motion were passed, it would be almost impossible for it not to send a signal around the world that the House no longer believes that it can honour its half of the commitment in the Good Friday agreement. To me, that would be an absolute tragedy.
  The right hon. Member for Bracknell may be sceptical about that problem and the likelihood of others misinterpreting the situation, but I remind him of the events in September this year when he himself commented on the Liberal Democrats' apparent commitment to vote against the prevention of terrorism legislation in the future. That completely fallacious idea did the rounds in the media and led the right hon. Gentleman, a man who is clued up about what is happening in Northern Ireland, to believe that it was the Liberal Democrats' position. He must know that he is playing with fire in tabling this motion because there are so many people who will see it as a sign of the breakdown of the bipartisan agreement.
  I hope that the right hon. Gentleman will be assiduous in ensuring that that misunderstanding does not go beyond this debate and that there is no danger that, in tomorrow's papers, there will be the slightest implication that the Conservatives are thinking of withdrawing from the bipartisan agreement. I wish him all speed in achieving that, however vigorous the reassurances to the press will need to be.
  Lastly, I wish to compliment all those who have brought us thus far. Some insightful comments have been made. For example, the right hon. Member for Bridgwater (Mr. King) clearly had a detailed understanding of the issues. In addition, the right hon. Member for Bracknell, who makes regular visits to the Province, is apprised of what is going on there. In congratulating those people, I must also think of those who operate in the sphere of northern Irish politics. I have much admiration for those who have brought us so far.
  My request to those in the Chamber who are actively engaged in the politics of the Province is that they will not feel bound to take a binary decision. I hope that they do not feel that the spotlight, of which I talked earlier, in some way corrals them into taking a position that is more hard line than they might otherwise adopt.

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  The official Opposition may have felt the need to make those points, but I am not sure that it was entirely prudent to do so in this way. However, they have now done so and doubtless we shall have other similar debates. Given the political realities, as the right hon. Member for Bridgwater said, there is no prospect of the motion's being passed. Therefore, the only logic in voting for it is to stake a claim that can be realised as accurate only if the peace process fails.
  We must plan for success, not for failure. Therefore, it is rather imprudent to corral the official Opposition into a position where—necessarily, if the process is successful—they will look as though they have committed a serious error of judgment.
  Mr. Grieve: The hon. Gentleman is making a characteristically thoughtful contribution. Does he not agree that it would be dangerous if, for the sake of bipartisanship, hon. Members gave the impression that there is not a growing groundswell of considerable opposition to terrorist releases when they are not accompanied by moving the peace process on by degrees, as envisaged in the agreement? If we did that, would not we be sending the wrong message to those who must decommission if the agreement is to work?
  Mr. Öpik: That is where we started. Although that is a fair summation of the Conservative position—the right hon. Member for Bracknell would agree with that—it is simply not where I stand. In such a sensitive debate, where so much more is conducted in private than in public, it is dangerous to throw the light of publicity on to the matter, especially at such a sensitive time.
  We will see who is right in the course of events, but my judgment is that the motion makes it more difficult to achieve the very things that all hon. Members believe are vital to future long-lasting and consolidated peace in the Province. The issue is one of judgment. It was dangerous to bring the matter up in such a way, but it would be crass foolishness to push the motion to a vote. If it is voted on, we shall vote for the Government amendment, not for the Conservative motion.
  It is always worth remembering that it is not bad faith that secures peace. I would like more of that from some quarters of the Chamber in the crucial months to come.
  Mr. Deputy Speaker: There is limited time for the debate. I must appeal for brief speeches, otherwise people will be disappointed.
  5.52 pm
  Ms Helen Southworth: Thank you, Mr. Deputy Speaker. I shall take account of your guidance.
  Like other hon. Members, I regret the decision of the right hon. Member for Bracknell (Mr. MacKay) to lend his name to this attempt by some, although by no means all, Opposition Members to rewrite the Belfast agreement. I take hope from the thought that, at some points, there have been only three Conservative Back Benchers present to listen to, and participate in, the debate.
  Like most hon. Members and people across these islands, I shared the joy of the people of Northern Ireland on Good Friday, when agreement was reached after long and difficult negotiations. On 22 May, while people in
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  northern and southern Ireland were voting overwhelmingly to support the agreement, my right hon. Friend the Secretary of State for Northern Ireland was in my constituency, unveiling a sign for peace on the site of Warrington's international peace centre. She saw and shared the hope that people in Warrington have for the agreement.
  While the people of Northern Ireland are working to implement the detail of the agreement, it would be dreadful if there were political opportunism and cherry-picking by hon. Members—looking for differences and exaggerating them, and stirring the pot for people's own narrow political interests. I hope that there will not be a vote on the motion.
  As the voice of the people who elected me, I have a different story for hon. Members. Town centres are an economic key and the heart of their local community. The all-party group on town centre management, which is the largest after the beer club, is meeting in Westminster today. It is about normal society, as is recognised by all hon. Members.
  The Warrington bombing by the IRA five years ago took two young lives and ripped the heart out of our town centre and our community. They were two more lives to add to more than 3,500 stolen by the conflict during the past three decades. It brought home to me and to many people in Warrington the fact that ordinary daily life in Northern Ireland was conducted in an environment of terror and threats of violence.
  We desire to build reconciliation—a bridge. The word "bridge" means a lot in Warrington, because the bomb went off in Bridge street. We are trying to build a bridge with ordinary people in Northern Ireland, whose experience of terror we have shared directly. We have been building relationships. The Tim Parry scholarship has organised exchange visits for children, who learn about each other's cultures and communities. There are relationships between schools, and we have held sporting events with people from northern and southern Ireland. People have been getting together and enjoying themselves.
  Warrington male voice choir has developed a programme, working with people in Belfast and in southern Ireland and bringing music and harmony across the islands, and so many people have given so much support to the Tim Parry and Johnathan Ball international peace centre. This has been about ordinary people, business sponsorship, raffles and sponsored walks. People across the north-west are investing time, money and energy in building friendships and breaking down barriers.
  Last weekend, I had the great pleasure of visiting Belfast and Omagh—town centres that have been torn by violence in the past—with Cohn and Wendy Parry, a civic party from Warrington and the male voice choir, which was participating in Christmas concerts. The discussions between civic leaders were of the kind that take place everywhere. They were about economic investment, growing small business, supporting women and helping them into business and sharing information about practical things, such as street furniture and arts centres, which are important for civic life.
  The Belfast choir was spectacular—it was a wonderful concert—and the Royal Ulster Constabulary and Garda combined band was really good. There were more than

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  500 young people, from the north and the south and across cultural and religious groups. They worked hard and they sang well. They were exceptional, not because they came from north and south and from across different cultural groups, but in the excellence of their singing. They showed the future for Northern Ireland. Those children are exceptional because they have worked hard and have achieved something—they were celebrating it together.
  It is the Christmas season. Madam Speaker held a service in Westminster Hall today, and that is the normal way to behave in this season—"sweet singing in the choir". The Omagh community choir sang "Across the Bridge of Hope" in Omagh and in Belfast. I am going to quote parts of it that the choir pointed out to me. [Interruption.] I honestly do not care whether Opposition Members are going to listen to this, because many other people will listen and give it their support.
  For many people, "Across the Bridge of Hope" is the peace process. It says:
  "For many hands have fashioned it, imperfect it may be
  But strong enough for plenty with support from you and me".
  The choir also sang:
  "When history dictates, mistrust may just be vanity".
  Those are children's words, and it is important for adults to listen to children at any time—especially children from Omagh, who need us to hear what they are saying.
  I want to tell Opposition Members a brief story about an exhibition on racism in Chicago. Two doors led into the exhibition, one saying "Prejudiced" and another saying "Unprejudiced". People chose which one to go through. When a person from Chicago was telling me this story, I said that I would go through the door saying "Unprejudiced". She said, "You wouldn't be able to, because it doesn't open. There is no such thing as a person without prejudice." I ask Opposition Members to learn from the past and to focus on the future, because it is our responsibility to create a better future. They should think carefully about how they will do that.
  Tomorrow, the next part of the "out of darkness comes light" programme will take place in Omagh. It will include children's story-telling for Christmas. The 500 children in the Belfast choir sang a Slade song, "Merry Christmas everybody". It is a Christmas party song that people dance to, the chorus of which goes:
  "So here it is, Merry Christmas.
  Everybody's having fun.
  Look to the future now.
  It's only just begun."
  As politicians, as civic leaders and as adults—we are adults—we have the responsibility and opportunity to ensure that the children of these islands have a peaceful Christmas and many happy and prosperous new years. I hope that we take that opportunity.
  6.1 pm
  Mr. Ken Maginnis: I regret that, because of the brevity of the debate, it will not be possible for those who come from Northern Ireland to speak with the depth of knowledge that years of experience of terrorism has given them. I do not want to
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  be offensive, but the hon. Member for Warrington, South (Ms Southworth) made about the most patronising speech that I have ever heard in the House.
  I am a Northern Ireland Member, and I have been in the House for almost 16 years. Having lived most of my life in Northern Ireland, I cannot ignore the fact that the Conservative party, which tabled the motion, let down the people of Northern Ireland during its 18 years in government. It undermined the foundations on which political progress and peace could have been built long before now. It is heartbreaking to realise that the present Government, after being in opposition for so long, are making exactly the same mistakes.
  I shall remind the official Opposition of the mistakes they made. There was the folly of the Anglo-Irish Agreement, which was imposed on the people of Northern Ireland without their consent, and without any consideration of their wishes. It was one of the greatest boosts that terrorism ever had in the 30 years to which the hon. Member for South Down (Mr. McGrady) referred. Those of us who understand the nature of terrorism remember the words of Danny Morrison, the publicity spokesman for Sinn Fein and IRA member, who talked about an Armalite and ballot box strategy.
  One of the problems that my colleagues and I have faced over the years is the fact that both main parties in turn—as they have been in government—have pandered to those who can bring the greatest force to bear in Northern Ireland. That is what the Anglo-Irish Agreement did. Baroness Thatcher now admits that she was wrong to introduce that agreement, but she did so because she could not tolerate the level of violence in Northern Ireland. Whatever her motives, the naivety of that agreement was experienced by all of us for a decade and longer.
  The Conservative Government's other huge faux pas was the framework documents, which were predicated on the notion that the way to bring an end to violence in Northern Ireland was to harmonise the two political entities. That again undermined the framework on which those of us who care about political progress and peace hoped to build.
  Now, in the most disingenuous manner, the present Northern Ireland Office team are undermining the Stormont agreement, for which many of us feel we paid a huge price. It is all very well for them to say that they support the letter of the Stormont agreement, but every action currently taken by the Northern Ireland Office team undermines the confidence of the greater number of people within both traditions in Northern Ireland. [Interruption.] I am glad that the Minister responsible for security, the hon. Member for East Kilbride (Mr. Ingram), has arrived, and feels that it is incumbent on him to mutter to colleagues on the Front Bench.
  I shall give an example of the disingenuous approach taken by the Northern Ireland Office. In the light of the continuing threat, I recently asked the Secretary of State
  "if she will identify those permanent security structures which are currently under consideration for demolition."
  One would have thought that that list would be fairly short, given the danger to Northern Ireland as terrorists move, at their convenience, from one group to another—

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  as they change cap badges. What did the Minister, who is still muttering, have to say? He said:
  "The Government are committed to returning Northern Ireland to normal policing and security arrangements as soon as it is safe to do so. This is clearly set out in the Good Friday Agreement. However, we can only move as fast as the security situation allows."—[Official Report, 18 November 1998; Vol. 319, c. 620.]
  The Minister says that we can only move as fast as the security situation allows. It might have increased my confidence and that of my constituents if he had had the guts to tell me that the Aughnacloy checkpoint is being demolished, as it is at present. A permanent, reinforced structure will not be replaced—God help us, if the violence starts again—yet one of the reassurances given by the Northern Ireland Office was that no irreversible steps would be taken to lessen security in Northern Ireland.
  My party has co-operated with measures to remove troops from Northern Ireland, and with other steps that have been taken to achieve normality on the streets. We wanted that obligation to be honoured, but that has not happened. That is part of the difficulty we face.
  I recently learned that the entire network of cross-border permanent checkpoints is under threat. I was told that they will not necessarily be removed after violence has been brought to an end and the guns and bombs have been decommissioned, but at an appropriate time in the medium term. That undermines the confidence of those of us in Northern Ireland who support the Stormont agreement, and who want that agreement to be implemented even-handedly.
  One difficulty is that the victims of the IRA who are sitting on the Labour Benches are different from the victims whom I represent. They are the victims of IRA propaganda, who chunter words such as "preconditions". The Secretary of State says that there will be no preconditions. Well, there are no preconditions since the signing of the Stormont agreement, but there are post-conditions, and, as I think that the Secretary of State is beginning to understand—she certainly did not understand it at Northern Ireland questions last week, but I think she is beginning to understand it now—those are obligations: obligations that must be fulfilled.
  Mr. Donaldson: My hon. Friend has mentioned the obligations placed on the Government. As he will know, the Northern Ireland (Sentences) Act 1998 places a specific obligation on the Secretary of State, requiring her, among other things, to take into account whether organisations benefiting from prisoner releases are co-operating fully with the International Commission on Decommissioning. Does my hon. Friend agree that no such organisation is currently co-operating with the commission?
  Mr. Maginnis: I am grateful to my hon. Friend for his intervention, which returns me to a point that I made earlier about the nature of terrorism and the Armalite-and-ballot-box policy of the IRA. It is a policy that has been recognised by other paramilitary groups. It means that a terrorist can go into hibernation in terms of the Armalite, but can continue to undermine society by exploiting the political process. The Government are not, at this stage, dealing with that effectively.
  If we are to make progress, we must understand what the IRA is trying to achieve. What will happen if the IRA can achieve the full release of prisoners, and a place
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  within the Administration—the Executive—which will, in turn, enable it to discredit the Government? I shall remind the House shortly of the original position of the House in terms of disarmament; but, if the IRA can discredit the Government, with the guns still in place it can threaten society. As many speakers have pointed out today, we will then be asked, "Are you going to give up this armed peace for a real war?"
  What does an armed peace—a phrase used by the Taoiseach of the Irish Republic, Bertie Ahern—offer a people in a democracy? Nothing, except exploitation by those who continue to threaten. There might just be an Omagh, an Enniskillen or a La Mon around the corner. Moreover, there is always the fallback that, if the Government show real commitment to real democracy, there might just be a Regent's park, a Canary wharf or a Warrington.
  We know what blackmail is, because we have seen it for 30 years. It is being applied in terms of the work being done by the Independent Commission on Policing in Northern Ireland. We need only walk into a public meeting, as I did on Friday night, to see an entire bank of Sinn Fein-IRA members, well orchestrated—
  Mr. McGrady: And Loyalists.
  Mr. Maginnis: The hon. Gentleman is right to remind me of that, but I was talking about my constituency, which, as he knows, does not contain a very active Loyalist terrorist element. The same is, of course, true of his constituency. In parts of the east of the Province, however, there they are—the Ulster Volunteer Force, the Ulster Defence Association and the rest.
  At the meeting that I attended in Dungannon on Friday night, I observed that there were no ordinary members of the hon. Gentleman's tradition in the hall. 1 was told that, if they had been present, they would not have dared to open their mouths. A member of the IRA—the father of the late commanding officer in Dungannon, who was shot at Loughgall—read out his statement as though, somehow, he had been a victim of violence. The wife of one of the Ballygawley bus bombers explained how she had been a victim of the security forces.
  The event was orchestrated to the last degree. A schoolmaster—a member of my tradition—made an even-handed and constructive contribution, and, after church on Sunday morning, I congratulated him on it. He—a man in his mid-sixties, who is well respected in the community—told me, "I found it very difficult, because I did not know whether that was a brick through my window or something worse, and I could not be sure what I was doing to my family." That is the extent of the intimidation that is occurring as the commission tries to fulfil its obligation to society in Northern Ireland. There is no balance.
  It really is time that Northern Ireland Ministers went out and met IRA propaganda head on. It is time that they took the trouble to prove that the IRA is incorrect in saying, "There is no tradition of disarmament. Where did you ever hear of disarmament taking place where there has been a civil conflict?" I could name El Salvador, the Lebanon, Mozambique, Guatemala and, currently, Colombia. Disarmament is taking place as a result of political agreements that are being honoured by some of the most callous militias and other terrorist groups; why

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  should Northern Ireland be any different? Why should the Secretary of State baulk at the idea that to meet Sinn Fein-IRA and other paramilitary organisations head on is somehow to leave us in a worse position than we are in now?
  The people of Northern Ireland, more than 70 per cent. of whom voted in favour of the Stormont agreement, do not expect to be betrayed, but they feel that the Government, and, in particular, the Northern Ireland Office, have been equivocal and evasive. I do not know why the Prime Minister does not step in as he did before 10 April, with the same enthusiasm and gusto, and reassure the people; someone must meet that obligation.
  I will end with that thought, as others wish to speak.
  6.19 pm
  Dr. Norman A. Godman: I intend to make the briefest speech in the debate, although I shall not resume my seat immediately.
  I remind the hon. Member for Fermanagh and South Tyrone (Mr. Maginnis) of a comment made by Senator Mitchell in his Dimbleby lecture last week:
  "I am not objective. I'm deeply biased in favour of the people of Northern Ireland. Having spent nearly four years among them, I've come to like and admire them. While they can be quarrelsome and too quick to take offence, they are also warm and generous, energetic and productive."
  I was prompted to make that comment by the hon. Gentleman's charmless response to the charming speech of my hon. Friend the Member for Warrington, South (Ms Southworth).
  I regret the motion. It is deeply unhelpful. I readily say that, when we have our debates, the exchanges with the right hon. Member for Bracknell (Mr. MacKay) are always civil-minded and courteous. Despite that courtesy and civil-mindedness, he has made a grave error of judgment in tabling the motion at this moment.
  It is right and proper that the Opposition offer tough-minded and legitimate criticisms of Government policy, even where, broadly, we have the same aspirations. I say the same to the right hon. Member for Bridgwater (Mr. King). He, too, was right to say that it is entirely legitimate to be tough-minded in response to a Government's policies. Labour Members were the same when we occupied the Opposition Benches. It will be many years before we are back there, but that is another story.
  Similarly, I thought that the right hon. Member for North-West Cambridgeshire (Sir B. Mawhinney) offered a fair-minded intervention on my right hon. Friend the Secretary of State for Northern Ireland. It was characteristically honest. Hon. Members will recall that he said that the subject is deeply divisive and the problem complicated and almost intractable, but, again, that he was right to offer criticisms of the Government. That is the duty of the Opposition, but the motion is a mistake.
  I remind the House of something else that Senator George Mitchell said the other day:
  "This week I met in Cork with the Irish Prime Minister, Bertie Ahern, and in Belfast with the leaders of the new Northern Ireland Assembly and the political parties. As you know, so far they have been unable to resolve issues relating to formation of the executive and the decommissioning of arms. There is uneasiness among some about the continuing release of prisoners."
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  I suspect that some hon. Members would say that that is an understatement.
  Senator Mitchell went on:
  "Next year there will be further controversy when reports are received from the independent commission on policing and the criminal justice system. Policing is especially sensitive. Chris Patten and his colleagues on that commission have an important and difficult task."
  I, along with other hon. Members of committee A of the British-Irish Inter-Parliamentary Body, will meet Chris Patten on Monday in this building.
  Senator Mitchell said—here he cannot be accused of understatement:
  "It will take extraordinary determination and commitment to get safely through all of these problems. But I believe it can be done and will be done. It would be an immense tragedy were the process to fail now. The British and Irish Governments and the political leaders of Northern Ireland have come too far to let peace slip away."
  He is absolutely right. We have known all along that decommissioning would be the most difficult question to address and to settle, but with patient, painstaking negotiations, and with the intervention of General de Chastelain and his colleagues, much can be achieved over the next 16 to 17 months.
  I remain—like Senator Mitchell, I like to think—a warm friend of the people of Northern Ireland, and optimistic that the painstaking negotiations can bring about the outcome that all of us want. There is too much pessimism on those matters among hon. Members on the Opposition Benches. I should like to see more optimism and more faith in the people who are at the forefront of the endeavours.
  I fully support what the Secretary of State is doing, and I am not being encouraged by—
  Mr. Paterson: Will the hon. Gentleman give way?
  Dr. Godman: Sit down.
  I am not being encouraged by active Parliamentary Private Secretaries, or even tough—
  Mr. Deputy Speaker: Order. I hope that the hon. Gentleman was not addressing that remark to the Chair.
  Dr. Godman: I would not dare, Sir. I was just asking someone across the way—certainly not you—to sit down.
  Mr. Deputy Speaker: Order. I am sorry, but the hon. Gentleman must know that matters of order are for the Chair and not for him.
  Dr. Godman: I take that stricture, and apologise to you, Sir.
  The Secretary of State's position is absolutely right on the issue. We should vote against the motion, and support the Government.
  6.26 pm
  Mr. Andrew Hunter: I shall be as brief as possible.
  I have a facsimile of the letter that the Prime Minister wrote in his hand on 20 May. It is headed:
  "My pledge to the people of Northern Ireland."

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  There are five pledges. The last two are worthy of consideration:
  "Those who use or threaten violence excluded from the Government of Northern Ireland",
  and
  "Prisoners kept in unless violence is given up for good"—
  some pledges.
  The fact that this debate is taking place is testimony to the fact that promises have been broken and trust betrayed. If the Prime Minister had kept his word—the word that he spoke at Balmoral on 14 May and repeated in the hand-written letter of 20 May, in the letter that was published in the News Letter and Irish Independent on referendum day and referred to on many occasions in the House, in particular on 6 May—there would be no need for this debate, but the Prime Minister and the Government have not kept their word. They have not honoured their pledge. The Government have betrayed the trust of the people of Northern Ireland and broken promises that were made to them.
  Few people, if any, deny that many Unionists voted yes on referendum day and for pro-agreement candidates in the Assembly elections because the Government had promised—so those Unionists understood—that there would be a direct link between decommissioning and early release, and between decommissioning and places on the Executive.
  Mr. Wilshire: Like me, my hon. Friend was in Northern Ireland recently—we were at the same place. Did he hear what I heard on that occasion—a significant number of Unionists saying that they had voted yes in the referendum to give the process a chance, but felt utterly betrayed and that they were now being sold out through appeasement, which was going to get them nowhere?
  Mr. Hunter: I do recall that powerful occasion and endorse what my hon. Friend has said. One reason why those people said that was because they perhaps remembered the exchange in the House on 6 May 1998, when my right hon. Friend the Leader of the Opposition asked the Prime Minister if he agreed that
  "prisoners should not be released early until the organisations to which they belong have substantially decommissioned their weapons".—[Official Report, 6 May; Vol. 311, c. 711.]
  Audio recordings of our proceedings confirm that the Prime Minister replied:
  "The answer to your question is, yes, of course".
  He went on further and applied it. He said:
  "both in respect of taking seats in the government of Northern Ireland and the early release of prisoners"—
  no ifs, no buts, unequivocal, unambiguous. The Prime Minister in this Chamber said, "No early release, no places on the Executive without decommissioning."
  The second episode worth remembering is the letter that the Prime Minister wrote to two Northern Ireland newspapers, which was printed on 22 May. It said:
  "There can be no accelerated prisoner release unless organisations and individuals concerned have clearly given up violence for good."
  That has not happened. The violence continues. There has been no let-up since the agreement, but the prisoners are coming out.
  366
  The Prime Minister continued:
  "Representatives of parties intimately linked to paramilitary groups can only be in a future Northern Ireland Government if it is clear that there will be no more violence and the threat of violence has gone. That does not just mean decommissioning, but all bombings, killings, beatings, an end to targeting, recruiting and all the structures of terrorism."
  Thankfully, the terrorists have pressed the pause button on the bombings, but they retain the capability to resume them whenever they want. Meanwhile, the killings, beatings, targeting and recruiting continue and the structures of terrorism remain intact.
  Mr. Peter Robinson: I am grateful to the hon. Gentleman, in particular because the majority of Unionists on the Opposition Benches voted against the Belfast agreement, but it looks as though none of us will be called to speak in the debate. May I draw the hon. Gentleman's attention to the Northern Ireland (Sentences) Act 1998, which relates decommissioning to the release of prisoners? It was a Government proposal, which was enacted by the House. Under that measure, the Secretary of State has powers to stop prisoners being released because decommissioning has not taken place.
  Mr. Hunter: The hon. Gentleman is correct.
  Finally, since 1 November—a mere five weeks—there have been 29 exiles, 11 shootings and 15 beatings in Northern Ireland and 138 people have been the victims of intimidation of a different nature. The Ulster Defence Association, the Ulster Volunteer Force and the IRA have all been involved in that grisly catalogue of mental and physical torture. Meanwhile, the obscene process of early release continues. The Prime Minister said:
  "There can be no accelerated prisoner releases unless organisations and individuals concerned have clearly given up violence for good."
  What was intended to be a peace process, long ago turned into a shameful process of appeasement. Labour Members say that there would have been no agreement without early release. So be it. A civilised society has core values, which include the rule of law and a judicial system that is independent of political interference. Neither exists in Northern Ireland—they died with the agreement.
  6.32 pm
  Mr. Malcolm Moss: The wording of the motion was carefully drafted, as my right hon. Friend the Member for Bracknell (Mr. MacKay) pointed out. The first part includes three comments that were made by the Prime Minister: the first at Balmoral on 14 May 1998; the second from Hansard on 20 April 1998; in response to my right hon. Friend the Leader of the Opposition; and the third in a response at Prime Minister's Question Time on 6 May. I shall read the last of the three quotations:
  "The only organisations that can qualify to take seats in the government of Northern Ireland and can expect the early release of prisoners are those that have given up violence for good".
  In another answer, he said
  "Decommissioning is part of that".—[Official Report, 6 May 1998; Vol. 311, c. 711.]

  367
  Listening to the views of the Government this evening, I find it extremely difficult to understand how they can oppose their own Prime Minister's words. We are asking that those pledges—given not only on those three occasions, but consistently throughout the past seven months—should be honoured.
  We have been consistent in our approach to the issues. In May, the Leader of the Opposition put the salient points to the Prime Minister. We are returning to the theme this evening because we are unhappy at developments, as is obvious from comments made in the debate by Conservative Members in particular, by those who favoured the Belfast agreement and were a party to it, and by those with a vested interest in the future of Northern Ireland.
  There is no break in the bipartisan approach. Nor do we seek to oppose or rewrite the agreement, as many Labour Members reading the Whip's notes are told to ask. As my right hon. Friend the Member for Bridgwater (Mr. King) said in his most telling contribution, hon. Members have a right to debate and to express opinions in the House, and not merely the opinions of Members, who have their own worries and considerations on the matter, but those of many people in Northern Ireland. I would go further. We also have a duty to express the fears, worries and concerns of the electorate we represent. This matter does not pertain merely to Northern Ireland. The entire United Kingdom electorate has a definite view of the situation. My right hon. Friend said that, to date, Government statements from the Secretary of State and the Prime Minister have been entirely admirable and I agree, but he went on, tellingly, to say that he believed that, so far, the giving had been one-sided.
  On the views of our electorate on the mainland of Britain, I refer the House to a Gallup poll that was printed in The Daily Telegraph a few weeks ago on Friday 6 November. The article, which was written by Anthony King, who is Professor of Government at Essex University and a well-known authority on these matters, stated:
  "There is overwhelming hostility to the early release of convicted terrorist prisoners. In the view of three quarters of Britons, prisoner releases should be halted until all terrorist weapons have been decommissioned.
  Gallup's data shows large numbers of voters are uneasy about some of the Blair Government's actions in connection with peace negotiations … Only 21 per cent. of people in Britain believe that the IRA 'has permanently renounced terrorism' and all but a tiny minority believe that terrorist organisations should be required to decommission all their weapons at once.
  The majority view is that weapons decommissioning should be complete before any further concessions are made to Sinn Fein and the IRA. Seventy per cent. are hostile to Sinn Fein joining any new devolved government in Northern Ireland pending the surrender of weapons and even more, 74 per cent., opposed further prisoner releases until the same condition is met."
  Ms Moran: Will the hon. Gentleman give way?
  Mr. Moss: We are running short of time, so if the hon. Lady does not mind, I will make progress.
  In this House, we have a responsibility to represent the views of the electorate on the mainland of Great Britain. On prisoner release, it is time that we shot the fox that
  368
  appears in every debate on the subject, probably due to the Labour Whip's notes. There is a fundamental difference between the prisoner releases that took place under the previous Government and those that are taking place now. That difference has been reiterated this evening and I shall explain it again so that, in future, Labour Members will tell their Whips, "No, we've had that debate", and say that they do not need that piece of paper any more.
  Under the previous Government, no life prisoners had their sentences reduced. When there was a ceasefire, some concessions were made in the negotiations, but we simply resumed remission levels of 50 per cent., as they had dropped to one third when we faced increased violence. That is the position on prisoner release under the previous Government, so let us have no more red herrings.
  The argument of the Secretary of State seemed to hinge on the definition of a ceasefire. She referred to the agreement and the linkage between prisoner release and a ceasefire and prisoner release and decommissioning. To return to the Prime Minister's statement on 6 May, which was:
  "It is essential that organisations that want to benefit from the early release of prisoners should give up violence. Decommissioning is part of that, of course".—[Official Report, 6 May 1998; Vol. 311, c. 711.]
  I simply do not understand how, on the one hand we can talk about a ceasefire, and on the other reject the definition of giving up violence for good. Only last week, during Northern Ireland Question Time the Secretary of State said:
  "I am not saying … that decommissioning should wait until last. We want it to happen as soon as possible and it is an essential part of the agreement. It is not a precondition but an obligation."—[Official Report, 2 December 1998; Vol. 321, c. 873.]
  She repeated the word "obligation" this evening.
  If it is an obligation, why was the right hon. Lady unable to answer my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg) when he asked her not once, not twice, but three times the fundamental and crucial question that we posed on other occasions and again tonight: is it possible that all the prisoners could be released with no weapons or explosives having been decommissioned? Perhaps she will answer yes or no in her reply to the debate so that we can have it on record.
  The hon. Member for South Down (Mr. McGrady) said that there was not a time scale but a time limit. The agreement talks in terms of a two-year limit. Are we suggesting that, at the end of two years, if prisoner release continues at its present rate, it is likely that all the prisoners will be out? Are we saying, and are the hon. Member for South Down and the Secretary of State saying, that it is highly possible that, at the end of two years, all the prisoners will have been released with no decommissioning at all having taken place? That is the fundamental question. It has been posed on many occasions and we have never received an answer.
  The motion has been criticised by the Liberal Democrats. Would not the hon. Member for Montgomeryshire (Mr. Opik) like an answer to that question? Does he know the answer? If he does, perhaps he will intervene. We would like an answer and that is why we tabled the motion. Indeed, that is why we shall vote on it. However, if as we expect, it is defeated, we shall not oppose the amended motion that may come in its wake.
  6.42 pm
  Marjorie Mowlam: With the leave of the House I shall respond to the debate. As I said at the start, it has provided a welcome opportunity to examine the progress that we are making on the Good Friday agreement. Right hon. and hon. Members on both sides of the House have acknowledged that progress is more rapid in some areas than in others. Whether we are talking about the shadow executive, the shadow assembly, the north-south implementation bodies, the north-south ministerial council, human rights, the Equality Commission, decommissioning, prisoner releases, the police or criminal justice reviews, we need to make progress on all those fronts together if the Good Friday agreement is to succeed.
  The right hon. Member for Bracknell (Mr. MacKay) must accept that, while a complete and unequivocal ceasefire is being maintained—he agrees that it is—the agreement requires that prisoner releases continue. He cannot say that he supports the agreement and then refuse to accept what the parties actually agreed. The right hon. Gentleman may be able to live with that contradiction in opposition, but the Government must remain consistent with the agreement.
  The hon. Members for Basingstoke (Mr. Hunter) and for North-East Cambridgeshire (Mr. Moss) quoted my right hon. Friend the Prime Minister and myself extensively. The Prime Minister's pledges and my statements are compatible with the agreement. The Opposition motion is not and that is why we cannot support it. Our position is clear. Progress needs to be made on all aspects of the Good Friday agreement. Earlier in the debate, I accepted that progress had been uneven. The answer is not to slow down on the issues on which progress has been made, but to speed up progress on the rest and eliminate the inequality. People need time and space to implement the agreement and the fact that they are being harried as a result of tonight's debate will achieve nothing.
  I echo the comments by the hon. Member for Montgomeryshire (Mr. Öpik) about punishment beatings, or mutilations as he referred to them. I keep the matter under continuous review, particularly after the events at the weekend with the Loyalist Volunteer Force. Next week, I shall meet all the parties attached to paramilitary groups to discuss precisely that issue as it is of deep concern to us.
  I thank the hon. Member for South Down (Mr. McGrady) and the right hon. Members for North-West Cambridgeshire (Sir B. Mawhinney) and for Bridgwater (Mr. King) for their speeches, which were honest and tried to show the complexity of the situation that they faced in government and some of the current difficulties. As two out of those three said, we would like more and quicker progress, but we can move only as quickly as the political leaders in the talks process. We shall do everything we can to encourage and facilitate that.
  Several Opposition Members, particularly the hon. Member for North-East Cambridgeshire, said that the House was being denied the right to debate the issue. Of course it is not. However, if hon. Members vote for the motion, they will be voting to rewrite the Good Friday agreement and that cannot be done.
  370
  The hon. Member for Fermanagh and South Tyrone (Mr. Maginnis) raised a specific point about Aughnacloy. All normalisation measures are taken on the advice of the Chief Constable and I can assure the hon. Gentleman that he guards his independence jealously and makes his own decisions. The demolition of the permanent vehicle checkpoint at Aughnacloy was his decision based on his professional judgment. Far from concealing it, the decision was announced on 20 September, but had been in the public domain for some weeks. Any future de-escalation measures will also be based on security advice.
  Mr. Maginnis: Will the Secretary of State give way?
  Marjorie Mowlam: I must make progress as time is short.
  The hon. Member for Lagan Valley (Mr. Donaldson) asked about the timetable for prisoner releases. The timetable for the accelerated release of prisoners is the responsibility of the Sentence Review Commission, acting in accordance with the terms of the Northern Ireland (Sentences) Act. He asked, as did the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg), whether all prisoners will be out in two years' time. The short answer is no. Many will still be in prison and the date is reviewable if progress is not made. Difficulties will arise if there is not sufficient confidence for progress to be made on all parts of the agreement before then.
  Mr. Maginnis: Will the Secretary of State give way on that point?
  Marjorie Mowlam: I have made it clear to the hon. Gentleman that I am not giving way.
  As I said earlier, I welcome the debate. It is right that we record what progress is being made on the Good Friday agreement. There is a long way to go, but the talks are continuing and I believe that the will is there to reach an agreement. Of course people on both sides are scared of the present position. They fear that progress is being stalled. It is a genuine fear that is common to both communities, but people are even more anxious that progress will not be made and that the process will move backwards. That is why I appeal to all those involved in the talks and all those holding positions of authority in Northern Ireland to do all that they can to make progress on all aspects of the Good Friday agreement.
  When one talks to people in Northern Ireland, they express a lack of confidence in the agreement. However, I agree with my hon. Friend the Member for Warrington, South (Ms Southworth) who mentioned their desire for normality. Despite the rude comments from Opposition Members, I agree with what she said about those in Warrington who suffered in the same way as people in Northern Ireland. I do not think that we should discuss whether a life lost in Northern Ireland is of more or less value than a life lost in Warrington or Canary wharf. We in the House treat the deaths of people and the sadness that it produces with equal seriousness and determination to ensure that progress is made. Therefore, I ask the House to support the Government amendment tonight and vote against the Opposition motion.
  6.50 pm
  Mr. Jeffrey Donaldson: I want to bring again to the attention of the House what is in the agreement. We have had a lot of discussion tonight about that. Let us look at what it contains on the release of prisoners. It says clearly:
  "Prisoners affiliated to organisations which have not established or are not maintaining a complete and unequivocal ceasefire will not benefit from the arrangements."
  That is the arrangements for prisoner release. It is beyond doubt that the organisations at present benefiting from the arrangements are not maintaining a complete and unequivocal ceasefire. Those ceasefires are being breached. Complete and unequivocal surely should mean an end to violence—that violence is not being perpetrated by those organisations.
  As other right hon. and hon. Members have said, Families Against Intimidation and Terror, an independent organisation partly funded by the very Government whose task it is to oversee the release of prisoners, has demonstrated that all these organisations are engaged in violence. They are breaching their ceasefires on a regular basis. I do not see how the Government can claim that the organisations benefiting from the release of their terrorist prisoners are maintaining a complete and unequivocal ceasefire. Surely "unequivocal" means that there is no equivocation on the question of violence. Yet the statistics for the last month alone clearly demonstrate that all those organisations that the Secretary of State has deemed to be maintaining a complete and unequivocal ceasefire are continuing to engage in acts of violence.
  Mr. Maginnis: Does my hon. Friend agree that, although the Secretary of State endeavours to evade her responsibilities by blaming the Chief Constable, the Chief Constable was unequivocal in pointing his finger after the Belfast-Donegal Celtic football team affair? He made it clear that the Provisional IRA had intimidated the members of that team into changing their decision.
  Mr. Donaldson: I am glad that my hon. Friend has made that point. It refers to an issue that was pointed up by Government Members when they talked about the new change happening in Northern Ireland. The hon. Member for South Down (Mr. McGrady) talked about the new changes. Yes, there are new changes, but unfortunately some of the mindsets have not changed. The action of Sinn Fein-IRA in dealing with the Donegal—[Interruption.] Hon. Members may think that it is funny that footballers who want to play a game of football are intimidated. I do not think that it is funny and neither do the footballers or the members of the Donegal Celtic football club. If the hon. Member for Carlisle (Mr. Martlew) wishes to intervene, I will give way to him, but since he remains seated it is obvious—
  Mr. McCabe: Am I right in thinking that, in condemning intimidation, the hon. Gentleman is even handed and also condemns the outrageous intimidation at Drumcree and the outrageous attacks on the RUC in the past week, which the Chief Constable has condemned?
  Mr. Donaldson: Indeed, without any equivocation, I condemn all acts of violence against the RUC or any person in Northern Ireland. My record on condemning violence is there for anyone to check. It has been consistent.
  In reference to the Donegal Celtic affair, the IRA is not maintaining a complete and unequivocal ceasefire. When it signed up to the agreement, Sinn Fein said that it was committed to exclusively peaceful and democratic means. How can it be democratic when it intimidates and sets about beating people up and shooting them?
  Ms Moran: I acknowledge the violence that the hon. Gentleman describes, but does he agree with the comments of Senator George Mitchell at the Richard Dimbleby lecture? He said:
  "But to succumb to the temptation to retaliate would give the criminals what they want: escalating sectarian violence and the end of the peace process."
  Does the hon. Gentleman agree that we are in grave danger of giving the terrorists what they want by trying to dismember the Northern Ireland agreement, as the motion attempts to do? Does he agree that it would be better if we acknowledged the more than 71 per cent. support for the whole of the agreement and did not divide the House on such an important issue so that we could make progress?
  Mr. Donaldson: No one is talking about retaliation by the use of violence and intimidation. May I quote to the hon. Lady the words of one Donegal Celtic footballer? He said:
  "we all received the phone threats and we know who threatened us. In fact he was only released from jail recently. That is why we took the threat so seriously because we all knew who this man was and what he was capable of."
  This man is the sort of person who is being released from prison and engaging in intimidation. According to Families Against Intimidation and Terror, a number of prisoners have been involved in so-called punishment attacks. Yet the Northern Ireland (Sentences) Act 1998 says that they must refrain from violence. There is a lot of duplicity here.
  When we talk about the agreement, let us also talk about the legislation that has been passed by the House, namely, the Northern Ireland (Sentences) Act. People ask where is the link between decommissioning and prisoner releases. It is in the law passed by this House. A link has been created between the release of prisoners and decommissioning. The Act that this House passed and the Government proposed says:
  "The Secretary of State shall in particular take into account whether an organisation… is co-operating fully with any Commission of the kind referred to in section 7 of the Northern Ireland Arms Decommissioning Act 1997".
  In my opinion, none of the organisations benefiting from prisoner releases are co-operating fully with that commission. Some of them have not even appointed a liaison officer to the international commission.
  What I and the decent people of Northern Ireland, including those who voted for the agreement, want to know is when the Secretary of State will fulfil the obligations placed on her by the House and ensure that those organisations benefiting from prisoner releases start to co-operate fully with the international commission and

  373
  that we start to make progress on the question of arms. There is a link between decommissioning and prisoner releases. Tenuous though it may be, it is there. The Government are under an obligation to ensure that we make progress on decommissioning. As the Opposition say, if we do not, the Government have to review the question of prisoner releases. There cannot be a blank cheque.
  One Labour Member talked about turning the key. The problem for many people in Northern Ireland is that the key that is being turned is the key to the cells in the Maze prison and that prisoners are being let out. Nothing is being given in response by terrorist organisations by way of decommissioning and an end to violence, threats, punishment beatings, shootings and maimings. All those things continue and have increased since the agreement was signed. That is not an end to violence. It is not peace. It is intimidation and violence and, for as long as it continues, the Government must review the whole question of prisoner releases.
  6.59 pm
  Mr. MacKay rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the original words stand part of the Question:—
  The House divided: Ayes 142, Noes 376.

  Division No. 19]

  [6.59 pm

  AYES

  Ainsworth, Peter (E Surrey)

  Duncan Smith, Iain

  Amess, David

  Emery, Rt Hon Sir Peter

  Ancram, Rt Hon Michael

  Evans, Nigel

  Arbuthnot, Rt Hon James

  Faber, David

  Atkinson, Peter (Hexham)

  Fabricant, Michael

  Bercow, John

  Forth, Rt Hon Eric

  Beresford, Sir Paul

  Fowler, Rt Hon Sir Norman

  Blunt, Crispin

  Fox, Dr Liam

  Body, Sir Richard

  Fraser, Christopher

  Boswell, Tim

  Gale, Roger

  Bottomley, Peter (Worthing W)

  Garnier, Edward

  Bottomley, Rt Hon Mrs Virginia

  Gibb, Nick

  Brady, Graham

  Gill, Christopher

  Brazier, Julian

  Gillan, Mrs Cheryl

  Brooke, Rt Hon Peter

  Goodlad, Rt Hon Sir Alastair

  Browning, Mrs Angela

  Gorman, Mrs Teresa

  Bruce, Ian (S Dorset)

  Gray, James

  Burns, Simon

  Greenway, John

  Butterfill, John

  Grieve, Dominic

  Cash, William

  Gummer, Rt Hon John

  Chapman, Sir Sydney (Chipping Barnet)

  Hague, Rt Hon William

  Hamilton, Rt Hon Sir Archie

  Chope, Christopher

  Hammond, Philip

  Clappison, James

  Hawkins, Nick

  Clark, Rt Hon Alan (Kensington)

  Hayes, John

  Clark, Dr Michael (Rayleigh)

  Heathcoat—Amory, Rt Hon David

  Clarke, Rt Hon Kenneth (Rushcliffe)

  Heseltine, Rt Hon Michael

  Hogg, Rt Hon Douglas

  Clifton—Brown, Geoffrey

  Horam, John

  Collins, Tim

  Howard, Rt Hon Michael

  Colvin, Michael

  Howarth, Gerald (Aldershot)

  Cormack, Sir Patrick

  Hunter, Andrew

  Cran, James

  Jack, Rt Hon Michael

  Davies, Quentin (Grantham)

  Jenkin, Bernard

  Davis, Rt Hon David (Haltemprice)

  Johnson Smith, Rt Hon Sir Geoffrey

  Dorrell, Rt Hon Stephen

  Duncan, Alan

  Key, Robert

  374

  King, Rt Hon Tom (Bridgwater)

  St Aubyn, Nick

  Laing, Mrs Eleanor

  Shephard, Rt Hon Mrs Gillian

  Lait, Mrs Jacqui

  Shepherd, Richard

  Lansley, Andrew

  Simpson, Keith (Mid-Norfolk)

  Letwin, Oliver

  Soames, Nicholas

  Lewis, Dr Julian (New Forest E)

  Spelman, Mrs Caroline

  Lidington, David

  Spicer, Sir Michael

  Lilley, Rt Hon Peter

  Stanley, Rt Hon Sir John

  Lloyd, Rt Hon Sir Peter (Fareham)

  Steen, Anthony

  Loughton, Tim

  Swayne, Desmond

  Lyell, Rt Hon Sir Nicholas

  Syms, Robert

  McIntosh, Miss Anne

  Tapsell, Sir Peter

  MacKay, Rt Hon Andrew

  Taylor, Ian (Esher & Walton)

  Maclean, Rt Hon David

  Taylor, Rt Hon John D (Strangford)

  McLoughlin, Patrick

  Taylor, John M (Solihull)

  Madel, Sir David

  Taylor, Sir Teddy

  Maginnis, Ken

  Townend, John

  Malins, Humfrey

  Tredinnick, David

  Maples, John

  Trend, Michael

  Mates, Michael

  Tyrie, Andrew

  Maude, Rt Hon Francis

  Walter, Robert

  Mawhinney, Rt Hon Sir Brian

  Wardle, Charles

  Wells, Bowen

  May, Mrs Theresa

  Whitney, Sir Raymond

  Moss, Malcolm

  Whittingdale, John

  Norman, Archie

  Widdecombe, Rt Hon Miss Ann

  Ottaway, Richard

  Wilkinson, John

  Page, Richard

  Willetts, David

  Paice, James

  Wilshire, David

  Paterson, Owen

  Winterton, Mrs Ann (Congleton)

  Pickles, Eric

  Winterton, Nicholas (Macclesfield)

  Prior, David

  Woodward, Shaun

  Randall, John

  Yeo, Tim

  Redwood, Rt Hon John

  Young, Rt Hon Sir George

  Robathan, Andrew

  Roe, Mrs Marion (Broxbourne)

  Tellers for the Ayes:

  Rowe, Andrew (Faversham)

  Mr. Nigel Waterson and

  Ruffley, David

  Mr. Stephen Day.

  NOES

  Abbott, Ms Diane

  Borrow, David

  Adams, Mrs Irene (Paisley N)

  Bradley, Keith (Withington)

  Ainger, Nick

  Bradley, Peter (The Wrekin)

  Ainsworth, Robert (Cov-try NE)

  Bradshaw, Ben

  Allan, Richard

  Brake, Tom

  Anderson, Donald (Swansea E)

  Brand, Dr Peter

  Anderson, Janet (Rossendale)

  Breed, Colin

  Armstrong, Ms Hilary

  Brinton, Mrs Helen

  Ashdown, Rt Hon Paddy

  Brown, Russell (Dumfries)

  Ashton, Joe

  Browne, Desmond

  Atherton, Ms Candy

  Bruce, Malcolm (Gordon)

  Atkins, Charlotte

  Burgon, Colin

  Austin, John

  Burnett, John

  Baker, Norman

  Burstow, Paul

  Ballard, Jackie

  Butler, Mrs Christine

  Banks, Tony

  Byers, Rt Hon Stephen

  Barnes, Harry

  Cable, Dr Vincent

  Barron, Kevin

  Caborn, Richard

  Battle, John

  Campbell, Alan (Tynemouth)

  Bayley, Hugh

  Campbell, Mrs Anne (C'bridge)

  Beard, Nigel

  Campbell, Menzies (NE Fife)

  Beckett, Rt Hon Mrs Margaret

  Campbell, Ronnie (Blyth V)

  Begg, Miss Anne

  Campbell—Savours, Dale

  Beith, Rt Hon A J

  Canavan, Dennis

  Bell, Martin (Tatton)

  Cann, Jamie

  Benn, Rt Hon Tony

  Caplin, Ivor

  Bennett, Andrew F

  Casale, Roger

  Benton, Joe

  Chapman, Ben (Wirral S)

  Bermingham, Gerald

  Chaytor, David

  Betts, Clive

  Chidgey, David

  Blackman, Liz

  Chisholm, Malcolm

  Blair, Rt Hon Tony

  Clapham, Michael

  Blears, Ms Hazel

  Clark, Rt Hon Dr David (S Shields)

  Blizzard, Bob

  Clark, Dr Lynda (Edinburgh Pentlands)

  Blunkett, Rt Hon David

  Boateng, Paul

  Clark, Paul (Gillingham)

  375

  Clarke, Charles (Norwich S)

  Hain, Peter

  Clarke, Eric (Midlothian)

  Hall, Mike (Weaver Vale)

  Clarke, Rt Hon Tom (Coatbridge)

  Hall, Patrick (Bedford)

  Clarke, Tony (Northampton S)

  Hamilton, Fabian (Leeds NE)

  Clelland, David

  Hancock, Mike

  Clwyd, Ann

  Hanson, David

  Cohen, Harry

  Harris, Dr Evan

  Coleman, Iain

  Heal, Mrs Sylvia

  Colman, Tony

  Healey, John

  Connarty, Michael

  Heath, David (Somerton & Frome)

  Cook, Frank (Stockton N)

  Henderson, Doug (Newcastle N)

  Cooper, Yvette

  Henderson, Ivan (Harwich)

  Corbett, Robin

  Hepburn, Stephen

  Corbyn, Jeremy

  Heppell, John

  Corston, Ms Jean

  Hesford, Stephen

  Cousins, Jim

  Hewitt, Ms Patricia

  Cranston, Ross

  Hinchliffe, David

  Crausby, David

  Home Robertson, John

  Cryer, Mrs Ann (Keighley)

  Hood, Jimmy

  Cryer, John (Hornchurch)

  Hope, Phil

  Cummings, John

  Hopkins, Kelvin

  Cunliffe, Lawrence

  Howarth, Alan (Newport E)

  Cunningham, Jim (Cov-try S)

  Howarth, George (Knowsley N)

  Curtis—Thomas, Mrs Claire

  Howells, Dr Kim

  Dafis, Cynog

  Hoyle, Lindsay

  Darvill, Keith

  Hughes, Kevin (Doncaster N)

  Davey, Edward (Kingston)

  Hughes, Simon (Southward N)

  Davey, Valerie (Bristol W)

  Humble, Mrs Joan

  Davidson, Ian

  Hurst, Alan

  Davies, Rt Hon Denzil (Llanelli)

  Iddon, Dr Brian

  Davis, Terry (B'ham Hodge H)

  Illsley, Eric

  Dean, Mrs Janet

  Ingram, Adam

  Denham, John

  Jackson, Helen (Hillsborough)

  Dewar, Rt Hon Donald

  Jamieson, David

  Dobbin, Jim

  Johnson, Alan (Hull W & Hessle)

  Donohoe, Brian H

  Johnson, Miss Melanie (Welwyn Hatfield)

  Doran, Frank

  Dowd, Jim

  Jones, Barry (Alyn & Deeside)

  Drown, Ms Julia

  Jones, Mrs Fiona (Newark)

  Dunwoody, Mrs Gwyneth

  Jones, Helen (Warrington N)

  Eagle, Angela (Wallasey)

  Jones, Nigel (Cheltenham)

  Eagle, Maria (L'pool Garston)

  Jowell, Ms Tessa

  Edwards, Huw

  Kaufman, Rt Hon Gerald

  Ellman, Mrs Louise

  Keeble, Ms Sally

  Ennis, Jeff

  Keen, Alan (Feltham & Heston)

  Etherington, Bill

  Keen, Ann (Brentford & Isleworth)

  Ewing, Mrs Margaret

  Keetch, Paul

  Fearn, Ronnie

  Kemp, Fraser

  Field, Rt Hon Frank

  Kennedy, Jane (Wavertree)

  Fisher, Mark

  Khabra, Piara S

  Fitzpatrick, Jim

  Kidney, David

  Flint, Caroline

  Kilfoyle, Peter

  Flynn, Paul

  King, Andy (Rugby & Kenilworth)

  Foster, Rt Hon Derek

  King, Ms Oona (Bethnal Green)

  Foster, Don (Bath)

  Kumar, Dr Ashok

  Foster, Michael Jabez (Hastings)

  Ladyman, Dr Stephen

  Foster, Michael J (Worcester)

  Lawrence, Ms Jackie

  Fyfe, Maria

  Laxton, Bob

  Gapes, Mike

  Lepper, David

  Gardiner, Barry

  Leslie, Christopher

  George, Andrew (St Ives)

  Levitt, Tom

  George, Bruce (Walsall S)

  Lewis, Ivan (Bury S)

  Gerard, Neil

  Linton, Martin

  Gibson, Dr Ian

  Livingstone, Ken

  Gilroy, Mrs Linda

  Livsey, Richard

  Godman, Dr Norman A

  Llwyd, Elfyn

  Godsiff, Roger

  Lock, David

  Goggins, Paul

  Love, Andrew

  Golding, Mrs Llin

  McAllion, John

  Gorrie, Donald

  McAvoy, Thomas

  Griffiths, Jane (Reading E)

  McCabe, Steve

  Griffiths, Nigel (Edinburgh S)

  McCafferty, Ms Chris

  Griffiths, Win (Bridgend)

  McCartney, Ian (Makerfield)

  Grocott, Bruce

  McDonnell, John

  Grogan, John

  McFall, John

  Gunnell, John

  McGrady, Eddie

  376

  McGuire, Mrs Anne

  Ross, Ernie (Dundee W)

  McIsaac, Shona

  Rowlands, Ted

  McKenna, Mrs Rosemary

  Ruane, Chris

  Mackinlay, Andrew

  Ruddock, Ms Joan

  McNulty, Tony

  Russell, Bob (Colchester)

  MacShane, Denis

  Russell, Ms Christine (Chester)

  Mactaggart, Fiona

  Salter, Martin

  McWalter, Tony

  Sanders, Adrian

  McWilliam, John

  Sarwar, Mohammad

  Mahon, Mrs Alice

  Savidge, Malcolm

  Mallaber, Judy

  Shaw, Jonathan

  Marsden, Gordon (Blackpool S)

  Sheerman, Barry

  Marsden, Paul (Shrewsbury)

  Sheldon, Rt Hon Robert

  Marshall, David (Shettleston)

  Shipley, Ms Debra

  Marshall, Jim (Leicester S)

  Simpson, Alan (Nottingham S)

  Marshall—Andrews, Robert

  Singh, Marsha

  Martlew, Eric

  Skinner, Dennis

  Maxton, John

  Smith, Angela (Basildon)

  Meacher, Rt Hon Michael

  Smith, Jacqui (Redditch)

  Merron, Gillian

  Smith, John (Glamorgan)

  Michael, Alun

  Smith, Llew (Blaenau Gwent)

  Michie, Bill (Shef-ld Heeley)

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

  Michie, Mrs Ray (Argyll & Bute)

  Snape, Peter

  Milburn, Alan

  Soley, Clive

  Miller, Andrew

  Southworth, Ms Helen

  Mitchell, Austin

  Squire, Ms Rachel

  Moffatt, Laura

  Starkey, Dr Phyllis

  Moore, Michael

  Steinberg, Gerry

  Moran, Ms Margaret

  Stevenson, George

  Morgan, Alasdair (Galloway)

  Stewart, David (Inverness E)

  Morgan, Ms Julie (Cardiff N)

  Stewart, Ian (Eccles)

  Morgan, Rhodri (Cardiff W)

  Stinchcombe, Paul

  Morley, Elliot

  Stoate, Dr Howard

  Morris, Ms Estelle (B'ham Yardley)

  Stott, Roger

  Mowlam, Rt Hon Marjorie

  Strang, Rt Hon Dr Gavin

  Mullin, Chris

  Straw, Rt Hon Jack

  Murphy, Denis (Wansbeck)

  Stringer, Graham

  Naysmith, Dr Doug

  Stuart, Ms Gisela

  Norris, Dan

  Stunell, Andrew

  Oaten, Mark

  Sutcliffe, Gerry

  O'Brien, Bill (Normanton)

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  O'Brien, Mike (N Warks)

  O'Hara, Eddie

  Taylor, Ms Dari (Stockton S)

  Olner, Bill

  Taylor, David (NW Leics)

  O'Neill, Martin

  Taylor, Matthew (Truro)

  Öpik, Lembit

  Temple—Morris, Peter

  Organ, Mrs Diana

  Thomas, Gareth (Clwyd W)

  Osborne, Ms Sandra

  Thomas, Gareth R (Harrow W)

  Palmer, Dr Nick

  Timms, Stephen

  Pearson, Ian

  Tipping, Paddy

  Pendry, Tom

  Todd, Mark

  Perham, Ms Linda

  Touhig, Don

  Pickthall, Colin

  Trickett, Jon

  Pike, Peter L

  Truswell, Paul

  Plaskitt, James

  Turner, Dennis (Wolverh'ton SE)

  Pollard, Kerry

  Turner, Dr Desmond (Kemptown)

  Pound, Stephen

  Turner, Dr George (NW Norfolk)

  Powell, Sir Raymond

  Twigg, Derek (Halton)

  Prentice, Ms Bridget (Lewisham E)

  Twigg, Stephen (Enfield)

  Prentice, Gordon (Pendle)

  Tyler, Paul

  Prescott, Rt Hon John

  Vaz, Keith

  Primarolo, Dawn

  Wallace, James

  Purchase, Ken

  Walley, Ms Joan

  Quinn, Lawrie

  Ward, Ms Claire

  Radice, Giles

  Wareing, Robert N

  Rammell, Bill

  Webb, Steve

  Rapson, Syd

  White, Brian

  Raynsford, Nick

  Whitehead, Dr Alan

  Reed, Andrew (Loughborough)

  Wicks, Malcolm

  Rendel, David

  Williams, Rt Hon Alan (Swansea W)

  Robertson, Rt Hon George (Hamilton S)

  Williams, Alan W (E Carmarthen)

  Robinson, Geoffrey (Cov'try NW)

  Willis, Phil

  Rogers, Allan

  Wills, Michael

  Rooker, Jeff

  Winnick, David

  Rooney, Terry

  Winterton, Ms Rosie (Doncaster C)

  377

  Wise, Audrey

  Tellers for the Noes:

  Wood, Mike

  Wray, James

  Mr. Keith Hill and

  Wright, Anthony D (Gt Yarmouth)

  Wyatt, Derek

  Mr. Greg Pope.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
  The House divided: Ayes 352, Noes 7.

  Division No. 20]

  [7.13 pm

  AYES

  Abbott, Ms Diane

  Chapman, Ben (Wirral S)

  Adams, Mrs Irene (Paisley N)

  Chaytor, David

  Ainger, Nick

  Chidgey, David

  Ainsworth, Robert (Cov'try NE)

  Clapham, Michael

  Allan, Richard

  Clark, Rt Hon Dr David (S Shields)

  Anderson, Donald (Swansea E)

  Clark, Dr Lynda (Edinburgh Portlands)

  Anderson, Janet (Rossendale)

  Armstrong, Ms Hilary

  Clark, Paul (Gillingham)

  Ashdown, Rt Hon Paddy

  Clarke, Charles (Norwich S)

  Ashton, Joe

  Clarke, Eric (Midlothian)

  Atherton, Ms Candy

  Clarke, Rt Hon Tom (Coatbridge)

  Atkins, Charlotte

  Clarke, Tony (Northampton S)

  Austin, John

  Clelland, David

  Baker, Norman

  Clwyd, Ann

  Ballard, Jackie

  Cohen, Harry

  Banks, Tony

  Coleman, Iain

  Barnes, Harry

  Colman, Tony

  Barron, Kevin

  Connarty, Michael

  Battle, John

  Cooper, Yvette

  Bayley, Hugh

  Corbett, Robin

  Beard, Nigel

  Corbyn, Jeremy

  Beckett, Rt Hon Mrs Margaret

  Corston, Ms Jean

  Begg, Miss Anne

  Cousins, Jim

  Beith, Rt Hon A J

  Crausby, David

  Bell, Martin (Tatton)

  Cryer, Mrs Ann (Keighley)

  Benn, Rt Hon Tony

  Cryer, John (Hornchurch)

  Bennett, Andrew F

  Cummings, John

  Benton, Joe

  Cunliffe, Lawrence

  Bermingham, Gerald

  Cunningham, Jim (Cov'try S)

  Betts, Clive

  Curtis—Thomas, Mrs Claire

  Blackman, Liz

  Darvill, Keith

  Blair, Rt Hon Tony

  Davey, Edward (Kingston)

  Blears, Ms Hazel

  Davey, Valerie (Bristol W)

  Blizzard, Bob

  Davidson, Ian

  Blunkett, Rt Hon David

  Davies, Rt Hon Denzil (Llanelli)

  Boateng, Paul

  Davis, Terry (B'ham Hodge H)

  Borrow, David

  Dean, Mrs Janet

  Bradley, Keith (Withington)

  Denham, John

  Bradley, Peter (The Wrekin)

  Dewar, Rt Hon Donald

  Brand, Dr Peter

  Dobbin, Jim

  Breed, Colin

  Donohoe, Brian H

  Brinton, Mrs Helen

  Doran, Frank

  Brown, Russell (Dumfries)

  Dowd, Jim

  Browne, Desmond

  Drown, Ms Julia

  Bruce, Malcolm (Gordon)

  Dunwoody, Mrs Gwyneth

  Burgon, Colin

  Eagle, Angela (Wallasey)

  Burnett, John

  Eagle, Maria (L'pool Garston)

  Burstow, Paul

  Edwards, Huw

  Butler, Mrs Christine

  Ellman, Mrs Louise

  Byers, Rt Hon Stephen

  Ennis, Jeff

  Cable, Dr Vincent

  Etherington, Bill

  Caborn, Richard

  Ewing, Mrs Margaret

  Campbell, Alan (Tynemouth)

  Fearn, Ronnie

  Campbell, Mrs Anne (C'bridge)

  Field, Rt Hon Frank

  Campbell, Menzies (NE Fife)

  Fisher, Mark

  Campbell, Ronnie (Blyth V)

  Fitzpatrick, Jim

  Campbell—Savours, Dale

  Flint, Caroline

  Cann, Jamie

  Flynn, Paul

  Caplin, Ivor

  Foster, Don (Bath)

  Casale, Roger

  Foster, Michael Jabez (Hastings)

  378

  Foster, Michael J (Worcester)

  Lepper, David

  Fyfe, Maria

  Leslie, Christopher

  Gapes, Mike

  Levitt, Tom

  Gardiner, Barry

  Lewis, Ivan (Bury S)

  George, Andrew (St Ives)

  Linton, Martin

  George, Bruce (Walsall S)

  Livingstone, Ken

  Gerrard, Neil

  Livsey, Richard

  Gibson, Dr Ian

  Llwyd, Elfyn

  Gilroy, Mrs Linda

  Lock, David

  Godman, Dr Norman A

  Love, Andrew

  Godsiff, Roger

  McAllion, John

  Goggins, Paul

  McAvoy, Thomas

  Golding, Mrs Llin

  McCabe, Steve

  Gorrie, Donald

  McCafferty, Ms Chris

  Griffiths, Jane (Reading E)

  McCartney, Ian (Makerfield)

  Griffiths, Nigel (Edinburgh S)

  McDonnell, John

  Griffiths, Win (Bridgend)

  McFall, John

  Grocott, Bruce

  McGrady, Eddie

  Grogan, John

  McGuire, Mrs Anne

  Gunnell, John

  McIsaac, Shona

  Hain, Peter

  McKenna, Mrs Rosemary

  Hall, Mike (Weaver Vale)

  Mackinlay, Andrew

  Hall, Patrick (Bedford)

  McNulty, Tony

  Hamilton, Fabian (Leeds NE)

  MacShane, Denis

  Hancock, Mike

  Mactaggart, Fiona

  Hanson, David

  McWalter, Tony

  Harris, Dr Evan

  McWilliam, John

  Heal, Mrs Sylvia

  Mahon, Mrs Alice

  Healey, John

  Mallaber, Judy

  Heath, David (Somerton & Frome)

  Marsden, Gordon (Blackpool S)

  Henderson, Ivan (Harwich)

  Marsden, Paul (Shrewsbury)

  Hepburn, Stephen

  Marshall, David (Shettleston)

  Heppell, John

  Marshall, Jim (Leicester S)

  Hesford, Stephen

  Marshall—Andrews, Robert

  Hewitt, Ms Patricia

  Maxton, John

  Hinchliffe, David

  Merron, Gillian

  Home Robertson, John

  Michael, Alun

  Hood, Jimmy

  Michie, Bill (Shef-ld Heeley)

  Hope, Phil

  Michie, Mrs Ray (Argyll & Bute)

  Hopkins, Kelvin

  Milburn, Alan

  Howarth, Alan (Newport E)

  Miller, Andrew

  Howells, Dr Kim

  Moffatt, Laura

  Hoyle, Lindsay

  Moran, Ms Margaret

  Hughes, Kevin (Doncaster N)

  Morgan, Alasdair (Galloway)

  Hughes, Simon (Southwark N)

  Morgan, Ms Julie (Cardiff N)

  Humble, Mrs Joan

  Morgan, Rhodri (Cardiff W)

  Hurst, Alan

  Morley, Elliot

  Iddon, Dr Brian

  Mowlam, Rt Hon Marjorie

  Illsley, Eric

  Mullin, Chris

  Ingram, Adam

  Murphy, Denis (Wansbeck)

  Jackson, Helen (Hillsborough)

  Naysmith, Dr Doug

  Jamieson, David

  Norris, Dan

  Johnson, Alan (Hull W & Hessle)

  Oaten, Mark

  Johnson, Miss Melanie (Welwyn Hatfield)

  O'Brien, Bill (Normanton)

  O'Brien, Mike (N Warks)

  Jones, Barry (Alyn & Deeside)

  O'Hara, Eddie

  Jones, Mrs Fiona (Newark)

  Olner, Bill

  Jones, Helen (Warrington N)

  O'Neill, Martin

  Jones, Jon Owen (Cardiff C)

  Öpik, Lembit

  Jones, Nigel (Cheltenham)

  Organ, Mrs Diana

  Jowell, Ms Tessa

  Osborne, Ms Sandra

  Keeble, Ms Sally

  Palmer, Dr Nick

  Keen, Alan (Feltham & Heston)

  Pearson, Ian

  Keen, Ann (Brentford & Isleworth)

  Pendry, Tom

  Keetch, Paul

  Perham, Ms Linda

  Kemp, Fraser

  Pickthall, Colin

  Kennedy, Jane (Wavertree)

  Pike, Peter L

  Khabra, Piara S

  Plaskitt, James

  Kidney, David

  Pollard, Kerry

  Kilfoyle, Peter

  Pound, Stephen

  King, Andy (Rugby & Kenilworth)

  Powell, Sir Raymond

  King, Ms Oona (Bethnal Green)

  Prentice, Ms Bridget (Lewisham E)

  Kumar, Dr Ashok

  Prentice, Gordon (Pendle)

  Ladyman, Dr Stephen

  Prescott, Rt Hon John

  Lawrence, Ms Jackie

  Primarolo, Dawn

  Laxton, Bob

  Purchase, Ken

  379

  Quin, Ms Joyce

  Stringer, Graham

  Quinn, Lawrie

  Stunell, Andrew

  Radice, Giles

  Sutcliffe, Gerry

  Rammell, Bill

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Rapson, Syd

  Reed, Andrew (Loughborough)

  Taylor, Ms Dari (Stockton S)

  Rendel, David

  Taylor, David (NW Leics)

  Robertson, Rt Hon George (Hamilton S)

  Taylor, Matthew (Truro)

  Temple—Morris, Peter

  Rooker, Jeff

  Thomas, Gareth (Clwyd W)

  Rooney, Terry

  Thomas, Gareth R (Harrow W)

  Ross, Ernie (Dundee W)

  Timms, Stephen

  Rowlands, Ted

  Tipping, Paddy

  Ruane, Chris

  Todd, Mark

  Ruddock, Ms Joan

  Touhig, Don

  Russell, Bob (Colchester)

  Trickett, Jon

  Russell, Ms Christine (Chester)

  Truswell, Paul

  Salter, Martin

  Turner, Dennis (Wolveth'ton SE)

  Sarwar, Mohammad

  Turner, Dr Desmond (Kemptown)

  Savidge, Malcolm

  Turner, Dr George (Norfolk)

  Shaw, Jonathan

  Twigg, Derek (Halton)

  Sheerman, Barry

  Twigg, Stephen (Enfield)

  Sheldon, Rt Hon Robert

  Vaz, Keith

  Simpson, Alan (Nottingham S)

  Walley, Ms Joan

  Singh, Marsha

  Ward, Ms Claire

  Skinner, Dennis

  Wareing, Robert N

  Smith, Rt Hon Andrew (Oxford E)

  Watts, David

  Webb, Steve

  Smith, Angela (Basildon)

  White, Brian

  Smith, Jacqui (Redditch)

  Whitehead, Dr Alan

  Smith, John (Glamorgan)

  Wicks, Malcolm

  Smith, Llew (Blaenau Gwent)

  Williams, Rt Hon Alan (Swansea W)

  Snape, Peter

  Soley, Clive

  Williams, Alan W (E Carmarthen)

  Southworth, Ms Helen

  Wills, Michael

  Starkey, Dr Phyllis

  Winnick, David

  Steinberg, Gerry

  Winterton, Ms Rosie (Doncaster C)

  Stevenson, George

  Wise, Audrey

  Stewart, David (Inverness E)

  Wood, Mike

  Stewart, Ian (Eccles)

  Wray, James

  Stinchcombe, Paul

  Wright, Anthony D (Gt Yarmouth)

  Stoate, Dr Howard

  Stott, Roger

  Tellers for the Ayes:

  Strang, Rt Hon Dr Gavin

  Mr. Keith Hill and

  Straw, Rt Hon Jack

  Mr. Greg Pope.

  NOES

  Beggs, Roy

  Thompson, William

  Donaldson, Jeffrey

  Forsythe, Clifford

  McCartney, Robert (N Down)

  Tellers for the Noes:

  Robertson, Laurence (Tewk-b'ry)

  Mr. William Ross and

  Robinson. Peter (Belfast E)

  Rev. Martin Smyth.

  Question accordingly agreed to.
  MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House recognises that the Good Friday Agreement represents an historic opportunity to bring agreed government and political stability to Northern Ireland; acknowledges the progress which has been made by the British and Irish Governments and the Northern Ireland parties in reaching and implementing the Agreement; and believes the only way forward for the people of Northern Ireland to find lasting peace is for the Governments and the parties to move urgently to implement every aspect of the Agreement in full.
  Mr. Winnick: On a point of order, Mr. Deputy Speaker. In view of the excellent decision on Pinochet, which has delighted all those who believe in the rule of international law, is the matter still sub judice? Has anything changed? If it is no longer sub judice, we would
  380
  like to have the opportunity to congratulate the Home Secretary on a decision that we believe to be absolutely right.
  Sir Patrick Cormack:Further to that point of order, Mr. Deputy Speaker. In view of the possibly irreparable damage that has been done to our relations with a friendly democratic country, will the Foreign Secretary come to the House and make a statement?
  Mr. Deputy Speaker (Mr. Michael Lord): Order. The matter is still sub judice and this is not the time to discuss it.

Tax Harmonisation
Mr. Deputy Speaker (Mr. Micheal Lord): We now come to the debate on tax harmonisation. Madam Speaker has selected the amendment in the name of the Prime Minister.
7.25 pm
Mr. Francis Maude: I beg to move,
That this House deplores the Government's attempts to be all things to all men on the issue of EU tax harmonisation; urges the Government to explain what confidence can be placed in Ministers' undertakings to use the veto, given the Chancellor's decision to sign up to the Party of European Socialists' "New European Way" document and given the EU Tax Commissioner's insistence that the UK is "fully on board" for progress towards tax harmonisation; asks the Government to place in the Library the list of 85 instances of alleged "harmful tax competition" identified by the Code of Conduct Working Group chaired by the Financial Secretary, ten of which are believed to relate to the UK; and urges the Government to make a clear statement of its policy towards EU tax harmonisation.
The House will wish to join me in expressing sympathy to the Chancellor and his family on their recent bereavement, which is the reason for his absence. We all want to send our condolences to him on that sad event.
The issue that we are discussing tonight sums up so much of what is wrong with the Government. On issue after issue, they try to have it both ways. In Europe, Ministers signed "The New European Way" and Commissioner Monti said that the United Kingdom is fully on board for the Commission's tax proposals, but those Ministers come back here and talk tough about using the veto. It is significant that such talk is always surrounded by weasel words that give them a let out for later.
The Government are starting to find that they cannot fool all of the people all the time. Sooner or later, decisions have to be made. Many of the tax harmonisation issues will come to a head in the next six months, so the Government need to make a clear statement of where they stand. They have an opportunity to do so today. The time for weasel words is over.
Mr. Tony McNulty: Sit down then.
Mr. Maude: I suspect that that comment is the peak of wit from those on the Government Benches. Judges used to ask, "Is that your best point?"; I suspect that it probably was.
I ask the Chief Secretary to address the chief issues and to have another crack at answering the question that we asked him last week, which he signally failed to answer: do the Government believe that the single currency requires tax harmonisation? It is not compulsory to believe that; plenty of people do not. Last week, however, the Chief Secretary provided two answers. First, he shook his head and then he nodded it. One can select the answer that one thinks is most appropriate. Let us see whether he can do any better today. I am watching him very carefully and he is not moving at all. He has had a week to think about the question, so when he makes his speech, he should answer it.
382
The Minister's colleagues on the continent think that economic and monetary union requires a degree of tax harmonisation. The German Finance Minister, Mr. Lafontaine, has said that the unified currency area needs a fair and equal tax framework.
Several hon. Members rose—
Mr. Maude: I do not know whether Labour Members have the same list of interventions as they had last week, but on this occasion they have not done us the courtesy of supplying it in advance. Perhaps we can hear the first one now.
Mr. James Plaskitt: How assiduous was the right hon. Gentleman in his campaign against tax harmonisation in 1992 when the Conservative Government signed up for minimum duty rates for alcohol, tobacco and fuel?
Mr. Maude: We always accepted that there was a case for minimal tax harmonisation. [Interruption.] Labour Members think that they have hit on something incredibly novel and miraculous, but it is perfectly well known that there was a case for minimal tax harmonisation for the development of the single market. We agreed to minimal movements, and that is simply a matter of history. Labour Members cannot wriggle away from the question that they now face; they are now the Government. The issue under consideration is a further programme of severe tax harmonisation in Europe. They have to answer the question. Do they support tax harmonisation or not? We are getting two different answers in two different places. They talk to their colleagues on the continent and clearly encourage them to believe that they are signed up to it; they then come back here and say something different.
If Labour Members spent any time talking to business men—now that the Paymaster General seems to be on his way out, there may be fewer opportunities for them to do so—they would find that business men are getting worried about the whole process. Because of the social chapter, they have already seen a levelling up of social and employment regulation, which has whittled away Britain's comparative advantage. Business men are beginning to see what would happen under the provisions to which the Government are committing themselves across the channel—they see the prospect of a levelling up of our taxation, which means the removal of exactly the things that have given Britain a comparative advantage in attracting investment.
Mr. Tom Levitt: Does the right hon. Gentleman accept that the two instances of tax harmonisation that we have seen—the signing up to the abolition of duty free and the imposition of value added tax on fuel—took place under his Government?
Mr. Maude: The issues today—[Laughter.] The reality is that the Government cannot get to grips with the fact that they are now in power. They have custody of those matters and have to come clean with the country on what they are planning to do. It will not do to keep on using weasel words and failing to answer questions.
Mr. Ian Stewart: Will the right hon. Gentleman give way?
Mr. Maude: No, I shall continue. I suspect that Labour Members are simply reading from the same hymn sheet.

383
We now know that when one gives way to one Labour Back Bencher, one might as well give way to all of them as they all read from one list. We can take one as proxy for them all because they are clearly too stupid to think up questions for themselves.
Mrs. Angela Browning: I am grateful to my right hon. Friend for giving way—look, no list. Will he confirm that the reason that there was an agreement on duty free at the time by the previous Conservative Government was that it was conditional on the Commission's making a detailed analysis of how it would affect individual countries and on its then coming forward with a report? We have never had that report—the Commission failed in its duty.
Mr. Maude: There was not only a commitment to supply an economic impact report of the effects of abolition of duty free on various countries but a commitment to bring forward proposals for a successor regime. That has not been done. The Government have only just cottoned on to that, and I shall have something to say about that later.
Let us hear from the Chief Secretary whether he agrees with the German Finance Minister that the
"unified currency area needs a fair and equal tax framework".
Does he agree with the Austrian Finance Minister, who said that economic and monetary union will
"make it imperative to start co-ordinating the sphere of taxation. The social democrat governments"—
that is rather chilling—
"will also have to look at harmonising prices and wage policy"?
That is what some of the Chief Secretary's joint signatories to the "The New European Way" say, but we have not heard what the Chief Secretary and the Chancellor say. Let us hear it tonight.
We also need to hear about a related matter. Do the Government seriously believe in tax competition? We heard the Prime Minister claim that he believes in it—he said so today. One wonders whether he has read the excellent recent paper by Mr. Marsden called "Is Tax Competition Harmful?", an issue that should be exercising the Financial Secretary at this time.
Mr. Marsden points out that, while the European Union is tackling cartels and encouraging competition in other parts of the economy, the reverse is true in the case of taxation. He shows that low tax economies consistently out-perform higher tax economies. What does the Chief Secretary think? Does he agree?
If the Chief Secretary genuinely believes in tax competition, as the Prime Minister today claimed that he did, why, in the one sphere where convergence would benefit Britain—excise duties, which were mentioned earlier—has he reversed the gradual convergence of British levels of excise duty with those of our continental trading partners? He has not only abandoned it but reversed it, so the gap is widening to Britain's disadvantage.
As we are talking about tax competition, it is good that the Financial Secretary is responding to the debate. She has been a somewhat elusive figure recently. The Government have gone a bit quiet about it now but, a few
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months ago, they were boasting about the fact that the Financial Secretary had been selected to chair the working group on the code of conduct on harmful tax competition. The Government thought that that was a great triumph for Britain. They were bragging about it and saying that it was great news for us. They have gone a bit quieter recently because it has turned out to be rather controversial and, for the Financial Secretary, rather embarrassing.
The Financial Secretary's group, we read, has identified 85 instances of harmful tax competition and 10 are said to relate to Britain. It would be lovely to hear her confirm or deny that. Those 10 items include tax breaks for the film industry, which were introduced by the Financial Secretary herself last year. Will she now publish the list of 85 instances of harmful tax competition? Is she prepared to publish it today so that the House can find out whether 10 such measures have been identified by her own working group? What is the Government's response? Is the Financial Secretary going to defend the very measures that she introduced last year but the group that she chairs has this year identified as being unacceptable? The country wants to know.
The Government spent a great deal of time last year boasting about what a wonderful scheme it was, about the jobs and investment that it would bring and the fact that it would revitalise the film industry in this country, but now the Financial Secretary says that it has to be scrapped. It was a bit short lived—what about all the long-termism that she has mentioned?
Mr. Paul Marsden rose—
Mr. Maude: This has turned into a short debate, which is a pity because it is on such an important subject. I must continue.
Will the Government publish an assessment of the impact of the removal of the 10 measures on jobs and investment? The film industry is important and we want to know about it, but what about shipping? What about the tax relief on reinvestment in ships, which the Labour party supported enthusiastically when it was introduced? That is apparently on the list and has to go.
The Financial Secretary must have been able to organise an assessment because she has been chairing the committee that has identified the problem. While she was doing that wearing one hat, presumably her officials in the Treasury could have been making an assessment of the impact on jobs and investment. The House wants to know.
Mr. Oliver Letwin: Does my right hon. Friend agree that it would also be useful if the Financial Secretary told the House why she told European Standing Committee B only a few months ago that the very committee that she was chairing would have no effect on domestic tax legislation? [Interruption.]
Mr. Maude: We hear from the Financial Secretary that it is apparently true that there will be no effect on Britain. I take that as a refutation of the suggestion that any of the 10 measures in question affect Britain. Will she confirm that?
The Financial Secretary to the Treasury (Dawn Primarolo): I shall speak later.
Mr. Maude: We shall be looking for a definitive answer then. From a sedentary position, she confirmed that what she said last year was absolutely true, so none of this affects Britain at all. Let us hear a definitive answer.
While we are on the subject of harmful tax competition, as it is called by the Labour Government and their European partners—
Mrs. Anne Campbell rose—
Mr. Maude: I must continue. I cheerfully gave way to my hon. Friend the Member for West Dorset (Mr. Letwin) because I know that he is capable of thinking up intelligent remarks for himself. We now know that Labour Members intervene only when comments have been handed out in written form beforehand.
Let us put paid to the idea that the Prime Minister again tried to put about at Question Time today, suggesting that the code of conduct on so-called harmful tax competition was produced under the previous Government. That is absolute rubbish—it was blocked when the previous Government were in office. It was signed up to by this Government. This Government thought that it was a great idea, and they signed up to it in December last year. Indeed, in announcing the decision, their press release said that Britain had signed up to the code of conduct "for the first time". They are condemned by their own mouth. Once again, the Prime Minister has given the House a misleading impression.
Mr. Ian Stewart: Will the right hon. Gentleman give way?
Mr. Maude: No, I shall continue. Giving way to the hon. Gentleman is very tempting, but I shall resist the temptation on this occasion.
The Chief Secretary to the Treasury (Mr. Stephen Byers)rose—
Mr. Maude: I shall give way to the right hon. Gentleman.
Mr. Byers: It must be recorded that the group on the code of conduct was first discussed during the United Kingdom presidency of the European Union. Will the right hon. Gentleman confirm that that was in November 1992, when the Conservatives were in office, and that they did nothing to block the proposal?
Mr. Maude: The proposal may have been discussed, but it was blocked while the Conservatives were in power. It was not signed until this Government were in office. They are condemned by the boast in their press release. It is very generous of them to want to share the credit, even though they tried to take it all for themselves when they announced the decision.
Mr. Byers: Once again, for the record, I refer to the ECOFIN meeting of 23 November 1992 and the agreement signed by the then Conservative Government. It was agreed that "the above criteria", which lists
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potential harmful tax matters, should be applied to the consideration of whether issues merit action and the level at which identified problems might be resolved, including those measures which are best taken on the basis of voluntary co-operative action. That is what the Conservatives agreed to during their EU presidency in 1992.
Mr. Maude: The more that the right hon. Gentleman reads out, the more it confirms the point. The Conservatives were committed to nothing in the nature of what this Government have signed up to. Britain signed up to such a damaging measure only when this Government came into office. They were then unwise enough to put the Financial Secretary in charge, with the result that the issue has come straight back like a boomerang, in condemnation of some of their very favourite measures.
Will the Chief Secretary spare us the weasel words that we have heard from him and his colleagues—[Interruption.] We have heard so much equivocation and qualification.
Mr. Christopher Leslie: Will the right hon. Gentleman give way?
Mr. Maude: I will not give way to the hon. Gentleman.
On this and related subjects, we need some straight answers. Last week, the Chief Secretary said:
"If necessary, we will be prepared to use our veto to protect the national interest."
That was a fudge. He cannot say when he will use the veto, what he is in favour of, or what he is against. He also said:
"if the draft directive on the withholding tax remains in its present form, we will veto that directive."—[Official Report, 1 December 1998; Vol. 321, c. 697–99.]
The directive will clearly not remain precisely in its present form. Will he veto the withholding tax? It is a very simple question. He cannot seek refuge, as he always does, in the qualification and equivocation that we have so much come to expect from the Government.
Will the Chief Secretary explain why, so very recently, but before all this subject became so controversial and uncomfortable for the Government, he and his colleagues were prepared to sign up to what amounted to a clear commitment in "The New European Way", which was launched with so much bragging, boasting and razzmatazz? We are told that that great document was drafted by the Chancellor's team in the Treasury. It is not for us to say whether its authorship, like another famous document, is "all Balls". The document states:
"We must make further progress in tax and benefit reform … by co-ordinating savings and corporate taxation".
We now know from what Mr. Lafontaine set out yesterday that, in Labour's lexicon, co-ordination of taxation and harmonisation of taxation are the same thing. The Government find co-ordination much less embarrassing to talk about—but the commitment is there.
Mr. William Cash: Will my right hon. Friend give way?
Mr. Maude: If my hon. Friend will forgive me, I shall continue.

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Will the Chief Secretary explain—he has utterly failed to do so—why the Prime Minister, in his address to the French National Assembly earlier this year, was explicit in committing the Government to protecting the veto only in respect of personal taxation? Does the Chief Secretary accept that that shows that everything else is negotiable?
A few months later, the report of the Labour party's national policy forum on Europe, which was presented to the Labour party conference and formally adopted as party policy, narrowed down the area of tax policy even more. It talked of member states retaining control over only "personal tax rates". Today, the joint letter signed by the Prime Minister and Chancellor Schröder narrowed it down even more. That great document was supposed to get the Prime Minister out of the hole in which he has found himself on this issue—yet, it makes matters worse. It says:
"At no time have we considered measures to harmonise personal income tax".
The weaselling continues. First, the Prime Minister is protecting personal taxes, then personal tax rates. Now personal income tax is all that is being protected. Does not the Chief Secretary understand that the more that the Government narrow down the areas of tax policy to which they attach importance, the greater the suspicion that everything else is negotiable?
Mr. Cash: Will my right hon. Friend give way?
Mr. Maude: No; I have given way several times and this is a short debate.
Why cannot the Chief Secretary say, as he has apparently been ready to say about the budget rebate, that such matters are simply not negotiable? Does he not understand that the rebate on which he stands so proudly was negotiated only because the Prime Minister of the day was ready to fight for it?
Today, I hope that the Chief Secretary will give some straight answers to the questions that he failed to answer last week. Will he use the veto to protect Britain's rates of stamp duty on house purchases? Will he use the veto to protect Britain's VAT rates? Will he use the veto to protect jobs in the City of London from the imposition of the withholding tax? Will he say no to the equally damaging fudge on exchange of information, which further analysis makes increasingly clear would pile up extra transaction costs and drive business out of the UK?
What assurance can the Chief Secretary give that our veto on tax will remain? Does he agree with the German Finance Minister, who clearly thinks that it should go? He said:
"It is my personal view that we eventually must go to qualified majority voting on the sensitive issue of taxes".
That was not just a personal view after all, because the German Chancellor agrees. He said:
"I must stress that the finance minister has the backing of the Government when he demands steps in this direction."
The Finnish Government, who will take over the EU presidency in July, have put moving to QMV on tax matters high on the agenda. They say:
"Majority voting on taxation is not a question of if but of when".
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Until the whistle was blown on them, the Government were merrily proceeding down the path of ever greater tax harmonisation. Why should they have committed themselves to protecting only such a narrow range of taxes from majority voting if they were not really saying, with a nudge and a wink, that everything else was negotiable? Why did the Prime Minister refer just to personal taxes when he spoke in the French National Assembly—as if that was not sending the clearest signal possible that the rest was open to negotiation?
That there is such a programme of tax harmonisation in the EU is now beyond question. That the Government have given the impression that they will go along with much of it is utterly clear. When Commissioner Monti and Mr. Strauss-Kahn claimed that Britain is "on board" for the EU's tax proposals, and when Mr. Strauss-Kahn said that he was confident that Britain would be signed up to tax harmonisation by the middle of next year, were they running scare stories? Were such claims the tools that The Sun used to generate scare stories in this country? That is absurd. In fact, Commissioner Monti and Mr. Strauss-Kahn have let the cat out of the bag.
I wonder whether Ministers understand—
Mr. Bill Rammell: Will the right hon. Gentleman give way?
Mr. Maude: No, I shall not give way.
I wonder whether Ministers understand how offensive it is to people, and how demeaning it is, that the Government have had to beg our European partners to moderate their language—"Not in front of the children, because it will upset them"—as though the German Ministers' honesty and openness in this matter threatened to upset the concerted deception that the Government have maintained.
As so often, the Government have been trying to be all things to all men, but it is decision time. Let us for once have clear answers to simple questions. I commend the motion to the House.
7.50 pm
The Chief Secretary to the Treasury (Mr. Stephen Byers): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
recalls that the last Government's record on tax was one of broken promises, that it raised taxes 22 times having promised to cut taxes, including putting VAT on domestic fuel and power having specifically promised not to do so, and further that it tried to raise VAT on fuel to 17.5 per cent.; welcomes the fact that this Government has kept all of its promises on taxation, including its promises not to raise the basic or top rates of income tax and cutting VAT on fuel to 5 per cent.; and further welcomes the Government's approach to taxation at an international level, favouring fair tax competition, supporting concerted action at European level, including through the EU Code of Conduct Group, to deal with discriminatory and unfair tax practices that distort real competition, stating that it will not support measures that are not in Britain's national economic interest or that damage British business, harm investment and jobs, or damage Europe's competitiveness, and reiterating that it will retain the veto on tax issues and that decisions on tax will remain subject to unanimity.
At the start of this debate, in which my right hon. Friend the Chancellor of the Exchequer was to have led for the Government, I associate myself with the remarks made by the shadow Chancellor; I am sure that the whole House wishes to express its condolences to my right hon. Friend and the rest of his family.

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In tonight's debate, I shall set out the Government's position on taxation, not just in relation to Europe but on domestic taxation. I shall specifically address the issues of tax harmonisation and of unfair tax practices, including tax abuse and evasion. I know that the issue of tax evasion and tax havens excites Conservative Members; they have been raising it indirectly, in one way or another for a long time. I can understand their personal interest, because of course—
Mr. Nick Gibb: What about the Paymaster General? Where is he?
Mr. Byers: There we have a good example. It is of personal interest to members of the Conservative party, because the present Treasurer of the Conservative party, Michael Ashcroft, has for many years been a tax exile, preferring to pay his taxes in Belize rather than Bristol.
The real issue that the Conservative party needs to address is why the party's latest accounts show a cash donation of £1 million by a connected party of Michael Ashcroft. No identity is disclosed. Why the secrecy? The only logical conclusion is that the donor, whether a company or an individual, is registered in a tax haven, and does not pay a penny in taxes in the United Kingdom. In my view, our democratic process must not be for sale to the highest bidder. I hope that the Tory party will come clean on that donation. We challenge the Leader of the Opposition to disclose the detail.
I want to place on the record tonight our position in relation to domestic taxation and on the issues in relation to Europe that were raised by the shadow Chancellor in his opening speech.
In place of the old spending philosophy, which sought to justify a policy of irresponsible tax and spend, this Government take a different, and principled, approach to public spending. Today—unlike 20 years ago—no national Government can set tax, spending and borrowing policies in isolation. They do so in a competitive global economy, within which we must justify policies for expenditure and taxation not just to our electorate but to a wider audience.
Mrs. Browning: Will the right hon. Gentleman give way?
Mr. Byers: May I make some progress? Then I shall give way to the hon. Lady.
Today, an irresponsible approach to tax, spending and borrowing—which is, in any case, the wrong approach—will be swiftly punished by financial markets. By contrast, a Government who take a prudent and sensible approach will enjoy the benefits in lower long-term interest rates and higher investment, which flow from the benefits of credibility.
The Government believe that efficiency and value for money in public spending are of central importance. Every penny spent must be justified by its objectives, priorities and efficiency. The Government have a responsibility to the public to use public money as efficiently as possible; and when, shortly, we publish the
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new public service agreements, we shall show exactly what the public can expect to get from the additional money that is being put into those services.
Mr. Crispin Blunt: Will the right hon. Gentleman give way?
Mr. Byers: I shall give way to the hon. Member for Tiverton and Honiton (Mrs. Browning) first.
Mrs. Browning: The right hon. Gentleman has moved on, but before he moves too far from his point about Michael Ashcroft, may I ask him whether he and his colleagues understand a fundamental point about the difference between someone like Michael Ashcroft and the present Paymaster General when it comes to overseas funds? Michael Ashcroft is a private citizen. The Paymaster General, who also has offshore trusts, currently presides over a policy that deprives some of my constituents—some of the poorest pensioners in the land—of £75 a year. That is the difference.
Mr. Deputy Speaker: Order. Before the Minister responds, I think it would be a good idea if we returned to the subject of tax harmonisation.
Mr. Byers: I shall certainly do so, Mr. Deputy Speaker, but first I shall point out to the hon. Lady that it was the Leader of the Opposition who said that there would be no secrecy as regards Conservative party accounts. I want to move on to the issues that I know are energising Conservative Members, because they want to get away from the fact that a secret £1 million donation in their accounts has been revealed; and I want to rush to address the issues that were raised by the shadow Chancellor.
The reality—
Mr. Blunt rose—
Mr. Byers: I shall give way to the hon. Member for Reigate (Mr. Blunt) if he wants to intervene now.
Mr. Blunt: The right hon. Gentleman introduced his remarks with talk about the fiscal rectitude that the Government were going to adopt on public expenditure. The Economic Secretary has been unable to give me an answer as to how long the economic cycle is. As that is rather germane to balancing the books over the economic cycle, how long is the economic cycle?
Mr. Byers: I thought that there was going to be a question about tax harmonisation so that we could satisfy the shadow Chancellor and his Front-Bench colleagues.
I want to address the issue of taxation. Let me start by saying clearly what our manifesto pledge was. We said that the principle of a tax system must be to encourage work. We said clearly in our manifesto that the whole purpose of a tax system must be to encourage work and reward effort. We stated:
"we are pledged not to raise the basic or top rates of income tax throughout the next Parliament."
We have kept that promise, and will continue to do so throughout this Parliament. We have not raised, and we shall not raise, the top or basic rates of income tax throughout this Parliament.

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We also said in our manifesto that we would reduce
"the high marginal rates at the bottom end of the earning scale".
We have kept that promise, too. As a result of the introduction of the working families tax credit—now opposed by the Opposition—national insurance reform and Britain's first-ever national minimum wage, the Government can give two very specific guarantees, on which we shall deliver. For families and their children, in a family where someone works full time, there is now a guaranteed income of at least £190 a week. To the same working family, we give a second guarantee: that no income tax will be paid on earnings below £220 a week. [Interruption.]
For the benefit of the shadow Chancellor, I am moving the amendment standing in the Prime Minister's name, and I am speaking to the amendment, which is in order because it has been accepted by the House authorities. I am making my own speech. The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) may not like it, but I am placing on record the appalling tax record of the previous Conservative Government. I want to remind Opposition Members of their record, and of the contrast that is now exposed—
Mr. Owen Paterson: Will the right hon. Gentleman give way?
Mr. Byers: In a second.
This Government, by contrast with the previous Government, can be trusted by the British people on tax. If we make manifesto commitments on tax, those commitments will be met. That contrasts starkly with the Conservative Government's approach. That is why we shall meet the pledge in our manifesto:
"We renew our pledge not to extend VAT to food, children's clothes, books and newspapers and public transport fares",
and why we shall deliver on that promise.
We made a further commitment on VAT at the last election:
"We will cut VAT on fuel to five per cent, the lowest level allowed."
In the very first Budget after the election, we moved immediately to do precisely that. That is why we shall take no lectures from the Conservative party on tax.
In the 1992 general election, the Tories promised time and again that they would cut taxes. After that election, they broke that promise 22 times. That is why the British people will never trust the Tories on tax again. There can be—
Mr. Paterson: Will the Minister give way?
Mr. Byers: I shall give way in a moment.
There can be no clearer demonstration than the Tories' approach to value added tax of the fact that they break their promises. In 1979, the Conservatives promised not to increase VAT. In the Budget following that promise, they doubled it. In 1991, the British people were made to suffer the consequences of the Tories' failure on the poll tax in an increase in VAT rates.
Mr. Paterson: We heard all this during the general election. Will the Minister address himself to the actions
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that he and the Government have taken since they came to power on one area of tax which it rests entirely in the Government's hands to decide—fuel duties and vehicle excise duty? In that area, we now have taxes so high that it costs £252 more to fill up a truck in Britain than in France, and VED is six times as high here as it is in France. What is that doing to jobs and prosperity in a strategic industry such as road haulage?
Mr. Byers: The hon. Gentleman's intervention came very close to an argument in favour of harmonisation of taxes with Europe. That is an interesting approach.
I can understand why Conservative Members feel uncomfortable about having their manifesto pledges broken time and time again. I understand that it is not pleasant for them to have those matters drawn to their attention. However, we continue to remind them because it is the truth and it is why the British people do not trust the Tories on taxes.
It is interesting to look through the record, including the record of the time when the shadow Chancellor of the Exchequer was a Treasury Minister. Many steps were taken then which led to the harmonisation of taxes. Which party justified a European directive stating
"we are committed to the harmonisation of indirect taxes"?
It was, of course, the Conservative party when in government. It was a former Chancellor of the Exchequer who said that in 1992. Which party signed at least 18 taxation directives while it was in government? Once again, it was the Conservative party.
That is the same Conservative party that now criticises and makes dire warnings about VAT being imposed from Europe and the same Conservative party that did not match our pledge on VAT. The Conservative party's manifesto did not even mention VAT. Let us not forget that the Conservative Government signed up to a minimum rate of VAT across Europe.
Mr. John Butterfill: Will the Minister give way?
Mr. Byers: I want to make some progress.
It was the Conservative party that signed up to extending qualified majority voting into 42 new areas while it was in government. That was done in the Single European Act 1985 and during the Maastricht treaty.
Mr. Andrew Tyrie: Will the Minister give way?
Mr. Byers: No. I should make some progress.
The Conservatives are the party that signed the Maastricht treaty, and the person who signed it was the present shadow Chancellor. That is the reality. The Conservatives attack what they once supported and deplore what they once agreed. They disown what they were once proud of and complain about promises when the fact is that we have kept ours and they have broken theirs.
Mr. Cash: Will the Minister give way?
Mr. Byers: As the shadow Chancellor would not give way to the hon. Gentleman, I am prepared to do so.
Mr. Cash: Does the Minister agree that, under the Maastricht treaty—under, I think, articles 103, 130 and

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various others—it is clear that it is intended to co-ordinate economic policy? How can the right hon. Gentleman deny—it is the burden of his argument, as far as I understand it—that the proposals for tax harmonisation do not flow from the Maastricht treaty? What will he do about it?
Mr. Byers: I must begin by thanking the hon. Gentleman for all the support that he gave us during the general election campaign, which was gratefully received. I am coming on, in literally 30 seconds, to address the issues relating to Europe in which I know the hon. Gentleman so likes to engage.
I move on to taxation in Europe. The arguments on issues concerning Europe should be based on common sense and not on narrow partisan politics. I want to take up some of the issues that have been raised concerning tax harmonisation. There has been a good deal of scaremongering, which we have heard this evening and over the past few weeks. I want to set out the principles that underpin the Government's approach. Our way forward for Europe is the promotion of employment, economic reforms and competitive markets, not tax harmonisation. The Government have made it clear that we shall not support any action at European level that will threaten jobs or the competitive position of British business. So any tax proposals will need to pass that fundamental test.
Mr. Tyrie rose—
Mr. Byers: No. I want to make some progress.
Questions of tax require a unanimous decision, so there is no question of tax changes that we do not support being imposed on us from Brussels. We are in favour of tax competition. We are in favour also of national Governments retaining control of taxation. Let us be clear: for the United Kingdom, that means taxation being decided when a British Chancellor of the Exchequer presents a Budget to this House.
Mr. John Bercow rose—
Mr. Byers: No. I want to make some progress.
We are also in favour of concerted action at European level to deal with unfair tax practices that distort real competition, to close tax loopholes and to cease unfair state aids and unfair tax breaks. The test always has to be whether in a particular instance the proposal delivers economic or financial benefits for the United Kingdom. If it does not, we shall oppose it and argue our case. The United Kingdom will not sign up to anything that is not in the national interest, that raises business costs, that harms investment and jobs or damages the competitive position of Europe.
I must give way to the hon. Member for Buckingham (Mr. Bercow) because I did not do so last time.
Mr. Bercow: If the right hon. Gentleman is in favour of tax competition, will he explain to the House why the Financial Secretary is prepared to relinquish up to 10 tax reliefs which work to the competitive advantage of the United Kingdom?
Mr. Byers: We certainly will not be doing that. I shall talk shortly about the group on the code of conduct. There
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has been much play about the 10 directives that will affect people in Britain. These are the 10 issues that are being discussed within the group. To give right hon. and hon. Members a taste of what is to come, of the 10 directives, five refer specifically to Gibraltar. They come to us as a member state of the European Union. I shall deal with the relevant five directives in the relevant part of my speech.
We shall retain the veto on tax issues. If necessary, we shall be prepared to use our veto to protect the national interest. The Government are clear that decisions on tax will remain subject to the agreement of all member states.
The shadow Chancellor referred to the position of the Finnish presidency and said that it would want to raise the question of all-state agreement. I should draw to the right hon. Gentleman's attention the statement made on 4 December by the Finnish tax Minister, who said that Finland's position
"is that unanimous decisions will make sure a small country can get its voice heard. Our position has not changed on that."
I think that we can see that Finland will not use its presidency to argue that what is at present a requirement for all member states to agree will be changed. So we shall retain the veto on tax issues. If necessary, we shall be prepared to use that veto in the national interest.
The Government's approach to Europe is clear. It is far better to be there shaping and engaging in the debates than sitting powerless on the sidelines. If and when draft Commission proposals come forward, the Government will discuss them constructively. However, we shall always judge them by what is in Britain's national economic interest.
In our discussions on tax in Europe, it is important to remember that we are not alone in our approach. Not only Britain but many other member states oppose the harmonisation of tax rates. Last Wednesday the Italian Finance Minister told the Financial Times that harmonisation of corporation tax would be
"untimely, questionable and, above all, hardly feasible"
and that it would be
"wrong in any event."
On the same day the Prime Minister of Spain spoke out against what he called the "dumbing down" of tax harmonisation and opposed a single rate of direct tax because it would be a recipe for inefficiency. There is no majority for the harmonisation of tax rates in Europe, never mind the unanimous agreement that would be required for action. Nor will the need for all-member agreement change. That would require all states of the EU to agree on a change to qualified majority voting on tax, and most member states will not agree to that.
Mr. Stephen Dorrell: The Chief Secretary has laid considerable stress on his claim that the Government support tax competition as a principle. Why did the Chancellor sign the document produced by the group of European socialist parties, titled "The New European Way", one of the principal purposes of which was to prepare the way for greater tax harmonisation? Why did the Chancellor sign a document that commits the Government to a policy that the Chief Secretary now says they oppose?
Mr. Byers: I do not know whether the right hon. Gentleman is relying on the Conservative research

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department brief, which has kindly been supplied to me. We seem to have a reciprocal agreement to exchange briefing notes between the official Opposition and the Government. If we co-ordinated it, perhaps we could save costs. Perhaps I should not say such things. 1 was pleased to take the right hon. Gentleman's intervention to get some balance in interventions from Conservative Members. We heard from an anti-European and have now heard from a pro-European—at least, I understand that that is the right hon. Gentleman's current position. The document that the Chancellor signed addressed issues not of tax harmonisation but of tax competition and if the right hon. Gentleman reads the document in detail, he will see that.
Mr. Dorrell: I was relying not on the Conservative research department but on the document provided in full on the internet. The Chief Secretary claims that it does not address tax harmonisation, but it addresses tax policy co-ordination—it is all in a word. A passage in the document specifically commits the signatories to greater tax policy co-ordination, but the Chief Secretary said that that is not Government policy. Did the Chancellor sign up in a fit of absent-mindedness? What is the Government's policy?
Mr. Byers: The policy is clear: we will judge every issue on its merits. We will exercise our veto over those that are not in the national interest, but we will not take the dogmatic approach of vetoing everything, as the Conservative Government did.
Mr. Bercow rose—
Mr. Tyrie rose—
Mr. Nick St. Aubyn rose—
Mr. Byers: I must make some progress, because I have probably taken longer than most hon. Members would wish me to so far.
Britain is not alone among member states in insisting that direct taxation is a matter for the national state. There is no proposal—nor any prospect of one—for the harmonisation of income tax in the European Union. No member state believes that there is a case for a European rate of corporation tax. Even the President of the Commission has said that
"income tax and corporation tax are sovereign national matters and will remain so."
The right hon. Member for Horsham, and the motion before us, raise the issue of the code of conduct group. I shall take this opportunity to inform the House of some facts, so that we do not allow prejudice to get in the way. The formation of such a group was first discussed during the United Kingdom presidency in November 1992. The group does not deal with tax harmonisation. It considers those measures that may be discriminatory and create harmful tax practices.
Five measures in the United Kingdom tax system are on the list to be considered by the code of conduct group. Five other measures relate specifically to Gibraltar. The fact that a measure is discussed by the group does not
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necessarily mean that it thinks that they are harmful, or that any pressure will be put on the United Kingdom to change them. The United Kingdom will submit a robust defence of the five measures that the group will discuss, and we are confident that they do not constitute harmful tax practices. We are able to submit a robust defence because of the criteria to be applied.
A potentially harmful measure is one where the effective level of taxation is lower than the general level of taxation in the member states in question. For a measure to be harmful, it also has significantly to affect the location of business activity in the Community. For example, it can be argued that a measure confined to small businesses is not harmful.
Measures are to be scrutinised against the following five further criteria; whether the measure is directed only at non-resident companies; whether it is ring-fenced from the domestic market; whether there is no real economic activity associated with it; whether the rules for the determination of profits are consistent with those of the OECD; and whether the measure is transparent.
As for the more general work of the code of conduct group, we have made it clear that we support fair tax competition and will not agree to any measures that will harm United Kingdom businesses and jobs. However, we believe that it is right to take action to tackle harmful tax practices, and that is what we intend to do.
As I said earlier, the Government believe that our approach to Europe should be based on common sense, putting reason before dogma. The test has to be whether proposals deliver economic or financial benefits to the United Kingdom. That is the Labour Government's principled position on Europe, which puts the national interest first, and it is worth contrasting that with the Conservative party's position. It has ruled out membership of monetary union for 10 years. Even if it were to be in Britain's national economic interest to join before then, it would not matter because joining has been ruled out for at least 10 years.
I remind the House of the comments made by the right hon. Member for Horsham when he was interviewed by The Observer. He was asked whether what he was saying was that, even if the single currency were a success, he could not use that to decide whether or not to join. The right hon. Gentleman replied, "Absolutely." That is another example of personal political positioning.
The events of the past few weeks have revealed the modern Tory party as anti-Europe, backward looking and with no vision of the future that lies ahead for our country. A serious debate is under way in Europe about its direction. This Government's modernisation and reform agenda applies not only to the United Kingdom but to Europe. The Tories failed in Europe because they stood on the sidelines and resorted to foghorn diplomacy. We will engage our European partners, shape the debate and ensure throughout that we act in our national interest. The reforms necessary in Europe are not in conflict with our national interest and, indeed, the two often complement each other. That is the way forward, that will be our course of action, and I commend the amendment to the House.
8.18 pm
Mr. Malcolm Bruce: I extend the condolences of my hon. Friends and myself to the Chancellor of the Exchequer on the loss of his father, who

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was a constituent of mine. I am sure that the Chancellor is in the village of Insch with his mother and brothers, and our thoughts are with them. Mr. Brown senior was a well-known, well-liked and well-respected figure in the community and he will be missed.
When I read the Conservative motion, I thought that it was sensible, but I am concerned by the way in which the argument has stacked up, which reveals two things. First, the Conservatives in government understood the practicalities of trying to secure co-operation on tax matters by voluntary agreement, but in opposition they have sought to turn that constructive approach into an anti-European rant. They are deliberately and mischievously failing to distinguish between voluntary co-operation for tax co-ordination—good—and the imposition of harmonised tax rates against our will—bad. Those are two quite different propositions. Yet Conservatives deliberately blur and mix them, so that people are not quite sure what is being addressed. Ultimately, it is not possible to support the motion because of the spirit behind it.
Liberal Democrats strongly believe that taxation is, and should remain, a national matter, and that we should be prepared to use our veto in the national interest. At the same time, if we can co-ordinate tax matters better with our European partners by agreement, that is all to the good. In doing so, we may be able to advance our national interest.
Why should we co-operate? On environmental issues, environmental taxes may well be more effective if they are agreed on a European basis. If we can plug tax loopholes—many of which are cynically exploited by financial institutions and accountants, many of whom are in the Conservative party—and argue for fairer duty levels on things such as our home-produced whisky, which suffers discrimination in some areas, that would be to our advantage, too. It is silly of the Tories to imply that such issues are neither to be looked at nor discussed.
Mr. Plaskitt: The hon. Gentleman raises the important matter of environmental taxes. As Liberal Democrats are in favour of £29 billion worth of new environmental taxes, will he take this opportunity to spell out to the British public what they are?
Mr. Bruce: I am not prepared to answer that question. If Labour Members intend to intervene with lists of questions, they had better get the brief right. This matter pops up in every debate. We shall continue to send hon. Members copies of our document. If they read it, they will stop asking silly questions.
We have some concerns about the issue that is currently being debated throughout Europe. We are in favour of co-operation but we oppose harmonisation. The Government must make the distinction clear. We should be seeking to build a liberal Europe. That is a good word. Such a Europe would not have unnecessary centralisation on these issues.
We certainly do not want a socialist Europe full of conformity, control and centralisation. Therefore, tax competition is the right discipline because it will limit tax variation of its own accord. It will ensure that European tax levels, although variable throughout the EU, will take full account, and will have to take full account, of competitive pressures in the wider world—a point which, to be fair, was clearly acknowledged by the Chief Secretary.
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I am confused by the Government's position on duty-free goods. A leading article in the Financial Times today argued that there was a smack of cynicism and opportunism in the Government's about-face on the issue. Duty-free goods must ultimately go. They cannot be justified on economic grounds. They undermine many small businesses in Britain and erode our tax base, as many will testify.
The real question is whether it is wise of the Government to express what I would suggest is synthetic opposition to getting rid of duty-free goods when the issue has already been dealt with and when there is unlikely to be a fundamental change of conclusion. The Government's position is unclear and inconsistent.
The third issue raised by the Opposition motion is what constitutes harmful tax competition. If we are talking about back-door subsidies of one kind or another, there can be a genuine debate about whether such subsidies should be eliminated by agreement, or whether each nation should be left to decide whether a subsidy is of benefit. That certainly should not be imposed on us. There are not more subsidies because, in a single competitive market, each nation ultimately has to determine that, in the long term, they are not in their economic interests.
There are those in the Irish Republic who are not entirely convinced that low corporation taxes have brought all the benefits that, on the face of it, appear to have been attracted. Businesses have located in Ireland to take advantage of the low tax rates, but they have repatriated the money. Ireland's GDP has been inflated to a level whereby it does not qualify for the cohesion funds which have been so important to the Irish economy. Most Irish citizens are not aware of the trickle-down effect of this wealth because it is not trickling down to the citizens. The Irish may want to reflect on whether that policy is in their long-term interests. We should allow market discipline and co-operation to be the way in which such anomalies are addressed, not central diktat.
We must be careful how we proceed because there may be measures which, for example, could help to promote employment in areas of high unemployment. They may be targeted and time limited to be of benefit, and it would be foolish to put ourselves in a situation where we never can agree measures to deal with special problems in special circumstances. Therefore, I urge the Financial Secretary not to give up tax breaks unless there is a clear case for doing so. I hope that when she replies she will make it clear that that would be her position.
In addition, when the Financial Secretary replies, some of us would like to know exactly where we are with tax relief on dividends for non-tax paying pensioners. That matter was on the Paymaster General's desk. He gave an undertaking to the House that it would be dealt with, but we now understand that it is on the Financial Secretary's desk. We would like to know whether she will deal with it and when she will make an announcement, preferably before the measure comes into effect.
My fourth point relates to the single currency. Today, the Prime Minister claimed to be engaging with Europe in order to promote our interests. That has been echoed by the Chief Secretary. The truth is that the decision to stay out of the single currency could make it more difficult in future for us to shape the European agenda and to serve our and other members' interests on tax policy

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and budgetary issues. That could be a real problem to which the Government to date seem not to have an answer.
The Chief Secretary made a powerful statement to the effect that we will engage in Europe, argue our case and present a robust argument in favour of the British national interest. Unfortunately, there will be no British representative in the decision-making body of the European central bank. There will be no British representative in the Euro X committee of financial Ministers for the co-ordination of economic policy. Empty chairs cannot negotiate, and that is a danger which the Government have not addressed.
My final point relates to the specific working of the single currency in the context of this debate. It is our absolute belief that a single currency will work effectively only if there is sufficient fiscal flexibility and subsidiarity. The argument being put forward by, for example, Oskar Lafontaine, that a single currency requires the co-ordination of taxation, is 180 degrees wrong. A single currency requires member states to be able to adjust their tax policy to take account of differentials within those member states. With a common exchange and a common interest rate, that flexibility must be maintained.
My challenge to the Government is to be clear about that and to enable us to give a lead. As the Chief Secretary said, there is no unanimity on this—indeed, there is barely a majority—and countries such as Spain, Sweden, Denmark and Italy are anxious to have Britain inside the euro single currency arguing that case robustly and ensuring, at the end of the day, that, although Germany may be the biggest member of the EU, it cannot impose tax uniformity, however much its Finance Minister wishes to do so, against the wishes of the majority or against the wishes of any one member determined to argue the case.
Mr. St. Aubyn: The hon. Gentleman agrees that fiscal policy will be needed to offset inappropriate monetary policy within a single currency. Will he confirm that, in Britain, current research shows that a change in fiscal policy will be required of the order of a 5p increase in taxation, or up to £10 billion taken out in taxation from the economy?
Mr. Bruce: That is arrant nonsense. The whole point about fiscal flexibility is that we can make our own decisions. We need to pursue an economic policy to ensure co-ordination and convergence, something that my party has consistently argued, but it is absolute nonsense to say that anybody can require us to alter our tax regime against our wishes and regardless of our own interest.
The Germans in particular are concerned that we have a flexible economy and a low-tax base, and that that affects our competitiveness to their disadvantage. They have problems, but the message to Mr. Lafontaine is, "Don't expect Europe to solve Germany's problems." Let Germany solve its own problems and recognise that tax policy should remain completely a matter for national interests and national Governments.
Once that is established, it may be possible to co-ordinate the policies that are necessary to enable this country to join the single currency early rather than late, and not to be in the absurd position of the Conservative
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party, which will not join even if it is in the national interest to do so. Indeed, the Conservative party has put itself increasingly in a situation in which even our continued membership of the European Union would be in question if we had no intention of joining at any time in the foreseeable future.
We must be upfront as a United Kingdom clearly pursuing a liberal agenda for Europe and rejecting the notion of a socialist Europe with controls, centralisation and diktat. I suspect that the Chancellor has reason to regret the fact that the document that flew around the socialist circles of Europe was initiated in his office. It is not surprising that he has tried to distance himself from it. I say to him and his team, "Don't apologise. Distance yourselves from it, strike the right balance and recognise that Britain can win this intellectual argument—if only the Government engage in it robustly enough."
8.32 pm
Mr. Bill Rammell: I welcome the opportunity to contribute to the debate, because in the past two or three weeks we have lived through one of the most hysterical periods in respect of tax harmonisation that this country has experienced for an awfully long time. To get an impression of how far we are from the reality of the European debate, it is instructive to look at newspapers from France and Germany. They have been focusing not on tax harmonisation, but on splits and debates in the Franco-German alliance in a way wholly unrelated to the discussion in this country.
There has been the kind of relentless press campaign that this country has not seen for a long time, with complete and utter fabrications about tax harmonisation. One day last week, The Sun even led its front page with the bold statement that zero-rating of value added tax on children's clothes and on food would go if Britain joined the single currency. There is no such proposal. We have to ask those newspapers, and Conservative politicians who support that disingenuous campaign, why they are doing that and why they are so intent on using extreme exaggeration that is not justified in any basis of fact to put their arguments.
We need to be clear about why the Conservative party has initiated tonight's debate. In trying to get the discussion about tax harmonisation and tax issues going, it hopes that the electorate will forget its record on taxation in government. The charges for its period in office are clear. First, the burden of taxation was shifted in an unfair direction. The only people who were paying less tax at the end of 18 years of Conservative government than they were in 1979 were those earning more than £70,000 a year, and only because everyone else was paying more.
Secondly, the Conservatives in government did something in respect of VAT that they said categorically in opposition that they would not do. It is hardly surprising, therefore, that on many tax issues, and especially on the issue of tax harmonisation, they attempt to muddy the waters and pretend, "Yes, we were dishonest and misled you, but isn't that what all politicians are like and isn't that what is likely to come through the back door via Europe?"
Let us deal with the substance of the allegations about tax harmonisation and look at the facts. Nothing in the Maastricht treaty or the essence of the single currency

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means that we have to have tax rates set in Brussels or harmonised taxation rates. The key reference in the Maastricht treaty is to sensible budget deficits—no more than 3 per cent. of gross domestic product. That leaves any democratically elected Government the option of a deficit that is either high tax, high spend and sensible or low tax and low spend. To pretend otherwise is simply not justifiable.
In general, when the European Union talks of tax harmonisation—there is a problem of language and translation—it is not talking about harmonising tax rates. It is talking about eliminating special tax breaks, which distort the market, and it is right to do so. In Britain, we should have no problem with that. Britain has a lot to gain from the elimination of tax breaks that provide unfair advantage to the industries of other countries, and of distortions in the single market.
On many occasions, we have heard Euro-sceptic Conservative Members rightly criticise what they perceive to be unfair state subsidies in other EU countries. A mechanism to tackle that should be supported.
Mr. Bercow: Given that the word "co-ordinate" is defined as
"to place or class in the same order, rank, or division",
at page 898 of the "Oxford English Dictionary", how is it to be distinguished in meaning from the word "harmonise"?
Mr. Rammell: I have not referred to page 898 as closely as has the hon. Gentleman. I would ask him to give the House a justification that takes his case forward and makes clear how any of the proposals on the table will take away the right of the British Government to set our tax rates. Nothing in the debate enables him to make that case.
I go further on the European situation: there are no European Union provisions for harmonisation of income tax rates, and no one has suggested that we should have that. There is no EU proposal to harmonise corporation tax rates. The hon. Gentleman and his hon. Friends will refer to Oskar Lafontaine. The most interesting revelation of the past few days is that his views do not even appear to be those of the German Government, let alone views that will win support across the EU.
The press has commented particularly on talk about the co-ordination and harmonisation of VAT rates. There have been co-ordinated VAT rates in this country and in Europe since 1977—more than 21 years. The idea that this is some new-fangled European wheeze to take away the powers for us to set our VAT rates simply does not bear any form of scrutiny.
The biggest single measure of tax harmonisation throughout Europe was introduced in 1991, as a result of the Conservative Government's decision to agree to a standard rate of VAT of 15 per cent. It was also agreed that, once introduced, that rate could not be reduced to less than 5 per cent. When the Labour Government came to power and wanted to reduce VAT on fuel, they could reduce it only to 5 per cent. and not to zero because of that tax-harmonising decision made by the Conservative Government. The Conservative party in government had already sold the pass.
There has been much misinformation about the withholding tax, the aim of which is to prevent tax evasion. The Government are rightly supporting that. The
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withholding tax concerns only cross-border income from investments in one member state to those resident in another. It has no impact on domestic savings taxation, but one would not have known that from the comments of Conservative Members and the newspapers in the past few weeks.
It has been argued that, if we sign up to a single currency, we will automatically have to sign up to harmonised tax rates. That is not the position in the United States of America. It has a single currency, but the individual states have differing tax rates. That deals with that argument.
Mr. Shaun Woodward: Is the hon. Gentleman saying that he would not use the veto on the withholding tax? If so, what does he believe the impact of the imposition of the tax would be on the bond market in London?
Mr. Rammell: I support the Government's position. There is concern about the euro bond market. If the withholding tax provision takes the form of an exchange of information, we can live with that. If it would damage the euro bond market, it would have to be agreed by unanimity and the veto would be available to us. I shall deal with the arguments about the manner and circumstances in which we use the veto, because that is pertinent to the discussion.
We should bear in mind the fact that the majority of Governments of the European Union, the European Central bank and the European Commission take the view that fair tax competition is a good thing. From the comments of Conservative Members and newspaper articles in the past few weeks, one does not get the impression that the majority view in the European Union is that fair tax competition is a good thing, and that taxes as a percentage of gross domestic product must be cut to make the EU more competitive. That is the stated aim of the ECB, and it is what the European Commission and the majority of elected Governments throughout the European Union are saying. They are hardly the views of a European Union that is about to harmonise our taxes and jack up our tax rates through some back-door mechanism.
It has also been argued—we heard the argument again this evening—that what the Government are saying is all very well, but we must listen to the detail and to what Oskar Lafontaine and this or that politician in Europe are saying. We should treat such comments with caution. Even within one Government and in one nation state there will always be a difference of views. Proposals will be talked up but will go nowhere, and kites will be flown that do not stay up.
The European Union has 15 different elected Governments, a Commission, a Central bank and a Parliament, so different proposals will be made and different views will be expressed. Just because ideas have been floated does not mean that there will be a change of policy. Over the years, the European Council table in Brussels has been littered with tax proposals that have died the death, such as the carbon tax proposals and the proposals for VAT on passenger transport, which were withdrawn in 1996.
It is not grown up or sensible government and politics to pretend that certain discussions will never take place or that no views will ever be expressed with which we are

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not comfortable. We should have a grown-up and mature debate on those issues, not the hysteria that we have seen in recent weeks every time such a suggestion has been made.
An article in the Financial Times this morning hit the nail on the head. It said:
"Tax issues are portrayed in black and white. In reality, governments opposed to one proposal often agree on other matters and there are inconsistencies within member states, notably in Germany."
That is the reality of the situation, and it should be brought out in the debate.
We are trying to refute the propaganda onslaught from the Conservative party about there being a major campaign to harmonise taxes, but people need not listen to Labour Members or to the Government. Conservative Members in particular should note what the right hon. and learned Member for Rushcliffe (Mr. Clarke) said last week. Commenting on tax harmonisation, he said that the United Kingdom
"could well benefit from changes … I always vetoed the savings tax which the Germans were very keen on … Gordon Brown sounded exactly like I did when I rejected scare stories about tax harmonisation".
The right hon. and learned Gentleman said that The Daily Telegraph and the Daily Mail had gone over the top on the basis of
"foolish remarks by Oskar Lafontaine."
That is what a senior and respected Conservative politician—a former Chancellor of the Exchequer—is saying. It would be helpful to hear from the Opposition spokesman who will wind up the debate whether the Conservative party considers that the right hon. and learned Member for Rushcliffe was being naive, whether he was making a deliberate attempt to mislead, or whether he was talking decent common sense and trying to bring people back to the facts.
There will always be a debate in Europe—in the European Union—about the way in which we wish to go forward, about the nature of the single currency, about whether we should join and about when we should join; but we should engage in that debate in a constructive, mature, reflective way. That is simply not happening at present. I believe that the country's only chance of economic success in the future lies in its being part of the European Union. We must seize the opportunities that exist, we must engage constructively in debate, and we must work together. There are circumstances in which we can achieve more together than we can alone: we should reject the isolationism—the retreat into the past, and into unreality—proposed by the Opposition.
We will preserve the country's economic interest. We must secure the best for Britain, but that will mean working with our partners in the European Union, rather than constantly rubbishing and rejecting them as Opposition Members do.
8.47 pm
Mr. Stephen Dorrell: The hon. Member for Harlow (Mr. Rammell) said that a debate was going on in Europe. At the end of his speech, the Chief Secretary to the Treasury also referred to a debate in Europe—a debate about the shape of the Europe in which we want to live in future.
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My right hon. and hon. Friends were right to table the motion. The Government must be much clearer—much straighter with the House, and with the British people—about where they stand in that debate about the future shape of the continent. The truth is that they are trying to have it both ways. The Chancellor of the Exchequer has signed up to the "New European Way" document, about which I shall have more to say shortly. While trying to cuddle up to the Party of European Socialists on the continent, the Government are also seeking to retain the endorsement of the Daily Mail.
It is not surprising that, when Ministers are speaking on the one hand to Mr. Lafontaine and Mr. Jospin and on the other hand to Mr. Dacre, they find that they have no words to cover the case; but the fudge that the Government are using to deal with the two audiences that they seek to satisfy is wearing thin. It is not a question of Europe, in or out; it is not a question whether we should engage in the argument on the continent about the future shape of Europe.
The Prime Minister was right this afternoon to stress the importance of Britain's engaging in the argument about the future shape of Europe, because our essential national interests are tied up in the conclusion that is reached in that debate. In truth, the debate is much more uncomfortable for the Prime Minister and for new Labour, because it is about Europe left or right, not Europe right or wrong.
One cannot help feeling a sneaking sympathy for the Prime Minister, in a sense. From his point of view, it is rotten luck that he should have spent so many years and so much effort in an attempt to suppress the voice of the old left in his party. He has seen off the old high-spend, high-tax forces in his party, and consigned them, more or less, to silent oblivion; then up pops the Party of European Socialists, reviving all the ideas that he thought that he had quelled in his own party.
It is not surprising that Ministers feel a certain embarrassment. Just at the moment when they thought that they had put all that to bed, suddenly the people on the continent whom they had been proud to regard as their friends—the new European left—start sending back across the channel all the arguments that are so inconvenient within the domestic argument for new Labour and the Labour party.
In an intervention, I quizzed the Chief Secretary on "The New European Way." I did not rely on selected excerpts. I enjoyed reading the document from beginning to end. I emphasise the point. My quarrel is not, by and large, with the European Commission. It is with the Party of European Socialists, and the vision of the future that is set out in the document.
I enjoyed reading "The New European Way" from beginning to end. It was a bit like a trip down memory lane. I quote one or two excerpts to which the Chief Secretary might not have had his attention drawn by the Conservative research department, because it draws some of the colour of the document:
"For the European Socialists and Social Democrats, pursuing macroeconomic policies in the interest of Europe's citizens has several aspects".
It then makes several unexceptional comments, until it comes to this masterpiece of an art that I thought was dead—the art of drawing up a composite motion. It says

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that, for the European Socialists—how the Prime Minister must have hated association with that word "socialists"—one of those aspects is
"a commitment to an increase of disposable incomes"—
the next bit was inserted presumably by the Chancellor of the Exchequer or Mr. Ed Balls—
"that is compatible with price stability"—
end of insert—
"so as to stabilise consumer expectations and macroeconomic demand, given an EU-import and export GDP share of only around 8 per cent."
The last bit, I suspect, was composited by the Greeks, but the key burden of that passage is that here is the voice, which has been given crisper and more grammatical form by Mr. Lafontaine, of people on the continent who still believe that it is important to maintain total aggregate demand as the key to delivering stable planning of the economy.
Those are the arguments of 25 years ago, and they are in the document that was signed by the British Chancellor of the Exchequer—small wonder that Ministers find themselves uncomfortable when asked whether he signed the document in a fit of absence of mind.
In particular, the Chancellor and the Prime Minister, who is known to hate that word "socialist", are embarrassed by the fact that they are associated with the document, but some people on the continent have made that case in the Party of European Socialists for a clear reason. Mr. Lafontaine is not embarrassed by the use of the word "socialist", and he is certainly not embarrassed by association with some of those ideas, because behind those commitments is a clear agenda.
Despite what the Chief Secretary says about his commitment to tax competition, the agenda is to reduce tax competition to make it easier to raise taxes and to go back to high-tax, high-spend policies. That is why "The New European Way" is dangerous, and why the Government, if they want to be taken seriously when they say that they are in favour of tax competition and divorced from the old ways of 20 years ago, should not have signed the document, but should, as the hon. Member for Gordon (Mr. Bruce), the Liberal Democrat spokesman, said, take the opportunity to distance themselves, as a Government and as a party, from ideas that the Prime Minister would prefer us to believe had been left behind long ago by the British Labour party. That is why I believe that hon. Members and those who follow these affairs outside the House are entitled to know whether the Government are for or against the ideas in the document. Do the Prime Minister and the Chancellor agree with the ideas that are set out by the European Socialists, or do they want us to believe that, although they have signed its document, they prefer the policies of the European centre right?
The Chief Secretary and the hon. Member for Harlow (Mr. Rammell) were right. A debate is going on, and there is a choice to be made between the route of the Party of European Socialists and that of the European centre right. Indeed, that alternative view of the way forward—the ideas of the European centre right—is a much more attractive view for Europe as a whole, and for Britain as part of Europe.
I do not agree with Mr. Lafontaine that a single currency leads inevitably to a single tax-and-spend policy, and I do not understand why the fact that he associates
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himself with that view should make it attractive elsewhere in this country. Furthermore, not only do I advance that point of view, but I remind the House that the separation between the single currency and tax-and-spend policy is not merely an expression of a point of view; it is set out in the Maastricht treaty, which separates fiscal from monetary policy, and establishes a separate line of responsibility for each.
That is one aspect of the programme of the European centre right which the Prime Minister has to decide whether he favours or is against; tax competition is the second aspect. The Chief Secretary said at the Dispatch Box that he was in favour, and I am delighted to hear it. However, "The New European Way" makes it abundantly plain that the European left is not in favour. Ironically, the argument for tax competition is clearly set out in the document, but it is applied not to Governments but to the private sector.
On competition as a policy for the private sector, the document states:
"With a single currency greater price transparency will increase the scope for cross-border competition. It will make it easier for consumers to compare prices and shop around. Firms will come under pressure to compete on quality, value for money and innovation. Firms will tend to avoid increased competition by price cartels or mergers.
That is why we need policies that offer fair competition in product markets through attacking cartels, monopolies and vested interests."
I completely agree. However, I do not agree with the distinction that the document draws between the argument for competition that the European Socialists think should apply to the private sector and that for protection against competition, which they think should apply to the public sector.
On tax harmonisation in the public sector—it is striking that the authors recognise that economic and monetary union will increase the pressure of competition—the document states:
"Economic and monetary union will intensify the potential for tax competition. Therefore,"—
in other words, because of that increased tax competition—
"further efforts will have to be undertaken to avoid harmful tax competition among the member states."
I wholly disagree with that proposition. The Chief Secretary sought to persuade us that he disagreed, too, but the choice is there. Either the Government follow the document produced by the European Socialists, or they follow the doctrine of the European centre right, which is in favour of tax competition as an essential discipline on Governments for the same reasons that it is an essential discipline on the private sector.
It is not part of my view that sensible technical co-ordination of tax policy has no place. It would be absurd for me to argue that. I was a Treasury Minister, and I followed my right hon. Friend the shadow Chancellor, the right hon. Member for Horsham (Mr. Maude), as Financial Secretary. As Ministers, both he and I were responsible for a succession of minor technical alignments of tax policy.
One is on the table from the Commission at the moment—the taxation of interest and royalty payments between associated companies. Ironically, it builds directly on an earlier directive on the taxation of such payments on wholly owned subsidiaries, which was

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passed under the previous Government. That is an example of a dry form of tax policy that offers an opportunity for sensible co-ordination.
I am not against that, but I strongly favour a tilt of policy throughout Europe in favour of tax competition between countries, for exactly the same reasons that I am in favour of private sector companies competing with one another. That sort of competition—by a comparison between the performances of individual Governments throughout Europe—is one of the best guarantees that can be provided that Governments will deliver good-value services.
It is right in principle for tax policy to be the responsibility of directly elected national Parliaments. The responsibility of the member state in Europe for tax policy is not merely an expression of view: it is there in the treaties, and to change it, the Party of European Socialists would need not only to change the balance of power in the Council of Ministers but to deliver a treaty amendment.
When we are faced with the document, bearing the Chancellor's signature, the central question, which only the Prime Minister, the Chancellor and the Government can answer, is: which side are the Government on? Are they on the side of the Party of European Socialists, with Mr. Lafontaine and Mr. Jospin, in favour of a cartel of socialists protecting high taxes; or on the side of the centre right, with a commitment to an open, competitive marketplace as the best discipline on Governments, for the same reason that it is the best discipline on companies?
9.1 pm
Mrs. Anne Campbell: We are all aware that the Tory party is against further European integration, but it was not until this evening that it became clear to me how far it had moved. The hon. Member for Stone (Mr. Cash), who was on the extreme Euro-sceptic wing in the previous Parliament, must be bewildered at the speed at which the rest of his party has caught up with him.
Every disagreement, every remark by a Minister from another European country, regardless of whether the Government agree with it, and every rumour that appears in the press, is used to further the Tory agenda. The Tories make no attempt to make a sensible argument against European integration, but merely use crude scare tactics to try to convince the British people that they will suffer catastrophic tax rises if we continue to talk to our European partners. Their whole agenda is obviously nonsense, and I do not believe that the British people will be taken in.
Our debate this evening is not about what is best for the United Kingdom, the British people or British business: it is simply about the dreadful state of the Tory party. That party is utterly demoralised by its disintegration in the House of Lords, and dismayed by the abysmal performance of its leader in the House of Commons, and it does not have the faintest idea how to be an effective Opposition.
I confess myself amazed that the Tory party would dare to raise the subject of tax, in the light of the previous Government's 22 tax rises, the abortive attempt to impose
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17.5 per cent. VAT on fuel, and all the broken promises. It appears to think that the people of this country have extremely short memories.
Mr. Desmond Swayne: Will the hon. Lady give way?
Mrs. Campbell: No, because I have only a short time, and others want to speak. I am sure that the hon. Gentleman will get an opportunity to speak if he catches the Deputy Speaker's eye.
Time and again, the right hon. Member for Huntingdon (Mr. Major), the previous Prime Minister, told the electorate that tax would be cut, but the reality was that the Tories did the very opposite of what they had promised: they increased taxes. The 22 new Tory taxes cost a typical family more than £2,000 extra. As if that were not enough, just before the 1992 general election, on 17 March, the right hon. Gentleman said:
"we have no need and no plans to extend the scope of VAT."
Earlier that year, he promised that there would be no VAT increase.
That seemed clear. Many people were taken in by the promise from what appeared to be Honest John, but the Tories imposed VAT on fuel at 8 per cent. A massive popular campaign helped the then Labour Opposition to defeat that unfair tax. It would have hit hardest those on low incomes and elderly people, who need to keep their homes warm.
How can anyone ever trust the Conservative party again? The party that keeps its promises is the Labour party, and I am proud to belong to a party which has kept its promises on tax—
Mr. St. Aubyn: On a point of order, Mr. Deputy Speaker.
Mr. Deputy Speaker (Mr. Michael J. Martin): Order. I hope that it is a point of order. Many hon. Members will not be called for this debate.
Mr. St. Aubyn: Mr. Deputy Speaker, are the hon. Lady's comments germane to a debate about tax harmonisation?
Mr. Deputy Speaker: I knew that it was not a point of order.
Mrs. Campbell: I know that the Opposition do not like to hear what I am saying, but it is extremely important that we continue to remind the electorate of the promises that were made and not kept.
The new Labour Government have cut VAT on fuel to 5 per cent. They have not raised the basic or top rates of income tax. They have not extended VAT to food, children's clothing, books, newspapers or public transport fares. I know that the Government will continue to keep their promises on tax.
The Conservative party is using scare tactics again when it pretends that the Government will give up their veto on matters of taxation. In 1997, the Labour party manifesto made it clear that we would retain the national

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veto over key matters of national interest such as taxation. My right hon. Friend the Chancellor has explained clearly that tax proposals require unanimity.
If the rules of the EU were to be changed so that tax proposals were no longer subject to a unanimous vote, that in itself would require a treaty change, and a treaty change cannot be achieved unless everyone agrees. The Government have made it clear that they will not agree, and there is no heart in the great majority of other European countries for change, either. So it simply will not happen. The Conservative Opposition are simply trying to create a crisis out of thin air.
The attitude of the Opposition on European issues shows that their election defeat in 1997 taught them nothing. Their approach of non-co-operation and non-negotiation was supposed to bring an early end to the beef ban. The previous Prime Minister remarked that the ban would be lifted by November. He certainly did not mean this November. He meant November two or even three years ago, when he was still in government.
The Conservative Government's attitude then was that, by bullying and not speaking to our European counterparts, and by refusing to address the arguments, they would win the day. In the event, the Europeans went ahead, and made policy without us. We were always on the outside, until the Labour Government came to power and showed what could be achieved with constructive dialogue and co-operation. That has always been the way to achieve results, and the Government have proved that it works.
The previous shadow Chancellor appeared to believe that entry into the single currency would require centralisation of tax and borrowing powers. He made that point in reply to my right hon. Friend the Chancellor, when my right hon. Friend explained the Government's policy to the House on 27 October 1997. The previous shadow Chancellor's view is mistaken, as is that of the present shadow Chancellor. It is easily seen to be a false proposition from the example of the United States, a country that has a single currency but different tax rates in different states. Tax harmonisation is not an inevitable consequence of a single currency.
I am not sure why we are debating this issue tonight. Tax harmonisation is never going to happen in Europe, so there seems little point in spending time and energy debating the issue. The important things to British people are jobs, high living standards and markets that are truly open and in which our businesses can compete.
On Monday morning, I was fortunate to attend one of my right hon. Friend the Chancellor's productivity roadshows, that held in the eastern region which was one of several roadshows that my right hon. Friend and his Ministers are holding around the country. I did not see any Opposition Members at the roadshow but the business people who were present warmly welcomed the Government's approach to productivity. They appreciate the reduction in corporation tax to its lowest-ever level, and the tax measures that have been proposed to encourage long-term investment and reward entrepreneurs. The huge increase in the science budget has come as a welcome surprise to research organisations and small firms. They all want the unique blend of low taxation and increased investment that the Government have put in place.
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I do not believe that the people will be fooled or scared by Tory stories on tax. The Labour Government are earning people's respect and trust, whereas the Conservative party will never again be trusted on tax.
9.10 pm
Sir Peter Lloyd: Before I embark on my speech, I join other hon. Members in expressing my sympathy to the Chancellor on the loss of his father.
Although I am tempted to do so, I shall not follow up the rather individual interpretation of recent history presented by the hon. Member for Cambridge (Mrs. Campbell), other than to comment on her reference to the beef ban being lifted by new Labour. In fact, it was finally lifted under the Labour Government because they had continued the measures that were introduced by the previous Conservative Government. The Labour Government deserve some praise for sustaining the effort, but to pretend that the measures belong to them is to rewrite history.
Despite the protests of hon. Members, it is plain that the Government are in a quandary over Europe and tax—it is plain from the exchanges at Prime Minister's questions and from the Chief Secretary's speech this afternoon. I shall not dwell on the quotations, because I intend to speak only briefly, so as to allow others to speak and because the quotations have been bandied about often enough today and on previous occasions.
Like my right hon. Friend the Member for Charnwood (Mr. Dorrell), I can sympathise with the Government. They want to be at the heart of Europe; they want to engage positively; and they want to appear to the public to be doughty defenders of British interests—defenders who will not let taxes be pushed up by Brussels, and who will retain at Westminster all the power necessary to ensure that they can prevent it.
At the start, it is quite easy for the Government to square all that rhetorically—at least, it would be, if leading European figures refrained from speaking and spoiling the effect—by saying, "We shall co-ordinate our tax systems and co-operate in removing harmful tax competition, but, rely on us, we shall use our veto to protect British interests." However, when it comes to it, the practice will be far more difficult in the continuous horse trading that is how the European Union does business.
The Government will find that, in Europe, not only is it not possible to please everyone, but that it is all too easy to please no one at all. Trying to earn plaudits in Europe and at home will ensure that the Government become distrusted and derided at both ends. That was a lesson that the previous Government learned to their cost, and so will the present Government. I suspect that the Government will pay a high political price, but I fear that the British people will pay a higher economic and constitutional price, unless the Government listen to the Opposition.
It is theoretically possible to have a single currency without tax harmonisation, but I do not believe that that is what will happen in the EU. The very demands of launching the euro and the transparency it brings will put increasing strain on the different tax regimes of member countries. Each country's regime will have at least one feature that the others find objectionable. It is only to be expected that European politicians and officials—not least

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the German and French Finance Ministers, who are not inconsiderable people—who want an ever-closer union will perceive an overriding need for tax matters to be settled by majority voting.
That will fit in with their ideals, and with the practical problems that they believe must be resolved. The only surprise is that it has been mentioned so soon: they clearly have the bit between their teeth. If the Government apply for United Kingdom entry into the single currency, they may be sure that they will have to accept majority voting on this matter—that is, if they have not already conceded it by then.
There is another reason to expect Europe to move in that direction. It will be the only way that it can conceive of getting rid of harmful tax competition, which features far more in the mind of Europe than in that of the Government. The problem is that one country's benevolent, business-encouraging, job-creating tax arrangement is another country's imported unemployment—or, in other words, another country's harmful tax competition.
I do not believe that the rest of Europe will raise duties on wine and cigarettes to British levels in order to halt the United Kingdom's loss of trade and revenue to northern France. However, we will certainly be expected to begin to raise taxes on business and employment closer to European levels.
We can also be assured that those levels will not come down in the foreseeable future. The new Government in Germany are acting like old Labour, increasing public spending to fund job creation measures. I am not arguing the merits or otherwise of that approach; I am merely emphasising the fact that harmonising taxes will inevitably lead to rising taxes in the United Kingdom.
The most harmful and unjust tax arrangement from the point of view of other European financial centres is that which is vital to the success of the City of London. It is not surprising that they regard the withholding tax as a simple and fair Community arrangement. However, as my right hon. Friend the Member for Horsham (Mr. Maude) said, the tax will ensure not a more equitable sharing of financial business across the Community but the migration of that business to New York, Zurich and elsewhere beyond Europe's borders. The business will be lost to London and to Europe.
Opposition to tax harmonisation is in Britain's, as well as Europe's, best interests. Europe needs to become more competitive, particularly in light of the fall in the value of Asian currencies. If that is to happen, Europe must have effective internal competition. The single currency is supposed to promote that. However, if the EU is to be genuinely competitive, it will need competing tax regimes. If one EU tax regime is more successful in encouraging business and jobs, it should be copied voluntarily, because it works, rather than legislated out of existence as a threat or an anomaly.
The Chief Secretary recognised that argument in part of his speech. He accepted that international competition and its needs will shape the tax systems of countries across the world, but he failed to draw the appropriate conclusions. The hon. Member for Gordon (Mr. Bruce)— I hope that I followed him correctly—drew the same conclusion, and rightly challenged the Government to say where they stand on that issue.
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The Opposition are concerned not about tax harmonisation that arises naturally and properly because certain tax measures are shown to be more efficient and effective in developing economies, but about enforced tax harmonisation. That should be resisted by the Government, and I hope that, in winding up, the Minister will confirm that that is their intention. Enforced tax harmonisation must be resisted, in the interests of Britain and of the wider Community.
9.19 pm
Mr. Christopher Leslie: Conservative Members have been skating on thin ice this evening, having called a debate about tax harmonisation, on which they face a dodgy dilemma. They are trying to throw accusations at the Government but they get very shaky and worried about Europe because it is the last subject that they want to discuss. Every Tory Member who has spoken this evening has given a slightly different version of how the future of Europe should develop. I hope that the hon. Member for Stone (Mr. Cash) will speak because I would like to hear his opinion.
Conservative Members are probably regretting the debate and thinking that it is a waste of an Opposition day. When the press was speculating last Wednesday that the Leader of the Opposition would raise the matter at Prime Minister's Question Time, the Tories made a big gaffe and he raised the issue of the House of Lords. Perhaps there is a greater need for harmonisation of Tory party efforts in the Commons and the Lords than there is for a debate on tax harmonisation.
The debate is a diversionary tactic to raise the spectre of Euro-federalism moving towards us and the evil arm of Europe reaching out to grab money from people's pockets. The Chief Secretary set out clearly Labour's policies and how the Government want tax policy to develop across Europe. We want to focus on reducing public sector borrowing levels and ensuring that there are no reckless spending plans, certainly in Britain. We want to ensure that there is wise, efficient prioritisation in public spending and that we take every opportunity to bear down on unnecessary tax and spending. We want to tax only to fund vital public services. That ethos needs to be spread across all European countries, and I am glad that the Government are leading the way in that.
Fairness in taxation has been mentioned by my hon. Friends. It is important that we focus on how the Government have led the way in Europe in showing that we can have fair taxation. The windfall levy on the privatised utilities is a clear example of redirecting money from areas that were not legitimate to spending that was vital for the nation's interests. The Government have been focusing on the national interest at all times.
Rewarding work and making work pay are fundamental aspects of the Government's tax strategy. I hope that they will lead the way in Europe also on the working families tax credit, which is just one example of the way in which the Government have demonstrated that the best option is to get people off benefit and into work. That is the context of the tax policy that we are discussing.
I was listening to the shadow Chancellor, the right hon. Member for Horsham (Mr. Maude), talking about harmonisation. It is a pity that he is not here now. I am dismayed that Conservative Members had the temerity to call this debate. I did some research. I took a leaf out of

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the hon. Member for Stone's book and delved into the Maastricht treaty. Article 99 provides that the Council can, for the first time, legitimately discuss tax harmonisation measures such as turnover taxes, excise duties and other forms of indirect taxation. Whose signature is at the bottom of the page? Why, it is that of the shadow Chancellor. I do not want to talk about facing both ways on this issue because it would probably be unparliamentary, but people must draw their own conclusions. As I said, I hope that the hon. Member for Stone will have an opportunity to speak.
We have been considering how the Tory party wants to scare people about taxation. It is no wonder that people are worried when newspapers build up those issues because the previous Government's record, which has already been set out, was one of making various promises before the election and breaking and discarding them afterwards. We have heard how VAT on fuel was one of the biggest betrayals by the previous Government. The Tory Government gave away our right to a zero rate of VAT on fuel. Conservative Members have the cheek to talk about tax harmonisation when they started the ball rolling. They are the ones who gave away our right to zero rate VAT on fuel. Some apologies are necessary, and a bit of contrition would not go amiss from the Opposition.
I am intrigued to note that there has been a reshuffle on the Conservative Front Bench. There has not been much news about the Tory Front Bench recently—I am not surprised about that—but the hon. Member for Sevenoaks (Mr. Fallon) used to be the Tory spokesman on tax matters. He has disappeared and has been replaced by a Back Bencher. I was wondering why that was—
Mr. John Whittingdale: On a point of information, my hon. Friend the Member for Sevenoaks (Mr. Fallon) unfortunately suffered a severe accident in the summer and is incapacitated. We all hope that he will return to the Front Bench very soon.
Mr. Leslie: I am sorry to hear that but glad to hear that the hon. Gentleman will be returning. I mentioned him because I wanted to read out an interesting comment that he made. He said:
"I favour the complete abolition of income tax—a tax on earnings—and its substitution by a purchase tax—a tax on spending."—[Official Report, 25 July 1983; Vol. 46, c. 840.]
The Tory party ought to think again before it starts delving into VAT—on fuel or anything else. Indeed, the Library tells me that if we took the hon. Gentleman's advice, VAT would be at 40 per cent.
If we want to consider tax policy across Europe, we should take the opportunity afforded by Opposition days to find out exactly where the Tory party stands. Of course, looking both ways has been a feature of Tory Members' contributions all evening, but how on earth would the Tories square their claim about supposedly wanting to move towards a fairer public finance system with the most ridiculous and contradictory positions that they adopted in debates on the Finance Bill? They were always calling for more public expenditure on defence and to fight crime, yet the amendments that they tabled called for an astronomical reduction of £6 billion in public services.
The Tories' priorities included, for example, the reopening of the loophole of the foreign earnings deduction, which would have cost £300 million. Also as
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a priority they wanted to halve the rate of bingo duty, something that I look forward to reading in the next Tory manifesto. Another top priority was the abolition of capital gains tax, a commitment costing £1.3 billion. There is a black hole in their financial proposals, and they have no answers as to how they would fill it. Would they cut spending, increase the national debt or raise taxes? We know that their hidden agenda during the election was to put VAT on many items, and I suspect that we could find many more.
If we compare the performance of the Labour Government with that of the rabble who are the Opposition, it is clear that there is no contest, as my hon. Friend the Member for Harrow, East (Mr. McNulty) rightly points out. In our manifesto, we promised not only that we would retain the national veto over key matters of national interest such as taxation—this debate is a waste of time because we keep our manifesto promises—but that we would not increase income tax. Despite the Tories' scaremongering before the election, we have kept, and will keep, our promises. That is the difference between the Government and that lot over there.
The Tory party makes policy on the hoof, not knowing where it is going, while the Labour Government stick to the pledges in their manifesto—for example, fair taxation at all times—while always looking to invest in vital public services.
9.29 pm
Dr. Vincent Cable: I shall be brief because I know that the hon. Member for Stone (Mr. Cash) also wants to speak.
Although there has been much rather tiresome political banter, the day has been useful because both the Prime Minister and the Chief Secretary have reiterated very forcefully and helpfully a complete commitment to the principle of tax competition. Moreover, they have made it clear that tax competition is not an obstacle to closer economic and, indeed, monetary union.
The hon. Member for Harlow (Mr. Rammell) helpfully mentioned the United States, which is much more highly integrated than Europe is—or, I suspect—will ever be because it is a political union. The United States has a great deal of tax diversity and tax competition. Indeed, it is mandated in the constitution. It is useful to reflect on how it manages the problems that are causing so much trouble for the European left.
There is much self-discipline on taxation. American states realise that there is no point in throwing vast amounts of public money in bribes to companies; it is self-defeating. The states therefore do not compete. There is no dive to the bottom in personal or business taxes in the United States. Moreover, there is a great deal of voluntary co-operation. There is something called a multi-state tax compact, in which American states that have problems co-operating simply negotiate bilateral agreements among themselves, thus dealing with many of the problems that are exercising Europe. That can take place in full monetary union. There is no reason why we in Europe should not follow that precedent.
I shall reiterate the two fundamental reasons why—even for my party, which is more unequivocally committed to the European Union than others—tax should remain a national responsibility. One is the principle of subsidiarity; that it is appropriate that the decision should

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be taken at the lowest-possible level. Indeed, one should repeat the premise, for which Lady Thatcher should claim great credit, of establishing through the single market not merely closer union but the principle of competition among standards—the mutual recognition of different standards as a way of deepening the EU in international trade and investment. It is perfectly possible to have deeper union and competition of product standards, of wages and, indeed, of taxation.
The second basic principle is the acceptance that, if monetary policy is surrendered, national states must have greater freedom to vary taxes and public expenditure. The two things go in opposite directions, and that is how Europe must deal with them. At the same time, there is an argument for co-operation in certain areas. One of those is the problem area of corporation tax. It would be quite wrong for a company operating in several states deliberately to manipulate one Government against another. That would amount effectively to the confiscation of public revenue. That is not tolerated in the United States and should not be in Europe, either.
We should not forget that, although everybody seems to be operating on the assumption that we have a highly competitive corporation tax rate, the UK's rate is higher than in most parts of Europe once all the various allowances are added. The way to deal with corporation tax is to acknowledge the many very damaging and distorting state aids. The previous Government—as well as the present one—accepted that we must intervene to create a single market to co-ordinate policies on corporation tax and state aids.
The right hon. Member for Charnwood (Mr. Dorrell) made a valuable point, although it was somewhat ideologically put. A genuine problem is arising in Europe as a result of the some of the demands of parts of the European left. I was alarmed to read in the paper this morning that the German socialist party is not only demanding tax harmonisation but opposing something that it calls "wage dumping". It seems to regard as wholly wrong in principle the fact that countries with different wage levels should compete. That is gross economic illiteracy. I hope that the Government—everything that they have said today on this subject is absolutely right—will show the same degree of courage in facing the loony left in Europe as they did toward their own party.
9.34 pm
Mr. William Cash: In the few minutes available, I shall address the reasons why tax co-ordination follows the Maastricht treaty, as it does in essence. The framework for co-ordination of economic policy is clearly laid down in articles 130, 103, 2, 2a, and so on, and title VII of the treaty lays down the parameters within which it is intended to go, which is why I opposed it so strongly. The statements of Oskar Lafontaine and Gerhard Schroder must be weighed against the remarks of Joschka Fischer, the German Foreign Minister, who has called for the decisive task of our time: the creation of a single state and an international entity in international law.
If one combines those two things, and throws in the costs that are inherent in the things that I shall now list, it becomes clear that not only will it be necessary to co-ordinate a tax policy, but it will be very expensive, and it will cost the British people an arm and a leg. I shall give the House the list.
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First, pension liabilities. People will not be able to receive pensions unless the money is found from the other countries in the European Union. In the United Kingdom, we have about £820 billion of privately funded pensions. In Germany, the figure is about £250 billion. As one considers each country in turn, the relevant figure decreases. The money simply is not there. If those countries are to provide public pensions, under the "new way" arrangements, with all the socialism that is now coming in through the back door, they will have to raise massive amounts of tax.
Secondly, cohesion funds. There will be an attempt to create the convergence that does not exist at the moment; that will cost an enormous amount of money.
Thirdly, German and European unemployment is still running at massive levels. That unemployment must be funded.
Fourthly, the Germans want their money back, and if it is given back in the form of a rebate to Germany—which is what Germany is insisting on—inevitably, the burden will fall on other people. Germany is asking for as much as £6 billion.
Fifthly, there is the whole "new European way" and the Keynesian growth policies that go with it—back to the 1960s, as my right hon. Friend the Member for Charnwood (Mr. Dorrell) said.
Sixthly, there are German tax levels. The other day, Joseph Joffe, a columnist for Siiddeutsche Zeitung Magazin, said in the Sunday Telegraph that the reason that the Germans want to Germanise economic and monetary union is to raise the taxes of other countries to German levels, so that capital will not fly out of Germany into Holland and Britain, where taxes are low.
Then there are the issues of enlargement, the black economy and fraud.
When one combines all those factors and throws in the fact that our economic and political philosophy is completely different from that of other socialist policy makers in Europe, one appreciates that the question whether there will be tax harmonisation is not simply an invention—a fantasy. It is based on the Maastricht treaty, which creates co-ordination of economic policy making. Moreover, one has the drive of each of the instances that I have given, towards the necessity to raise the money if the member states are to achieve the policy of the single state that they are aiming at. It is all extremely simple.
There is one last factor—the European Court of Justice. The European Court of Justice is already effectively bypassing the rules that have been laid down, and which were mentioned by the Chief Secretary. According to Professor Franz Vanistendael of Leuven university,
"Increasingly the European Court of Justice is applying the non-discrimination principle, that has fully been accepted … in the area of indirect taxation, to the area of income tax."
The reality is that the Court is running a policy that will lead to harmonisation or co-ordination of taxes—I do not care which word is used. The fact is, it will come in unless it is stopped.
At Prime Minister's questions on Wednesday 2 December 1998, I asked the Prime Minister whether he "can and will" guarantee to veto all this; he did not answer. Nor did he answer when I asked him whether he was going to tell the truth to the British people in a White Paper. He cannot, because he dare not.
9.39 pm
Mr. John Whittingdale: This has been a short but important debate. It has also been a highly revealing one. The Government have been telling us for months that reports that Europe wanted to harmonise taxes were scaremongering. Only last week the Foreign Secretary talked about
"exploding myths and mischief that have been peddled as facts."
This evening the hon. Member for Harlow (Mr. Rammell) talked about an hysterical period and the hon. Member for Cambridge (Mrs. Campbell) referred to very crude scare tactics. At the same time, however, other European Governments have made no secret of their wish to move towards a system of common European taxation. They see it as an integral part of economic and monetary union and they cannot understand why that has come as such a surprise.
My right hon. Friend the Member for Horsham (Mr. Maude) is absolutely right. It is theoretically possible to have a single currency without common taxation. However, that is not the intention of the European Union. Three years ago, the president of the Bundesbank said:
"A European currency will lead to member nations transferring their sovereignty over financial and wage policies as well as in monetary affairs. It is an illusion to think that states can hold on to their autonomy over taxation policies."
Since then, there has been a procession of Finance Ministers, central bankers, Commission officials and Heads of Government all reiterating the same message, so that barely a day passes without another European politician spelling it out. Not even the Government can maintain the pretence that this is not happening or that it is not a central priority for many other European states.
We were told, "Never mind, we have a veto. Any change to taxation can be done only on the basis of unanimity, and nobody wants to change that." A few days after that was said, the German Finance Minister announced that it was his view that we should have qualified majority voting on taxation and that the veto should be scrapped. We were told, "That does not matter because it is only a personal view." The Chief Secretary said just that in the debate which took place a week ago. The Prime Minister's official spokesman said that the idea was a non-starter, that it did not represent anyone's official policy and that it had
"a cat's chance in hell"
of being adopted.
Within a matter of hours the French Finance Minister said that he supported Mr. Lafontaine, while the German Chancellor said that it was the official policy of the German Government. The next day, the Finns said that extending majority voting to taxation would be high on the agenda of their presidency.
The Chief Secretary has told us this evening that that is not the view of the Finnish Finance Minister. The Finnish version of Alastair Campbell has said:
"Majority voting on taxation is not a question of if but when."
If the Finnish Government are anything like this Government, we know who is pulling the strings. So much for myths and mischief. What the Government said was irresponsible fantasy a few weeks ago is now, according to the Prime Minister, a debate in which we must be engaged.
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The Government use tough language for domestic consumption. The Chancellor of the Exchequer is only too happy to bolster his macho image by talking about using the veto. Tax harmonisation, an end to zero rates of value added tax, a withholding tax and a cut in the British rebate—we are told that decisions on all those things can and will be vetoed. However, as my right hon. Friend the Member for Charnwood (Mr. Dorrell) said, the Government are trying to have it both ways because that is not what is being said on the continent. There, they are happy to sign up to greater co-ordination of taxes and an end to so-called harmful tax competition. When the Financial Secretary to the Treasury replies, I hope she will try to square what the Government have been saying with the words in the document to which they signed up, "The New European Way".
Let us be clear, co-ordination of taxes is harmonisation, as Mr. Lafontaine has helpfully made clear. When the other countries in Europe talk about ending harmful tax competition, they are talking about getting rid of Britain's low-tax environment, which has been a magnet for jobs and investment for countries throughout the world.
What about the Liberals? The hon. Member for Gordon (Mr. Bruce) told us that, in his view, taxation is a national matter and that we have a veto which we should be prepared to use. That point was repeated by the hon. Member for Twickenham (Dr. Cable). The Liberal party, too, is happy to talk tough at home, as we heard this evening; however, a few weeks ago, in European Standing Committee B, the hon. Member for Twickenham gave a very different account of Liberal policy. He said that there must be a more satisfactory basis for funding the European Union and that an international income tax was a better option. He said that it would make sense if energy taxes were harmonised from the outset. As for the British rebate, he said that it was politically difficult to perpetuate the idea that Britain is uniquely disadvantaged or that it needs special treatment.
The Government say one thing in the United Kingdom and another on the continent. The Liberals appear to say one thing in the Chamber and another in Committee when they hope that no one is listening.
There is no doubt that there is a European agenda for harmonisation of tax. The Prime Minister has proudly produced today a joint statement that he and the German Chancellor have signed. It says that they are opposed to the harmonisation of personal taxes and to a unified system of corporate taxation, but that does not mean that there will be no harmonisation of corporate taxation. Indeed, the document explicitly leaves the door open for harmonised corporate taxation. That is hardly surprising, as Germany is on record as saying that it is high on its list of political priorities. What about all the other taxes? The statement does not mention VAT, taxes on savings or capital taxation. Clearly, they are now all on the agenda in the Government's eyes.
We know that the withholding tax is under discussion. Despite more tough talk from the Chancellor, this Government agreed at ECOFIN in December last year that a Community-wide withholding tax should be introduced. The proposal that the Commission has now brought forward, as instructed, would put at risk thousands of jobs. It would fatally undermine the City of London as an international financial centre. As my right hon. Friend the Member for Fareham (Sir P. Lloyd) said, it would drive the euro bond market out of London and

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out of reach of the Commission to Zurich or New York. The Chancellor told us that he will not accept the withholding tax and said that he favoured the provision of information instead. That will suit the Commission fine, and the Chancellor will not need to use the veto on that because it is allowed for in the directive. However, it will not suit the City. For many, the compulsory provision of information would be worse than the withholding tax. It would add to the cost of doing business in London and its effect would be the same—it would drive business overseas. The Government should make it clear that neither a withholding tax nor the compulsory provision of information is acceptable and that any such proposal will be vetoed by the United Kingdom.
Another outcome of the ECOFIN meeting last December was the establishment of the code of conduct group, under the chairmanship of the Financial Secretary. We were told at the time that it was a great triumph for Britain and the Chancellor said that it would put us at the heart of the debate. What has it achieved? It has produced a list of 85 so-called harmful tax measures, although we are not allowed to know what those measures are. We are told that the Government are not prepared to place the document in the Library. I hope that the Financial Secretary will now say that she will do so, so that we can read it. We know that one of the measures on the list is the tax relief given to the British film industry. That relief was introduced by this Government, who trumpeted it at the time, and was welcomed by the industry. It has helped to attract more investment to film. I talked to the producer of "Waking Ned", a British film that is having considerable success. He told me that tax relief was a vital factor in helping him to raise the equity investment that he needed. However, according to the Financial Secretary's committee, it is a harmful tax measure and a distortion that must be removed.
Nothing that the Government have said this evening has done anything to reassure us. For all their tough talk, every sentence is hedged with qualifications and escape clauses. They have turned weasel words into an art form and the strong smell of fudge already surrounds the entire issue. The Prime Minister once said that he would never allow this country to be isolated or left behind in Europe. However, leadership sometimes requires one to be isolated and, on this issue, we are prepared to be isolated in Europe. If the Government's pledges mean anything, they should make it clear now that they will say no to harmonisation.
9.49 pm
The Financial Secretary to the Treasury (Dawn Primarolo): I thank hon. Members for their condolences to my right hon. Friend the Chancellor and his family on the sad death of his father. I am sure that all hon. Members will share those sentiments.
In addition to dwelling on phrases such as "weasel words" and "fudge", and every other catch-phrase that is in the Tory party's brief for today, the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) talked about illusion and isolation.
The illusion is that Conservative Members do not want to understand, and do not believe, what is going on both in the debate here in the United Kingdom and in Europe.
420
When the hon. Gentleman said that the Conservative party is happy to be isolated, we know that it is because it is completely isolated—isolated from the other place, from the electorate and from reality, it would appear from the contributions that we have heard today.
Let us be clear about the Government's position. Britain's way forward for Europe is the promotion of employment, economic reforms and competitive markets. The Government will not support any action that will threaten jobs or the competitive position of British business. That is nice and clear.
Tax matters coming before the Council, of course, require unanimous decisions. There is no question of tax changes being imposed on us, as was suggested by the right hon. Member for Fareham (Sir P. Lloyd). That suggestion is preposterous. Tax requires unanimity. Unanimity means all of the member states, including the United Kingdom.
If a proposal does not meet the test of national interest, we will oppose it and argue our case. If necessary, as my right hon. Friend the Chief Secretary said, and as my right hon. Friend the Chancellor has said before, we will be prepared to use the veto.
Mr. Swayne: Will the hon. Lady give way?
Dawn Primarolo: I shall not give way at this moment. I have only 10 minutes to answer all the accusations that have been made against the Government and, out of respect to the House, I should try to do that before any more accusations are made.
The Government believe that fair tax competition is a good thing. We support action to tackle unfair tax practices which distort competition in European economies.
I have the published conclusions from ECOFIN in November 1992, which met under the United Kingdom presidency with the then Chancellor of the Exchequer, now Lord Lamont, in the chair. It states:
"The Council endorses the concern expressed … about the effects of special tax arrangements designed to attract internationally mobile capital … resulting in the loss of revenue … and unfair competition; and believes that consideration is urgently needed of possible remedies to this problem".
Therefore, let us be clear tonight that it was the Conservative party that initiated the process that led to the code of conduct.
Now I briefly remind the House how we will apply our principles as spelt out by my right hon. Friend the Chief Secretary to the three specific areas raised in today's debate by the Opposition.
All European VAT matters are subject to agreement by all member states.
Mr. Bruce Grocott: Say it again, Dawn.
Dawn Primarolo: All member states.
We will honour our manifesto pledge on VAT. VAT on food, children's clothes, books, newspapers and public transport fares will remain zero rated. I remind the House that it was the Conservative party that agreed to a minimum VAT rate of 15 per cent. and an illustrious cast of Conservative Members endorsed that. On 2 July 1992, the then Chancellor of the Exchequer said that the

421
Government were committed to the harmonisation of indirect taxes in as far as that was necessary for the internal market.
The right hon. Member for Hitchin and Harpenden (Mr. Lilley), that well-known pro-European, signed an explanatory memorandum to the House explaining why we should have the minimum rate—not a minimalist rate, or whatever it was the shadow Chancellor wanted to call it, not nearly a minimum rate, but a minimum rate. That, too, was endorsed by the right hon. Member for South-West Norfolk (Mrs. Shephard). That well-known champion of Europe, the right hon. Member for Wells (Mr. Heathcoat-Amory), also signed the same memorandum when it came before the House. The right hon. Member for Horsham (Mr. Maude) said, "Let's be minimalist about this." Conservative Members have been minimalist about the truth—nothing else.
There are no Community proposals on the table for corporation tax harmonisation. The Government will not sign up to anything that is not in Britain's national economic interest or that raises business costs and harms investment.
Mrs. Browning rose—
Dawn Primarolo: I will not give way to the hon. Lady. As a Minister in the previous Government, she knows what their policy was, although she has amnesia now. She is suffering under the same illusion and has forgotten their policy.
There is no evidence that we need harmonisation, nor is it clear what would be the benefits of launching into such an enormous project. With such widely varying corporation tax rates across Europe, we believe that tax harmonisation is a non-starter. There have been many quotes—from the Italian and Finnish Finance Ministers, the Spanish Prime Minister and even the French Prime Minister—making it clear that harmonisation of corporation tax rates is not on the agenda.
The rationale behind the withholding tax is prevention of tax evasion. I hope that that is a principle with which all parties in the House, even the Conservatives, can agree. The Government are committed to effective international action to prevent tax evasion and to protecting the competitiveness of the United Kingdom and European financial services industries. In particular, we have said that any future directive must exclude the eurobond market. The proposals as currently drafted are unacceptable. Any decision requires unanimity. I remind hon. Members that that means that everybody must be in favour, so the proposals cannot be changed unless their present form is improved.
The code of conduct aims to tackle harmful tax competition and, by doing so, would create the preconditions for healthy competition. We are helping to protect British jobs which are threatened by unfair subsidies abroad. The code of conduct uses two specific key criteria to decide what is harmful. The first and most important is that a measure must significantly affect the location of business activities in the Community. The second specifies that the potentially harmful measure has an effective level of taxation lower than general levels of taxation in that member state.
422
Under the terms of the code—voted for in European Standing Committee B—five measures in the United Kingdom tax system are on the list of measures that could fall into that category. That does not mean that they are harmful, and the group has yet to reach its conclusions. We do not believe that those measures are harmful and we have submitted a robust defence of them to the group. We are confident that they do not constitute harmful tax measures because all five satisfy the criteria for not being harmful; they are proportionate in their target—[Interruption]
Mr. Deputy Speaker: Order. There is far too much conversation. It should be borne in mind that this is an Opposition Supply day.
Dawn Primarolo: This is obviously too hard for Conservative Members to follow, because I am telling them what is really going on instead of talking about their illusions.
The Government are pursuing a clear agenda in Europe. It is about shaping a better Europe, engaging in debate and making sure that our best interests are represented—interests that Conservative Members cannot even recognise.
Question put, That the original words stand part of the Question:—
The House divided: Ayes 140, Noes 359.

Division No. 21]

[9.59 pm

AYES

Ainsworth, Peter (E Surrey)

Faber, David

Amess, David

Fabricant, Michael

Ancram, Rt Hon Michael

Forth, Rt Hon Eric

Arbuthnot, Rt Hon James

Fowler, Rt Hon Sir Norman

Atkinson, David (Bour'mth E)

Fox, Dr Liam

Atkinson, Peter (Hexham)

Fraser, Christopher

Bercow, John

Gale, Roger

Beresford, Sir Paul

Garnier, Edward

Blunt, Crispin

Gibb, Nick

Body, Sir Richard

Gill, Christopher

Boswell, Tim

Gillan, Mrs Cheryl

Bottomley, Peter (Worthing W)

Gorman, Mrs Teresa

Bottomley, Rt Hon Mrs Virginia

Gray, James

Brady, Graham

Green, Damian

Brazier, Julian

Greenway, John

Brooke, Rt Hon Peter

Grieve, Dominic

Browning, Mrs Angela

Gummer, Rt Hon John

Burns, Simon

Hague, Rt Hon William

Butterfill, John

Hamilton, Rt Hon Sir Archie

Cash, William

Hammond, Philip

Chapman, Sir Sydney (Chipping Barnet)

Hawkins, Nick

Hayes, John

Chope, Christopher

Heathcoat—Amory, Rt Hon David

Clappison, James

Heseltine, Rt Hon Michael

Clarke, Rt Hon Kenneth (Rushcliffe)

Hogg, Rt Hon Douglas

Horam, John

Clifton—Brown, Geoffrey

Howard, Rt Hon Michael

Collins, Tim

Howarth, Gerald (Aldershot)

Colvin, Michael

Hunter, Andrew

Cormack, Sir Patrick

Jackson, Robert (Wantage)

Cran, James

Jenkin, Bernard

Davies, Quentin (Grantham)

Key, Robert

Davis, Rt Hon David (Haltemprice)

King, Rt Hon Tom (Bridgwater)

Donaldson, Jeffrey

Laing, Mrs Eleanor

Dorrell, Rt Hon Stephen

Lait, Mrs Jacqui

Duncan, Alan

Lansley, Andrew

Duncan Smith, Iain

Letwin, Oliver

Emery, Rt Hon Sir Peter

Lewis, Dr Julian (New Forest E)

Evans, Nigel

Lidington, David

423

Lilley, Rt Hon Peter

Soames, Nicholas

Lloyd, Rt Hon Sir Peter (Fareham)

Spelman, Mrs Caroline

Loughton, Tim

Spicer, Sir Michael

Lyell, Rt Hon Sir Nicholas

Spring, Richard

McIntosh, Miss Anne

Stanley, Rt Hon Sir John

MacKay, Rt Hon Andrew

Steen, Anthony

Maclean, Rt Hon David

Swayne, Desmond

McLoughlin, Patrick

Syms, Robert

Major, Rt Hon John

Tapsell, Sir Peter

Malins, Humfrey

Taylor, Ian (Esher & Walton)

Maples, John

Taylor, Rt Hon John D (Strangford)

Mates, Michael

Taylor, John M (Solihull)

Maude, Rt Hon Francis

Taylor, Sir Teddy

Mawhinney, Rt Hon Sir Brian

Tredinnick, David

May, Mrs Theresa

Trend, Michael

Moss, Malcolm

Tyrie, Andrew

Norman, Archie

Walter, Robert

Ottaway, Richard

Wardle, Charles

Page, Richard

Wells, Bowen

Paice, James

Whitney, Sir Raymond

Paterson, Owen

Whittingdale, John

Pickles, Eric

Widdecombe, Rt Hon Miss Ann

Prior, David

Wilkinson, John

Randall, John

Willetts, David

Redwood, Rt Hon John

Wilshire, David

Robathan, Andrew

Winterton, Mrs Ann (Congleton)

Robertson, Laurence (Tewk'b'ry)

Winterton, Nicholas (Macclesfield)

Roe, Mrs Marion (Broxbourne)

Woodward, Shaun

Ross, William (E Lond'y)

Yeo, Tim

Rowe, Andrew (Faversham)

Young, Rt Hon Sir George

Ruffley, David

St Aubyn, Nick

Tellers for the Ayes:

Shepherd, Richard

Mr. Stephen Day and

Simpson, Keith (Mid-Norfolk)

Mr. Nigel Waterson.

NOES

Abbott, Ms Diane

Bruce, Malcolm (Gordon)

Adams, Mrs lrene (Paisley N)

Burgon, Colin

Ainger, Nick

Burnett, John

Ainsworth, Robert (Cov'try NE)

Burstow, Paul

Allan, Richard

Butler, Mrs Christine

Anderson, Donald (Swansea E)

Byers, Rt Hon Stephen

Armstrong, Ms Hilary

Cable, Dr Vincent

Ashdown, Rt Hon Paddy

Caborn, Richard

Ashton, Joe

Campbell, Alan (Tynemouth)

Atherton, Ms Candy

Campbell, Mrs Anne (C'bridge)

Atkins, Charlotte

Campbell, Menzies (NE Fife)

Austin, John

Campbell, Ronnie (Blyth V)

Ballard, Jackie

Campbell—Savours, Dale

Barnes, Harry

Cann, Jamie

Barron, Kevin

Caplin, Ivor

Battle, John

Casale, Roger

Bayley, Hugh

Chapman, Ben (Wirral S)

Beard, Nigel

Chaytor, David

Begg, Miss Anne

Chidgey, David

Bell, Martin (Tatton)

Chisholm, Malcolm

Benn, Rt Hon Tony

Clark, Rt Hon Dr David (S Shields)

Bennett, Andrew F

Clark, Dr Lynda (Edinburgh Pentlands)

Benton, Joe

Bermingham, Gerald

Clark, Paul (Gillingham)

Berry, Roger

Clarke, Charles (Norwich S)

Betts, Clive

Clarke, Eric (Midlothian)

Blackman, Liz

Clarke, Rt Hon Tom (Coatbridge)

Blears, Ms Hazel

Clarke, Tony (Northampton S)

Blizzard, Bob

Clelland, David

Blunkett, Rt Hon David

Clwyd, Ann

Boateng, Paul

Cohen, Harry

Borrow, David

Coleman, Iain

Bradley, Keith (Withington)

Colman, Tony

Bradley, Peter (The Wrekin)

Connarty, Michael

Bradshaw, Ben

Cook, Frank (Stockton N)

Brand, Dr Peter

Cooper, Yvette

Breed, Colin

Corbyn, Jeremy

Brinton, Mrs Helen

Corston, Ms Jean

Brown, Russell (Dumfries)

Cranston, Ross

Browne, Desmond

Cryer, Mrs Ann (Keighley)

424

Cryer, John (Hornchurch)

Hopkins, Kelvin

Cummings, John

Howarth, Alan (Newport E)

Cunliffe, Lawrence

Howells, Dr Kim

Cunningham, Jim (Cov'try S)

Hoyle, Lindsay

Curtis—Thomas, Mrs Claire

Hughes, Kevin (Doncaster N)

Darvill, Keith

Humble, Mrs Joan

Davey, Edward (Kingston)

Hurst, Alan

Davey, Valerie (Bristol W)

Hutton, John

Davies, Rt Hon Denzil (Llanelli)

Illsley, Eric

Davis, Terry (B'ham Hodge H)

Ingram, Adam

Dawson, Hilton

Jackson, Ms Glenda (Hampstead)

Dean, Mrs Janet

Jackson, Helen (Hillsborough)

Denham, John

Johnson, Alan (Hull W & Hessle)

Dewar, Rt Hon Donald

Johnson, Miss Melanie (Welwyn Hatfield)

Dobbin, Jim

Donohoe, Brian H

Jones, Barry (Alyn & Deeside)

Doran, Frank

Jones, Mrs Fiona (Newark)

Dowd, Jim

Jones, Helen (Warrington N)

Drown, Ms Julia

Jones, Ms Jenny (Wolverh'ton SW)

Dunwoody, Mrs Gwyneth

Eagle, Angela (Wallasey)

Jones, Jon Owen (Cardiff C)

Eagle, Maria (L'pool Garston)

Jones, Dr Lynne (Selly Oak)

Edwards, Huw

Kaufman, Rt Hon Gerald

Ellman, Mrs Louise

Keeble, Ms Sally

Ennis, Jeff

Keen, Alan (Feltham & Heston)

Etherington, Bill

Keen, Ann (Brentford & Isleworth)

Fearn, Ronnie

Keetch, Paul

Fisher, Mark

Kemp, Fraser

Fitzpatrick, Jim

Khabra, Piara S

Flint, Caroline

Kidney, David

Flynn, Paul

Kilfoyle, Peter

Follett, Barbara

King, Andy (Rugby & Kenilworth)

Foster, Rt Hon Derek

King, Ms Oona (Bethnal Green)

Foster, Don (Bath)

Kumar, Dr Ashok

Foster, Michael Jabez (Hastings)

Ladyman, Dr Stephen

Foster, Michael J (Worcester)

Lawrence, Ms Jackie

Fyfe, Maria

Laxton, Bob

Gapes, Mike

Lepper, David

George, Andrew (St Ives)

Leslie, Christopher

George, Bruce (Walsall S)

Levitt, Tom

Gerrard, Neil

Lewis, Ivan (Bury S)

Gibson, Dr Ian

Linton, Martin

Gilroy, Mrs Linda

Livingstone, Ken

Godman, Dr Norman A

Livsey, Richard

Godsiff, Roger

Lock, David

Goggins, Paul

Love, Andrew

Golding, Mrs Llin

McAllion, John

Gorrie, Donald

McAvoy, Thomas

Griffiths, Jane (Reading E)

McCabe, Steve

Griffiths, Win (Bridgend)

McCafferty, Ms Chris

Grocott, Bruce

McCartney, Ian (Makerfield)

Grogan, John

McDonnell, John

Gunnell, John

McFall, John

Hain, Peter

McGuire, Mrs Anne

Hall, Mike (Weaver Vale)

McIsaac, Shona

Hall, Patrick (Bedford)

McKenna, Mrs Rosemary

Hamilton, Fabian (Leeds NE)

Mackinlay, Andrew

Hancock, Mike

McNulty, Tony

Hanson, David

MacShane, Denis

Harris, Dr Evan

Mactaggart, Fiona

Harvey, Nick

McWalter, Tony

Heal, Mrs Sylvia

McWilliam, John

Healey, John

Mahon, Mrs Alice

Heath, David (Somerton & Frome)

Mallaber, Judy

Henderson, Ivan (Harwich)

Marsden, Gordon (Blackpool S)

Hepburn, Stephen

Marsden, Paul (Shrewsbury)

Heppell, John

Marshall, David (Shettleston)

Hesford, Stephen

Marshall, Jim (Leicester S)

Hewitt, Ms Patricia

Marshall—Andrews, Robert

Hill, Keith

Martlew, Eric

Hinchliffe, David

Maxton, John

Hodge, Ms Margaret

Meacher, Rt Hon Michael

Hoey, Kate

Merron, Gillian

Home Robertson, John

Michael, Alun

Hood, Jimmy

Michie, Bill (Shef-ld Heeley)

Hope, Phil

Michie, Mrs Ray (Argyll & Bute)

425

Milburn, Alan

Skinner, Dennis

Miller, Andrew

Smith, Angela (Basildon)

Mitchell, Austin

Smith, Rt Hon Chris (Islington S)

Moffatt, Laura

Smith, Jacqui (Redditch)

Moore, Michael

Smith, John (Glamorgan)

Moran, Ms Margaret

Smith, Llew (Blaenau Gwent)

Morgan, Ms Julie (Cardiff N)

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

Morgan, Rhodri (Cardiff W)

Snape, Peter

Morley, Elliot

Soley, Clive

Morris, Ms Estelle (B'ham Yardley)

Southworth, Ms Helen

Morris, Rt Hon John (Aberavon)

Starkey, Dr Phyllis

Mudie, George

Steinberg, Gerry

Mullin, Chris

Stevenson, George

Murphy, Denis (Wansbeck)

Stewart, David (Inverness E)

Naysmith, Dr Doug

Stinchcombe, Paul

Norris, Dan

Stoate, Dr Howard

Oaten, Mark

Stott, Roger

O'Brien, Bill (Normanton)

Strang, Rt Hon Dr Gavin

O'Brien, Mike (N Warks)

Stringer, Graham

O'Hara, Eddie

Stuart, Ms Gisela

Olner, Bill

Stunell, Andrew

O'Neill, Martin

Sutcliffe, Gerry

Öpik, Lembit

Taylor, Rt Hon Mrs Ann (Dewsbury)

Organ, Mrs Diana

Osborne, Ms Sandra

Taylor, Ms Dari (Stockton S)

Palmer, Dr Nick

Taylor, David (NW Leics)

Pearson, Ian

Taylor, Matthew (Truro)

Pendry, Tom

Temple—Morris, Peter

Perham, Ms Linda

Thomas, Gareth (Clwyd W)

Pickthall, Colin

Thomas, Gareth R (Harrow W)

Pike, Peter L

Timms, Stephen

Plaskitt, James

Tipping, Paddy

Pollard, Kerry

Todd, Mark

Pope, Greg

Tonge, Dr Jenny

Pound, Stephen

Touhig, Don

Powell, Sir Raymond

Trickett, Jon

Prentice, Ms Bridget (Lewisham E)

Truswell, Paul

Prentice, Gordon (Pendle)

Turner, Dennis (Wolverh-ton SE)

Prescott, Rt Hon John

Turner, Dr Desmond (Kemptown)

Primarolo, Dawn

Turner, Dr George (NW Norfolk)

Quin, Ms Joyce

Twigg, Derek (Halton)

Quinn,Lawrie

Twigg, Stephen (Enfield)

Radice, Giles

Tyler, Paul

Rammell, Bill

Vaz, Keith

Rapson, Syd

Wallace, James

Raynsford, Nick

Walley, Ms Joan

Reed, Andrew (Loughborough)

Ward, Ms Claire

Rendel, David

Wareing, Robert N

Robertson, Rt Hon George (Hamilton S)

Watts, David

Webb, Steve

Robinson, Geoffrey (Cov'try NW)

White, Brian

Rooney, Terry

Whitehead, Dr Alan

Ross, Ernie (Dundee W)

Wicks, Malcolm

Williams, Rt Hon Alan (Swansea W)

Rowlands, Ted

Ruane, Chris

Williams, Alan W (E Carmarthen)

Ruddock, Ms Joan

Wills, Michael

Russell, Bob (Colchester)

Winnick, David

Russell, Ms Christine (Chester)

Winterton, Ms Rosie (Doncaster C)

Salter, Martin

Wise, Audrey

Sanders, Adrian

Wood, Mike

Sarwar, Mohammad

Wray, James

Savidge, Malcolm

Wright, Anthony D (Gt Yarmouth)

Shaw, Jonathan

Wright, Dr Tony (Cannock)

Sheerman, Barry

Wyatt, Derek

Sheldon, Rt Hon Robert

Shipley, Ms Debra

Tellers for the Noes:

Simpson, Alan (Nottingham S)

Mr. David Jamieson and

Singh, Marsha

Jane Kennedy.

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
The House divided: Ayes 316, Noes 161.

Division No. 22]

[10.13 pm

AYES

Abbott, Ms Diane

Davey, Valerie (Bristol W)

Adams, Mrs Irene (Paisley N)

Davies, Rt Hon Denzil (Llanelli)

Ainger, Nick

Davis, Terry (B'ham Hodge H)

Ainsworth, Robert (Cov'try NE)

Dawson, Hilton

Anderson, Donald (Swansea E)

Dean, Mrs Janet

Armstrong, Ms Hilary

Denham, John

Ashton, Joe

Dewar, Rt Hon Donald

Atherton, Ms Candy

Dobbin, Jim

Atkins, Charlotte

Donohoe, Brian H

Austin, John

Doran, Frank

Barnes, Harry

Dowd, Jim

Barron, Kevin

Drown, Ms Julia

Battle, John

Eagle, Angela (Wallasey)

Bayley, Hugh

Eagle, Maria (L'pool Garston)

Beard, Nigel

Edwards, Huw

Begg, Miss Anne

Ellman, Mrs Louise

Benn, Rt Hon Tony

Ennis, Jeff

Benton, Joe

Etherington, Bill

Bermingham, Gerald

Fisher, Mark

Berry, Roger

Fitzpatrick, Jim

Betts, Clive

Flint, Caroline

Blackman, Liz

Flynn, Paul

Blears, Ms Hazel

Follett, Barbara

Blizzard, Bob

Foster, Rt Hon Derek

Blunkett, Rt Hon David

Foster, Michael Jabez (Hastings)

Boateng, Paul

Foster, Michael J (Worcester)

Borrow, David

Fyfe, Maria

Bradley, Keith (Withington)

Gapes, Mike

Bradley, Peter (The Wrekin)

George, Bruce (Walsall S)

Bradshaw, Ben

Gerrard, Neil

Brinton, Mrs Helen

Gibson, Dr Ian

Brown, Russell (Dumfries)

Gilroy, Mrs Linda

Browne, Desmond

Godman, Dr Norman A

Burgon, Colin

Godsiff, Roger

Butler, Mrs Christine

Goggins, Paul

Byers, Rt Hon Stephen

Golding, Mrs Llin

Caborn, Richard

Griffiths, Jane (Reading E)

Campbell, Alan (Tynemouth)

Griffiths, Win (Bridgend)

Campbell, Mrs Anne (C'bridge)

Grocott, Bruce

Campbell, Ronnie (Blyth V)

Grogan, John

Campbell—Savours, Dale

Gunnell, John

Cann, Jamie

Hain, Peter

Caplin, Ivor

Hall, Mike (Weaver Vale)

Casale, Roger

Hall, Patrick (Bedford)

Chapman, Ben (Wirral S)

Hanson, David

Chaytor, David

Heal, Mrs Sylvia

Chisholm, Malcolm

Healey, John

Clark, Rt Hon Dr David (S Shields)

Henderson, Ivan (Harwich)

Clark, Dr Lynda (Edinburgh Pentlands)

Hepburn, Stephen

Heppell, John

Clark, Paul (Gillingham)

Hesford, Stephen

Clarke, Charles (Norwich S)

Hewitt, Ms Patricia

Clarke, Eric (Midlothian)

Hill, Keith

Clarke, Rt Hon Tom (Coatbridge)

Hinchliffe, David

Clarke, Tony (Northampton S)

Hodge, Ms Margaret

Clelland, David

Hoey, Kate

Clwyd, Ann

Home Robertson, John

Cohen, Harry

Hood, Jimmy

Coleman, Iain

Hope, Phil

Colman, Tony

Hopkins, Kelvin

Connarty, Michael

Howarth, Alan (Newport E)

Cook, Frank (Stockton N)

Howells, Dr Kim

Cooper, Yvette

Hoyle, Lindsay

Corbyn, Jeremy

Hughes, Kevin (Doncaster N)

Corston, Ms Jean

Humble, Mrs Joan

Cranston, Ross

Hurst, Alan

Cryer, Mrs Ann (Keighley)

Hutton, John

Cryer, John (Hornchurch)

Illsley, Eric

Cummings, John

Ingram, Adam

Cunliffe, Lawrence

Jackson, Ms Glenda (Hampstead)

Cunningham, Jim (Cov'try S)

Jackson, Helen (Hillsborough)

Curtis—Thomas, Mrs Claire

Johnson, Alan (Hull W & Hessle)

Darvill, Keith

Johnson, Miss Melanie

427

(Welwyn Hatfield)

O'Hara, Eddie

Jones, Barry (Alyn & Deeside)

Olner, Bill

Jones, Mrs Fiona (Newark)

O'Neill, Martin

Jones, Helen (Warrington N)

Organ, Mrs Diana

Jones, Ms Jenny (Wolverh'ton SW)

Osborne, Ms Sandra

Palmer, Dr Nick

Jones, Jon Owen (Cardiff C)

Pearson, Ian

Jones, Dr Lynne (Selly Oak)

Pendry, Tom

Kaufman, Rt Hon Gerald

Perham, Ms Linda

Keeble, Ms Sally

Pickthall, Colin

Keen, Alan (Feltham & Heston)

Pike, Peter L

Keen, Ann (Brentford & Isleworth)

Plaskitt, James

Kemp, Fraser

Pollard, Kerry

Khabra, Piara S

Pope, Greg

Kidney, David

Pound, Stephen

Kilfoyle, Peter

Powell, Sir Raymond

King, Andy (Rugby & Kenilworth)

Prentice, Ms Bridget (Lewisham E)

King, Ms Oona (Bethnal Green)

Prentice, Gordon (Pendle)

Kumar, Dr Ashok

Prescott, Rt Hon John

Ladyman, Dr Stephen

Primarolo, Dawn

Lawrence, Ms Jackie

Quin, Ms Joyce

Laxton, Bob

Quinn, Lawrie

Lepper, David

Radice, Giles

Leslie, Christopher

Rammell, Bill

Levitt, Tom

Rapson, Syd

Lewis, Ivan (Bury S)

Raynsford, Nick

Linton, Martin

Reed, Andrew (Loughborough)

Livingstone, Ken

Robertson, Rt Hon George (Hamilton S)

Lock, David

Love, Andrew

Robinson, Geoffrey (Cov'try NW)

McAllion, John

Rooney, Terry

McAvoy, Thomas

Ross, Ernie (Dundee W)

McCabe, Steve

Rowlands, Ted

McCafferty, Ms Chris

Ruane, Chris

McCartney, Ian (Makerfield)

Ruddock, Ms Joan

McDonnell, John

Russell, Ms Christine (Chester)

McFall, John

Salter, Martin

McGuire, Mrs Anne

Sarwar, Mohammad

McIsaac, Shona

Savidge, Malcolm

McKenna, Mrs Rosemary

Sheldon, Rt Hon Robert

Mackinlay, Andrew

Shipley, Ms Debra

McNulty, Tony

Simpson, Alan (Nottingham S)

MacShane, Denis

Singh, Marsha

Mactaggart, Fiona

Skinner, Dennis

McWalter, Tony

Smith, Angela (Basildon)

McWilliam, John

Smith, Rt Hon Chris (Islington S)

Mahon, Mrs Alice

Smith, Jacqui (Redditch)

Mallaber, Judy

Smith, John (Glamorgan)

Marsden, Gordon (Blackpool S)

Smith, Llew (Blaenau Gwent)

Marsden, Paul (Shrewsbury)

Snape, Peter

Marshall, David (Shettleston)

Soley, Clive

Marshall, Jim (Leicester S)

Southworth, Ms Helen

Marshall—Andrews, Robert

Starkey, Dr Phyllis

Martlew, Eric

Steinberg, Gerry

Maxton, John

Stevenson, George

Meacher, Rt Hon Michael

Stewart, David (Inverness E)

Merron, Gillian

Stinchcombe, Paul

Michael, Alun

Stoate, Dr Howard

Michie, Bill (Shef-ld Heeley)

Stott, Roger

Milburn, Alan

Strang, Rt Hon Dr Gavin

Miller, Andrew

Stringer, Graham

Mitchell, Austin

Stuart, Ms Gisela

Moffatt, Laura

Sutcliffe, Gerry

Moran, Ms Margaret

Taylor, Rt Hon Mrs Ann (Dewsbury)

Morgan, Ms Julie (Cardiff N)

Morgan, Rhodri (Cardiff W)

Taylor, Ms Dari (Stockton S)

Morley, Elliot

Taylor, David (NW Leics)

Morris, Ms Estelle (B'ham Yardley)

Temple—Morris, Peter

Morris, Rt Hon John (Aberavon)

Thomas, Gareth (Clwyd W)

Mudie, George

Thomas, Gareth R (Harrow W)

Mullin, Chris

Timms, Stephen

Murphy, Denis (Wansbeck)

Tipping, Paddy

Naysmith, Dr Doug

Todd, Mark

Norris, Dan

Touhig, Don

O'Brien, Bill (Normanton)

Trickett, Jon

O'Brien, Mike (N Warks)

Turner, Dennis (Wolverh'ton SE)

428

Turner, Dr Desmond (Kemptown)

Williams, Alan W (E Carmarthen)

Turner, Dr George (NW Norfolk)

Wills, Michael

Twigg, Derek (Halton)

Winnick, David

Twigg, Stephen (Enfield)

Winterton, Ms Rosie (Doncaster C)

Vaz, Keith

Wise, Audrey

Walley, Ms Joan

Wood, Mike

Ward, Ms Claire

Wray, James

Wareing, Robert N

Wright, Anthony D (Gt Yarmouth)

Watts, David

Wright, Dr Tony (Cannock)

White, Brian

Wyatt, Derek

Whitehead, Dr Alan

Wicks, Malcolm

Tellers for the Ayes:

Williams, Rt Hon Alan (Swansea W)

Mr. David Jamieson and

Jane Kennedy.

NOES

Ainsworth, Peter (E Surrey)

Gillan, Mrs Cheryl

Allan, Richard

Gorman, Mrs Teresa

Amess, David

Gorrie, Donald

Ancram, Rt Hon Michael

Green, Damian

Arbuthnot, Rt Hon James

Greenway, John

Ashdown, Rt Hon Paddy

Grieve, Dominic

Atkinson, Peter (Hexham)

Hague, Rt Hon William

Ballard, Jackie

Hamilton, Rt Hon Sir Archie

Bercow, John

Hammond, Philip

Beresford, Sir Paul

Hancock, Mike

Blunt, Crispin

Harris, Dr Evan

Body, Sir Richard

Harvey, Nick

Boswell, Tim

Hawkins, Nick

Bottomley, Peter (Worthing W)

Hayes, John

Bottomley, Rt Hon Mrs Virginia

Heath, David (Somerton & Frome)

Brady, Graham

Heathcoat—Amory, Rt Hon David

Brand, Dr Peter

Hogg, Rt Hon Douglas

Brazier, Julian

Horam, John

Breed, Colin

Howarth, Gerald (Aldershot)

Brooke, Rt Hon Peter

Hunter, Andrew

Browning, Mrs Angela

Jackson, Robert (Wantage)

Bruce, Malcolm (Gordon)

Jenkin, Bernard

Burnett, John

Keetch, Paul

Burns, Simon

Key, Robert

Burstow, Paul

King, Rt Hon Tom (Bridgwater)

Butterfill, John

Laing, Mrs Eleanor

Cable, Dr Vincent

Lait, Mrs Jacqui

Campbell, Menzies (NE Fife)

Lansley, Andrew

Chapman, Sir Sydney (Chipping Barnet)

Letwin, Oliver

Lewis, Dr Julian (New Forest E)

Chidgey, David

Lidington, David

Chope, Christopher

Lilley, Rt Hon Peter

Clappison, James

Livsey, Richard

Clifton—Brown, Geoffrey

Lloyd, Rt Hon Sir Peter (Fareham)

Collins, Tim

Llwyd, Elfyn

Colvin, Michael

Loughton, Tim

Cormack, Sir Patrick

Lyell, Rt Hon Sir Nicholas

Cran, James

MacKay, Rt Hon Andrew

Davey, Edward (Kingston)

Maclean, Rt Hon David

Davies, Quentin (Grantham)

McLoughlin, Patrick

Davis, Rt Hon David (Haltemprice)

Major, Rt Hon John

Donaldson, Jeffrey

Maples, John

Dorrell, Rt Hon Stephen

Mates, Michael

Duncan, Alan

Maude, Rt Hon Francis

Duncan Smith, Iain

Mawhinney, Rt Hon Sir Brian

Emery, Rt Hon Sir Peter

May, Mrs Theresa

Evans, Nigel

Michie, Mrs Ray (Argyll & Bute)

Faber, David

Moore, Michael

Fabricant, Michael

Morgan, Alasdair (Galloway)

Fearn, Ronnie

Oaten, Mark

Forth, Rt Hon Eric

Öpik, Lembit

Foster, Don (Bath)

Ottaway, Richard

Fowler, Rt Hon Sir Norman

Page, Richard

Fox, Dr Liam

Paice, James

Fraser, Christopher

Paterson, Owen

Gale, Roger

Pickles, Eric

Garnier, Edward

Prior, David

George, Andrew (St Ives)

Randall, John

Gibb, Nick

Redwood, Rt Hon John

Gill, Christopher

Rendel, David

429

Robathan, Andrew

Tonge, Dr Jenny

Robertson, Laurence (Tewk'b'ry)

Tredinnick, David

Roe, Mrs Marion (Broxbourne)

Trend, Michael

Rowe, Andrew (Faversham)

Tyler, Paul

Ruffley, David

Tyrie, Andrew

Russell, Bob (Colchester)

Wallace, James

St Aubyn, Nick

Walter, Robert

Sanders, Adrian

Wardle, Charles

Simpson, Keith (Mid-Norfolk)

Webb, Steve

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

Wells, Bowen

Soames, Nicholas

Whitney, Sir Raymond

Spelman, Mrs Caroline

Whittingdale, John

Spicer, Sir Michael

Widdecombe, Rt Hon Miss Ann

Spring, Richard

Wilkinson, John

Stanley, Rt Hon Sir John

Willetts, David

Wilshire, David

Steen, Anthony

Winterton, Mrs Ann (Congleton)

Stunell, Andrew

Winterton, Nicholas (Macclesfield)

Swayne, Desmond

Yeo, Tim

Syms, Robert

Young, Rt Hon Sir George

Taylor, Ian (Esher & Walton)

Taylor, Rt Hon John D (Strangford)

Tellers for the Noes:

Taylor, John M (Solihull)

Mr. Stephen Day and

Taylor, Matthew (Truro)

Mr. Nigel Waterson.

Question accordingly agreed to.
MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House recalls that the last Government's record on tax was one of broken promises, that it raised taxes 22 times having promised to cut taxes, including putting VAT on domestic fuel and power having specifically promised not to do so, and further that it tried to raise VAT on fuel to 17.5 per cent.; welcomes the fact that this Government has kept all of its promises on taxation, including its promises not to raise the basic or top rates of income tax and cutting VAT on fuel to 5 per cent.; and further welcomes the Government's approach to taxation at an international level, favouring fair tax competition, supporting concerted action at European level, including through the EU Code of Conduct Group, to deal with discriminatory and unfair tax practices that distort real competition, stating that it will not support measures that are not in Britain's national economic interest or that damage British business, harm investment and jobs, or damage Europe's competitiveness, and reiterating that it will retain the veto on tax issues and that decisions on tax will remain subject to unanimity.

Finance Act 1998 (Section 155)
10.25 pm
The Chief Secretary to the Treasury (Mr. Stephen Byers): I beg to move,
That the Code for Fiscal Stability, which was laid before this House on 3rd November, in the last Session of Parliament, be approved.
As the House will be aware, section 155 of the Finance Act 1998 requires the Government to lay before Parliament a code for fiscal stability. We have put the code on to a statutory basis because it will make policy more transparent and Governments readily answerable for any departure from the code.
The code requires the Government to apply five key principles to the formulation of fiscal and debt management policy. They are transparency, stability, responsibility, fairness and efficiency. Those principles are fundamental to a commonsense approach to fiscal management. By requiring Governments to specify objectives and rules that are consistent with those principles, the code will ensure that policy is set for the long-term benefit of the British economy.
The code sets out in detail how the Government will apply the five principles to the formulation of fiscal and debt management policy. The first principle is that of transparency. This requires the Government to publish enough information to allow the public to scrutinise both fiscal policy and the public finances. We believe that transparency will encourage Governments to plan for the long term and therefore encourage a more sustainable fiscal policy.
The principle of stability requires the Government to set fiscal policy in a way that is consistent with high and stable levels of growth and employment.
Responsible and prudent management of public assets, liabilities and fiscal risks is also fundamental to managing public finances in the long-term interests of the United Kingdom. The principle of responsibility means that Governments should plan and operate policy to ensure long-term sustainability and viability of public services.
The Government are committed to fairness both between and within generations. The principle of fairness means that it is important to take into account the financial effects of current fiscal policy on future generations.
The last principle that the code requires is that fiscal policy be set in accordance with the principle of efficiency. That means that Governments should not waste resources or cause resources to be wasted elsewhere. Value for money in the use of scarce resources is of prime importance if the UK is to achieve its social and economic goals.
The Government believe that those five principles are the appropriate basis for setting out our fiscal policy. The principle of transparency outlined in the code requires the Government to be open about their fiscal and debt management objectives and rules. That is in stark contrast to the Opposition who, when they were in government, changed their fiscal rules so that we were never sure whether they were able to meet them.
The Labour Government set out their fiscal rules in their first Budget in July 1997. The first is the golden rule that, over the economic cycle, the Government will borrow only to invest. The second is the sustainable

431
investment rule that public debt as a proportion of national income will be held over the economic cycle at a stable and prudent level.
Mr. Andrew Tyrie: Is the Chief Secretary aware that the German Government and the Bundesbank have all but abandoned the golden rule? They have concluded that the golden rule is completely meaningless—indeed there has been a supreme court ruling in Germany to that effect—and it is no longer used as a tool of fiscal policy. Why, at the very time that the Germans, who more or less invented the golden rule, have abandoned it, have the Government decided to try to adopt it?
Mr. Byers: That appears to be an argument in favour of the harmonisation of golden rules. We shall not endorse that, just as we shall not endorse tax harmonisation. We believe that the argument is well made in respect of the United Kingdom. If the hon. Gentleman wants to present the counter-argument, he is perfectly entitled to do so. It is for the German Government to make their own decisions on those matters; in this case, it is not a decision that we would have made ourselves.
Mr. Tyrie: Will the Chief Secretary give way?
Mr. Byers: No. The debate is a short one and many hon. Members will want to speak on an issue as important as section 155 of the Finance Act 1998. I know that many Opposition Members are eager to participate in the debate and, as always, I want to provide the opportunity for as many Back Benchers as possible to speak. The hon. Gentleman is perfectly entitled to try to catch your eye, Mr. Deputy Speaker, and I certainly look forward to hearing his pearls of wisdom.
I had better quit while I am ahead and return to the subject of the two fiscal rules being operated by the Government. Those rules are consistent with the principles outlined in the code. Parliament and the public will have available to them the information needed to assess our performance against those rules.
Mr. Robert Sheldon: I welcome my right hon. Friend's setting out of the code, so that we know exactly what it means and what it implies. However, we had an economic forecast at the time of the Budget, in July, and at the time of the autumn statement. Is it the intention to have those three forecasts on a similar basis?
Mr. Byers: Later, I shall outline the publications that we intend to make available to ensure that we meet the principle of transparency, to which I referred earlier. At that point, I shall address my right hon. Friend's question.
The Government believe that we have put in place a coherent framework and set firm fiscal operating rules. We tightened fiscal policy soon after coming into office, reducing borrowing by £20 billion last year. That has re-established sound public finances in the United Kingdom. As my right hon. Friend the Chancellor said on 3 November, our cautious and prudent approach to the public finances means that, even with more moderate growth next year, we are on track to meet our tough fiscal rules.
432
Following the fiscal tightening last year, we expect a surplus on the current budget this year and over the current cycle. The expected surplus on the current budget this year contrasts with deficits in all but three of the past 25 years. In addition, the ratio of debt to national income is expected to fall below 40 per cent. from next year.
The principle of transparency defined in the code requires transparency in setting debt management policy as well. The Government's objective for debt management is laid down in the code for fiscal stability. The objective is to minimise over the long term the cost of meeting the Government's financing needs, without taking undue risks with, or hindering the operation of, monetary policy.
Mr. Nick St. Aubyn: The Chief Secretary says that he intends to bring down the level of debt to less than 40 per cent. of gross domestic product but, under the previous Government, it reached a low point of only 28 per cent. of GDP. When will the right hon. Gentleman reach that figure?
Mr. Byers: Regrettably, that low point occurred some years ago and, on 1 May last year, the figure was well over 40 per cent. Our objective is to reduce it to below that figure, as I explained.
An important feature of the code, following the principle of transparency, is the reporting arrangements that it lays down. Those arrangements will improve the ability of Parliament and the public to scrutinise fiscal and debt management policy. As my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) said, we have already foreshadowed that we will make three specific publications available as a result of the key transparency principle.
There will be a statutory requirement to produce a pre-Budget report, which will include proposals for consideration in the Budget. A financial statement and Budget report will report on Budget measures and economic and fiscal projections, and an economic and fiscal strategy report will set out the Government's long-term strategy and assess short-term outcomes against objectives. The code also requires the Government to publish—
Mr. Sheldon: When will the last report be published? Will it be in July?
Mr. Byers: At this stage, the Government do not want to be pinned down to any specific month. Our intentions are transparent in terms of the publications, but that does not mean that we have to announce six months in advance precisely when they will be published. We want to be in a position to publish reports when it is appropriate to do so—which is what we will do.
The code requires the Government to publish each year a debt management report on the structure of their borrowing. That report will give the public sufficient information to allow scrutiny of the debt management policy. I believe that those reporting requirements are a major step forward in transparency and scrutiny. Never before have such demanding requirements been made of a British Government. Clear objectives will be set and there will be an honest assessment each year of progress against those objectives. Unlike the previous Government, we will ensure that the objectives are met.

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Transparency and prudence are the key themes of the new fiscal framework. That is why the code formalises the role of the National Audit Office in auditing any changes to the key assumptions underlying the public finances forecast. The National Audit Office has already audited those assumptions and found them to be "reasonable". The code ensures that the National Audit Office will continue to play a key role in the Budget process.
Mr. Nick Gibb: Given that there were changes to the assumptions used in the November pre-Budget report, can the right hon. Gentleman explain why no auditor's report was released before that pre-Budget report when one was produced in March and November last year and in March this year?
Mr. Byers: The National Audit Office will undoubtedly comment on the changes that were introduced. The hon. Gentleman will be aware that they were implemented to ensure that we complied with the European standards on accounting introduced in 1995. They are perfectly in order and the National Audit Office will report on them in due course. It is no secret that the changes were made to meet those 1995 requirements, which is perfectly understandable.
High-quality information is the basis for good decision making, so the code requires the Government to use best-practice accounting methods. A key element of that is the adoption of resource accounting and budgeting, which will help with planning and accounting for the resources used by Government.
This Government were elected because we promised to modernise Britain—a modernisation that was long overdue. We inherited an economy with fundamental weaknesses: a poor record of productivity and investment and a constant cycle of boom and bust that had afflicted our economy for too long. In the past 20 years, we have endured the two worst recessions on record and an unsustainable boom. Over the past 10 years, no European Union country has suffered as much instability as the United Kingdom.
Our first task on taking office last year was to put in place the building blocks for stability. It is only through stability that individuals and businesses can plan with confidence for the future so that we can achieve the higher levels of growth and employment that we all want to see. We took action immediately on coming to office by giving the Bank of England independence in setting interest rates.
Mr. John Bercow: Will the Chief Secretary tell the House at what stage drafts of the pre-Budget report were circulated to his Cabinet colleagues? The Secretary of State for Trade and Industry was ignorant of important features of the report when he appeared before the Trade and Industry Committee on 4 November, 48 hours after the report's publication.
Mr. Byers: I am beginning to regret giving way to the hon. Gentleman. I was pleased when he received the Back Bencher of the year award a couple of weeks ago. It does not need to be returned. I told him that it was well deserved. He made an amusing speech about being picked up by the political sketch writer of The Guardian for splitting his infinitives. I can tell him that there are a few Labour Members who would gladly split his infinitives.
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I honestly cannot remember exactly when the drafts were circulated. It was a few weeks ago. I am sure that my right hon. Friend the Secretary of State for Trade and Industry is never ignorant about such matters. He is always perfectly on message, as we know.
I was talking about giving the Bank of England independence in setting interest rates and I thought that that was why the hon. Member for Buckingham (Mr. Bercow) wanted to intervene. Interest rate decisions are now made in the long-term interests of the economy, not for short-term political gain. As a result, long-term interest rates have fallen to their lowest level for 35 years, which is a clear demonstration of the credibility of the new monetary framework. People and businesses can plan ahead and invest with greater confidence, knowing that high and damaging inflation episodes of the past will not be repeated.
Just as we had to put in place a new monetary framework, we also had to put in place a new framework for fiscal policy. The previous Government's fiscal policy led to a record deficit of £50 billion and, over the previous economic cycle, they had a current budget deficit of £149 billion. Their fiscal policy was made behind closed doors and lacked openness and predictability, which made worse the problems of instability. As with monetary policy, we have introduced a new framework for fiscal policy that is based on an open, transparent and accountable approach.
That is the right way forward for fiscal policy. It is vital for economic stability that public finances are managed responsibly and prudently. The code for fiscal stability will ensure that the Government can live up to the tough standards of fiscal practice imposed on them. I commend the code to the House.
10.42 pm
Mr. David Heathcoat-Amory: The Finance Act 1998, which followed this year's Budget, is one of the longest ever. It was presented to the House in two volumes. Now that it has become law, it has been consolidated into a single volume of more than 400 pages, costing £28.
The Act would have been even longer, and the tome even heavier, if it had included all the taxation measures announced in the Budget, but unfortunately many of them are to be implemented by secondary legislation. For example, the change to corporation tax, which will require accelerated payments from big companies, will be set out in statutory instruments that will never become before the House for scrutiny. That is a scandal, but it means that the Act is not as long as it could have been.
The Act is so long partly because it contains many gimmicks instead of the substance of tax changes. One of those gimmicks is before the House this evening. Section 155 imposes no obligation on the Government beyond a requirement that they should present to the House a code for fiscal stability. A code for fiscal stability already exists. Indeed, the Government published the first one in November 1997, so what is gained by having this one presented to the House? Presumably, a code published by the Government was to be observed by the Government anyway. Nothing is gained by this debate.
The code imposes no rules or discipline on the Government. That became clear from the Chief Secretary's speech. Even the golden rule, which he did

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mention and of which the Chancellor has been very proud, is not included in the code for fiscal stability. The new document contains no obligation on the Government to abide by any fiscal rules. The Chief Secretary was very unconvincing in his reply to my hon. Friend the Member for Chichester (Mr. Tyrie) about the golden rule, but the Chancellor believes very strongly in it. The idea that the Government should borrow only for investment prompts the question of what is to be categorised as investment. There are many examples of the Government reclassifying expenditure as capital expenditure to get around or obey the golden rule.
We conclude either that the Government do not believe that they can keep to the golden rule, and that is why it is not in the code, or—this is more likely—the entire exercise is to create the illusion of financial responsibility and prudence, while in practice they do nothing whatsoever to enforce it. The code will undoubtedly be approved at the end of the debate, but I hope that Back Benchers are aware that this is an entirely vacuous undertaking. It is yet another example of the triumph of spin and presentation over substance and reality.
Even if we take the code as a sort of general guide to action and as a collection of suggestions, the Government are breaking the few suggestions that it contains. They are in breach of the principles for fiscal stability enunciated in the code. The word "prudence" litters the code. Poor old prudence—she is usually wheeled out by Treasury Ministers when they want to cover up some especially reckless affair.
How is it prudent to take a growth forecast for next year, as the Government have, which is so much higher than that of independent analysts and commentators? The Government have done the same for the year after, too. Independent forecasters are predicting that growth in 2000 will be no more than 1.6 per cent. Why is it that the Government have chosen a growth target for that year of 2.5 per cent.? That is higher than they were predicting in the summer. What is prudent about that? How is it right to take a prediction in which no one else believes?
Even the Confederation of British Industry is now talking about a black hole in the public finances. Earlier this week, the director general of the CBI said that the Government risk finding a
"black hole in public finances"
unless they can reduce demand for increases in social security spending, health and education. Instead of being prudent, in line with the code for fiscal stability, the Government are being reckless.
Let us consider the treatment of unemployment, and the cost of it in published documents. Everyone agrees that the level of unemployment is a crucial determinant of public expenditure, especially the social security budget. In the comprehensive spending review in July, the Government estimated that unemployment would be flat at the April 1998 level. Why, four months later, in the pre-Budget report that was published just a few weeks ago, has that suddenly been changed? Suddenly, unemployment is predicted at the September 1998 level. Accordingly, social security expenditure has been reduced.
We all know that the unemployment figure in September was probably the low point. No one outside the Treasury seriously believes that unemployment will
436
not rise in the coming months. Indeed, it has already started to rise. Why therefore pretend in the pre-Budget report that it is realistic to hold unemployment and spending on benefits for the unemployed at that September level?
The code of fiscal stability talks about prudence, responsibility and transparency. Will the Chief Secretary explain how it is prudent or responsible or transparent to lock in at a wholly unrealistic prediction of social security expenditure, based on the low point in the unemployment cycle? If he cannot tell us now, will he confirm now or later that, when unemployment starts to rise, he will revise upward his estimates of social security expenditure?
That leads directly to the mystery of the National Audit Office involvement. As the Chief Secretary said, the National Audit Office is asked to comment on key assumptions, especially on whether any assumptions have been changed. As my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) pointed out, the National Audit Office commented on the Government's first Budget of July 1997, their pre-Budget statement of November 1997 and their Budget in March 1998 but not—suddenly and mysteriously—the pre-Budget statement that they presented to the House last month.
Not only has the NAO suddenly stopped auditing the assumptions, but doing so breaches the code for fiscal stability. It is written very clearly on page 4 of the code, which the House is invited to approve, that the Government will
"invite the National Audit Office to audit changes in the key assumptions and conventions underpinning the fiscal projections".
That is repeated and expanded upon on page 10. Yet there was no National Audit Office audit of last month's figures.
The Chief Secretary rather lamely said that he expected that the NAO would take some interest in the figures—but that is not the point. The code for fiscal stability requires that the Government ask the NAO to audit such changes. I have just pointed out changes to key assumptions; I described the one affecting unemployment. Assuming that it will be flat at the April level is a major change in the assumptions, yet the National Audit Office has not been invited to comment on it. I wonder why not. Actually, I do not wonder why not. I know the answer, and shall tell the House.
In July 1997, the Government made an unemployment assumption of 1.65 million claimants, which was examined in considerable detail by the National Audit Office. The Comptroller and Auditor General reported on that, and went into the fact that the Government's assumption corresponded to similar estimates made by outside commentators. He concluded, on page 8 of his report:
"As a level assumption for claimant unemployment, the figure of 1.65 million would seem consistent with the available independent assessments of unemployment prospects."
In other words, the Comptroller and Auditor General very carefully compared the Government's figure with outside assessments. He concluded that it was a reasonable assumption, and he listed at the back of the report the names of all the outside commentators and forecasters whose views he had taken into account.
The reason the Government have not done the same for the latest pre-Budget report is that their latest unemployment assumption is plainly ludicrous. As I

437
mentioned, it is now down to 1.3 million—the September level—but none of those independent forecasters could be brought to believe, or could be induced to suggest, that the figure was anything but a temporary phenomenon and, I am afraid, set to rise. Everyone outside the Treasury knows that unemployment is already rising. That is why the National Audit Office has not been asked to do its checks on the pre-Budget statement, already in contravention of the code of fiscal stability.
Mr. Steve Webb: I understand that the right hon. Gentleman used to be a Treasury Minister; I do not recall exactly when. When he was a Treasury Minister, was the practice on assumptions about unemployment to use a consensus of estimates, or to assume level unemployment?
Mr. Heathcoat-Amory: We made estimates of unemployment, and they turned out to be correct. The hon. Gentleman knows that the golden economic legacy that we bequeathed to the Government included falling unemployment, in addition to stable inflation and steady growth. Therefore, we were absolutely right to estimate, in our published documents, that expenditure on that part of social security was falling. We published our forecasts, and they turned out to be right. The Government have published their forecasts and already, a month later, they are shown to be unrealistic.
However, I am arguing that the Government, by failing to invite the National Audit Office to audit their assumptions, are breaching the rules, not only of common sense, but of their own code of fiscal stability, which they are inviting the House to approve tonight.
Mr. Andrew Lansley: One of the key determinants of the assumption on tax receipts is the assumption relating to economic growth, and the audited assumption is the trend GDP. Does my right hon. Friend agree that it is interesting that, between the Budget in March and the pre-Budget report in November, the Treasury did not update its assumption relating to trend GDP, or its assumption relating to economic growth, as it did with the unemployment count, because that might have led to a reduction, and a challenge to the Government's assumption about future tax receipts?
Mr. Heathcoat-Amory: My hon. Friend has spotted another—and glaring—flaw. There is an asymmetry. The Treasury does not alter its assumptions if they help the Government's case on the revenue side, but it does alter the assumptions when they flatter the expenditure forecasts.
The disturbing aspect of all this is the fact that the Comptroller and Auditor General, who knows perfectly well what is going on, has suddenly been frozen out of the entire process. The series of NAO reports, going back to the first Budget, has suddenly been stopped; and yet, bizarrely, it is a written requirement in the code of fiscal stability that such a report be produced. I hope that the Minister who replies to the debate will explain to the House, before we approve this ludicrous document, exactly how the Government expect to get away with breaking the rules before the ink is dry on the documents.
Not only unemployment assumptions are changed; there is an effect on social security expenditure generally, the forecasts for which have been reduced between the
438
July figures, the comprehensive spending review and the pre-Budget statement figures produced last month. The total of those social security expenditure forecasts is now lower by £7 billion over the next three years. Why was not that figure audited by the National Audit Office?
I believe that we are getting near to an answer when we detect a division between one part of the Government and another. My hon. Friend the Member for Bognor Regis and Littlehampton asked the Economic Secretary why the NAO had, apparently, not been asked to audit the figures. He received the following startling answer:
"The assumptions and conventions … in the pre-Budget report were unchanged".
We have already discussed how the unemployment assumptions clearly have been changed. Help for this view comes from an unexpected quarter. I asked the Secretary of State for Social Security why it was that there had been this rather dramatic cut in social security expenditure projections. The right hon. Gentleman helpfully confirmed to me:
"Revisions to the forecast of social security expenditure published in the pre-Budget report reflect new information about caseloads and economic assumptions."
There we have it. The Treasury thinks that there are no changes in the economic assumptions and we all know that there have been. To be fair to the Secretary of State for Social Security, he also understands that there have been those changes. Again, can those on the Treasury Bench explain themselves? We have an interesting split between the Treasury and the Department of Social Security and we need to get to the bottom of it.
At least one of the answers that we have received is misleading. They cannot both be true. Either there have been changes to economic assumptions or there have not. Either the Treasury is telling the truth or the Department of Social Security is. Someone is misleading the House. The Minister who replies to the debate owes the House an explanation.
I can well understand why the Government are so sensitive about these forecasts of social security expenditure. We all remember the broken promises, and what the Prime Minister said bears repeating. The right hon. Gentleman said that
"as we get the welfare bills down … then we can release more money into education and health".
So first there would be cuts in social security, then extra expenditure on education and health. That is one of the promises that went out of the window in the first few months. I cannot remember which happened first. Was it the sacking of the then Minister for Welfare Reform or was it that the Government published an estimate for social security expenditure requiring an extra £37.5 billion on the budget over the next three years—almost as much as the additional expenditure that they promised for health and education combined?
Mr. Christopher Leslie: Will the right hon. Gentleman take the opportunity to let us know what exactly he proposes to cut from the social security budget?
Mr. Heathcoat-Amory: I am asking the Government for no more than what we achieved. In the last three years of the Conservative Government, and in the expenditure targets that we left behind, social security expenditure in total rose by only 1.5 per cent. I am asking the

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Government to continue with our record. Instead, they have published figures showing that, in the next three years, social security expenditure will rise by more than 3 per cent. every year in real terms. I am not asking the Government to do the impossible. I am asking them instead simply to continue the record of controlling expenditure that the Conservative Government achieved in practice.
Mr. Webb: Presumably the only relevant comparison would be non-cyclical social security spending over each of the Parliaments. Since 1979, every Conservative Parliament increased social security spending by more than the Labour Government plan to.
Mr. Heathcoat-Amory: The figures which I have quoted come from the Library. The Government may be frightened of submitting their figures to the National Audit Office but I am not frightened of my figures being audited, checked and verified by the Library. I shall gladly pass over to the hon. Gentleman after the debate the figures that set out the record that we achieved in practice and left behind in the expenditure targets, which the Government said that they were taking over from us. The document states that the object is
"to allow the public to scrutinise the conduct of fiscal policy".
That is a laudable aim, which I share, but what would a member of the public find if he attempted to do so? He would be met by a blizzard of changed statistics. Familiar and tested measurements of the public accounts have been renamed. The public sector borrowing requirement, familiar to all of us, has suddenly become the public sector net cash requirement. The control total, which was effective in controlling public expenditure, including social security, when we were in office, has been abolished. Privatisation has become the public-private partnership, and we discovered earlier today that tax harmonisation in Europe is to become tax co-ordination in Europe.
Changing all the terms does not aid transparency. The figures have not changed, but a smokescreen has been thrown before members of the public who seek to discover what has happened to their money under Government control.
Mr. Denis MacShane: Accountants have changed their means of accounting at least 10 times in my lifetime. Will the right hon. Gentleman remind the House how many times the previous Government changed the means of recording unemployment figures?
Mr. Heathcoat-Amory: The hon. Gentleman is wrong, because we did not change the definitions in the public accounts or the published documents. We held to the definitions that existed when we took office and we always accounted to the public, transparently, against the previous year's figures. The Government are now recasting the public finances so that they are incomprehensible to a lay reader, despite the obligation in the code for fiscal stability to make the information understandable to the taxpaying public.
I shall give a specific example. My hypothetical member of the public might want to know what had happened to what is now called annually managed
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expenditure. That is the element in the public accounts that comes under each departmental heading but is under the control of the relevant Secretary of State. The member of the public would find, on page 107 of the comprehensive spending review, that the third biggest departmental item is "Accounting and other adjustments". That is not a trivial sum, because it amounts to £20 billion in the third year. Is it transparent to hide expenditure of that magnitude under that heading?
As someone lucky enough to be a Member of Parliament, I have tabled a parliamentary question to find out what is included under that general heading. I found—surprise, surprise—that the largest item is social security expenditure. It is that part of the working families tax credit that the Government do not wish to show up as mainstream social security expenditure. Why have the Government sought to disguise the full level of social security expenditure? They must be embarrassed by their failure to control the welfare state and they have resorted to fiddled statistics to try to disguise what has happened.
The code contains some permitted exemptions from the transparency principle. The Government need not provide information in a transparent form if it would harm national security or if it would damage the Government's ability to undertake commercial activities. Will the Chief Secretary tell the House under which heading he claims exemption from the transparency principle when disguising a large element of social security expenditure under the heading "Accounting and other adjustments"?
Mr. Jim Cousins: Does the right hon. Gentleman think that mortgage tax relief should be reclassified as housing expenditure, or that tax relief on pensions should be reclassified as social security expenditure? Does he think that the distinction between current and capital is a useful one in the public accounts?
Mr. Heathcoat-Amory: We are talking here about a social security benefit. This is a welfare benefit and it should be classified as such. If the Government wish to take out part of that and show it as a different line, let them do that. Is the hon. Gentleman seriously claiming that it is part of the transparency principle not to describe it as in any way connected with the working families tax credit, but to bury it as an accounting or other adjustment?
The code, and the whole of section 155, is an exercise in posturing. It places no real disciplines or obligations on the Government. Even if it can be taken as a suggestion of some general principles, the Government have already broken them, in the way that I have described.
To some extent, this is a useful debate. To that extent, perhaps it is a useful guide; not for what it requires from the Government, but for what it tells us about the Government. Instead of the principles of transparency, stability, responsibility, fairness and efficiency, we are increasingly finding from the Government an opaque treatment of unstable accounts, presented in an irresponsible manner, unfair to the tax-paying public and inefficient to the economy at large.
By all means, let the Government publish this code and let them try to prove the opposite, but they will be found out. They will be judged not on the code or on what they say, but by what they do in practice. There is a large and growing gap between the Government's rhetoric and what they do in practice. The publication of the code simply goes to show that that is the case.
11.12 pm
Sir Michael Spicer: As my right hon. Friend the Member for Wells (Mr. HeathcoatAmory) has just said, the code for fiscal stability is a load of rubbish. My right hon. Friend put it more politely. He described it as misleading spin. However, it is more than just misleading; it is dangerously misleading.
Principle 3a is transparency, but the code is the opposite of transparency. As my right hon. Friend said, the golden rule, which the code does not mention, but which the Chief Secretary did, lies behind the whole concept of fiscal probity. The golden rule is probably the most muddling, obscure and spin-infested concept that one could imagine.
First, it is wrong and misleading because the distinction between capital and current spending in public expenditure is false.
Mr. Cousins: What!
Sir Michael Spicer: If the hon. Gentleman allows me to develop my point, I shall happily give way to him. We debate matters happily on the Select Committee on the Treasury, so we can do so in the House for once.
The Government recognise that the distinction is misleading, because, as has been said, they keep on reclassifying capital and current spending. The blur is there, and the Government know it. It is misleading because, as we all know, there is a direct connection between decisions on capital spending and decisions on current spending. That link has been recognised for many years. A capital expenditure programme is started, and the current expenditure flows along behind it. Roads may be classified in one case as capital spending, although not always, and maintenance as current spending, and the same applies to hospitals. The distinction is a false one.
The fundamental point as to why the matter is so confusing is that all public spending has to be funded in the same way. Whether it is capital or current spending, public spending is funded through taxation or by borrowing. The macro-economic effects are therefore the same.
In the late summer, the Government said that they would spend £40 billion more than they had originally intended—on health and education—but would magically balance the books on current account. The Budget forecast was couched entirely in terms of balancing the books on current account. That was the spin, but they slipped in a footnote that the total deficit on public spending would go up by £11 billion in the next two or three years.
The measure is so dangerous because the whole thing is presented through the fiscal code and the golden rule by using mirrors—in a way that obscures what is going on with public spending and the public borrowing requirement in particular, which is going up strongly. The Government keep talking about having been frightfully careful with the public finances over the past couple of years, but they have failed to say that they inherited and stuck with Conservative policies—unashamedly, but to the embarrassment of their Back Benchers.
We are now out at sea with Labour. Public spending is going up—no doubt the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) would approve of that—but the Government cannot have it both ways. Public
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borrowing is also forecast to go up. The false distinction between current and capital accounts in terms of public spending is helping to obscure that from the public, and it is therefore dangerous.
Mr. Desmond Swayne: Does my hon. Friend agree that what matters is not whether an arbitrary distinction is made about current or capital spending so much as whether capital expenditure has sufficient return to repay the initial investment? If that is not the case, the golden rule is no more than rust.
Sir Michael Spicer: My hon. Friend makes a good point. Most public spending does not have such a rate of return.
The Government's problem is that they may be deceiving themselves about the so-called golden rule. They have divided up fiscal and monetary policy in such a way that they have been forced into this position on fiscal policy. In reality—as opposed to the spin and this golden rule idea, which may even be deceiving the Government, let alone the public—public expenditure, and with it the borrowing requirement, is going up. That is the small print in the Government's own document.
The monetary authority—the Bank of England—is being asked in statute to keep inflation at 2.5 per cent., although fiscal policy is becoming more profligate and pushing up inflation. As some of us keep reminding the Governor when he appears before the Treasury Committee—much to the embarrassment of some of my Labour colleagues—the Bank is charged specifically and overwhelmingly with keeping inflation at that level. Everything else is subsidiary.
The bank is bound by law, therefore, to keep interest rates higher than they would otherwise be, because of profligacy and perhaps because of the Government's self-deception about the golden rule. Such self-deception is dangerous. Keeping interest rates at such a level will be economically disastrous for the country. The only good news is that the public will start to rumble the Government, and their position will be eaten into.
Although it would be good news if the Government were undermined by all this, such deception—or self-deception—on fiscal policy, fed through the Bank of England on interest rates, has the makings of immediate economic disaster as we face a recessionary period. That is why the code of practice is not merely a con; it is dangerous, and should be exposed and resisted.
11.20 pm
Mr. Edward Davey: Unlike the right hon. Member for Wells (Mr. Heathcoat-Amory) and his colleagues, the Liberal Democrats welcome the code for fiscal stability. The Conservative party's view on this issue is not consistent. When it was in government, it believed that there should be a clear framework for setting economic policy. Some of us remember the publication of the medium-term financial strategy. The economic theory that underpinned that framework is not dissimilar to the economic theory underpinning this code for fiscal stability. One no longer expects consistency from the modern Conservative party.
However, I agreed with the right hon. Member for Wells that there is nothing new in the code. I studied the document with anticipation, because, having read the

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Prime Minister's speech at the Lord Mayor's banquet, in which he expressed his new-found excitement and desire for stability, I thought that there might be something new in it, but I suppose that a code of fiscal stability should not change too much. That is the benefit of it: it gives clarity to economic policy and reduces uncertainty, which helps the public and the House to hold the Government to account for their economic policies.
That is the theory, and it is, in principle, a good way forward. However, I share some of the concerns of the right hon. Member for Wells, because it is not the theory but the practice that matters. We have yet to see the worth and substance behind the code, and we shall be able to measure that properly only when we see what the Government will do when the chips are down. Will they revert to the practice of the previous Government, who fiddled the figures when they did not turn out as they had predicted, or will they rely on the independent auditors? Will they ensure that the figures they put before the House have wide acceptance?
Concern was expressed about the recent pre-Budget report. There were arguments over the growth forecasts, which did not relate to the consensus reached by external forecasters, and there was anxiety that the Government will not be quite as up front and honest as the principles outlined in the code suggest.
We shall give the Government the benefit of the doubt for the moment. We urge them to make progress on some of the points in the code. Page 7 of the code refers to accounting practice:
"The Government shall, as soon as reasonably practicable, adopt a Resource Accounting and Budgeting approach for planning".
I am pleased that the Chief Secretary mentioned that in his opening remarks. I hope that those plans for a new form of accounting will be implemented as soon as possible, because they are vital for the objectives of the fiscal code.
Resource accounting and budgeting will, for the very first time, provide the House and the public with the information that we need to assess whether the Government are promoting fiscal stability and are taking good care of the public purse.
I disagree with the hon. Member for West Worcestershire (Sir M. Spicer). I have not heard anything so ridiculous in a debate for some time. There is a clear distinction between capital and current spending. There is an economic difference between a building and a pay cheque, and between a battleship and a benefits cheque. The Conservative Front Bench contains some former distinguished accountants. I hope that, when the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) winds up the debate, he will confirm that the private sector is used to making those important distinctions. It is about time that the public accounts also made those distinctions.
Mr. Lansley: Would the hon. Gentleman care to reflect on the point that he has just made? A battleship is an asset that is used but offers no economic return, whereas revenue expenditure on education may be construed as having a direct economic return. Which of those two should be capitalised in a firm's accounts.
Mr. Davey: There is obviously a difference. It clearly makes sense to budget on a cash flow basis for large sums
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that are consumed over a period of years. A battleship has value over its lifetime, and there is no reason why the accounts should not reflect that.
It is time that the House had access to the sort of meaningful information that would be provided by resource accounting and budgeting. I am astonished that the Conservatives should talk about the sovereignty of the House in terms of the European debate. When they were in government, they failed to produce information of the kind that the House needs to hold the Government to account. The House does an appalling job in holding the Executive to account over the spending of billions of pounds of taxpayers' money; but the Conservatives, when they were in power, failed to provide the House with the information that we need in order to hold the Executive to account. That was a lamentable failure.
The Conservatives talk about sovereignty, and about defending the rights of the House. When they were in office, they did nothing to enable the House to do its job properly.
Mr. Derek Foster: I find the hon. Gentleman's argument interesting. How would he propose to strengthen the ability of the House—particularly that of Select Committees—to bring the Government to account? In fact, we do not scrutinise any accounts in this place, do we? They all go through on the nod, when no one is here. It happened for years under the Conservatives. Only when the then Opposition called votes—as we often did, until 3 am: unfortunate people were having to vote every 15 minutes—did we actually vote on the accounts. We did it just to keep hon. Members here: we did not do it in order to scrutinise the Government. [Interruption.]
Mr. Deputy Speaker (Mr. Michael Lord): Order. The right hon. Member for Bishop Auckland (Mr. Foster) has probably finished his intervention.
Mr. Davey: I am grateful for the intervention, which enables me to draw hon. Members' attention to a report that will soon be forthcoming from the Select Committee on Procedure—a Committee of which, for my sins, I am a member. We are reporting to the House on financial procedure, and on financial reporting to the House.
A number of issues will feature in our report. It relates to information, and resource accounting budgeting will go some way towards providing that. It relates to resources for Select Committees. It relates to changing procedures in the House to enable it to vote on Select Committee reports that have examined departmental spending programmes. A change in procedures and information could enable the House to hold the Executive to account far more effectively.
Let me add a rider. I do not think that this will appear in the Select Committee's report, but we need to change the political system—the rules of our political culture in the United Kingdom. I believe that proportional representation would be very effective in enabling the House to bring the Executive to account.
If the next code for fiscal stability really does develop my theme of resource accounting and budgeting, that will take the fiscal framework much further. Let me say to the Chief Secretary that I hope that that theme will be linked with the public service agreements which I believe that he is soon to announce. I think it very important for those

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targets to be linked with the accounts, so that the House can see the targets in the context of the money that it votes to the Executive. There is a link there, which follows from the principles of transparency and efficiency that are embedded in the code.
Having praised the Government to some extent, let me add that there are some shortcomings, some of which were mentioned in the Standing Committee that gave rise to this discussion of section 155 of the Act. Those shortcomings are still germane, and I hope that the Government will produce better codes in future. The main point, however, is that there is still no link with the environment—no link with sustainable development. Clearly, sustainable development is connected with fiscal stability, and it should be at the heart of Government economic policy.
Recently, the Deputy Prime Minister published a document called "Sustainability Counts"—and a very good document it is. My only concern is that it was launched by the Department of the Environment, Transport and the Regions, not by Her Majesty's Treasury. If the environment is going to be put at the heart of government, such documents should come from the Chancellor of the Exchequer. That would be a case of joined-up thinking.
The Deputy Prime Minister's foreword to the document states:
"The Government is committed to a new way of thinking. One which puts environmental, social and economic concerns alongside each other at the heart of decision making."
That is absolutely right. It continues:
"We are used to judging the economy's performance on the basis of statistics such as GDP, inflation and employment figures. I want these broader 'quality of life' headline indicators, over time, to become just as useful and familiar."
That is why they should be in the code. The code refers to gross domestic product, to inflation and to employment. I hope that, in due course, the code will refer to those other indicators, which the Deputy Prime Minister at least thinks are important.
Another aspect of that document is directly linked to fiscal stability. One of the headline indicators proposed by the Deputy Prime Minister is social investment. That is introduced in the document with these words:
"Sustainable development means living off our income, not eroding our capital base, so that we are not storing up problems for future generations. Especially important is investment in 'public' assets which benefit everyone."
The Deputy Prime Minister was right. The previous Government eroded social investment, ran down public assets and reduced public wealth in an attempt to create an economic golden legacy, but we knew that just switching things from the public to the private sector did not necessarily create any wealth.
I am not suggesting that privatisation was not a good thing in many industries, but it did not create any new wealth; it just switched ownership. The headline indicators in that document could usefully be incorporated into the code.
There is another shortcoming in the way in which the codes are being framed. They do not talk much about the role of fiscal policy in economic management—how it can be used counter-cyclically, and how, within a single
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currency, it could, as we heard earlier, take a proactive, not a passive, role in the national economic management of the United Kingdom.
The final shortcoming is that such a code and the documents that it requires a Government to publish, particularly economic and financial projections, will not be updated just before a general election. One of the benefits of the code is that it enables us and the general public to hold the Government to account, so what more important time do we need the code to be updated and published? We need it just before a general election.
History shows us why we need the code to be published at that time. In 1992, I had the pleasure of being economics adviser to my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith). We were analysing the pre-election Budget, which was published by one of my predecessors, now Lord Lamont. He had published the Budget two days before the general election was called in 1992. In that Budget, he introduced the 20p income tax rate, and published a public sector borrowing requirement of £20 billion.
That was not audited. It was much disputed and debated during the general election. When the Conservatives managed to scrape back, unfortunately, after the 1992 election, they changed the PSBR within a few months. It magically went up from £20 billion to £50 million. That is why we need such codes, and why we need them to be published just before elections—so that the British people can vote on facts, not on fatuous made-up figures from the Executive.
The code borrows from an innovation from New Zealand. It borrows many of the ideas in its Fiscal Responsibility Act 1994, but the one lesson that it has not borrowed is the requirement to publish the code just before a general election. That is one reason why Liberal Democrats, although for the moment we are prepared to give the Government the benefit of the doubt, remain sceptical about how they will use the code. If the code is merely an illusion—that was the charge made by the right hon. Member for Wells (Mr. Heathcoat-Amory), from the Conservative Benches—it will be a great disappointment. There is the potential for a significant innovation in economic policy. If it is missed, it will be a great shame.
There is room to extend the concepts contained within the code. Independent auditing of the assumptions behind other Budgets would help. For example, could the Audit Commission review the local government grant settlement and study the assumptions behind that? Could it establish whether the resources that the Government provide to councils—obviously, I have Kingston council in mind—are sufficient for them to meet their statutory obligations? For many councils, I very much doubt it. If we could extend the concept of the fiscal code to such areas, it would be welcome.
I hope that the code will be developed and improved in the years ahead, and that the Chief Secretary will respond positively about how he views the code and its future.
11.36 pm
Mr. Nick St. Aubyn: Conservative Members have been sceptical as to whether the code for fiscal stability" will achieve anything. In the hope that it

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might, I remind the Chief Secretary to the Treasury that paragraph 19 of the code mentions an economic and fiscal strategy report and promises that it should
"present illustrative projections of the outlook for the key fiscal aggregates for a period not less than 10 years into the future, based on a range of plausible assumptions."
The subsequent paragraph states that the report should provide
"an analysis of the risks surrounding the economic and fiscal outlook, including Government decisions and other circumstances that have still to be quantified".
Finally, paragraph 22 states:
"The financial statements shall also include any other such indicator as is required to judge … the Government's European commitments".
We are talking about projections and, if those are to include assumptions on Government policy, they must include the policy assumption that this Government intend to join the euro. Therefore, will the Chief Secretary acknowledge that the projections to be published under the code will show the effects on fiscal policy of joining the euro?
I wonder whether the Treasury is aware of a study undertaken by Oxford Economic Forecasting last December, which used the Treasury forecasting model to study what would happen if we joined the euro in 1999. It clearly showed that, because of the dramatic cut in interest rates that would be required for us to join, there would have to be a corresponding increase in general taxation, equivalent at that time to a rise of 3p in the standard rate of income tax.
The stability of our economy is not provided for by a code; it is rooted in the balance and structure of our economy. As that report pointed out last year, in this country, mortgage debt is nearly 60 per cent. of gross domestic product, compared with only 40 per cent. in Germany and 24 per cent. in France. In this country, 80 per cent. of all mortgage debt is on a variable, as opposed to a fixed rate, of interest. According to that research, the comparable figures for Germany and France are only 5 per cent. and the rest of their mortgage debt is on a fixed rate.
Clearly, not only would a cut in interest rates within the euro have a different impact on the stability of our economy, but the sudden reduction that would occur if we joined in the early years, would have a dramatic impact on the stability of our economy. That is why, according to that research, there would have to be a significant increase in general taxation if we joined.
Has the Treasury done a study and will the Chief Secretary's forward projections under the code include an analysis of what will happen if the Government join the euro in the near future? Will he show us the honesty for which the hon. Member for Kingston and Surbiton (Mr. Davey) asked, and tell us by how much taxation would have to increase?
I asked the Library to undertake further research, in the light of the current economic environment, 12 months after the Oxford research was published. According to the Library, we would now be contemplating a 3 per cent. change in short-term interest rates if we were to join the euro at its start. The analysis clearly shows that general taxation would have to be increased by the equivalent of
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5p in the pound on income tax, or nearly £10 billion a year in total, for every single year of the projection. That extra taxation would be money taken out of the economy, not to be spent by the Government.
Will the Chief Secretary undertake to make his own analysis, within the terms of the stability code, and tell us what his corresponding figures are.
Mr. Cousins: The hon. Gentleman cited some interesting figures on the impact on mortgages of a hypothetical interest rate if we joined the euro. How much better off would the average mortgage payer be if we were to have those interest rates? Frankly, my appetite is being somewhat whetted by his argument.
Mr. St. Aubyn: Surely hon. Members are familiar with the low fixed-rate mortgages offered by many mortgage brokers. As the "Money Box" programme on Radio 4 has been telling its listeners, the catch comes in the long term, when one tries to renegotiate the terms of the mortgage and finds that there are high penalties for withdrawal. The problem with the cheap offer available from the euro is that the penalty for withdrawal is totally excessive and that, later, when the penalties have to be paid, there may indeed be no withdrawal and no exit.
That is the problem with the euro. At least, under the code, the Government are now duty bound to admit that any benefit to be gained from lower mortgage rates, even in the short term, would be offset by higher taxation. Many retired people on fixed incomes, part of which depends on deposit interest, will be hit by a double whammy. The retired would not only have lower interest on their deposit savings but would have to share the burden of higher taxation.
Does the Chief Secretary accept, in all honesty, that the code, in the range of assumptions on pages 8 to 10, requires him to show the effect on taxation if we were to join the euro in the early years? Has the Treasury made an analysis of the issue, and if not, why not? When will we get Treasury figures on the amount that tax will have to rise—immediately—if we join the euro, as a fiscal offset to the monetary easing that would take place.
11.44 pm
Mr. Nick Gibb: It is clear from this debate that the code is vapid and meaningless, full of airy phrases that can be interpreted to mean exactly what the Government want them to mean. However meaningful they may be, and there are considerable misgivings about that, the Government's two fiscal rules—the golden rule and the sustainable debt rule—are not even incorporated in the code.
The explanation of the code, published in March, said that
"to embrace the Government's two fiscal rules in the code would be unduly restrictive."
How strange then that the Government's consultative document on a proposed code, published six months earlier, said that
"the code needed to be restrictive so as to rule out the possibility of profligate fiscal behaviour."
Just six months later, the Government have changed their minds. No longer do they want to be restricted. No longer do they want to rule out profligate fiscal behaviour,

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perhaps because in July this year they engaged in profligate fiscal behaviour with their public spending plans for the next three years.
What of the two fiscal rules? The golden rule involves splitting out current expenditure from capital expenditure and declaring that borrowing should not exceed capital expenditure. As my hon. Friend the Member for West Worcestershire (Sir M. Spicer) correctly said, the distinction between capital and revenue in this context is false. Willem Buiter, a member of the Government's Monetary Policy Committee said, "It has no merits" as a guide to optimal borrowing. The Ernst and Young Item Club in its summer report said that borrowing to fund capital expenditure has exactly the same effect as borrowing to fund current expenditure. They both increase the pressure of demand.
Not only is the golden rule meaningless but it is dependent on the definition of capital expenditure. That is open to abuse by Governments. They can change those definitions. There is nothing in the code about not manipulating the definition of capital expenditure. Indeed, the reason why Willem Buiter is so opposed to the golden rule is just such manipulation that occurs in other jurisdictions such as Germany. That is why my hon. Friend the Member for Chichester (Mr. Tyrie) was right to say that Germany had decided to abandon a golden rule. But this Government are perpetrating that manipulation here.
On page 124 of the November 1998 pre-Budget report published just a few weeks ago, paragraph B28 says:
"Some expenditure that was previously classified as current—chiefly dual-use military equipment and computer software—has been redefined as capital."
Here we come to the nub of the debate—the pretensions in the code to transparency, which is the first of the five principles of fiscal management.
How is it transparent to introduce a new and bogus concept of a surplus on current budget, which the Chancellor, the Prime Minister and the Chief Secretary again this evening have tried to shorten, in an outrageous attempt at obfuscation, to current surplus? They give the impression that the Government are running a budget surplus, whereas the reality is a budget deficit.
The current surplus is merely a sub-total of revenue less current expenditure before taking into account the so-called capital expenditure. Once the capital expenditure is included, as it should be, the result is a budget deficit. It is a wholly bogus concept—opaque, not transparent.
It gets worse. After the July comprehensive spending review, the Chancellor trumpeted his £30 billion current surplus. That figure was cobbled together by adding up the next three years of so-called surpluses on current budget of £7 billion, £10 billion and £13 billion, equalling £30 billion.
When, some five months later, the Chancellor was forced to recompute his numbers due to lower growth, by some miracle of creative accounting that would rate a place in the campaign of the hon. Member for Great Grimsby (Mr. Mitchell), that surplus rose—rose, not fell—to £33 billion. How was that calculated? It was calculated by taking the next five years rather than the three years of so-called surpluses on current budget of £1 billion, £3 billion, £8 billion, £10 billion and £11 billion. So it seems that the code does not apply to the statements that the Chancellor makes about the public finances.
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There is no requirement for him or his Ministers to present to the public the public finances in a clear and transparent way.
"The Code for Fiscal Stability" is a meaningless document. It has no force of law. It has no credibility. It is circumvented at every turn by the Government. I trust that the Chief Secretary will answer the question put by my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) about why there is no audit report of the assumptions in the November 1998 pre-Budget report.
11.50 pm
Mr. Byers: With the leave of the House, Mr. Deputy Speaker, I shall reply to the debate.
I begin by addressing the point made by the right hon. Member for Wells (Mr. Heathcoat-Amory), which the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) mentioned at the end of his speech, about the involvement of the National Audit Office and the reasons why it has not reported on the November 1998 pre-Budget report. The reason is simple. As the code says, the Government will
"invite the National Audit Office to audit changes in the key assumptions and conventions underpinning the fiscal projections".
There have been no such changes; therefore, there was no necessity to invite the NAO to carry out such an audit.
The right hon. Member for Wells spun an interesting web of conspiracy about why the September unemployment figures were used for example, but that is a good illustration of how we are following the normal conventions. The pre-Budget report came out in November and used the most recent unemployment figures available, which were the September figures. That is the convention that has been used for many years—indeed, it was used by the Government in which the right hon. Gentleman was a Minister—and we are simply continuing its use.
Mr. Heathcoat-Amory: Will the Chief Secretary give way.
Mr. Byers: I shall give way, if there is time after I have answered some of the many points raised by right hon. and hon. Members in the debate. I understand that that is the purpose of a winding-up speech.
The right hon. Gentleman asked why we have a new format for public finances and was extremely critical on that point. The reason is simply that we are aligning our accounts with international and national definitions, and we make no apologies for doing so.
The hon. Member for West Worcestershire (Sir M. Spicer) started an interesting discussion about the distinction between current and capital expenditure. Given the way in which the Conservative Government slashed capital spending, I can understand why Conservative Members do not like a clear distinction to be made between the two forms of expenditure. The Labour Government are perfectly happy to have an analysis of spending divided into current and capital, because we believe that a real distinction can be made between the two. We are not hiding behind an artificial distinction, but being open and transparent about our spending in those areas.

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The hon. Member for Guildford (Mr. St. Aubyn) raised the subject of the euro and the estimates and projections that have been built into forecasts in the light of our possible entry into the single currency. It is interesting that Conservative Members find it difficult to speak in any debate on the economy without bringing us back to the euro and what they see as its disadvantages.
Let me make the Government's position clear: we shall decide whether or not to join the euro based on whether that is in the national interest, and subject to a vote of the British people. That is not the policy that the Conservatives have adopted, of ruling out entry for 10 years because of political dogma and in an effort to paper over the cracks in the Conservative party. That is not our approach. We shall decide in the national interest whether or not the euro is appropriate for the United Kingdom.
The hon. Member for Kingston and Surbiton (Mr. Davey) spoke for the Liberal Democrats. I accept the importance of transparency and openness and the code seeks to achieve those aims. It is especially important that we move to resource accounting and budgeting, and we intend to do so. The hon. Gentleman was right to say that public service agreements and the targets that they include will be a means by which the Government are judged on whether the new money that we are committing to crucial areas, such as hospitals and schools, is valued and brings something extra in terms of improving standards and raising the quality of provision. The agreements will be made public and Parliament and the public will be able to judge how well we deliver those ambitious but challenging targets.
This evening's short debate has revealed that, if there is a black hole, as the right hon. Member for Wells says that there is, it is a black hole in Conservative thinking on the economy. I regret that this evening has witnessed yet another attempt to talk down our economy and a failure to recognise its underlying strengths. There are now 400,000 more people in jobs than there were on 1 May last year and inflation is at its target of 2.5 per cent. Under the Labour Government, there will be no going back to the days of boom and bust. When the right hon. Member for Horsham (Mr. Maude) was a Treasury Minister, interest rates were at 15 per cent., inflation was at 10 per cent. and more than 1 million jobs were lost. We shall not turn back the clocks to those days. The code for fiscal stability will assist the Government in steering a course of stability for our economy, and I commend it to the House.
Question put and agreed to.
Resolved,
That the Code for Fiscal Stability, which was laid before this House on 3rd November, in the last Session of Parliament, be approved.

DELEGATED LEGISLATION
Mr. Deputy Speaker: With permission, I shall put together the motions relating to delegated legislation.
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

DELEGATED LEGISLATION
  POLICE
  That the draft Police Act 1997 (Notification of Authorisations etc.) Order 1998, which was laid before this House on 19th November, in the last Session of Parliament, be approved.
  POLICE
  That the draft Police Act 1997 (Authorisation of Action in Respect of Property) (Code of Practice) Order 1998, which was laid before this House on 19th November, in the last Session of Parliament, be approved.

  PRISONS
  That the draft Parole Board (Transfer of Functions) Order 1998, which was laid before this House on 17th November, in the last Session of Parliament, be approved.—[Jane Kennedy.]
  Question agreed to.

SCOTTISH GRAND COMMITTEE
Motion made, and Question put forthwith, pursuant to Standing Order 100 (Scottish Grand Committee (sittings)),
That the Scottish Grand Committee shall meet:—
(1) on Monday 18th January at half-past Ten o'clock at New Parliament House, Edinburgh, to consider a substantive motion for the adjournment of the Committee;
(2) on Monday 1st February at half-past Ten o'clock at New Parliament House, Edinburgh, to consider a substantive motion for the adjournment of the Committee;
(3) on Monday 8th March at half-past Ten o'clock at New Parliament House, Edinburgh, to consider a substantive motion for the adjournment of the Committee; and
(4) on Monday 22nd March at half-past Ten o'clock at New Parliament House, Edinburgh, to consider a substantive motion for the adjournment of the Committee—[Jane Kennedy.]
Question agreed to.

PETITION

  School Closures (Borehamwood)
  11.55 pm
  Mr. James Clappison: I wish to present a petition from my constituents concerning the future of education in Borehamwood. This petition has attracted more than 2,000 signatures. It states:
  Petition of Save Our Schools Association
  Declares that we are opposed to the closure of five schools in Borehamwood in the County of Hertfordshire as proposed by the Education Committee of Hertfordshire County Council.
  The Petitioners therefore request that the House of Commons urge the Secretary of State for Education and Employment to reject the proposed closure of these schools and demand that Hertfordshire County Council utilise the facilities and sound education that these five schools currently offer to the children of our town.
  And the Petitioners remain, etc.
  To lie upon the Table.

Speed Cameras
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jamieson.]
11.56 pm
Mr. David Kidney: This has been an impressive week for the parliamentary deliberation of transport policy. I participated in Monday's debate on the Water Industry Bill but, sadly, we did not discuss the subject of water-borne transport. However, things looked up for transport on Tuesday when the main debate concerned the Road Traffic (NHS) Charges Bill and the Adjournment debate was about rail fares. The first debate today addressed the issue of road traffic reduction and the last debate is about the funding of speed cameras.
It has also been a good week for considering transport policy outside the Chamber. Yesterday, the Deputy Prime Minister published his consultation document on road, use charges and workplace car park charges, and today, the Select Committee on the Environment, Transport and Regional Affairs considered the Government's integrated transport policy. By coincidence, one of the witnesses who appeared before the Committee was a member of the Association of Chief Police Officers. The assistant chief constable of Cleveland, Mr. Richard Brunstrom, gave evidence about the funding of speed cameras.
I aim to deliver two basic messages to the House and to the Minister who will respond to the debate. First, speed cameras contribute significantly to road safety; and, secondly, we cannot achieve the optimal coverage of road routes without more secure funding for speed cameras. I hope that, when the Minister responds to the debate, he will confirm the accuracy of the report that appeared in today's edition of the Evening Standard that the Home Office is convinced of the benefits of additional funding for speed cameras on Britain's roads.
In 1987, a previous Government set a target to achieve a one third reduction in road casualties by 2000. The House now awaits the Government's announcement in this Parliament of new national targets for road casualty reduction beyond 2000. In addition, we understand that the Government will soon issue a road safety strategy. I ask the Minister to confirm when we might expect those new targets and the Government's new road safety strategy. It is difficult to imagine that those documents will not contain some substantial news about speed cameras and the part that they will play in driving down the number of road casualties in this country. Indeed, speed cameras have a proven record of reducing road casualties.
In Staffordshire, where my constituency lies, in the three years since cameras were installed on the first 12 sites, there has been a dramatic reduction in crashes causing personal injury. In the three years before the cameras were installed, there were 599 accidents, compared with 472 accidents after their installation. That represents a 21 per cent. reduction. Applying the law of averages to the figures for the period before the cameras were installed, the reduction represents a saving of 10 lives on the road, 29 serious injuries in road crashes and 88 slight injuries. The financial benefit to the community from the subsequent lack of need for attention at sites by the police and the fire service and for health treatment of people injured in accidents is estimated to total £8 million.
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It is significant that the severity of the crashes has decreased. Incidents of fatal and serious injury have fallen by 49 per cent. from 79 to 40. That reflects the slower speed of traffic at those sites.
What is the national picture? Where better to look for news on the success of speed cameras than in a report commissioned by the Home Office? In 1995, the Home Office commissioned a cost-benefit analysis of speed cameras and traffic lights from Andrew Hook, Jim Knox and David Portas. The report, which was issued in 1996, revealed that, in areas where speed cameras were used, accidents fell by 28 per cent. and speeds were reduced by an average of 4.2 mph. The fixed cost for installing cameras was £12,500 each and the average recurring expenditure for each camera was £8,500 per year.
The report went on to describe the wider benefits of the cameras, such as the release of police officers from speed enforcement duties for other useful duties and the detection not only of speeding offences but other crimes, including serious crimes. There is also anecdotal evidence that people in the local communities along the routes where the cameras are installed feel safer.
In addition to those benefits, ACPO—which has given evidence today to the Select Committee—estimates that there is a financial saving to the community of £8 billion a year from the wider use of speed cameras. ACPO argues that that translates into substantial savings in NHS treatment, which results in lower waiting lists. That is truly an example of the joined-up thinking in which the Government are interested.
On funding, the conclusion of the cost-benefit analysis commissioned by the Home Office said:
"The cost benefit analysis demonstrated that the use of … speed cameras generated substantial net benefits. It was also shown that the 'pay back' period for this technology was fairly short and that implementation has led to a reduction in the number of road traffic accidents at camera sites."
In Staffordshire, a good example of that is the good partnership working arrangements between the county council's highway authority and Staffordshire police, who are the enforcing agency. Both contribute to the costs of the speed cameras. That means that council tax payers are paying for the speed cameras. The budgets of the council and the police authority are under pressure. That is not unique to Staffordshire; it is typical of what is happening around the country. Staffordshire has identified further sites that would benefit from the installation of speed cameras by potentially reducing road casualties, but the limited funds restrain its ability to install the cameras to make the savings in road casualties. In the meantime, all the fines collected from speeding motorists go directly to the Treasury; none of the money goes towards the cost of installing and maintaining the speed cameras themselves.
How much is the income from fines? About 250,000 people face speeding fines each year, and a fixed penalty is £40. If a quarter of a million people pay £40, the fine income is £10 million. However, some people go to court because their speeding is so serious that a fixed penalty is not appropriate. The average court fine is a little over £100, so each year the income from fines must be well above £10 million. The Evening Standard report gives a figure of £17 million.
A little-noticed fact about the speeders who go to court and face a fine is that the magistrates add to the fine an award of costs that the motorists must also pay. Those

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costs are for the administration of bringing the case before the magistrates court, so there is nothing new in asking those who offend to pay administration costs in addition to the penalty. Might it not be a neat solution, as some police and councils argue, if the speeder were charged an administration fee in addition to the fine? I strongly agree with that approach.
I understand that the Government have been reviewing the funding of speed cameras for some time. Has the Minister any news of when an announcement might be expected? Some argue that the administration charge that I mentioned could be said to be an extra levy or another tax on motorists. That was certainly the approach taken in an article in The Sunday Telegraph last week. My response to that—perhaps the Minister will agree—is that that would certainly not be the case if best practice were strictly enforced.
I take best practice to mean that the amount of the administration fee is transparently all that is required to cover the administration costs but, more important, that the sites selected for the placing of speed cameras are selected by reference to criteria that relate exclusively to road casualty reduction and also that, when the radars are set for the cameras, they are set within strictly defined parameters. The cost-benefit analysis to which I have referred also mentions that point.
The report's conclusion states:
"The study also generated a number of good practice guidelines which are presented in the main report. These suggest that the level of benefit derived from the use of cameras was linked to the manner in which they are deployed."
In other words, following best practice is the right thing to do, in terms not only of effectiveness in use but of not claiming extra money from people, over and above the penalty.
In Staffordshire, best practice is underwritten by the fact that the police and the council have signed a service level agreement, which includes criteria such as how the sites for the road cameras are selected. In this way, the public are reassured that the only priority is road safety.
I recently visited the Staffordshire traffic police headquarters, which is in my constituency. I take this opportunity to pay tribute to the dedication of the workers—police officers and civilians—who detect and enforce the payment of fines by those who exceed speed limits. They, like others across the country, are working to make our roads safer, but will the Minister outline the Government's policy to make sure that they all have the right tools to do their job effectively.
12.9 am
The Minister of State, Home Office (Mr. Paul Boateng): The House owes my hon. Friend the Member for Stafford (Mr. Kidney) a debt of gratitude for bringing this matter before it. He has shown unusual prescience—not that he does not normally show prescience—in that, in view of several announcements over the past 24 hours by my right hon. Friend the Deputy Prime Minister and my right hon. Friend the Chief Secretary to the Treasury, an Adjournment debate has seldom been as well timed.
The funding of speed cameras is, of course, an important issue. We are all familiar with the camera logo at the road side. It warns us to slow down. Those with
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any sense do so, and those without risk a fine. It would be all too easy to forget that the objective of cameras is not to raise revenue through the levying of fines but to reduce injuries and to save lives. I very much welcome the way in which my hon. Friend highlighted at the outset of his speech the importance of the road safety benefits of cameras. He was quite right to set that as a context in which this important debate should be conducted. We are fully committed to ensuring as a Government that we work across Departments—the Home Office, the Department of the Environment, Transport and the Regions and the Treasury—to improve road safety. We recognise that the use of cameras is one important means of so doing.
The history of the matter is well known. It goes back to the North report in 1988, which recommended that the law should be changed to facilitate the use of cameras for enforcing road traffic law, and the Road Traffic Act 1991, which implemented that report, starting the growth in the use of cameras. They have grown like Topsy ever since. The Act provided enhanced powers for the police to trace the drivers of cars and introduced a new arrangement for improving the accuracy and reliability of cameras, linked with the introduction of a fixed-penalty system, which allows the police to serve fixed penalties on offenders by post. That was the platform on which the growth has occurred.
The good news is that the number of speeding offences detected by cameras has risen from a little more than 32,000 in 1993 to more than 262,000 in 1996–34 per cent. of speeding offences dealt with in that year, the last year for which we in the Home Office have official figures. We expect the figure for 1997 to be significantly higher.
Despite such growth, the issue of funding has always been challenging. Indeed, it was the very first issue raised with me during my recent attendance at the annual conference of the Association of Police Authorities in Blackpool. I am delighted that we are not only debating it, but doing so in the context of a change in our practice.
It was originally envisaged that the police would purchase the cameras and pay their running costs. However, the Home Office circular issued with the 1991 Act envisaged the possibility that highway authorities could, by agreement, share the cost with the police. That is precisely what has happened. Most cameras have been purchased by local highway authorities, and the police pay for the processing of film and administrative costs. That partnership is to be commended. It fits in well with the highway authorities' responsibility for the promotion of road safety.
As my hon. Friend has pointed out, however, as the number of cameras and administrative costs have grown, so the financial burden on local authorities and the police service has increased—hence their understandable concern. In light of that, it is not surprising that much of the correspondence that my fellow Ministers and I receive on the subject, as Ministers, suggests that some of the fine income from cameras should be re-invested in its source, to promote road safety. That hypothecation has its attractions. There are some difficulties and challenges too, and in recent months we have been reflecting on those.
We understand the attraction of the scheme. It is a simple way to fund cameras, and there is a certain sense of justice in the notion that offenders should pay for the

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running of the cameras that detect their offending. It could be suggested that, without offenders, there would be no need for cameras.
However, in government we must take a broader view as to how revenue is raised and the priorities for spending it. The fact that speed cameras can generate fine income for the Treasury does not automatically mean that the money should be re-invested in cameras. Some Government priorities generate no income, and funding must come from somewhere. It is not just a question of following the apparently easy and obvious course. It is necessary to recognise the importance of ensuring good value for money.
Any decision whether to change camera funding arrangements depends on a proper, detailed evaluation of the case. We have been engaged in such an evaluation. The emerging findings are reflected in the announced statements and intentions of my right hon. Friends the Deputy Prime Minister and the Chief Secretary to the Treasury, but we must remember that we are talking about providing additional public funds for cameras over and above that which the police service and highway authorities have already earmarked. That additionality is very important, and it is vital that we get an objective judgment as to the costs and benefits.
My hon. Friend the Member for Stafford referred to some of the analysis that we have commissioned on traffic lights and speed cameras, and has cited some results that were published in 1996. When considering the fall in accidents at speed camera sites—some 28 per cent., as my hon. Friend said—the £5.3 million investment made to install cameras, the fivefold return on that amount after one year and the return of more than 25 times that amount after five years, we must recognise that it is not all cash, and that opportunity costs are included. Nevertheless, the figures are impressive, and they show the benefits. They also show some spin-off advantages. Many forces found that the use of cameras released officers from other duties. That is enormously important. Significantly, cameras have produced some useful results in terms of the detection of other crime, not least in the identification of stolen vehicles.
We have seen, objectively, the costs and benefits that can arise from running speed cameras when they are properly deployed and used. The study also identified for the first time the costs that running cameras places on the court system. My hon. Friend, as a solicitor, will be aware of those costs. There are costs of administration and of court time—and from time to time, not least, there are costs on the Crown Prosecution Service.
The funding of speed cameras is of concern not only to the police and local highway authorities; a chain of processes needs to be taken into account. We must ensure that we do not distort the process by using any form of hypothecation that would have that effect. A concern exists that, if a person's income depends directly on the number of motorists that they prosecute, that person will feel pressure to take action against the marginal case.
That would obviously not be right. I am bound to say that, in this country, that risk is a pretty theoretical one, but it is there. There are a number of important interests that we need to balance, not least continued public support for the notion that speed cameras are in place, first and foremost, to reduce casualties on our roads. My hon. Friend the Member for Stafford and other right hon. And
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hon. Members will be aware of the experience in Canada. When it became clear to the public that cameras were being used not primarily for road safety purposes but to generate revenue, public opinion turned against the cameras to the detriment of road safety. That was because they became a political issue. As a result of that, speed cameras were driven off the roads in the aftermath of the electoral process. I do not believe that that would happen in this country but we need to take into account the importance of public support.
We must always remember as well that operational matters are for the chief officer. It is the chief officer—not Ministers or local government officers—who must determine precisely how the cameras are deployed for maximum effect in his area. Deployment will vary properly from force to force. Indeed, some chief officers have made it clear that their interest in the proposals stem from the fact that they do not have the revenues that they would like to place the cameras where they would like. Sometimes conflicting priorities need to be set. Local choices are sometimes difficult.
The Government also have to make choices. There are never enough resources to pursue all our aims to perfection, but we are convinced that the partnership approach is the one that holds out the best solution. We are determined to build on that as we take forward this issue and as we explore the possibilities that are now being opened up by the Treasury's position and the announcement made by my right hon. Friend the Deputy Prime Minister.
The criteria that need to be met were summarised in "The Economic and Fiscal Strategy Report 1998" of my right hon. Friend the Chancellor of the Exchequer. He made the position clear then and my right hon. Friend the Chief Secretary made the point that, in determining what would be a flexible and effective framework within which the controls on the spending of public money operate, there must be strict criteria. He believes that the time is now right to consider how such criteria would work in this area. Indeed, my right hon. Friend makes the point that it is important to ensure that, in each instance, the money raised is appropriate, that it is spent where it is most needed and that it will not distort the operational priorities of the organisations concerned.
The point was made in section 3.4 of "The Economic and Fiscal Strategy Report 1998" that Departments will be able to keep some levies and similar taxes, netting them off the departmental expenditure limit where that would further the Government's economic objectives, improve efficiency and not prejudice spending plans and priorities. It is important that there should be safeguards. Safeguards would ensure that some income from fines might also be netted off the departmental expenditure limit where that would assist in fighting crime. We are anxious to ensure that those criteria are developed along the lines announced by the Treasury today. They represent a significant departure from previous policy and I am sure that hon. Members on both sides of the House, not least my hon. Friend the Member for Stafford, who raised these matters at such a timely stage, will find the development most encouraging.
There is still some way to go. We still need to ensure that we can meet and readily identify the costs of enforcement and apportion them without undue bureaucracy. We still need to ensure that we get the inter-departmental and inter-agency agreement in place.

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We still need also to identify the savings that we can achieve through change and ensure that adequate efficiency arrangements are in place to deliver those changes in a way that does not impose additional costs. Those costs, where they exist, will need to be properly controlled, and we need to keep efficiency under regular review.
We are working with the Department of the Environment, Transport and the Regions and the Lord Chancellor's Department on carrying the issue forward.
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We will make proposals to the Treasury in due course, and the Chief Secretary has indicated his willingness to agree such proposals if they meet his criteria. I have no doubt that, in due course, in the spirit of partnership and co-operation that I have outlined, we will be able to meet the objectives which my hon. Friend the Member for Stafford has so ably shown he shares and which are so much in the interests of his constituents and of the people of our country in general.
Question put and agreed to.
Adjourned accordingly at twenty-five minutes past Twelve midnight.