Commons Sitting of 11 June 1998

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

  LLOYDS TSB BILL [LORDS](By Order)
  Order for Third Reading read.
  To be read the Third time on Thursday 18 June.

Oral Answers to Questions
  EDUCATION AND EMPLOYMENT
  The Secretary of State was asked—
  EDUCATION AND EMPLOYMENT

    Ethnic Minorities
    Ms Helen Southworth: How he intends to ensure that people from ethnic minorities have equal access to the new deal. [43751]
    The Minister for Employment, Welfare to Work and Equal Opportunities (Mr. Andrew Smith): Ethnic minorities will, of course, have the same entitlements as anyone else to all aspects of the new deal. For the first time in employment programmes, we have brought in ethnic monitoring, and we are working closely with ethnic minority groups and businesses. Trained personal advisers will help to tackle both barriers to employment and the discrimination that ethnic minorities face. A key priority of the new deal is to ensure full and fair opportunities for people, whatever their ethnic origin. As there are still appallingly high levels of unemployment among black and Asian people, that help is long overdue.
    Ms Southworth: Does the Minister welcome the fact that three black organisations have joined up to provide gateway services? Does he agree that every local new deal partnership has a responsibility to be a true, rather than just a paper, partnership that is inclusive of all members of the local community so that people from minority ethnic organisations can have equal access to the opportunities of the new deal, and a real step forward into employment?
    Mr. Smith: I agree with my hon. Friend's two good points. We are encouraging ethnic minority community groups and businesses to be involved at all levels of the new deal, and we are acting on their advice. A six-monthly review of the effectiveness of local partnerships in involving representatives of local ethnic minority communities will ensure that the new deal is reaching those clients.

    Independent-Maintained School Partnerships
    Mr. Nick St. Aubyn: What responses he has received during the period of consultation before his Department issues regulations governing partnership between local education authorities and independent schools. [43752]
    The Minister for School Standards (Mr. Stephen Byers): We intend to begin consultation on draft regulations once the School Standards and Framework Bill receives Royal Assent.
    Mr. St. Aubyn: Given that the Minister has demanded that Surrey council spends an additional 5 per cent. on education this year, while the Department of the Environment, Transport and the Regions has cut Surrey's funding by 1 per cent., how does he expect Surrey to meet his desire when its efforts to do so in partnership with independent schools are being hamstrung by delays caused by his own Department?
    Mr. Byers: No delays are being caused by my Department. I wrote to the hon. Gentleman on 22 March and 12 May to ask for details of the scheme that is being promoted by Surrey. I regret that he has not replied to those letters or supplied me with details of the scheme. Perhaps he knows full well that Surrey's proposals have met almost universal opposition from schools in Surrey. The message to Conservative councillors in Surrey is that they should give priority to education in the county's own schools, as the Labour Government do. Those schools should be given every pound that the Government have provided to Surrey.
    Mr. Dale Campbell-Savours: Who benefits from partnerships, and how?
    Mr. Byers: There is the possibility, in a positive sense, to have partnerships between the independent sector and the maintained sector in a way that actually builds bridges for the benefit of all children. What the Government are not prepared to see is the sort of scheme being promoted by some authorities which seek to replace the assisted places scheme with a local variation that is not about building bridges but about reinforcing divisions. The Government believe that the time has come to put dogma to one side, and to have a school system that meets the needs of all our children, not just a few.

    Class Sizes (Leicestershire)
    Mr. Andrew Robathan: If he will make a statement on primary school class sizes in Leicestershire. [43753]
    The Secretary of State for Education and Employment (Mr. David Blunkett): In January this year, the average primary class size in Leicestershire was 26. Last year, it was 26.7. Currently, 21.7 per cent. of children are in classes of more than 30. Last year, the figure was 23.4 per cent.
    Mr. Robathan: My figures show that the average primary class size has gone down by 0.06 of a pupil in one year. Even the Secretary of State would have to admit

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    that it will take some time for that to work its way through to reduced class sizes. The children of most parents will have left primary school before there is any effect. What does the Secretary of State say to the 30 parents from Thistley Meadow school in Blaby who have written to me, some of whom voted Labour in the general election because they believed in Labour's pledge? When is a pledge an early pledge and when is it a late one? Was not the little card that I have with me, Labour's general election pledge card, a fraud perpetrated by new Labour on the parents of Leicestershire and the people of the United Kingdom?
    Mr. Blunkett: Many more might have voted Labour if they had known that there would be a reduction of 0.7 per cent. in just one year [HON. MEMBERS: "0.06"] I am using the official figures. Leicestershire has received £291,000 and Leicester city £584,000 so that 4,100 children will be in smaller class sizes from September, with an extra 65 teachers.
    Mr. Andrew Reed: I am sure that my right hon. Friend remembers visiting Sileby Highgate school in Leicestershire, at which I am a governor, in 1996. He will recall that all its class sizes were well over 30. That was under the previous Administration, so we do not need to take any lectures. Will he confirm what he told me in a written answer last July—that in Leicestershire the cost of the assisted places scheme for the 447 pupils who were benefiting from it was £1.49 million? Does he agree that that money is much better spent on reducing class sizes in Leicestershire schools, particularly Sileby Highgate?
    Mr. Blunkett: I agree with my hon. Friend. That is why those who buy private education put tremendous emphasis on class sizes. It ill becomes Conservative Members to proclaim that they are in favour of smaller classes for the children of those who buy private education but to be against it for the children whom they should represent.
    Mr. Don Foster: Does the Secretary of State realise that, to implement his Government's literacy scheme, teachers are required to create a maximum of five groups of six pupils? That is 30 for every class.
    Madam Speaker: Order. The question relates specifically to Leicestershire.
    Mr. Foster: I assure you, Madam Speaker, that this is very much about Leicestershire. I hope that the Secretary of State is aware that his literacy scheme requires five groups of six pupils. Given that he has no plans to reduce key stage 2 classes—
    Madam Speaker: Order. I am sorry but the hon. Gentleman is not accepting my guidance. I am moving on. This is about Leicestershire.
    Mr. Jim Marshall: I hope it is, Madam Speaker, as I represent a Leicestershire seat. May I confirm what my right hon. Friend said about infant class sizes in the city of Leicester—that, because of the extra money that the city has received this year, there will be no infant class in excess of 30 from
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    September this year? Does he accept that 10 per cent. of junior classes will be in excess of 30, however, and that one reason for that is that local heads and governors make the decisions on the distribution of class sizes? Will he signal his intention to offer guidance to heads and governors about the need to have smaller class sizes across the whole age group?
    Mr. Blunkett: A prerequisite of the plans that will have to be submitted this autumn will be that reductions in class sizes will not have a knock-on effect for primary schooling as a whole. Leicester and Leicestershire will benefit from the £62 million that we have allocated for this year and from the 1,500 extra teachers. Some 100,000 children will gain from the investment that we are making nationally.
    Mr. David Willetts: I am sure that the Secretary of State is familiar with the report of the Local Government Association, representing Leicestershire—and other parts of the country—on the devastating practical implications of the Government's class size pledge. Can the right hon. Gentleman assure parents in Leicestershire—and throughout the country—that there will be no reduction in parental choice and no increase in mixed-year teaching as a result of the Government's pledge?
    Mr. Blunkett: We have made it absolutely clear that parental preference is a critical part of enabling people to make the right choice in sending their children to the nearest high-quality school. We have made no bones about the fact that, where there are mixed-age classes, the guidance of Ofsted and the standards unit should be followed in making them work. I find it difficult to answer the question coming from an hon. Member who has written and spoken condemning the argument about class size, suggesting,
    "there is little evidence of any correlation between class size and educational achievements".
    No wonder he wrote it in a book called "Why Vote Conservative?" He knows he has the answer in the words he used.

    Schools (Bury)
    Mr. Ivan Lewis: If he will make a statement on the (a) performance and (b) level of funding of Bury's schools. [43755]
    The Minister for School Standards (Mr. Stephen Byers): Key indicators show that the performance of Bury's schools is above the England average. The level of Bury's standard spending assessment in 1998–99 was £67.8 million—an increase of 6.4 per cent. on the figure for 1997–98. That amounts to an extra £109 for every primary pupil and an extra £127 for every secondary pupil.
    Mr. Lewis: I thank my hon. Friend for that response. Is he aware that, before and during the election, my hon. Friends and I promised people that five, six and seven-year-olds would be taught in classes of 30 and under by about 2001, which will be towards the end of the first term of the Labour Government? Is he further

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    aware that from September 1998, 95 per cent. of five, six and seven-year-olds in Bury will be taught in classes of 30 and under?
    Mr. Byers: I offer my congratulations to those schools in Bury and the teachers responsible for the good standards that are now being achieved. I compliment my hon. Friend and his colleague my hon. Friend the Member for Bury, North (Mr. Chaytor), who have been great champions of the school system there. I am delighted to confirm that we pledged that, by the end of this Parliament, there would be no five, six or seven-year-olds in a class of 30 or more. I am delighted that, in September of this year, 3,500 fewer five, six and seven-year-olds in Bury will be in classes of more than 30. I am confident that, with that targeted support, Bury will be able to do even better for its children than it is doing now.

    School Exclusions
    Mr. Chris Mullin: What advice he has given to local education authorities regarding school exclusions and the making of alternative arrangements for the education of children who are excluded; and if he will make a statement. [43757]
    The Parliamentary Under-Secretary of State for Education and Employment (Ms Estelle Morris): We have recently issued brief interim guidance on the changes to the law that come into force in September 1998. We are also preparing a new package of guidance on a range of exclusion issues that will reflect the recommendations of the truancy and school exclusion report.
    Mr. Mullin: Is my hon. Friend aware that, in many parts of the country, there is little or no provision for excluded school children? I am aware of a couple of cases in my constituency where children as young as 10 or 11 are left hanging around the streets for much of the day. Does my hon. Friend agree that if we allow the problem to continue, we will store up a big difficulty for ourselves in future? Will she tell us what plans we have to address this problem?
    Ms Morris: My hon. Friend is right: sadly, children who are excluded from school are often those who need the most help and more education to raise standards, but they are excluded from any educational provision. It is not only in my hon. Friend's constituency that excluded children receive no education; it is a pattern that we found throughout the country when we took office a year ago. That is why we have already made a firm commitment, coming out of the school exclusion report, that children excluded for more than three weeks will have a right to full-time and appropriate education. That will be phased in when resources allow; the resources will be there and we intend that implementation should take no longer than three years in every local education authority throughout the country.
    Mr. Tony Baldry: Most parents, teachers and governors are concerned not about school exclusions but about when the Labour Government are going to
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    deliver on the pledge they made at the general election to reduce class sizes. Class sizes in Bury might be going down, simply because there is substantially—
    Madam Speaker: Order. The question is not about class sizes.
    Mr. Baldry: No, Madam Speaker; it is about school exclusions. The Government are making a lot of what they are doing about exclusions, but my point is that people in Oxfordshire are not coming up to me and expressing their concern about exclusions of children in Oxfordshire. They are concerned about when the Government are going to deliver on their policy and pledge to reduce class sizes—
    Madam Speaker: Order. Thank you very much.

    Universities (Access)
    Mr. Barry Sheerman: What assistance he proposes to give to those universities that wish to increase the numbers of students from mainstream comprehensives. [43760]
    The Secretary of State for Education and Employment (Mr. David Blunkett): From this autumn, we are doubling access funds and, from September, universities will be able to use a proportion of those funds to provide support and help for new access, and not merely for hardship among those who are already at university. We are also working with the university sector as a whole to link individual universities with schools and their communities, so that pupils can experience university life well in advance of deciding from the options available.
    Mr. Sheerman: That is quite a good answer, but my right hon. Friend could do better. We need to acknowledge the seriousness of the fact that the best universities for teaching and research are dominated by entrants from the private sector, from the best grammar schools, from comprehensives in affluent areas of the country and from sixth-form colleges. In the top 40 to 50 universities, the continued exclusion of students from average comprehensives who get three As at A-level is a national tragedy and a scandal. Will my right hon. Friend put the profile on the matter and make it a top priority to get something done about it?
    Mr. Blunkett: I shall try to do better, and will do so by following what we are already doing, which is holding detailed meetings with the university sector and the Higher Education Funding Council to achieve precisely what my hon. Friend rightly wants. It is true that in the West Riding of Yorkshire, in which his constituency used to be incorporated, more students from comprehensive schools went to Oxford and Cambridge in the days of Alec Clegg than do so now. The way to achieve a real transformation is not only to increase expectations and get the universities to be more embracing in their admissions policy but to transform the standard of education in schools so that every child has that chance.
    Sir Sydney Chapman: Is it the right hon. Gentleman's view that more students will go to university from mainstream comprehensives as a result of

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    the introduction of tuition fees and the abolition of the maintenance grant? On reflection, does he not bitterly regret that it is under a Labour Government that our state education system will become no longer free at the point of access?
    Mr. Blunkett: I bitterly regret the fact that the Conservatives put a cap on entry to higher education; that they cut the unit cost by 40 per cent. and reduced quality; and that they did not concentrate on lifting standards for all children in our schools to get them into university. I am pleased that, from this autumn, an extra 1 per cent. of those leaving school—comprehensive or otherwise—are taking up higher education. We have every intention of extending that in future.
    Mrs. Anne Campbell: Will my right hon. Friend join me in congratulating King's college, Cambridge, which admits more than 90 per cent. of its students from the state sector? Does he welcome Cambridge university's advertising campaign to encourage more students from the state sector to apply?
    Mr. Blunkett: Yes, I applaud what is being done by King's college and by students at Cambridge, who are reaching out—visiting, linking with and mentoring students in schools across the country. I just wish that it were happening in all colleges and all universities.
    Mr. David Willetts: May I tell the Secretary of State that my book, "Why Vote Conservative?" has a companion volume, "Why Vote Labour?", which has much less to say about raising educational standards? Following his letter to me yesterday about university applications, will he confirm that, during the debate on the Teaching and Higher Education Bill, Ministers deployed statistics that were embargoed by the Universities and Colleges Admissions Service and showed that the proposed introduction of tuition fees is having a significant impact in reducing applications to Scottish universities from English students?
    Mr. Blunkett: I am inclined to read from another of the hon. Gentleman's books, "Is Conservatism Dead?"—the answer to which is yes. The answer to his question is no. Ministers did not use embargoed information. As I told him in the letter, the information was not made available until 4.30 pm on Tuesday, so Ministers could not have used it.

    Teacher Shortages
    Mr. Tim Boswell: What plans he has to modify teacher qualifications to take account of shortages. [43761]
    The Parliamentary Under-Secretary of State for Education and Employment (Ms Estelle Morris): Ensuring that there are sufficient, well-trained, high-quality teachers is central to our aim to raise standards. We have no plans to boost recruitment by lowering the entry requirements to the profession.
    Mr. Boswell: The hon. Lady will be aware from correspondence between us of some hard cases concerning the transition between the licensed and the
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    registered teachers schemes, and difficulties when somebody wishes to teach at primary level but does not have a degree in one of the national curriculum subjects. Nobody in the House would wish in any way to devalue the qualified teacher status or to reduce standards, but, given the growing teacher shortage, does she agree that is essential that the rules are interpreted as flexibly as possible to ensure that willing teachers are not deterred from the profession of their choice?
    Ms Morris: For once, I am in total agreement with the hon. Gentleman. I assure him that his constituent, Miss Morgan, who, if my memory serves me correctly, is seeking a place on a bachelor of education course, is fully entitled to do so given her degree. I am happy to reassure the House and those beyond it that nothing in the entry requirements to initial teacher training demands that one must have a degree in a national curriculum subject. Of course, by the end of the training course, one must have the necessary subject knowledge in order to teach effectively, but there is no bar to ITT if one does not have a degree in a national curriculum subject. If any hon. Member knows of any constituent who finds such a difficulty when they apply for teacher training, I would be most grateful to hear of it and would make the Government's views known directly to the initial teacher training institute concerned.
    Mr. Gerry Sutcliffe: Will my hon. Friend look at the process of postgraduate certificates of education and of the clearing house through the graduate teacher training regime, as some things do not seem to match in that area? The entire process seems to be becoming disreputable.
    Ms Morris: My hon. Friend is right; the subject needs looking at. There is a problem about the timing of applications and the way in which different institutions deal with them. We are determined that those who wish to apply for teacher training are able to do so as easily as possible and that institutions providing courses can choose the best and most suitable candidates. I am not entirely convinced that that is happening at the moment; we have the matter under review.
    Mrs. Theresa May: Does the Minister accept that the problem of teacher shortages is creating a growing crisis in our schools? Yesterday, it was reported that the chief inspector of schools, Chris Woodhead, called on the Government to take action to redress the problem. So far, the Government have produced a cinema advertisement and a plan for what the Minister for School Standards describes today in The Sun as a "super teacher grade", which is creating much concern in staff rooms. Will the Minister guarantee that, during this Parliament, there will not only be sufficient teachers to stand up in front of pupils in schools across the country but every child in a secondary school will be taught in every subject by a teacher who is a specialist in that subject?
    Ms Morris: I welcome the hon. Lady to her position on the Front Bench. This is the first opportunity that I have had to do so, although we have spent many months in Committee together, and I feel that we already know each other reasonably well. I remind her that being new to the Front Bench does not mean that she can wipe away

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    18 years of Conservative Government. Her comments were amazing coming from somebody whose Government left a crisis in teacher recruitment. Year after year, we saw the number of people applying for teacher training courses decreasing, and the previous Government took no action.
    We inherited that situation, and, in the past 12 months, we have taken action and we shall continue to do so. We have provided £10 million for secondary subject shortage schemes; there are two new employment-based routes; we have established the General Teaching Council; we have set standards in initial teacher training; we have run taster courses for shortage subjects and targeted particular groups. The hon. Lady referred to the advertising campaign. That has led to about 1,000 new inquiries every week from people who might be interested in teacher training. Our record over 12 months of trying to improve teacher recruitment stands up very well compared with the inaction of the previous 18 years.

    Ethnic Minorities
    Ms Karen Buck: What plans he has to promote equal opportunities for ethnic minorities in training and employment. [43762]
    The Parliamentary Under-Secretary of State for Education and Employment (Mr. Alan Howarth): We attach great importance to ensuring that people from ethnic minorities are not disadvantaged in training and employment. The Department for Education and Employment is committed to mainstreaming race equality in all our policies, programmes and services. That is part of our strategy across Government to build an inclusive society.
    Ms Buck: Does the Minister agree that it is unacceptable that half of London's young black men are unemployed? Is he aware that there is genuine concern that the training and enterprise councils are not tailoring all their employment and training programmes to meet the skills deficit of young black men? Will he give us an assurance that he will review the TECs' performance in that respect, in consultation with representatives of black and ethnic minority groups?
    Mr. Howarth: I share my hon. Friend's deep concern about the problem she describes, which is particularly severe in London. The rates of unemployment among people from ethnic minorities are twice as high as those for white people. Across the country, the position deteriorated during the last 10 years of Conservative Government, but it is particularly concerning among young black people, for whom, as my hon. Friend says, the figure is vastly higher. I congratulate her on her strong personal commitment to improving equal opportunities in the part of London that she represents and to supporting our strategy across the country.
    We share my hon. Friend's concern about the unequal opportunities that members of ethnic minorities appear to have had in TEC-delivered training programmes. We have introduced a national minimum standard and required TECs to set demanding targets to deal with the problem.
    Mr. Michael Fabricant: I remind the Minister that he was a Minister in the very Government
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    to whom he referred. Will he confirm that the way to improve job opportunities for black people and other ethnic minorities in London and elsewhere is to instil in them a work ethic and improve their job and training opportunities, not to introduce a quota system for employers?
    Mr. Howarth: I should be sad to think that the hon. Gentleman was complacent about the position that the previous Conservative Government allowed to develop; I was not, as he knows. There is no question of imposing quotas. We are determined to ensure equal opportunities because Labour Members find racial discrimination abhorrent.
    Given that there is no significant disparity in advanced level and other adult qualifications between members of ethnic minorities and others and yet there is a disturbing gap in employment levels, part of the explanation must lie in employers' attitudes. We have to find the most constructive and effective ways to ensure that culture and attitudes change so that members of ethnic minorities get the opportunities which the hon. Gentleman, like all hon. Members, surely wants them to have.
    Mr. Derek Foster: Does my hon. Friend agree that, if we are to keep faith with black and Asian communities, we must give the matter the highest priority? Will he look again at the modern apprenticeship scheme, where only 2 per cent. of the participants are black and Asian young people?
    Mr. Howarth: My right hon. Friend is right: we must do very much better in a range of Government-funded and training and enterprise council-delivered programmes. I accept the anxiety that he expresses about the poor performance of members of ethnic minorities in modern apprenticeships.

    Student Loans
    Mr. Phil Willis: What plans he has to allow part-time further education and higher education students to have access to income-contingent loans. [43765]
    The Minister for School Standards (Mr. Stephen Byers): The Teaching and Higher Education Bill contains provisions that will give the Government the power to make support available to part-time students by way of income-contingent loans.
    Mr. Willis: On 21 April, the Under-Secretary of State for Education and Employment, the hon. Member for Pontypridd (Dr. Howells), said in the Standing Committee on the Teaching and Higher Education Bill that the Government intended to move to resource accounting in 2001–02 and to use the student loan debt as a "balance sheet asset". Can the Minister confirm that? In those circumstances, what earthly reason is there for not allowing part-time students to have access to income-contingent loans from 2001?
    Mr. Byers: The year 2001 will take care of itself when it arrives. We must give the Government the power to provide part-time students with access to

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    income-contingent loans. The Bill enables us to do that. In 2001, we may be able to make the finances available to secure access to those loans.
    We are putting measures in place before then, because current part-time students need support. That is why my right hon. Friend the Secretary of State announced on Monday access to a fund for part-timers who are at present in work and who might become unemployed. He also announced that, for the first time, part-time students would have access to the access fund, and the money for the access fund was doubled. Practical steps are being taken now to offer new opportunities to part-time students—we are not waiting until 2001.
    Mr. Derek Wyatt: One of the great things that we did this century was to create the Open university. Will Open university students qualify for part-time funding?
    Mr. Byers: Open university students will be in the position of other part-time students. The year 2001 may well be the time when they will have access to income-contingent loans. They will have access to the new measures announced by my right hon. Friend the Secretary of State on Monday, and that will make a real difference to many of them.
    The Government are seized of the fact that Open university students are one of the categories of students for whom education has not been free. People speak of free access to education, but that is simply not the case. We believe that the status quo is not an option. Change must and will take place to extend opportunities and to provide higher education institutions with the money that they need.

    Standard Spending Assessment (Worcestershire)
    Mr. Peter Luff: What was the real-terms percentage change per pupil in the education standard spending assessment of Worcestershire for 1998–99 compared to 1997–98. [43766]
    The Minister for School Standards (Mr. Stephen Byers): The real-terms increase was 1.85 per cent. per primary pupil and 1.21 per cent. per secondary pupil. That amounts to an extra £94 for every primary pupil and an extra £106 for every secondary pupil.
    Mr. Luff: Does the Minister understand that, notwithstanding those figures, school budgets are being cut? Most parents, teachers and governors in Worcestershire think that, when the Prime Minister spoke of "education, education, education", he meant "education cut, education cut, education cut". Will the Minister give an early—preferably urgent—pledge that, next year, Worcestershire will have an increase at least equal to that of other education authorities, and preferably more, to make up for this year's frankly shocking settlement?
    Mr. Byers: The hon. Gentleman is letting his prejudices get in the way of fact. The reality is that an extra £106 will be provided for every secondary pupil in Worcestershire this year. That stands in stark contrast to what occurred in the five years between 1992 and 1997—a period in which the hon. Gentleman was a Conservative
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    Member of Parliament for Worcestershire—when there was a real-terms cut of £177 for every secondary school pupil in Worcestershire. The facts are simple: in the last five years of the Conservative Government, there was a real-terms cut of £177 for secondary pupils in Worcestershire, and, one year into a Labour Government, there has been an increase of £106 for every secondary age pupil in Worcestershire. Those are the facts—not the prejudice of Opposition Members.

    New Deal
    Laura Moffatt: What plans he has to help unemployed people over the age of 25 years move from benefits into work. [43767]
    The Minister for Employment, Welfare to Work and Equal Opportunities (Mr. Andrew Smith): On 29 June, the new deal for those aged 25 and over who have been out of work for more than two years will get under way across the country. That will be another manifesto promise kept. In addition, in November we shall start pilot programmes bringing more intensive help to those who have been out of work for 18 months or a year. We have also introduced five prototype employment zones, which began in February.
    Laura Moffatt: Does the Minister agree that the extra £100 million for the long-term unemployed will help my constituent Maureen Wells? She has been a carer since she was a newly wed and now wishes to take her place in the work force, but she must have her self-esteem and employability improved. Will the new deal partnership help her and give her the time to sort herself out so that she may take her rightful place in full employment?
    Mr. Smith: Yes, indeed. A very important feature—and, according to the evidence so far, a very effective feature—of the new deal is that unemployed people are receiving personal counselling with the continuity of support that a dedicated personal adviser can provide, coupled with access to a range of specialist advice and help, including training courses. That support will be available for the long-term unemployed under the new deal which starts on 29 June and under the pilots, which have been announced for November and to which my hon. Friend referred.
    Mr. Nigel Evans: Will the Minister do two things for unemployed people over 25 who live in the Ribble Valley? First, will he congratulate Skillshare—an organisation of volunteers and others who provide education for the over-25s, among others, and allows people to share their skills with the unemployed so that they have a better chance of education or employment? Secondly, will he contact Lancashire county council, because that Labour-controlled authority is stopping the £26,000 in funding for Skillshare? The organisation will close at the end of the month unless the county council continues that funding, which is essential for the unemployed in my area.
    Mr. Smith: I join the hon. Gentleman in congratulating organisations such as Skillshare and other voluntary and community bodies that are dedicated to the education and training needs of the unemployed. They certainly need support, and they are getting it through the new deal.

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    As to the hon. Gentleman's second point, I shall ensure that the new deal partnership in his area—which is almost certainly already in contact with Skillshare—investigates what means might be found to make sure that the invaluable services that Skillshare provides will continue to be available to local unemployed people.
    Mr. Mike Gapes: The Minister referred to pilot schemes for those who have been unemployed for a long time. Is he aware that many people who have suffered long-term unemployment have complex personal problems and difficulties? For example, many of them do not have great levels of literacy. Will the Minister ensure that assistance is given to people with literacy difficulties to help them enter a technological and increasingly information-based employment market?
    Mr. Smith: Yes. The assessment of the basic skills help that people need is an important feature of the gateway in the pilots which will begin in November. It is crucial that appropriate, effective and high-quality courses are available for the older and long-term unemployed as well as for the young unemployed so that they may achieve those skills that are a key component of employability and can do so much to enhance their prospects of gaining rewarding work.
    Mr. Damian Green: Why are the Government providing relatively less help for the unemployed who are over 25, when all the evidence shows that they are much more likely to need help to find work? Does that not suggest a gap between pious rhetoric of the policy and policy itself, which is dictated largely by short-term presentational gimmicks?
    Mr. Smith: First, I congratulate the hon. Gentleman on his appointment to the Front Bench.
    The priorities that we set out in introducing the new deal for the young unemployed and the new deal for the long-term unemployed reflect what we said and, indeed, go beyond what we promised in our manifesto. We cannot forget that youth unemployment runs at well over twice the level of unemployment across the rest of the work force.
    Everyone knows the particular damage to young people and to the community at large that is inflicted by exclusion from the opportunities and the responsibilities of work at an older age, but our new deal programmes are designed to provide the right assistance, right across the age range. As well as offering counselling and continuity of support from a personal adviser, the new deal for the long-term unemployed offers a £75 a week subsidy for the first six months of employment for someone who has been out of work for more than two years, and the opportunity to be educated or to train for up to a year. It really is a new deal for the long-term unemployed. The public will ask the hon. Gentleman why the previous Government did nothing about that.

    School Transport
    Mr. David Heath: What plans he has to review arrangements for home-to-school transport. [43768]
    The Parliamentary Under-Secretary of State for Education and Employment (Ms Estelle Morris): My right hon. Friend the Secretary of State has no plans to review the arrangements for the provision of home-to-school transport.
    Mr. Heath: Given the large amount of money that some local authorities are forced to spend on school transport—Somerset, for example, has to spend £5.3 million, which is £26,000 a day, on bussing children around—and, given that the precise distances involved, such as the two-mile and three-mile limits, and the appropriateness of particular routes are major bones of contention between local authorities and families with children, does the Minister agree that it is time that the Education Act 1944 was thoroughly reviewed to consider the provision of a comprehensive and fairer system of school transport?
    Ms Morris: I appreciate that school transport is an important issue for local authorities in constituencies such as the hon. Gentleman's. It is one of the issues to which they must give careful consideration when allocating resources.
    The key point is that it is up to the local authority to make decisions about school transport, as long as it is acting within the law. The law says that transport is necessary for a pupil of a compulsory school age to attend the nearest suitable school if it is beyond statutory walking distance. Above and beyond that, his local authority, as well as many others, has flexibility to offer financial assistance where it thinks that is appropriate. It is up to local authorities to respond to local situations.
    Mrs. Gwyneth Dunwoody: None the less, my hon. Friend might have a gentle word with some local authorities about the quality of school transport. Although some counties are working hard to ensure that no contracts are handed out to substandard firms, does she agree that some buses that are on the road carrying school children need to be put off it as soon possible?
    Ms Morris: My hon. Friend is right. She has a long-standing interest in the issue. The Department keeps it under review, and will continue to do so.
    Mr. Jonathan Sayeed: But this Labour Government cut a £4.3 million grant to Bedfordshire county council which the previous Conservative Government gave to it. It is likely that school transport will be cut in Bedfordshire, because the Government have cut the money to it. Will the hon. Lady consider the money that rural parts of Britain are receiving from the Government, and do better? Rural parts of Bedfordshire need help, which the previous Conservative Government gave but which this Labour Government have denied.
    Ms Morris: The hon. Gentleman has a bit of a cheek. One reason why school transport was cut year after year was that, year after year, local authorities had to manage with a diminishing budget from the Conservative Government. Local authorities now have more money to

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    spend on education—an extra £850 million this year, which means that they will be able to decide to put money into school transport, as well as into school standards.
    Mr. Cynog Dafis: Does the Minister agree that it is important not just to provide transport for school children, but to enable them to walk and cycle to school? Is the Department working closely with the Department of the Environment, Transport and the Regions to develop the safe routes to schools scheme that would enable children to arrive safely at school, and also make an important contribution to reducing the amount of road traffic?
    Ms Morris: The hon. Gentleman is right to ask that question. My Department has been working closely with Transport Ministers on the forthcoming White Paper. Making it safe for children to walk to school is crucial. There has been a massive increase in the number of children who are being driven to school, often for very short distances and to destinations that are not on their parents' way to work. We want to encourage children to walk to school, but we know that we cannot do that unless we can ensure that conditions are as safe as possible. That is what parents want and have a right to expect.
    This is an important agenda, and I am sure that, like me, the hon. Gentleman looks forward to the publication of the White Paper.

    New Deal (North-east Lincolnshire)
    Mr. Austin Mitchell: When he plans to extend the new deal to older workers in north-east Lincolnshire. [43769]
    The Minister for Employment, Welfare to Work and Equal Opportunities (Mr. Andrew Smith): The new deal for people aged 25 and over will start on 29 June. In addition, the area will benefit from the November new deal pilots, as South Humber is one of the districts in which the private sector has been invited to tender. We are consulting on the content of that programme.
    Mr. Mitchell: This is mildly sycophantic on the Mackinlay scale, but I am delighted with my right hon. Friend's answer. I know that he is determined to extend the benefits of the new deal to older workers who need and deserve the boost—the help and support—that he has been giving to the young unemployed.
    I hope that my right hon. Friend will continue to bear in mind the urgent needs of north-east Lincolnshire. We have not only higher unemployment, while unemployment in the rest of the country is still falling, but—on a new basis of calculation—one of the highest unemployment levels, if not the highest, in the whole of Yorkshire and Humberside. The need is urgent in north-east Lincolnshire.
    Mr. Smith: I agree with, and welcome, my hon. Friend's commendation of the programme, and its relevance to the needs of his constituents. I assure him that, whatever is the private sector lead, it will—together with the new deal partnership—engage in close consultation with the local community and local business
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    to ensure that the particular needs of those older long-term unemployed people are dealt with effectively, and in a way that conforms to the high-quality standards that are the hallmark of the new deal.
    Miss Anne McIntosh: Does the Minister agree that, in north-east Lincolnshire, as elsewhere—
    Madam Speaker: Order. Not "as elsewhere". The question applies specifically to north-east Lincolnshire.
    Mr. Edward Leigh rose—
    Madam Speaker: I call the hon. Member for Gainsborough (Mr. Leigh). He represents Lincolnshire.
    Mr. Leigh: In view of the particularly helpful question put to him by the hon. Member for Great Grimsby (Mr. Mitchell), will the Minister consider extending the new deal to him in the forthcoming Government reshuffle? Some of us admire the hon. Gentleman.
    The Minister ought to remember that unemployment is very high in Lincolnshire, especially in rural areas. I hope that he will not forget our problems, rather than directing his attention entirely to north-east Lincolnshire.
    Mr. Smith: We all admire my hon. Friend the Member for Great Grimsby. As for the needs of the part of Lincolnshire to which the hon. Member for Gainsborough has referred, partnerships in the new deal across the country have been invited to bid to have the opportunity to be one of the 20 pilots alongside the private sector pilots to which I referred. We shall evaluate those bids against the effectiveness and quality of what they offer the local community, and how much innovation they show in working with local authorities, training and enterprise councils and local private business.

    University Students
    Mr. Howard Flight: If he will make a statement on the number of new students at British universities (a) starting in autumn 1998 and (b) who started in autumn 1997. [43771]
    The Minister for School Standards (Mr. Stephen Byers): Some 507,000 students domiciled in England started either full or part-time courses in 1997. It is too early to say how many students will start in autumn 1998, but I am sure that the House will be delighted to know that, so far, applications from 18 to 21-year-olds have increased this year compared with last year.
    Mr. Flight: It is pretty poor that the Government do not know how many students will be going to university this autumn. Given the need for overall planning and budgeting, I see no reason why the figures should not be available. If, as I suspect, there is no increase, does the Minister attribute the outcome to the unwise changes that the Government have made, such as the introduction of tuition fees and those made as a result of the Government's particular interpretation of the Dearing report?
    Mr. Byers: There are two principal reasons why I cannot give the hon. Gentleman the figures for this

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    autumn. First, the A-level results are not yet known, which is a significant factor for entry into university. Secondly, mature students are applying ever later in the cycle. This year, as in previous years, mature students are applying far closer to the start date than they did a few years ago. It ill becomes a Conservative Member to talk about access to higher education when his party not only starved the sector of resources, but put a 30 per cent. cap on the number of young people who could enter higher education. That was not merely a bureaucratic cap; it was a cap on the aspirations of tens of thousands of young people who had the qualifications but who, under a Conservative Government, never had the opportunity of going on to higher education, which their talents and abilities merited. No more of that under this Government: we shall extend and expand higher education. No more caps on aspirations: we shall meet the needs and desires of young people.
    Mr. Derek Twigg: On Monday evening, during the debate on the Teaching and Higher Education Bill, in response to a question from my hon. Friend the Member for Cambridge (Mrs. Campbell), the shadow Secretary of State said that the Conservative party would introduce top-up fees. To be fair to him, he said that it would not be widespread. When challenged to say what areas would be included, he would not answer. Would not top-up fees have a detrimental effect and prevent wider access to higher education?
    Mr. Byers: My hon. Friend is absolutely right. The hon. Member who now speaks for the Conservative party on education matters wants to create an Ivy League of university establishments, which would divide the sector. As a result, many young people would not be able to go to the university of their choice. That is a good example of the policies pursued by the Conservative party, and it shows why the Conservatives will not be returned to office until they recognise the plot, which for education is quality provision in schools, further education colleges and universities for all our young people, not just for a few.

    EU Tobacco Advertising Directive
    Mr. Graham Brady: When he plans to publish an employment impact assessment of the effect of the EU tobacco advertising directive on UK employment. [43772]
    The Minister for Employment, Welfare to Work and Equal Opportunities (Mr. Andrew Smith): A preliminary regulatory appraisal was produced as part of the parliamentary scrutiny of the EU proposals and was deposited in the Library on 2 December. An updated assessment, including any employment effects, will be included in the White Paper, which my right hon. Friend the Secretary of State for Health will publish later this year.
    Mr. Brady: I thank the Minister for that response. Does he share my concern that an employment impact assessment after the Government decided to support the directive is of questionable value? Does he further share my concern that the Employment Commissioner, Mr. Padraig Flynn, has explicitly ruled out conducting an
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    employment impact assessment across the European Union? If the Government think that such an assessment is worth doing, why does not the Commission?
    Mr. Smith: As I think the hon. Gentleman should know, when the Select Committee on European Legislation and Standing Committee B examined this proposal, they debated these matters in great detail and decided that the proper procedure had been complied with throughout. The hon. Gentleman and his hon. Friends should take note of the fact that 61 per cent. of respondents to the 1996 Office for National Statistics attitudes survey said that they did not think tobacco advertising should be allowed. The Government are not only implementing an important manifesto commitment, but going with the will of the people and implementing proposals that will be good for the public's health.
    Mr. Peter L. Pike: We cannot disregard the employment implications altogether, but is it not somewhat sad that Conservative Members still do not believe that tobacco advertising has implications for the health of our constituents. We only have to look at what is happening in our hospitals—the deaths, amputations and other operations—to realise that the directive is right and should be fully supported by hon. Members on both sides of the House.
    Mr. Smith: My hon. Friend is right. This is a manifesto commitment. It will save lives and it is good for health. It makes sense to get on with it.

    Postgraduate Researchers
    Mr. Tam Dalyell: If he will meet the Committee of Vice-Chancellors and Principals to discuss problems faced by postgraduate researchers on temporary contracts. [43773]
    The Parliamentary Under-Secretary of State for Education and Employment (Mr. Alan Howarth): My right hon. Friend the Secretary of State has not been approached by the Committee of Vice-Chancellors and Principals on this issue. He would, of course, consider carefully any representation that it wished to make.
    Mr. Dalyell: Are temporary contracts a satisfactory way in which to reward researchers, who may be in their 40s and 50s and who have depended on this form of remuneration all their lives?
    Mr. Howarth: My hon. Friend is well aware that this is a long-standing, very difficult and important problem. He will, I hope, at least share my pleasure that a concordat relating to contract researchers has been agreed between the CVCP, other bodies representing universities and colleges, the research councils, the British Academy and the Royal Society. The signatories are committed to improving the terms and conditions of employment of contract staff, to training and careers guidance, to appraising and reviewing their development and to the provision of maternity and long-term sickness benefit. A group has been established to monitor the concordat's implementation and to identify and encourage practice. It is chaired by Sir Gareth Roberts, whom my hon. Friend knows well. The group hopes to report in the autumn.

Economic and Fiscal Strategy
3.30 pm
The Chancellor of the Exchequer (Mr. Gordon Brown): With permission, Madam Speaker, I should like to make a statement. The comprehensive spending review has been the most comprehensive and in-depth examination of Government spending and priorities for many years. The results of it will be announced in two stages. Today, I will announce an entirely new regime to apply to public spending control: a fundamental reform of the rules that govern our public finances. Later next month, I will set out the results of a wholesale revision of our spending priorities and the purposes of Government support in each Department.
The central challenge is to combine prudence and stability in public finance with investment and reform in public services. There are four key elements to our approach. First, the new regime must be consistently prudent and responsible. Strong public services cannot be sustained on weak public finances. The spending plans that we set must ensure sustainable finances over the whole economic cycle—rigorous financial discipline that, together with monetary stability, ends once and for all the boom and bust that for 30 years has undermined stability, hindered long-term investment in our public services and prevented this country from achieving its potential.
That is why we will enforce two fiscal rules: the golden rule that, over the cycle, current spending is covered by revenues, and the sustainable investment rule that there must be a prudent debt-to-gross domestic product ratio.
Secondly, in each Department, we are assessing radically what Government do and how and where they spend their money. The comprehensive spending review results, when published, will not only show changes in priorities within and between Departments, but must redefine the role of Government, so that they are enabling and empowering, not centralising and controlling. Where Government should be acting, we will do more. Where Government is unnecessary or restrictive, we should not act at all. The results of the spending review will mean reform and modernisation.
Thirdly, in respect of publicly owned assets, the essential test should be how best to meet the public interest, and we will, therefore, propose a radical change in Government policy towards investment and the assets that Government hold. Finally, where Government spend on public services, they should link spending explicitly to modernisation and reform for each Government Department. Where there is extra money, it will be tied to specific outputs. It will be investment, but only in return for reform.
First, therefore, the framework that follows for the future. For 30 years, British public spending has been characterised by the annual spending round rather than long-term planning; by the year-to-year bidding culture, with all the problems of hurried end-of-year corrections, instead of the strategic planning of resources; by incremental bids that are not tied to outcomes, rather than spending to achieve defined results. Too much attention has been given to current spending and muddling through, too little attention to long-term investment and reform. There has been too much focus on the public sector acting in isolation from the private sector and not enough long-term partnership with it.
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To break decisively with this old-fashioned and short-termist culture, we will first abolish the annual spending round. We will now set Departments firm plans and fixed budgets for three years at a time. Secondly, to ensure that our fiscal rules are met and to make possible long-term investment in our infrastructure, there will now be a separate capital budget and a separate current budget for each Department. Thirdly, in place of incremental budgeting, we will lay down new targets for efficiency and performance for every Department. Fourthly, instead of the old, sterile conflict between public and private sectors, we will now promote new partnerships between public and private sectors. Fifthly, for the first time, the Government are legislating for a Code of Fiscal Stability which requires more open and comprehensive reporting of the public accounts. The key assumptions have been and will continue to be audited by the independent National Audit Office.
My right hon. Friend the Chief Secretary to the Treasury, whom I thank for all his work in the review, and I are today publishing detailed figures both for the current balance and for capital spending. We will set out in these documents not only the public sector's net cash requirement—the PSBR—but the internationally accepted accruals measure of public sector net borrowing, which will provide a better guide to the underlying state of public finances—that is the public sector net borrowing. Copies of the Economic and Fiscal Strategy Report will be available in the Vote Office.
All these changes—the end of the annual spending round, a long-overdue distinction between investment and current spending, a new emphasis on outputs, more effective partnership between public and private sectors and proper public scrutiny of how Governments are meeting their fiscal rules—make clear the importance that the Government attach to reform and modernisation as the foundation for both sound finance and good public services.
I turn now to the public finance plans that follow from the fiscal rules. The Government inherited a national debt which doubled in the early 1990s. In the last economic cycle, debt as a proportion of national income rose by 18 percentage points and is now around £15,000 for every family in the country. As a result, we are paying more in interest payments than we spend on schools, or on housing and law and order put together.
In addition, we inherited an annual level of public borrowing that was unacceptably high. In the final year of the previous Government, the public sector net cash requirement was £23 billion, and public sector net borrowing was £27 billion. In the first year of the Labour Government, with the tough decisions that we took in our first Budget in July, public sector net borrowing fell last year from £27 billion to £6 billion. We kept within the spending ceilings that we inherited. In addition to a £400 million increase in the Budget for pensioners, we were also able to put £2 billion more into the health service and £2 ½ billion more into education.
Those who said that we would fail to meet our targets and would fail to show the discipline necessary have been proved entirely wrong. Indeed, over the first two years of the present Government, through setting tough departmental limits, spending is within budget as promised. But Britain must have sustainable public finances, not just for one year or two, but throughout the economic cycle. British public spending, which,

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for decades, has been denied a long period of consistency and stability, must now be subject not only to the framework for the future that is prudent, but to clearly defined limits.
As a result of the plans that I am announcing today, we will lock in the fiscal tightening that I announced in the March Budget, not just for this financial year, but for the next financial year as well. Over the three years from the time we came into Government—that is to 1999–2000—the fiscal tightening amounts to 2 ¾ per cent. of national income, measured by the public sector net cash requirement, and 3 ½ per cent. of GDP measured by public sector net borrowing. That is more than £25 billion since 1996–97. This is the fiscal tightening from 1996–97 to 1999–2000 that we promised in the Budget.
To meet our first rule—the golden rule—the Government will plan for balance on the current budget over the economic cycle as a whole. For 35 years, current spending has grown by an average of nearly 3 per cent. a year in real terms. Within that average, annual changes have ranged from plus 11 per cent. to minus 3 per cent. From 1989 to 1994, a surplus on the current budget of over £10 billion was transformed into a deficit on the current budget of £38 billion. So, in the same way as our economy has suffered from the instability of boom and bust, public spending has suffered from the instability of stop and go. The uncertainties caused by that short-termist approach have frustrated the long-term planning of decent public services.
Let us be clear about who has suffered first and who has suffered worst: the vulnerable who depend most on our public services. Imprudence in public spending is of no help to those who rely on public services being there when they need them.
In the previous economic cycle, Britain ran an average deficit on the current budget of 1 ½ per cent. of GDP—the equivalent of an annual deficit of £12 billion. By contrast, the plans that we publish today will ensure that, over the full economic cycle, Britain will have a current budget balance—current expenditure covered by revenues over the cycle—which other Governments have promised but not achieved.
So that we can deliver sustainable public finances—and, thus, sustainable public services—over the whole cycle, the plans that I am announcing today deliberately take a more cautious approach than previous plans in meeting the fiscal rules. That is why we need to plan for a surplus on the current budget over the next three years. The plans that we publish today are for a surplus on the current budget, next year, of £7 billion; in 2000–01, of £10 billion; and, in 2001–02, of £13 billion.
Within that new framework, I can confirm that current spending will grow in line with our cautious estimate of the trend rate of growth of the economy, which is 2¼ per cent. in real terms each year over the next three years. Current spending is now planned to be 39¼ per cent. of GDP every year for the rest of the Parliament.
It is because we are showing that prudence in public finance and because we are prepared to modernise in choosing our priorities that we will be able to invest in long-term improvements in our key public services—education and health—and also fulfil our commitments to those such as the elderly, who depend on public services.
As everyone knows, the public will be better served if we also ensure the best value for money and the most efficient possible use of resources. Inefficiency in the
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public sector is a cost which could be afforded by a Government who had a vested interest in proving that the public service could not work and believed in a philosophy of private, good; public, bad.
Inefficiency will not be tolerated by a Government who will modernise the public sector so that this country is properly equipped for the future. That is why, in our spending review, there will be no place for new spending unless there is reform through clear targets, new standards and rigour in the use of money. I can confirm that each Department will set efficiency targets as a result of our review. Each Department will also be set new quality standards. I can confirm that, as part of best value, we will introduce an inspectorate for housing that will help to improve management of council housing, set new standards for performance and guarantee the high quality of investment.
Before allocations are made from the comprehensive spending review, Departments will have to demonstrate how they propose to root out unjustified subsidies. Therefore, not only will we set ourselves fixed budgets for three years, but we are building in new disciplines to ensure that investment is conditional on reform. Just as those new disciplines will apply to current spending, they will be applied also to capital investment.
Our second fiscal rule is to ensure a stable and prudent ratio of debt to national income—the sustainable investment rule—which is essential if we are to contain interest payments on the national debt. If the Government simply left the debt-to-GDP ratio at the level that we inherited from the previous Government, we would be making interest payments of £25 billion more over the Parliament, at a cost to public services.
In the interests of greater stability, I propose to bear down on the debt-to-GDP ratio. The plans that we are publishing today show that the debt ratio falls from 45 per cent., when we came into government, to 40½ per cent. next year; and, in the following years, down again, to 39½ per cent., and to 38¼per cent. The comparable figure in the European Union is 78 per cent.
Britain will now plan on the basis that our debt-to-GDP ratio will be 40 per cent. or lower. For the first time for decades, we are set, over the cycle, to have both a current budget in balance and a prudent debt-to-GDP ratio. As a result of our two fiscal rules, public sector net borrowing, which was more than 3 per cent. of national income in the most recent economic cycle, will average 0.2 per cent. for this Parliament, 0.2 per cent. for next year, 0 per cent. for the following two years and 0.1 per cent. for the year after that. We will meet the fiscal rules that are laid down in the Maastricht treaty.
It is only because we have set this tough framework—based on strict control of public spending, a prudent debt-to-GDP ratio and a fiscal tightening—that it is possible to take the necessary action to reverse the chronic underinvestment in our country's education, health, transport and housing infrastructure and to re-equip Britain as a modern nation. In recent years, total investment, public and private, in Britain has fallen as a share of national income—it is far behind the rates of our competitors and those that we achieved in the 30 years after the war.
If Britain is to renew its infrastructure, as it should, we must be prepared to break with old dogmas. We will not succeed simply by throwing money at problems or by

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privatising the responsibility for them, so we must be prepared to look at new ways in which to manage our assets and, if necessary, to redeploy them so that they serve the future rather than reflect the past.
The British Government have property, land and other assets worth hundreds of billions of pounds. As we discovered in the first register of national assets, Britain has an accumulation of unused and underused properties and holdings. We can no longer afford a surplus of holdings when we have such a deficit in investment. There is no benefit to us in hoarding assets that do nothing to equip us for the future when we need to build a 21st century infrastructure. No public interest is served by continuing to hold surplus land and buildings that we know are not needed.
The fiscal projections set a new target for central Government to realise for investment around £1 billion a year for each of the three coming years from the sale of surplus holdings that we no longer need. In the next financial year, we will go ahead with the sale of all remaining debt held in British energy. We will realise the value of what we do not need, to invest in what we do need.
My right hon. Friend the Deputy Prime Minister and I will propose a new long-term framework for investment by local authorities to release resources for new investment and to co-ordinate the use of existing assets. Local authorities are now expected to realise at least £2¾ billion a year from property sales—again, that is a sale of what we do not need, to pay for investment in what we do need.
To maximise investment in the renewal of our infrastructure, public and private sectors must work together in a more effective and modern partnership. In the past, the private finance initiative was a means of substituting private investment for public investment—it was an excuse for abdicating responsibility for public investment, so there was no net gain to investment in our country.
As we have shown in our new deal for schools, public-private partnerships work best when public investment succeeds in levering in additional finance from the private sector. Moreover, as the Deputy Prime Minister has shown in the planned investment in the channel tunnel rail link and in London underground, private investment can be mobilised to serve the public interest.
The Government will apply a public interest test. What is the best means—whether through private or public investment—to secure the highest levels of investment in Britain's future, so ensuring the best public services? It is not to demand private ownership as a matter of dogma when it does not serve the public interest, and it is not to maintain state ownership when private and public partnership is the best way in which to advance the public interest.
It is obvious to the Deputy Prime Minister and me—[Interruption.] It is obvious that the levels of investment and efficiency that we need in National Air Traffic Services can be best achieved by a partnership between the public and private sectors, which will give NATS the ability to plan and finance the forward investment that they want to make.
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Safety is paramount: the Government's proposals will ensure that air safety regulation is conducted independently from National Air Traffic Services and is open and transparent. The regulator's remit will be to enforce the toughest safety standards in the world.
My right hon. Friend the Minister of Transport is to make a separate announcement today on the future of air traffic control services. Our preference is for 49 per cent. of the shares, and a golden share, to be held by the Government, and 51 per cent. by private investors, including employees. We will hold consultations on the details of the implementation of the proposals.
The realisation of assets will enable us to invest more in our transport infrastructure, as will our proposals for greater commercial freedom for financially sound regional airports such as Manchester, Newcastle, Leeds-Bradford and Norwich. [Interruption.]
Madam Speaker: Order.
Mr. Brown: I thought that Conservative Members would be interested in plans for new investment in our airports.
The same partnership approach is appropriate for the Commonwealth Development Corporation, which needs new finance for higher investment in developing countries. The Secretary of State for International Development will introduce proposals to sell a majority holding.
We will consider how to extend the existing public-private partnership in the Tote into a broader partnership with the private sector. We are also agreed in principle that a new public-private partnership is the best way for the Royal Mint to take advantage of new commercial opportunities.
Those are four examples of new partnerships being evolved that show that we can make the long-term investment that we need while protecting and safeguarding the public interest. Public investment in reform and modernisation is also a means by which the Government can help to renew the infrastructure.
Under the previous Government, public investment fell below 1 per cent. of national income—to 0.8 per cent.—and we now invest less than our major European partners. The present Government recognise that we must invest properly in our economic and social infrastructure to equip us for the future.
We must invest in our schools and hospitals; our transport infrastructure; our science and technology base; and in building better housing and safer and stronger communities. To meet those challenges for the future, we are setting up a new programme: investing in Britain's future.
Over this Parliament, we will double the level of net public investment as a share of national income, raising it from ¾per cent. to 1½ per cent. Through realising unused and underused assets and being prepared to take tough decisions, we will plan to invest £29 billion a year in our economic and social infrastructure by the end of this Parliament.
In place of two decades of rundown in investment, Britain is now ready to invest in its own future. Our long-term aim will be to maintain the share of investment in national income at this sustainable and prudent level.

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For years, we were told that prudence in public finances could be achieved only at the cost of running down public investment and neglecting public services. Those Conservative years ended with neither good public services nor prudence in public finances.
The framework that I am announcing today means that, with sensible and tough decisions about priorities in every Department in our spending review, this country will be able to ensure that the necessary resources are available for health, education and essential public services. Because of our toughness to modernise, our discipline and reform, our prudence today provides the solid foundation to invest in better schools, hospitals and public services today and tomorrow.
In place of short-termism and neglect of public services, we have a new long-term direction for renewal of our public services and of our country. Prudence and investment in reform are the way forward to creating a Britain that is modern, strong and fair. I commend the statement to the House.
Mr. Francis Maude: So far, the Chancellor of the Exchequer has had a Budget in July last year, a pre-Budget in November, another Budget in March and a mini-Budget in June. Now there is a comprehensive spending review in July. Four Budgets in 12 months is not bad going for a self-proclaimed devotee of long-term planning and consistency.
In today's Financial Times we can read why he has been forced to do all that. It states:
"The announcement is expected to 'focus ministers minds' in the final stage of spending negotiations, says a government member."
We know where that came from—not from the Red Lion, but from the horse's mouth. The statement effectively announces the failure of the Chancellor's comprehensive spending review. It was designed to save money, but it has saved nothing.
We support the reduction in national debt—[Interruption.] We certainly support it, but we should like to know whether all Labour Members support it. If the Chancellor reads the papers, he will find that the reduction in national debt to which he has referred was due to be exceeded under the plans of the past Conservative Government. For him to claim the credit is quite cheeky.
I pay tribute to the Chancellor's courage in adopting a programme of modernisation of the public sector. I assure him that we shall give firm support to his plans to privatise a number of entities. We remember the comments that he and his colleagues made when those issues were debated in the past, and we shall do our best in the coming days to reconcile those remarks with his fulsomely enthusiastic remarks of today. No doubt such a reconciliation can be achieved; we are charitable folk and we shall do our best to seek one, and to give him the support that he deserves for his programme of public sector reform.
It is just a pity that whenever—[Interruption.] The Deputy Prime Minister should listen with enthusiasm because we are the only people who are supporting him; he will not find much support behind him.
The Chancellor's statement is of some importance. We always said that the Government would be a tax and spend Administration. We have already seen the taxes—the equivalent of 5p added to the basic rate of income tax in
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only 13 short months. Today, goaded by broken promises on waiting lists and class sizes, he has gone soft on spending. No one should doubt that today's statement amounts to a fundamental reversal of the Government's economic policy. It is not surprising that press stories over recent days have veered widely between—[Interruption.]
Madam Speaker: Order. The House must settle down and listen.
Mr. Maude: Press stories have veered widely between promoting Brown the lion Chancellor and Gordon the giveaway spender. Today, it is goodbye Iron Chancellor; may he rust in peace.
Can the Chancellor confirm that the Bank of England's Monetary Policy Committee knew of his spending plans last week when it decided to put up interest rates again? If it did not know, how can it be expected to do its job when the monetary right hand does not know what the fiscal left hand is doing? If it knew, was not its immediate decision to raise interest rates a damning indictment of his change of policy? Once again, are not hard-working people paying the price for the Chancellor's mistakes?
On the Chancellor's claim to be abolishing the spending round, what will be the size of the contingency reserve for these three years? If it is substantial, does he understand that there will be a spending round? All his colleagues will wrangle about how it is divided up. If it is not substantial, how will he cope with the unexpected demands for public spending that arise, the necessities that cannot be avoided? Does he really think that the Secretaries of State for Health and for Education and Employment will sit quietly, accept it as it is and not wolf all their dinner at once and come back for more?
Before the general election, Labour made a string of incompatible pledges. It pledged not to raise taxes, to spend more on health and education while cutting spending on welfare, and to end boom and bust. If we had to count the number of times that we have heard the Chancellor and the Prime Minister use the words "boom and bust", we would run out of calculators. On promise after promise, the Chancellor is failing to deliver. He has delivered boom and bust at the same time. Manufacturing is in recession while inflation is rising. He has put taxes up 17 times, the equivalent of 5p on the basic rate of income tax. It is easy to be an Iron Chancellor when all it involves is putting his hand in other people's pockets.
Today, the Chancellor has had to announce that he has lost the battle with his Cabinet colleagues to keep spending down. Will he confirm that in his last set of Budget forecasts, he set three growth options for public spending: ¾per cent., 1½ per cent. and 2¼ per cent? Having failed to get savings from his colleagues has he not he been forced into the slackest, least prudent, least disciplined choice? Is not his central problem his failure to control welfare spending? He promised to cut it, yet every welfare reform so far has cost more, not less. The basic objective of the comprehensive spending review has failed.
Is not the baseline figure fiddled to begin with? Can the Chancellor say how much higher the control total would be without the fiddles to hide billions of pounds of public spending? Has he not changed the rules of the private finance initiative to get debt off the Government's balance sheet without the transfer of risk, which is

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essential? Can he confirm that the Accounting Standards Board is resisting his attempts to fiddle the books in that way? Is not the extraordinary treatment of the channel tunnel rail link, about which he boasted, the most brazen of those fiddles? How does he justify taking the cost of the new deal outside public spending altogether, as if, in some mysterious way, it is not public spending at all?
Will the Chancellor confirm what is said in one of the newspaper reports that mysteriously appeared this morning—that school repairs will in future count as capital spending? Is not the fudging of the difference between capital and current spending at the core of his great boast to be increasing investment? It is a good job that he is increasing public investment because his Red Book shows that private investment in business is scheduled to fall sharply in future years. That is directly because of the economic policies that he has pursued. Will the Chancellor persist, as one of the fiddles, in raiding the lottery for yet another slab of public spending? This is new Labour, new accountancy. It is the Chancellor's contribution to creative Britain.
The reality is that Labour was elected to office on incompatible pledges. To the City, it was an end to tax and spend; to the spending lobbies, it was jam today. The comprehensive spending review was designed to square that circle. The Chancellor has told us today that he has failed comprehensively. The Government made clear promises before the general election that they would not raise taxes but they have. They were going to control inflation, but the Chancellor has missed his target 11 months out of 12. Labour was going to support home owners, but they are all paying more now. It has all gone now. Prudence has been dumped. She was just another photo opportunity.
Mr. Brown: I should start by welcoming the shadow Chancellor of the Exchequer to his new position. I hope that he will enjoy his period in the office. Conservative Members should have some pride in the fact that the new spokesman on financial matters was the Minister who in 1991 personally signed the Maastricht treaty.
The right hon. Gentleman started by saying that he supported us. Then he said that he opposed us. Then he said that he supported us. Then he opposed us. What he revealed as he went on is the extreme right-wing agenda that is now dominant in the Conservative party. He lectures us on debt, but it was his Government who ran up the national debt and doubled it. He lectures us on stop-go, but the worst two economic cycles happened under the Conservative Government when they caused two of the most difficult recessions for our industry. He lectures us on social security, but his Government, by their failure and by causing unemployment, massively pushed up social security spending simply to keep people out of work. He lectures us on tax, but his Government were responsible for 22 tax rises and for raising the amount of tax, against all promises that they made in their election manifesto. He even tried to lecture us on the channel tunnel rail link, but it was his Government's failure which caused all the problems that my right hon. Friend the Deputy Prime Minister had to intervene to solve.
In all those areas, the shadow Chancellor has nothing to offer to the debate, except for one thing—that we should cut spending more. He says that we should cut
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spending and the share of spending. Over the next few months and years, he will have to explain to the British people through debates in the House which hospitals, schools, transport investment and housing expenditure he wishes to cut. We will relentlessly pursue the Conservative party over its real aims for the future of the welfare state.
It is wrong to say that there is any problem with the Accounting Standards Board.
The Monetary Policy Committee makes the decisions. It is independent and able to do so.
The right hon. Gentleman mentioned public spending as a share of national income. It will fall to 39 per cent. during the next three years, as I said in my statement.
Debt interest payments over the next few years will be at a prudent level because we are reducing the share of debt in national income.
We have a programme of investment and reform combined with prudence. During the Conservative years, we had neglect of investment, the run down of our public services, and imprudence and boom-bust in the economic management of this country. We offer the only way forward. The shadow Chancellor will have to go home and think again. The Conservative party is unfit not only for Government, but for Opposition.
Mr. Giles Radice: The Treasury Select Committee will want to look carefully at the Chancellor's statement and at the comprehensive spending review when it is announced later. Is my right hon. Friend aware that abolishing the annual spending round in favour of a three-year planning period will not only build in fiscal prudence, but will provide Departments with a long-term planning perspective which is so badly needed? Is he further aware that the public spending plans announced today will provide extra resources for badly strapped public services, especially education and health, and will promote badly needed capital investment and capital projects?
Mr. Brown: I am grateful to my hon. Friend, who is the Chairman of the Treasury Select Committee. I shall be happy to work with it in reviewing the proposals, as will the Chief Secretary. My hon. Friend rightly points to the big change that we are announcing today, from an annual spending round to a three-year plan of spending, within which each Department will have far greater flexibility and the ability to plan over that period. I was surprised when I heard the shadow Chancellor say at lunchtime that the annual spending round was a tried and tested way of doing things properly. If it is the first commitment of the Conservative Opposition to restore the annual spending round, I hesitate to think what other proposals they will come forward with later.
My hon. Friend is absolutely right to say that the purpose of the spending review is to ensure that we can get the money that is necessary to the priorities that we have. Education and health are two of the greatest priorities for this country, but they were neglected under the previous Government. We are determined to make sure that those priorities have the resources they deserve. We are prepared to take tough decisions to make that

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possible. When I come back to the House in a month's time, we shall be able to announce the allocations for health and education over the coming years.
Mr. Malcolm Bruce: Does the Chancellor accept that the Liberal Democrats welcome the timing of today's statement and, like the Chairman of the Treasury Select Committee, the hon. Member for North Durham (Mr. Radice), the signs of greater long-termism in the Government's fiscal policy? The Chancellor may agree that, under the Tories, the short-term approach to budgeting and, in particular, to capital investment was extreme. To the extent that that is clearly going to change, his statement is immensely welcome.
The Liberal Democrats also welcome the Chancellor's greater emphasis within Government on outputs as a determinant of funding. However, if budgets for three years are to be set in one go, should not the Government open up the debate to wider public consultation, in line with the spirit of the pre-Budget report, rather than keep it so tightly under wraps that we have little opportunity to contribute? With budgets fixed for three years, will the Chancellor assure us that there will be a sufficiently funded contingency reserve to meet variations over that period?
Is not there a danger that the Chancellor is trying to satisfy two audiences at once? Would it not be better to choose more decisively than he has done between bigger public surpluses and better public services? Today's Financial Times was right to conclude:
"The question … is whether the increases he"—
that is, the Chancellor—
"will feel able to permit can meet the objectives for improved services the government has set."
Liberal Democrats welcome the boost to investment that the statement provides, but does the Chancellor not understand that quality education and quality health rely just as much on first-class teachers and nurses as on first-class buildings?
Will the Chancellor confirm that, even if control spending grows at 2.5 per cent. in real terms over the next three years, it will still have grown by only 1.5 per cent. per year over the life of this Parliament—less than the 1.8 per cent. achieved by the Tories over the past 18 years? Does the Chancellor accept that, even if spending growth was 3.75 per cent. per year over the remainder of the Parliament, it would still be no higher as a share of national income than it was under the Tories?
What will the extra money deliver in terms of services? That is the question people need to have answered. No doubt, the modest early years pledges are now deliverable by the later years of this Parliament, but can the Chancellor say whether average hospital waiting lists will be lower in this Parliament than in the last? Will primary school pupils of all ages be removed from oversized classes? Will nursery education be extended to all three-year-olds whose parents want it?
During the election campaign, the Liberal Democrats warned that keeping to Tory spending plans would mean worse education and health services. Sadly, so far, we have been proved right. Is not the reality that, although the Chancellor might have done enough today to stop things getting worse, he has done far too little to deliver
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the sort of radical improvement in our education and health services for which the British people thought they had voted and which they are now entitled to expect?
Mr. Brown: First, let me tell the hon. Gentleman where I agree with him. I agree with him when he says that we should concentrate on outputs and on the effectiveness of services and not simply on the size of the budget. I agree with him when he says that we should have three-year plans; indeed, that is what we shall do. I agree with him when he says that he wants to have a discussion on what level of public spending is necessary; no doubt, through the Treasury Select Committee, of which he is a member, he will involve himself in that debate. I agree with him that it is important that resources go to education and health, which are the two priorities.
However, the hon. Gentleman should congratulate the Government on what we are doing and what we plan to do. On education, he asked for £500 million to be invested in capital re-equipping of our schools. We are investing £2½ billion already and, of course, today's announcement makes more investment in the long term possible. He said at the election that we should invest £1¼ billion in the health service. We have already put £2 billion more into the national health service—£300 million last year and £1.7 billion this year. Of course, it is our aim to get resources to help. He should congratulate us on what we have done and on what we are doing.
The hon. Gentleman read out a list of items which, no doubt, the Liberal Democrat party has carefully costed. We will not make spending commitments in every single area, as he has been doing. The Liberal Democrats will not face up to difficult decisions about taxation in the Finance Bill; on public spending, their amendments to student loans legislation alone would have cost 1p on income tax. We do not know what they favour.
I should remind the hon. Gentleman that, in the first speech of this Parliament by the leader of his party, the right hon. Member for Yeovil (Mr. Ashdown) said:
"If we tighten our belts now, we have a real opportunity to get to grips with the huge hangover of debt left behind by the Conservatives."—[Official Report, 14 May 1997; Vol. 294, c. 74.]
That is the real world that we inherited; that is what we are tackling. In the spirit of the statement of the leader of his party, the hon. Gentleman should be supporting us.
Several hon. Members rose—
Madam Speaker: Order. I appeal for co-operation from hon. Members in asking brisk questions, and ask the Chancellor to give brisk answers, as so many hon. Members are seeking to put questions.
Mr. Robert Sheldon: The Chancellor is obviously right to draw the clear distinction between capital and current expenditure in a new form, which will be widely welcomed. He will be judged by how far that leads to the very large increase in capital investment that many of us want. Ending the annual spending round will be welcomed not least by spending Ministers, who will find themselves short of the annual misery, and by Treasury Ministers, who have the worst of it. Is my right hon. Friend aware that, over a long period such as three years, there will be a change in priorities

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and in their perception? How does he intend to ensure flexibility, other than, perhaps, by increasing the contingency reserve?
Mr. Brown: I am grateful to my right hon. Friend. I very much appreciate his guidance and advice—first as Chairman of the Public Accounts Committee, and since then. He is right to draw attention to the importance of capital investment in the modernisation of the country. We shall insist on the toughest efficiency standards in the use of resources. Some of the measures that we are bringing forward this afternoon are designed to achieve exactly that. We can prove that public investment and prudence can go hand in hand.
My right hon. Friend also raised the abolition of the annual spending round. As he knows, under its old form, end-of-year allocations were made simply to use up the budget. There was not the necessary flexibility to put the money forward for the best available purpose, and Departments were not able to plan ahead strategically, as we are now able to do. Of course, within their budgets, Departments will be able to examine their priorities and regularly assess them. It is one of the fundamentals of the review that standards and efficiency targets must be met. His fears about an inability to change when new priorities develop are not founded, because there are flexibilities in the budgets.
Mr. Stephen Dorrell: I enjoyed the Chancellor's description of his medium-term financial strategy almost as much as I enjoyed his description of his privatisation programme. If he is really going to set before the House detailed three-year programmes, Department by Department, without the safety valve of an annual spending review, how will he accommodate, as the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) asked, not just shifts of priority in a Department's programme, but shifts in the Government priorities between departmental programmes? How will he deal with the inevitable unexpected event that will arise during this Parliament?
By setting firm programmes three years ahead, is not the Chancellor lining himself up for a spending crunch some time in this Parliament, or are we seeing the beginnings of a process that will lead to excuses for another round of tax increases later in the Parliament?
Mr. Brown: I welcome the sight of the right hon. Gentleman on the Back Benches. I hope that he will be able to speak his mind in the way in which he promised. Unfortunately, his first statement was to agree with the shadow Chancellor that the annual spending round is somehow of great merit. Perhaps its repeal should be the first item in the Conservatives' manifesto at the next election on which they can agree.
The problem in British public spending is not too much long-termism or that people have made decisions in advance and have not been able to change them, but too much short-termism and an inability to plan ahead. Of course, individual Departments will be able to consider priorities within their budgets, but the comprehensive spending review is considering priorities for the next three years. When I report, with the Chief Secretary, to the House next month, we shall be able to
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say not only what those priorities are, but how the modernisation and reform necessary to achieve them is working. I hope that the right hon. Gentleman will be able to welcome our proposals.
If the right hon. Gentleman thinks about his experience at the Treasury and as a departmental Minister, he will realise that it is the short-termism of Government that has made us unable to invest in our future. Public expenditure on investment is so low because it was very easy for Governments to transfer money from investment to consumption and not face up to difficult decisions. The result is a run-down Britain in terms of transport and other amenities that are vital for the future. We shall tackle that problem and take the necessary action. The right hon. Gentleman's perspective, and his writings—which I have read—mean that he should be in a position to support us.
Mr. Ken Livingstone: Could the Chancellor assure the House that the spending totals that he is setting will be sustained in real terms even if lower than expected GDP growth means that those totals would go beyond 40 per cent. of GDP?
Mr. Brown: The whole point of the spending figures that we are announcing is that we are working on a three-year basis. In other words, individual Departments will be able to consider their position over time and make the necessary adjustments. I want them to have flexibility, which we are introducing in other areas. Conservative Members were shouting when I announced our proposals to enable local authority airports to have greater commercial freedom to make investments.
On public spending as a whole, we shall not promise to allocate money that we do not have simply because decisions are not made by others. We shall set targets, which must be met. They will be sufficiently good to enable our health and education services to invest in the future. The three-year programme offers the flexibility necessary to deal with any problems that arise.
Mr. David Davis: The Chancellor will be aware that I was among those who welcomed his commitment to eradicate the deficit in all the years of this Parliament. I certainly welcome his commitment today to output and the associated realisation of under-utilised assets, which will help towards that end.
However, does not the Chancellor accept that it will be a tragedy if that commitment is viewed by the financial communities as an exercise in creative accounting? Earlier, he brushed aside the question of the independent Accounting Standards Board's concerns about his treatment of private finance as off balance sheet. That is not simply a technical issue; it means that the Government may conceal from the public the shouldering of large liabilities for the future. Will he tell the House how he will deal with that serious concern of the Accounting Standards Board?
Mr. Brown: I am happy at all times to discuss these measures, but the right hon. Gentleman is referring to a discussion within the accounting community about the specific treatment of items related to the private finance initiative. He referred to creative accounting. We shall not do as the previous Conservative Government did, which is why we have introduced public sector net borrowing as

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a better measure of the underlying state of public finances. The old public sector borrowing requirement figures did not reflect the true underlying state of public finances. If the right hon. Gentleman considers the public sector net borrowing figure, he will find that it is a better estimate of that state. I am happy to discuss these matters with the Accounting Standards Board, but PFI projects are a precise issue, which we and the board are dealing with.
Mr. Geraint Davies: I welcome my right hon. Friend's statement, particularly on the public-private partnership in National Air Traffic Services. Will he reiterate that its employees can now look forward—perhaps through having their own shares—to having a real share in the success of the services; that safety, while independent of NATS, will remain paramount; and that, taken with new commercial freedoms for regional airports, his statement is good news for investment in Britain's transport infrastructure and, therefore, for prosperity and success up and down the land?
Mr. Brown: A high level of investment in the air traffic control service will be necessary in future years. We have proved in other initiatives in which we have been involved that private finance can be levered in to support the public investment that is being made. Our preferred option for National Air Traffic Services will do exactly that. As a result, both the employees and the users of the service will see enhanced investment in the future service. Our proposal for the independent, wholly publicly controlled regulatory body is designed to ensure that we have the safest air standards in the world. I believe that when people study the proposals as they come forward, they will find them worthy of support.
Mr. Peter Brooke: I congratulate the Chancellor on keeping a straight face for most of his statement. What effect does he expect today's announcement to have for the balance of the year on the value of sterling?
Mr. Brown: The right hon. Gentleman, who is a former Treasury Minister, knows that it is not for me to comment on the day-to-day movement of sterling. I have already said that I share the worries of exporters about the level of sterling. Most of the questions to me were tabled when sterling was at DM3.10. It is now substantially lower than that. Indeed, it is only 2 to 3 per cent.—if I am right today—higher than it was when the Labour Government came to power last May. The big rise in sterling took place in the years and months before the general election. The sterling rate in relation to the dollar is virtually unchanged over the past two years.
As I said, I share the worries of exporters about the pound, but what they fear most of all is what we are taking steps today to eliminate: the stop-go in our public economy and our national finances. By taking steps to ensure stability, we are doing the best service to exporters.
Mr. Tam Dalyell: Rather differently from my hon. Friend the Member for Croydon, Central (Mr. Davies), may I express concern about the air traffic controllers? Has there been discussion with the representatives of their unions? What technical advice has the Treasury received on safety? As I understand it, we
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are proposing something which no other country in the world has done. Every other country has a public air traffic control system. The temptations in certain circumstances to take short cuts could imperil safety.
Mr. Brown: I am grateful to my hon. Friend for raising the question. A statement is being made this afternoon by the Minister of Transport. In time, he will also publish his reply to the Select Committee report that examined all the issues in relation to air traffic control. The proposed independent regulator will ensure that the air safety standards are the best in the world.
My hon. Friend might consider that we need new investment at the highest possible levels in our air traffic control services, and if, as a result of the partnership that we propose, we can lever in private investment in addition to the existing public investment, that will ensure a better future for both the employees and the customers of National Air Traffic Services. I give my hon. Friend a guarantee that the best safety standards in the world are our objective.
Mr. John MacGregor: I welcome the Chancellor's total reversal of his previous position and his conversion to the privatisation of National Air Traffic Services, but why the delay? Why did he not do that a year ago, as he could have done, as we urged him, and as the Civil Aviation Authority wanted, to avoid delaying its investment plans for a whole year?
Will the Chancellor answer the question on the private finance initiative that he has so far failed to answer? Will he give a guarantee that the Government will not engage in off-balance-sheet creative accounting on the new and substantial Government guarantees on private sector finance, such as the channel tunnel rail link, and will he include them in his public expenditure figure?
Mr. Brown: There is no question of that in the channel tunnel rail link proposals. The Deputy Prime Minister made clear the arrangements that we had agreed, which were put to independent authorities.
On air traffic control, we are determined to ensure the highest levels of investment that are necessary. When we came into government, the plans that the right hon. Gentleman suggests were well advanced were not well advanced at all. We have had to examine these matters in detail, and will continue to do so. I guarantee that we will want the highest standards of safety, and a public sector independent regulator will ensure that. Air traffic control will benefit, as will transport as a whole, from levering in more private investment. It is a private-public partnership in which the Government, under the preferred option, have 49 per cent. of the shares.
Mr. Alan Williams: May I congratulate my right hon. Friend on his good luck in the choice of shadow Chancellor, whose performance today almost made his predecessor appear competent? May we assume that the proceeds from the sale of council assets will be invested by those same councils? If so, how will my right hon. Friend ensure that the asset-poor councils do not slip inexorably further and further behind the asset-rich councils?
Mr. Brown: I said in my statement that the Deputy Prime Minister and I were considering a new framework

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for investment by local authorities. We aim to raise the levels of investment in our vital assets. That new framework with local authorities will be discussed by the Deputy Prime Minister, in the case of England, and by the Secretaries of State for Wales, Northern Ireland and Scotland. Those discussions will take place in order to ensure that we secure the best use of our assets. I assure my right hon. Friend that the distribution will be fair.
Mr. Alex Salmond: Does the Chancellor recall the phrase "selling the family silver" and the political criticisms that he once shared about the folly of basing an economic strategy on the wholesale disposal of public assets? Was it not the Labour party's position hitherto that privatisation of air traffic control would jeopardise the new air traffic investment promised to Prestwick? What assurances can the Chancellor give Prestwick workers that that new investment will be delivered under the new privatised arrangement?
Mr. Brown: It will not prejudice the new investment. We are talking about higher levels of investment after years of uncertainty. I hope that the Scottish National party will not start the sort of scaremongering that it indulged in on many other issues, only to be proved wrong. I made it absolutely clear at the general election that we were prepared to consider this issue, and we have done so.
As to the hon. Gentleman's point about the use of resources from privatisation, I remember reading that the shadow Chancellor had said that the great thing about privatisation is that it can be used for tax cuts. We are releasing resources that we do not need, in order to fund investments that we do need. In view of this country's infrastructure and what needs to be done in the health service, in education and in transport, we must take a modern view of how we shall equip ourselves for the future and be prepared to release assets that we do not need in order, to make the investments that we do need. I am sorry to say that, once again, the Scottish National party—with its extreme and old-fashioned views—opposes us.
Mr. Alan Simpson: May I congratulate the Chancellor on recognising that having a medium-term economic plan is better than not having one? It has been a long time since the House was in such a position.
I have two specific questions. First, I am sure that the Chancellor is aware of the considerable economic arguments, particularly in the private sector, regarding whether it is better to use one's asset base to borrow against for investment purposes or to sell parts of it in order to use the capital for investment purposes. Will he put in the Library the comparative analysis that led him to the conclusion that it was better to sell assets than to borrow against them?
Secondly, the Chancellor will know also that the distribution of assets among local authorities is as inconsistent and uneven as the distribution of capital receipts. Would he consider it acceptable if local authorities that do not have surplus lands were to advance
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proposals to sell the properties in which their tenants live or the school buildings in which children are educated and the lands on which those buildings stand?
Mr. Brown: The discussions that the Deputy Prime Minister is having with local authorities and other Secretaries of State will consider issues in relation to the use of resources.
I hope that my hon. Friend the Member for Nottingham, South (Mr. Simpson) will not raise groundless fears regarding particular assets that are important to individuals. His main question was about whether we would be prepared to relinquish some of our assets or to fund new investments by borrowing. I remind him that we inherited borrowing levels of £25 billion and that we are paying more in interest payments than we are paying to fund our schools. As a result of the previous Government's mismanagement, we are paying more in interest payments than we are spending on housing and law and order combined.
I want to create a situation where, instead of paying interest, we use the funds that we have to invest in our future. As I said in my statement, if we had continued with the debt-to-GDP ratio that we inherited from the previous Government, we would have been funding an additional cumulative total of £25 billion in interest payments over this Parliament. I am not prepared to use public money to do that when we want to be able to put it directly into houses, hospitals, schools and transport infrastructure.
My hon. Friend asked whether we are prepared to borrow. The answer is yes, but within limits. We are not, however, prepared to borrow in a way that would amass huge interest payments—that money could be better used for other things. I hope that he will now agree with me.
Sir Michael Spicer: Having given up control of monetary policy, the Chancellor of the Exchequer apparently intends to give up year-on-year control of fiscal policy, so what will be the point of his job? Perhaps he should consider adding the Treasury to the excellent list of sales that he announced today.
Mr. Brown: The hon. Gentleman spends most of his time criticising me for measures that I have taken, so I presume that he thinks that some of my decisions are sufficiently controversial not to be written off as irrelevant.
At the Treasury, we have inherited a situation in terms of debt and borrowing levels that has to be dealt with. We must reform the public finances, and the Chief Secretary and Ministers are doing that. I hope that, by the end of that process, the hon. Gentleman will agree that we have done things that should have been done a long time ago.
Mr. Barry Sheerman: May I congratulate my right hon. Friend on his radicalism and his pragmatism in his statement? He has been radical; we all know that longer-term planning makes sense and that some of the ideological baggage on this side needed to be buried, and buried now. Will he ensure that his radicalism carries through to the sort of investment that we need in this country? We must prioritise investment that leads to value added wealth creation in enterprise, innovation and intellectual property.
Mr. Brown: I agree entirely with my hon. Friend, and he rightly points to the wholly unacceptable neglect of

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investment over recent years. When hon. Members absorb the fact that, under our proposals, it will be possible to invest £31 billion in the last year of this Parliament to improve the infrastructure of this country as a result of the tough decisions that they are taking, they will begin to see the difference that we can make to public services and infrastructure.
We shall, of course, do that in a way that gives us a long-term plan for the future. The public-private partnerships that we propose are a means to realise resources for investments elsewhere and, at the same time, to lever in private finance to enhance the public investments that we are making. The policy of long-termism—planning for the long term—is one which we shall continue to pursue.
My hon. Friend mentioned investment in innovation and science. I can tell him that that is one of the priorities that we have identified. Hospitals, schools and transport are priorities, as are housing and building stronger communities, but I also mentioned the science and technology base. I hope that we will be able to show results in that area when we come to the end of the spending review. The rundown of science and technology under the previous Government is something which no Government should have allowed, and something which we are not prepared to tolerate.
Rev. Martin Smyth: I welcome the general thrust of the statement, especially the long-term view. About 13 years ago in the Northern Ireland assembly, we had carry-over from Departments so that we did not have mad spending at the end of a period.
May I press the Chancellor on the concept of the continual review to update matters? Will we have open accountancy so that we can see where the money is going? It is amazing how money is missed time and again in normal business practices, and we must admit that, even in Government circles, it is hard to understand some of the accountancy.
Mr. Brown: I hope that the hon. Gentleman agrees that some of the announcements that we have already been able to make in Northern Ireland have allowed us to begin to make provision for enhancing the infrastructure of the country in roads and railways, and in new investment in airports. That is an important means by which we can help to create new job opportunities and encourage businesses in the area. We shall continue to do that as a contribution to matching prosperity with peace in Northern Ireland.
As for the hon. Gentleman's point about openness of access, I entirely agree with him that independent audit and public scrutiny are needed. That is why the National Audit Office has been called on to scrutinise our figures and some of our assumptions—as it will continue to do—and why we are prepared to be judged on the basis of the fiscal rules that we set down. The fiscal responsibility clause in the Finance Bill shows that we are prepared to be judged on the basis of regular reporting to Parliament on these issues.
I hope that the hon. Gentleman will agree that that system is far preferable to the one that we had before. It means long-termism, which he has supported, along with openness and proper scrutiny. That is right for Parliament.
Mr. Paul Goggins: I thank my right hon. Friend for his statement. Will he
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spell out in more detail its implications for Manchester airport? Sixteen million passengers travel through the airport each year, and 15,000 people work there. It is estimated that that figure could be doubled by 2005, with proper investment. Can my right hon. Friend confirm that greater commercial freedom for Manchester airport will mean greater freedom to invest, bringing jobs to my constituency and to the north-west as a whole?
Mr. Brown: It is exactly because we want further investment, and want to give greater commercial freedom to enable it to take place, that we are making this provision as part of our comprehensive spending review. Manchester airport, which I have visited, has expanded enormously in recent years, and is set to expand again. We want to give that profitable airport the commercial freedom in key areas that will enable it to make the investments that will be necessary for the future. I hope that in Manchester, as well as in other areas where the same will happen, the move will be welcome. It is a contribution to a modern airports policy.
Mr. Nicholas Winterton: If the Chancellor is genuinely determined to adopt long-termism as against short-termism, and to facilitate greater capital investment publicly, privately and in partnerships with, for instance, Manchester international airport—a magnificent airport, serving the north-west—he has my support.
Wearing my hat as Chairman of the Procedure Committee, however, and describing the right hon. Gentleman as a modernising Chancellor, may I ask whether he backs the Committee in its desire to ensure that the House can scrutinise the estimates and public expenditure more effectively than it does at present? The current structure and system are outdated.
Mr. Brown: I am grateful to the hon. Gentleman for his initial remarks. I think that he speaks more for mainstream opinion than many Conservative Members, although they know that further investment—indeed, the modernisation of our infrastructure—must take place, and that we are making the tough decisions that are necessary to achieve that. I hope that the hon. Gentleman will continue to speak out boldly on the issues that matter.
As for what the hon. Gentleman said about the Procedure Committee, I have talked to my right hon. Friend the Leader of the House, who is sitting beside me. We will consider the matter, but I cannot give the hon. Gentleman a final answer now.
Mr. Stephen Timms: Will the Chancellor ensure that the welcome increase in public investment that he has announced is targeted where it is most needed, so that we can tackle effectively the legacy of social exclusion and unequal public services left by the last Government?
Mr. Brown: I thank my hon. Friend for drawing attention to one part of my statement—the announcement of public investment to enable us to build stronger and safer communities.
Historically in this country, money invested in our communities has not been invested in a way that has tackled the causes of poverty, deprivation and

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unemployment. As part of the new deal for the communities in which my right hon. Friend the Deputy Prime Minister is involved, I want us to look at problems of social exclusion—in particular, at the causes of social exclusion—and to establish how, by investing in education or by providing new business opportunities, we can create the jobs that will enable people to move out of poverty.
I assure my hon. Friend that tackling social exclusion is a major priority of this Government. I want a country in which there is opportunity for all, and in which everyone knows that he or she has a contribution to make.
Mr. Dafydd Wigley: Does the Chancellor accept that the broad welcome given to his statement by Conservative Back Benchers reflects the fact that he has today set in concrete Tory spending levels for the rest of the current Parliament? How on earth will he be able to adjust his policy to the reality of life year on year and the state of the economic cycle, when he plans to have precisely 39.25 per cent. of gross national product as current expenditure in each year?
Mr. Brown: In one sense, I am grateful to the right hon. Gentleman, who has drawn attention to the problems of investment. He does not, however, follow me down the road in understanding what we must do about those problems. I propose that we invest in our future, and release funds with which to do so. The right hon. Gentleman should support me in that.
The funds to which I refer owe nothing to Conservative underinvestment in our future. The Conservatives refused to invest. Investment as a share of gross domestic product fell to 0.8 per cent; we inherited that problem, and are trying to deal with it. The right hon. Gentleman should support us when we are trying to secure more hospitals and schools, and a better transport infrastructure—but is this not typical of the nationalist parties, which are so extreme that they will not see the need for investment in our future?
Several hon. Members rose—
Madam Speaker: Order. We must move on. [Interruption.] I know that hon. Members are disappointed and are heaving sighs, but I have the names of those who have not been called, and I shall try to call them on another occasion. Forty-nine Members were rising to question the Chancellor, and they could not all be called in the space of an hour and a quarter.

Business of the House
4.45 pm
The President of the Council and Leader of the House of Commons (Mrs. Ann Taylor): I should like to make a statement about the business for next week.
MONDAY 15 JUNE—Consideration in Committee of the Northern Ireland (Sentences) Bill.
TUESDAY 16 JUNE—Opposition Day (13th allotted day).
Until about 7 pm, there will be a debate on NHS waiting lists, followed by a debate entitled "The crisis in Scottish local government". Both debates will arise on Opposition motions.
Motion on the Council Tax Limitation (Derbyshire County Council) (Maximum Amount) Order.
WEDNESDAY 17 JUNE—Until 12.30 pm, debate on the fourth report from the Social Security Committee on disability living allowance, followed by a debate on the first report from the Defence Committee on peace support operations in Bosnia and Herzegovina, followed by debates on the motion for the Adjournment of the House.
For three hours, consideration in Committee of the Human Rights Bill [Lords] (second allotted day).
For three hours, conclusion of consideration in Committee of the Northern Ireland (Sentences) Bill.
THURSDAY 18 JUNE—For three hours, remaining stages of the Northern Ireland (Sentences) Bill.
Motion on the Church of England National Institutions Measure.
FRIDAY 19 JUNE—Debate entitled "Enterprising UK—the small business agenda" on a motion for the Adjournment of the House.
The provisional business for the following week will be as follows.
MONDAY 22 JUNE—Progress on remaining stages of the Crime and Disorder Bill [Lords].
TUESDAY 23 JUNE—Conclusion of remaining stages of the Crime and Disorder Bill [Lords].
WEDNESDAY 24 JUNE—Until 2 pm, there will be debates on the motion for the Adjournment of the House.
Consideration in Committee of the Human Rights Bill [Lords] (third allotted day).
THURSDAY 25 JUNE—Opposition Day (14th allotted day).
There will be a debate on an Opposition motion in the name of the minority parties. Subject to be announced.
FRIDAY 26 JUNE—The House will not be sitting.
Sir George Young: We are grateful to the right hon. Lady for giving us details of next week's business and an indication of the business for the following week.
We are particularly pleased to learn that there will be a debate on the Floor of the House on the Derbyshire rate-capping order. Can the right hon. Lady confirm that her Government will follow the practice that has existed up until now—that if central Government want to control the expenditure of local government, that raises issues of sufficient importance for them to be debated on the Floor of the House rather than in a Standing Committee?

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We have just heard a very important statement from the Chancellor of the Exchequer, which will be followed by another statement next month on the comprehensive expenditure review, setting the financial parameters for spending for the rest of this Parliament. Does the right hon. Lady agree that that raises issues of such importance that the House must debate them before we rise for the summer recess?
Can the right hon. Lady confirm that, contrary to what we had been led to believe, there will not be a statement next week or the week after on the transport White Paper? The reason that has now been given—that it has to follow the comprehensive expenditure review—goes clean against what the Government had said until a few days ago, which was that the White Paper would come first. Will she confirm that the real reason for the delay in the transport White Paper is the serious disagreement between the Prime Minister and the Deputy Prime Minister?
Can the right hon. Lady confirm that a statement will be made to the House on the outcome of the strategic defence review when that has been completed? Is she aware of the growing uncertainty in the armed forces caused by the delay in the completion of that exercise?
May I revert to a question that I posed last week about the Select Committee on Foreign Affairs and its request for a debate? The right hon. Lady said that the matter had been "overtaken by events". Does she, on reflection, agree that that is not the case? The request remains outstanding, and the Foreign Affairs Committee has rejected the offer by the Foreign Secretary.
As the Modernisation Committee addresses itself to the future of the parliamentary calendar, will the right hon. Lady turn her mind to the future of the summer recess and let us know whether she plans to invite the House to sit in August?
Mrs. Taylor: I shall deal with the right hon. Gentleman's points individually. I hope that he will accept that the usual channels work well on occasions. We are willing to be reasonable and to listen to representations. It is right that requests should be dealt with case by case. I am glad that we were able to reach an accommodation to enable the order relating to Derbyshire county council to be taken on the Floor of the House.
The right hon. Gentleman asked whether it would be possible to have a debate on today's statement from the Chancellor and next month's statement on the comprehensive spending review. I think that it will be possible to have such a debate before the summer recess. We should perhaps have further discussions through the usual channels about the exact timing and nature of that debate.
The right hon. Gentleman asked for a statement on transport. I hope that that will be made after the comprehensive spending review, but before the summer recess. That shows that we shall be extremely busy at that time, because he also asked for a statement on the strategic defence review. He should not complain about the fact that that review is taking some time. Given his previous interest in that matter, he will no doubt agree that such consideration should be extremely thorough.
The right hon. Gentleman referred to the Foreign Affairs Committee. I said last week that discussions were taking place. I understand that the Committee is still considering what it wants to happen, and the subject is with it at the moment.
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The right hon. Gentleman asked about the Modernisation Committee and the summer recess. We would all like as much notice as possible of the summer recess, but I am afraid that I cannot give details at this stage.
Mr. Paddy Tipping: Could we have a statement next week about the Government's energy policy and the consequences for the deep-mined coal industry? The Leader of the House will be aware that the current agreements run out on 30 June. In coalfield communities, not just in Nottinghamshire but all over the country, coal miners are asking for fairness, not favours. There is an urgency about the matter now.
Mrs. Taylor: I am aware of the deadlines surrounding the issue, and I hope that a statement can be made about it shortly.
Mr. Paul Tyler: May I put two questions to the Leader of the House on matters that concern the role and the perception of the role of Parliament, and the way in which we conduct our business?
First, will the right hon. Lady give us some guidance on the status of the consultants' report that has come into my hands, on the issue of the Line of Route visitors to both Houses? It would appear that consultants are investigating the possibility of charging our constituents who visit the House perhaps £9.50, which is comparable with the charge to visit Buckingham palace, or £5, which Westminster abbey charges. Will she give us an assurance that those proposals will be considered carefully? Who in the House has seen the proposals, and on what basis was the consultancy report prepared? Will she assure us that she will defend the rights of our constituents to come free of charge to the House, to see how the people's Parliament operates?
Secondly, does the right hon. Lady feel that we can draw lessons from the success or otherwise of the experiment with programme Committees? Will she pay particular attention to what happened in the House on Monday evening, when, sadly, we did not have a proper opportunity either to debate or to divide on the vital issue of tuition fees, which I think she will acknowledge is one of the central proposals in the Teaching and Higher Education Bill? If the House is not able to scrutinise such proposals and give a view on them, the other place must have the opportunity to spend a considerable time doing so. Is not the lesson from what happened on Monday night that programme Committees should be a great deal more scrupulous in recognising the needs of both sides of the House, particularly Opposition parties, and should not simply do the bidding of the Government party? I hope that the right hon. Lady will acknowledge that there are lessons to be learned, and that the Modernisation Committee will shortly be given an opportunity to see what can be learned from our experience so far.
Mrs. Taylor: I am aware of the report about the Line of Route visitors, although I have not yet seen it. I shall put the report in context. There is no proposal to charge constituents for coming to see Members of Parliament or how Parliament works. At present, this building is not open to the public during the summer recess or at weekends. A study has rightly been carried out to see

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whether it would be possible to provide greater access to this historic building. Many tourists would want to visit the building if it were open at those times. It is right to consider charging in that context, but only in that context. We are still some way from any decision on the matter.
Programme motions and the Business Committee allocate the time that it is agreed should be devoted to any Bill. It is an all-party process: that is the essence of the agreement reached. I understand that an agreement was reached among all parties for the Bill that was debated on Monday. Decisions sometimes depend on which amendments are selected or are selectable. I refute the hon. Gentleman's claim that those Committees do the Government's bidding. All parties are represented, and there has always been agreement among the parties on the allocation of time within the overall limits. If there are lessons to be learned, it is right that we should learn them. This is an experimental process, and if anything can be done to improve the way in which we work, we should look into it.
Mr. Tam Dalyell: On the understandably timetabled business for Monday, would the Government look kindly on an amendment that would allow us to discuss the problems of the case of Guardsmen Fisher and Wright, with a view to clarifying their position? That case can now be discussed in the House of Commons only under privilege, as Mr. Ernest Telford, lawyer of Belfast, has taken legal action that makes it very difficult for papers such as The Spectator, the Daily Mail and others to have a serious discussion of the case, which is of deep public interest and concern. As it is only under privilege that the country can have a proper discussion of the case, will there be an opportunity for that amendment to be selected?
Mrs. Taylor: I am aware that my hon. Friend has tabled an amendment on that subject. It is not for me but for the Chair to decide whether such an amendment should be selected. If it is, I am sure that my right hon. Friend the Secretary of State for Northern Ireland will be as informative as she can in her response to a debate on that topic.
Mr. Philip Hammond: Is the right hon. Lady aware of the damning report by Sir Herbert Laming on the crisis in child protection in the Labour-controlled London borough of Ealing, which is to be published by the Department of Health this evening? It says that in Ealing
"children in public care and on the child protection register cannot be considered to be adequately safeguarded."
Is she further aware that the Under-Secretary of State for Health, who has responsibility for children's issues, has already issued a press statement saying how deeply concerned he is by that matter, and that he will call in the London borough of Ealing for consultation with him? Will she arrange for a statement by the Minister next week?
Mrs. Taylor: The hon. Gentleman raises what is obviously a serious problem that will concern hon. Members on both sides of the House. He mentioned that my hon. Friend the Minister has expressed his concern
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about that matter and is talking to the local authority involved. I shall ensure that the hon. Gentleman's comments are brought to my hon. Friend's attention, and I am sure that my hon. Friend will respond directly to him.
Mr. Michael Clapham: Will my right hon. Friend consider allowing time to debate the latest report by the Select Committee on Trade and Industry on energy policy? In that debate, we may be able to ascertain whether Lord Wakeham, who made a declaration in the House of Lords on 4 June that he was a director of Enron, the largest gas corporation in the world, knew that he would become a director of that company when, as a Minister in this House, he implemented privatisation plans for electricity. Those plans rigged the market against coal and pushed coal over the cliff.
Mrs. Taylor: The Government have welcomed the Select Committee's report and its contribution to the important debate on energy policy. My hon. Friend specifically refers to certain aspects of that report, and he may want to pursue them further either in an Adjournment debate or at Question Time next Thursday.
Sir David Madel: Will the right hon. Lady think again about her answer to the hon. Member for North Cornwall (Mr. Tyler)? There was an agreement on the Teaching and Higher Education Bill as to the amount of time that should be spent on it—nine hours—but surely, when the Opposition parties agree to the total amount of time, they should have the right to slice up that time as they see fit. We should be allowed to discuss the amendments that we want. The Government should not be so greedy in wanting everything.
Will the right hon. Lady please arrange for the Deputy Prime Minister to come to the Dispatch Box on Monday to make a statement? There will be a two-day strike on the tube, which will cause great inconvenience. We should like to know how the Labour Government will sort that matter out. After all, a year ago, they said that left can talk to left. Why do we not find out what has happened?
Mrs. Taylor: I have little to add to what I said about programme motions. I agree with the hon. Gentleman's comment that no one should be greedy. All views have to be taken into consideration; that, of course, includes the views of the Government, as well as those of others who might table amendments. The agreement on that programme motion encompassed all parties.
Industrial action on the tube would, of course, be regrettable. We hope that all those involved in these potential disputes will make every effort to achieve a quick resolution. None of us wants passengers to be inconvenienced. It is important that all the ramifications are taken into account by those involved.
Mr. Gordon Prentice: Is it possible to have an early debate, before the debate on the White Paper on integrated transport strategy, on the Government's policy on clean vehicle technology? I say that in the context of today's deputation at Westminster, by Lucas Aerospace. My right hon. Friend may know that it has served redundancy notices on 70 employees. If that goes through, it will mean the end of the only UK plant manufacturing cylinders for natural gas to power clean vehicles. That is

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of immense importance not just to Burnley—my hon. Friend the Member for Burnley (Mr. Pike) is with the deputation at the moment and cannot be with me—but to my constituency. In a wider sense, it is of immense importance to the UK.
Mrs. Taylor: I agree that clean vehicle technology is of immense importance. My hon. Friend will be aware of the work that my right hon. Friend the Deputy Prime Minister has been doing in that sector. I cannot promise my hon. Friend the debate that he and my hon. Friend the Member for Burnley (Mr. Pike) wish to have in Government time in the near future, but one of them may wish to apply for an Adjournment debate.
Mr. Patrick McLoughlin: May I thank the Leader of the House for arranging for the debate on the capping of Derbyshire county council finally to be taken on the Floor of the House? Was it not disgraceful that the Government attempted to debate that in Committee, which has never happened to any previous capping order? As a senior member of the Government and as an upholder of the rights of Members of Parliament, will she comment on the fact that the Government's original plans were to ensure that no Derbyshire Labour Members were appointed to the Committee to discuss the measure? Following strong representations from the Opposition, Derbyshire Labour Members will be fully able to support the Government next Tuesday, if they so wish, on that capping measure.
Mrs. Taylor: I should have thought that the hon. Gentleman would have been partly wearing his new hat and accepting that, on this occasion, the usual channels worked well.
Mr. John Cryer: Can the Leader of the House find time for a debate on the past 10 years of British foreign policy? It would allow the House to consider the contrast between the open and straightforward way in which this Government have dealt with the Sierra Leone question, and the way in which the scandalous and seedy manipulations of the previous Government led to the Pergau dam scandal, arms to Iraq and the Scott inquiry, during which they tried to manipulate the situation, so that the then shadow Foreign Secretary had only three hours to read five volumes before the statement. It is a scandalous and sorry story, which continues with the apparent machinations of Secret Agent Aitken.
Mrs. Taylor: I am in a slightly dangerous position because the Foreign Secretary is here echoing the demands of my hon. Friend. I have to tell them both that I do not see the prospect of that specific debate in the near future, but I understand its attraction.
Sir Sydney Chapman: May I join my right hon. Friend the Member for North-West Hampshire (Sir G. Young), the shadow Leader of the House, in asking the right hon. Lady to look favourably on the need to find time for a debate on the statement that has just been made by the Chancellor, but may I differ with my right hon. Friend in one respect: we need that debate to take place ahead of the comprehensive spending review statement that the Chancellor will make next
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month? In the meantime, does she recognise that what the Chancellor said in relation to air traffic control, the Commonwealth Development Corporation and the Royal Mint presented an unassailable case for the privatisation of London Transport and the Post Office, among other public businesses, even if she and he prefer to call privatisation by any other name?
Mrs. Taylor: On this matter, I agree with the shadow Leader of the House that it would be appropriate to have a debate after the comprehensive spending review, and I think that I made my position clear on that. On London Underground or, indeed, the channel tunnel rail link, we should congratulate the Deputy Prime Minister on the new approach that he has adopted and the successful partnerships that he has been negotiating. The whole House should wish them well.
Mr. Tony McNulty: My right hon. Friend will know that, in recent weeks, the London crime statistics have been published and that, in many national newspapers today, there is extreme concern about corruption among a small core of those in the Metropolitan police. It is usually at about this time of year that we have the annual Adjournment debate on policing in London. Would it be possible to squeeze it in this side of the recess, or may I have an assurance that it will take place as soon as possible after we return?
Mrs. Taylor: My hon. Friend is right to say that there is usually a debate on crime in London at this time, but it is not that long since we had one, and it is more likely that the debate will take place later in the year, rather than in the next few weeks.
Mr. David Tredinnick: The Leader of the House will be aware that there are now three early-day motions on the Order Paper expressing concern about the Government's proposals to restrict the sale of vitamin B6; there are 177 signatures on one of the motions. Indeed, the Select Committee on Agriculture has examined the matter. Is she aware that many scientists in Britain believe that the report that the Government have used is fundamentally flawed, and that that view is backed up by the United States national academy of science, which suggests that the Government have got this completely wrong? Given the huge concern in the House and in the country—I speak having served for 10 years as an officer of the parliamentary group for alternative and complementary medicine; I have never seen as much concern on any other issue—does she not think that it is time for the Government to provide Government time to debate that matter? Restricting the sale of vitamin B6, if it goes ahead, will seriously affect ladies suffering from PMT, elderly people with Alzheimer's disease and a range of people who rely on vitamin supplements, particularly vitamin B6, to alleviate their afflictions.
Mrs. Taylor: I think that we all have received representations from constituents about vitamin B6. The hon. Gentleman specifically mentioned the report produced in the United States. The Government have seen that report and Ministers have announced that they will take account of it in considering their responses to the consultation exercise. My hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food has

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been considering the matter carefully. I can assure the hon. Gentleman that all representations have been taken into account.
Judy Mallaber: Does my right hon. Friend accept that Labour Members representing Derbyshire constituencies look forward to the opportunity on Tuesday to promote our beautiful county, welcome the opportunity to discuss the council's successes in view of the Conservatives' intransigence towards our county over the past 18 years and are pleased that the Government have recognised our financial difficulties and allowed us to raise the spending limits? Does she agree that it promises to be an interesting debate as Conservative Members are now asking why the Government have not given Derbyshire everything it wants, when, previously, Conservative Members and local councillors were saying that the council should not ask for anything at all?
Mrs. Taylor: It will be an extremely interesting debate. The cap on Derbyshire has been increased by £2.9 million. Such debates often do not turn out in the way that some hon. Members expect. My hon. Friend's analysis is probably nearer to what is likely to happen than that of some Conservative Members.
Mr. Norman Baker: May I ask the Leader of the House for a debate on the important subject of genetic engineering? Is she aware that genetically modified crops are being planted in Britain, genetically modified food is on sale and experiments are being conducted in which animals are being genetically manipulated? Is she further aware that it is a matter of great concern to many people, including one who I understand I am not allowed to name in the House? Does she understand that the Government's ability to respond to the issue is being fatally undermined by the fact that the responsibility is split across so many Government Departments? Will she draw that fact to the attention of the Prime Minister?
Mrs. Taylor: The Government are determined to ensure that the use of genetic modifications to produce new crops and foods does not threaten public health or environmental safety. We are aware of all the issues that are involved and have campaigned in the European Union for better labelling, so that the public are properly informed. Full public consultations on the matter will take place in the next few months. The hon. Gentleman's point about proper co-ordination among Government Departments has been taken on board and, taking the wider issues into account, that is one reason why we have proposed a Food Standards Agency.
Mr. Barry Sheerman: Does my right hon. Friend agree that the essence of democracy is the ability of the legislature to check the Executive? Is it not the case that it is difficult to check the Executive when they perform their role collectively in Europe? May we have an early debate on that complicated issue? Many of us feel that legislatures across Europe are very weak vis-a-vis the ever-powerful and growing Executive tiger. Will she accept my invitation to join a group of parliamentarians from across Europe who are meeting tomorrow in Church house to discuss ways in which we
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can set up a virtual assembly, whereby nearly 5,000 parliamentarians will communicate using modern technology, so that we can start plotting and planning the downfall, or at least the curbing, of the European Executive?
Mrs. Taylor: I do not know whether my hon. Friend was planning to speak in this afternoon's debate, but I should have thought that he could make a significant contribution were he minded to do so and fortunate enough to catch your eye, Madam Speaker. I should also draw his attention to a report that the Modernisation Committee hopes to publish next week, on how the House deals with European legislation. It proposes some important alterations to the way in which we consider European legislation, which would benefit all concerned. I hope that my hon. Friend will welcome that report. He could develop his other points further this afternoon.
Mr. Nigel Evans: Has the Leader of the House seen early-day motion 266?
[That this House welcomes Scope's report, Polls Apart 2—Disabled People and the 1997 General Election, which shows that 94 per cent. of polling stations surveyed on 1st May were inaccessible to disabled people voting independently, and that some disabled people were either unable to vote or were injured trying to get into their polling stations, the majority of which were located in public buildings; recognises that the majority of disabled people interviewed by Scope wanted to vote in person on election day and rejected postal votes as a suitable alternative; and calls on the Government to review the Disability Discrimination Act 1995 and Home Office guidance to returning officers with a view to removing the barriers that currently prevent disabled people from exercising their right to vote.]
The motion deals with "Polls Apart 2", Scope's survey of the inaccessibility of polling stations during elections. I understand that a House of Commons Committee is looking at electoral reform. Can the right hon. Lady ensure that it looks carefully at the accessibility of polling stations, so that disabled people can vote in person, and the possibility of extending the time limits for postal votes? The new technology that was just mentioned by the hon. Member for Huddersfield (Mr. Sheerman) should mean that more people would have access to postal votes.
Mrs. Taylor: The hon. Gentleman again raises an issue that should be of concern to us all, as we are elected through a democratic process. We should all want to make it easier for everyone to vote in person, wherever possible. We welcome the report that has been published and we are committed to establishing comprehensive and enforceable civil rights for disabled people. At present, we are considering how best to take forward that commitment and how advice and guidance to acting returning officers can be improved. We all have examples of such problems; before the general election, many hon. Members contacted returning officers in an effort to improve matters. I hope that we can build on that good work.
Mr. Patrick Nicholls: May I ask the right hon. Lady to consider—if not next week, in the fairly near future—a full-day debate on the crisis in British agriculture? When the matter was last discussed in the House on 21 May, there was a three-hour debate in which

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the Minister of Agriculture, Fisheries and Food spoke for three-quarters of an hour. He glazed over Agenda 2000, barely mentioned agrimonetary policy and neglected to address the catastrophic fall in farm incomes. British agriculture needs a proper airing in the House, and the way in which the time was divided up on that day simply did not give it due credit. Will the right hon. Lady consider providing a full-day debate, so that all the issues can be discussed properly?
Mrs. Taylor: Ministers have made it clear, as has my right hon. Friend the Prime Minister, that the Government are aware of the problems faced by many people in agriculture. I would have hoped that the hon. Gentleman might have included in his reasons for a debate the excellent news that the European Commission has agreed a proposal for a date-based export scheme. Although there is a long way to go on that, perhaps he could put his comments in that context, too.
I cannot promise a debate in the near future, but I understand the concerns that were expressed by hon. Members on both sides of the House at the time taken by Front Benchers in that and other debates on similar topics. It is important that those of us who speak from the Front Bench understand the pressures on the time of the House and do our best to make sure that as many hon. Members as possible have the opportunity to speak.
Sir Patrick Cormack: Would the right hon. Lady be kind enough to look again at the answer that she gave my right hon. Friend the Member for North-West Hampshire (Sir G. Young) on the special report of the Foreign Affairs Committee? We are asking essentially a very simple question. The Committee said that it wished to gauge the feelings of the House. Will she please provide an opportunity for the House to express its views in the very near future?
Mrs. Taylor: As I said earlier, the Select Committee is still considering the matter. My right hon. Friend the
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Foreign Secretary has heard that the Select Committee will be writing to him, but he has not yet received a letter on that point. At the moment, I do not think that it will serve any useful purpose to take it further in the House.
Sir George Young: On a point of order, Madam Speaker. It concerns a matter on which I have written to you—the treatment by Ministers of questions from hon. Members. In respect of oral questions, you were good enough to say on 11 May:
"I certainly expect Ministers to tackle them and to give a proper answer."—[Official Report, 11 May 1998; Vol. 312, c. 22.]
As for written questions, a number of my colleagues have tabled specific and factual written parliamentary questions, which were accepted by the Table Office. They have received replies from Ministers that refer them to previous ministerial statements or to other documents. However, nowhere in those statements or documents can the answer to the questions be found. Madam Speaker, are you prepared to give on the record a ruling on written replies that is similar to the one that you gave on oral replies?
Madam Speaker: I am grateful to the right hon. Gentleman for giving me some indication earlier of his point of order. My advice to Ministers on answering written questions is exactly the same as the advice that I recently gave on answering supplementary questions to oral questions. As the right hon. Gentleman will be the first to appreciate, the satisfaction of the questioner cannot always be guaranteed. However, for all that, I expect Ministers to tackle all questions asked of them and to give a proper answer. In view of the right hon. Gentleman's comments on questions and answers, I wonder whether it might be a good suggestion if I were to ask him to give some specific examples to the Leader of the House, who is in the Chamber. I am sure that she would be interested to see those examples.

Cardiff European Council
[Relevant documents: Minutes of Evidence taken by the Foreign Affairs Committee on 2nd June (HC 387-ii); White Paper on Developments in the European Union July-December 1997 (Cm 3961); and Proposals for Council Decisions on the Principles, Priorities, Intermediate Objectives and Conditions contained in the Accession Partnerships (presented by the Commission)—ten unnumbered Explanatory Memoranda submitted by the Foreign and Commonwealth Office on 25th February 1998 (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia) Council Number 6637/98 COM (98)53 final.]
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kevin Hughes.]
5.20 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Robin Cook): I am pleased to announce at the outset of this debate that, today, the House of Lords has not insisted on its amendment to the European Communities (Amendment) Bill. The Bill's parliamentary stages are now complete. We hope that Royal Assent will be granted very shortly, opening the way for the United Kingdom to ratify the treaty of Amsterdam in the near future. We shall be among the first three countries in Europe to do so. Under the previous Administration, the United Kingdom was one of the last two countries to ratify the Maastricht treaty. That contrast underlines the new priority and commitment that this Administration have given to Europe, and provides an excellent basis on which, on Sunday, we can welcome to Cardiff the leaders of the 15 member states of the European Union.
The leaders' agenda will be wide ranging. On Monday, they will meet Finance Ministers to discuss economic reform. At lunchtime, my right hon. Friend the Prime Minister will lead a discussion on the future direction of Europe. On Monday afternoon, they will discuss progress on enlarging the European Union, and the Agenda 2000 issues, such as reforming the common agricultural policy, simplifying the structural funds and securing budget discipline.
On Tuesday morning, the leaders will debate the summit's conclusions, including proposals from Foreign Ministers on current issues in foreign policy. It is with those foreign policy issues that I wish to start my speech.
On Monday, I chaired the preparatory meeting for Cardiff of Foreign Ministers, at which our discussion on the crisis in Kosovo was the most grave and sombre of our presidency. At the start of last week, Serbian security forces mounted a major military operation, with support from the Yugoslav army. Heavy machine guns and anti-tank weapons were used against villages and towns in Kosovo, particularly along the border area with Albania. The clear objective of the offensive was to empty those towns and villages of their civilian population. It is our belief that, last week, about 50,000 people were rendered homeless. Most of them were women and children; few could ever have been members of the Kosovo Liberation Army.
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Monday's meeting of Foreign Ministers strongly condemned the ratcheting up of military violence, and expressed our firm belief that
"these attacks are beginning to constitute a new wave of ethnic cleansing."
In our statement, we specifically reaffirmed that the remit of the war crimes tribunal on Yugoslavia applies to all parts of the former Yugoslavia, including Kosovo. Those who carry out extra-judicial killings or crimes against humanitarian law should not do so in the hope that they will escape justice.
In the meantime, the urgent task is to halt the violence. At the United Nations, Britain has taken the lead in the Security Council to seek a resolution, under chapter VII, that will provide a mandate for all necessary action to halt the conflict. I am pleased to report to the House that, on Monday, the Foreign Ministers of European countries unanimously expressed their support for such a resolution. As we speak, NATO Defence Ministers are meeting to hear reports from their military advisers, who are considering all options that might be taken under that mandate.
Tomorrow, I shall host a meeting in London of the Group of Eight Foreign Ministers, which was originally called to discuss nuclear escalation in India and Pakistan. All members of the contact group on the former Yugoslavia are represented on the G8. We will, therefore, take the opportunity of our gathering tomorrow to hold a special meeting of the contact group, to send a clear signal of our resolve to Belgrade.
President Milosevic must bear personal responsibility for the crisis in Kosovo. Last week, he authorised violence on a scale that has not been seen in the former Yugoslavia since the truce in Bosnia three years ago. He should not make the heavy mistake of assuming that, this time, the international community will be as slow to react as it was in the early years of the crisis in Bosnia. Nor can he hope to find a place for his country in the modern Europe unless he starts to abide by the democratic standards of modern Europe.
In the past fortnight, President Milosevic has removed the broadcasting licences of 33 independent radio stations. At the same time, he has given separate broadcasting licences to his wife, to his son and to his daughter. No one can be fooled that that outcome reflects an impartial assessment of the respective merits of those applications.
Finally, before leaving the subject of Kosovo, I should emphasise that Europe condemns the use of violence for political ends by either side. The violent repression by President Milosevic has been totally counter-productive: it has strengthened the Kosovo Liberation Army. However, the Kosovo Liberation Army's activities will not liberate the people of Kosovo, but will only ensure the continuation of their suffering. Our support in Kosovo is for the elected leadership of the Kosovar people, who, to their credit, have consistently pursued a peaceful path towards their goal of autonomy.
For that reason, as we hold the presidency of the European Union, I shall this evening receive Dr. Rugova, the elected leader of the Kosovar people, to demonstrate our support for those among the Kosovars who seek a negotiated, not a violent, means of achieving their aspirations. I am confident that both sides of the House

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will wish me today to convey to Dr. Rugova our united respect for his support for peace, and our resolve to halt the violence.
Mr. Tam Dalyell rose—
Mr. Menzies Campbell: I would not disagree with anything that the Foreign Secretary has said in the past moment or two, and I welcome his comments on his intention of receiving Mr. Rugova later today. However, the Foreign Secretary will be aware that the possibility of obtaining a resolution on suitable terms from the Security Council of the United Nations will depend on Russia's attitude. Is he able—consistent with the usual diplomatic niceties—to give us some indication of what exchanges he has had with Mr. Primakov, his opposite number in Russia? What prediction can he make about the extent to which Russia will share the sentiments that he has just expressed to the House?
Mr. Cook: We have not, as yet, had any indication that Russia could support such a resolution. I very much hope that Russia would not choose to block such a resolution. It is worth recalling that Russia has now not vetoed a Security Council resolution for some half dozen years. I do not think that either Mr. Primakov or President Yeltsin would wish to break that very helpful moratorium on the veto by now using it to protect President Milosevic. One of the advantages of our meeting tomorrow is that Mr. Primakov will be present at the contact group, which will give us an opportunity of dialogue—in the hope that peer group pressure will get Russia to understand the strength of feeling in the rest of the international community.
Did my hon. Friend the Member for Linlithgow (Mr. Dalyell) wish to intervene?
Mr. Dalyell: I had the same question, and the Foreign Secretary has given as much of a reply to it as he can.
Mr. Cook: My hon. Friend is one of the few hon. Members who is honest enough to say that a question has been answered. I am grateful to him.
The ethnic confrontation and violence in Kosovo provide a stark contrast to the security and peace enjoyed by the peoples in the European Union. It is because all the countries of central Europe hunger for the security and stability that we enjoy that they now seek membership of the European Union.
As I look back over the months of our presidency, I believe that the achievement of greatest strategic significance was the successful launch that we gave to the enlargement process. We were able to develop a process in which all 11 countries were in the same pipeline, moving towards the same destination—the speed at which they arrive at the finish will depend entirely on the urgency with which they make the necessary reforms. We were also successful in negotiating a formula that dissuaded France from blocking the start of negotiations with Cyprus, which could have provoked Greece to block negotiations with any country.
In January, I made giving enlargement a flying start one of the objectives of our presidency—we have done that, which will be of long-term credit to Britain. Over the next decade, all the countries involved will become
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member states with full voting powers at the Councils of Ministers. It is important to our interests that they should remember the United Kingdom presidency as a time when we proved ourselves advocates and friends of their membership and competent managers of the process of enlargement.
It is equally important that the peoples of those countries should associate Britain with the benefits that they will enjoy as consumers as they lower the barriers to trade. When I addressed the House in the European debate in December, I mentioned the strong enthusiasm that I found in Warsaw for my insistence that membership of the European Union would require Poland to abolish the unfair, discriminatory and punitive taxes on whisky. I am delighted to report to the House that, last week, I received a message from the Foreign Minister of Poland informing me that the Cabinet had approved a reduction in the duty on whisky, to give it parity with brandy. I am confident that that news will be as welcome to drinkers of whisky in Warsaw as it will be to distillers of whisky on Speyside.
Enlargement is not the only historic step that is being taken under our presidency. Last month, the Heads of Government agreed that 11 member states could proceed to the final stage of economic and monetary union. Britain has not joined that first wave. We will judge whether we are ready to join on the basis of a hard-headed assessment of the economic interests of the British people; the Government are united in their view that the decision on the single currency must be determined on that basis.
Mr. Dafydd Wigley (Caernarfon): Will the right hon. Gentleman give way?
Mr. Cook: I was hoping that I would get a Tory Euro-sceptic, but the right hon. Gentleman will do.
Mr. Wigley: I am sorry that I cannot fit either bill. The right hon. Gentleman regards the well-being of the economy as the paramount consideration in deciding the timing for entry to the euro, but if the well-being of the economy so dictates, will the Government consider entry sooner than 12 months after the next general election—assuming that this Parliament goes to its full term—or does the well-being of the economy take second place to the commitment to wait until a referendum after the general election?
Mr. Cook: We do not expect any tension between the two commitments. We came to our conclusion because Britain and the continent are at very different points in the economic cycle. That substantial difference will not be lessened in the short term—it will take some years for true convergence to come about. I assure the right hon. Gentleman that we have no intention of joining before we are confident that it would be to the economic advantage of the British people.
Our unity of view on the single currency contrasts with the division among Conservative Members, who are united only in the strength of their contempt for one another's views on the matter. When the European Parliament voted last month on the single currency, half the Tory MEPs abstained and the other half voted in three different ways—a multiple split that makes the Tory MEPs much more representative of the Tory party than many of the Tory Euro-sceptics would admit.

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Europe faces many other challenges as a result of the two historic changes that I have outlined. A European Union in which Finns to Italians are paid in a common currency, and whose borders stretch from Poland to Portugal and from Scotland to Cyprus, will be a Europe that gives rise to new challenges as well as to new opportunities. We must ensure that we strike the right balance between the unity and cohesion of the Union and a flexibility that can reflect the diversity of its increased number of member states. That is why it is right that a centrepiece of the Cardiff summit will be a discussion by the leaders on the future of Europe.
In his Paris speech two months ago, my right hon. Friend the Prime Minister set out his vision for Europe. He stressed the importance of reconnecting Europe with its citizens and of striking a better balance to respect not only the advantage of Europe acting in unity, but the individual identity of each member state.
The letter from Chancellor Kohl and President Chirac, which was released earlier this week, demonstrates that those arguments are winning the debate on the future of Europe. It represents a powerful statement of the case for subsidiarity, which the two leaders demand must be "strictly respected and applied" even more rigorously, and which rightly recognises that
"the citizen will not accept decisions at the European level unless it is clear that …such rules cannot be adopted at a satisfactory manner at the local, regional or national level."
That statement is unequivocal. It exposes the Euro-sceptics' fears of a centralised, federalised European state for the fantasies that they are—nightmares that have something of the night about them, but nothing of reality. If the Euro-sceptics will not listen to me, perhaps they will listen to the Conservative party's nominee on the European Commission, Sir Leon Brittan, who said the other week:
"Europe has changed and Britain has played a big part in changing it."
There could be no better place for Britain to demonstrate the leading role that it has played in promoting subsidiarity than Cardiff.
Mr. Wigley: Hear, hear.
Mr. Cook: I am grateful for the right hon. Gentleman's support. As a result of the Government's policies—which the right hon. Gentleman is also welcome to support—Cardiff will become the centre of a democratically elected assembly which will make political decisions in Wales accountable to the people of Wales. That is a visible reminder that the Government not only preach subsidiarity in Brussels, but practise it in Britain.
We also welcome the strong recognition in the letter from Chancellor Kohl and President Chirac that decisions within Europe should be open and transparent. During the UK presidency, we have made making proceedings more transparent a priority. I am pleased to tell the House that more members of the public and representatives of non-governmental organisations have attended open Council meetings during our presidency than in any previous presidency. Indeed, we had broken all previous records before our presidency reached halfway.
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The more that Europe opens up its proceedings to the public, the more important it becomes that the public see that those proceedings focus on the issues that are of concern and relevance to them. When we launched the UK presidency, we stressed that its theme would be to make Europe work for the people and that we would focus on issues of popular concern, such as jobs, crime and the environment. Over the past six months, we have made solid progress on all three fronts.
On jobs, we were the first member state to produce a national action plan on employment, and Cardiff will be the first European summit at which the action plans, which have now been developed by every member state, will be reviewed. An unusual feature of the summit will be the morning discussion, with Finance Ministers, on economic reform to make Europe more competitive and to encourage employment.
We will also discuss reports from the Commission and from the business test panels on how we can encourage small and medium enterprises by reducing the complexity of European regulations. The objective is well expressed in the title of the Commission document—"Doing Less, but Doing it Better".
We have negotiated a pact on organised crime with all the countries that are candidates for membership of the European Union, to enable us to achieve greater co-operation in fighting the criminals who run major rackets in the drugs trade, money laundering and the sordid exploitation of the traffic in illegal immigrants.
Mr. Dalyell: Before my right hon. Friend leaves the subject of crime, he will not be entirely surprised when I ask him whether there will be any discussion of the Lockerbie crime and relations with Libya, especially in the context of his meeting with Dr. Mudenge and others from Uganda, Cameroon and other African states, and of the possibility of a resolution of a crime that will be 10 years old at Christmas 1998.
Mr. Cook: I congratulate my hon. Friend on the skill with which he has worked in a question which I know concerns him closely. I am happy to say that I had a very good meeting with the representatives of the Organisation of African Unity and the Arab League, at which I explained why we have full confidence in the standards of Scottish justice. I expressed regret at the fact that those two organisations did not respond positively to our invitation to them and the United Nations to send observers to study our legal system, and I repeated that offer to them.
I think that it is fair to say that Stan Mudenge and his colleagues left with the impression that they had had a fair hearing, and that I had explained exactly why we are robust in our faith in Scottish justice and why we are determined to ensure that the mass murder of 270 people is not allowed to pass without those who have been charged being brought to justice.
We have acted to implement the commitment in the Amsterdam treaty to integrate the protection of the environment across the broad range of European policies. Our presidency has witnessed the first ever joint meeting of the Transport and Environment Councils. As a result of that joint work on the environment and transport, we have been able to adopt tougher standards on vehicle emissions, which will produce cleaner air for our citizens.

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The decision last week to ban the drift nets that drown dolphins has been broadly welcomed by the many people in Britain who support the campaigns to protect wildlife.
As we deliver on our commitments in our presidency of the European Union, we are constantly aware that Britain is a country with major ties of history and culture, and alliances around the globe, and not only in Europe. In particular, we have forged an excellent working relationship with Washington, and an effective partnership with both the White House and the State Department.
Britain's current high standing in Washington has been of direct benefit to Europe. At last month's United States-European Union summit, we secured an agreement that will protect European companies from US sanctions and commits the United States Government to resist any legislation that will result in extra-territorial penalties on European companies that are breaking no national or international law.
We have averted what could have been division between Europe and the United States over trade, and replaced it with unity in our approach towards countries such as Iran. I believe that the successful outcome of the summit, which is good for both sides of the Atlantic, was largely due to the fact that it was Britain in its presidency that represented Europe there.
In our presidency, it has been our job to speak for all the member states. I am happy to say that that does not prevent us, and has not prevented us, from also speaking for Britain. I noticed last Sunday that the Minister for Europe in the previous Conservative Government, the right hon. Member for Haltemprice and Howden (Mr. Davis), complained that we had not given enough priority to tackling the ban on British beef. That was a compelling example of how out of touch Conservative Members can be with what is going on in Europe.
On 1 June, only a fortnight ago, the ban was lifted on exports of cattle from Northern Ireland under the certified herds scheme, and yesterday, the Commission agreed to propose to lift the ban on the export of beef under the date-based scheme for cattle born after August 1996.
We are not over the obstacle course yet: there are further hoops through which that proposal must go before it gets Council approval and comes into effect, and there appear to be elements in the Commission's proposals that we regard as unnecessary and unduly restrictive, but the fact remains that we now have in sight an end to the beef ban for the British mainland, as well as for Northern Ireland.
The fact that we have got this far is a striking illustration of how much better the Labour Government have been able to promote British interests through their constructive and positive approach to Europe. By contrast, the policy of confrontation pursued by the previous Government left Britain on the sidelines of Europe, with neither influence nor respect, and did nothing to further Britain's interests on beef or anything else.
I noticed last month that, one year on from the general election, The Times had discovered that Labour led the Conservatives as the party with the most popular policy on Europe by a margin of almost two to one. I freely admit that it was not always like this: at the previous general election, the same pollsters found the Conservatives leading on Europe by exactly the same margin.
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The dramatic turnaround has happened because the public have had a year in which they have seen how much more can be delivered by a Government who have respect throughout the capitals of Europe and are taken seriously because the Europeans know that we are serious about doing business with Europe. In a spirit of fairness, I acknowledge the strong contribution made to our public support over Europe by Conservative Members, who have spent the past year unable to convince each other, never mind the public, what is the right policy for them on Europe.
The British public are much more sensible than many Conservative Members. They know that, in the modern world, we can make our way only by the health of our alliances and our trading links with the rest of the world. They know, too, that we shall not achieve security or prosperity in a global economy by being as rude as possible to our nearest neighbours.
The British public know that, if the Conservative party had, by some miracle, remained in power at the general election, the past six months of the UK presidency would have been squandered in the sterile and hostile confrontation that marked its last years in office. By contrast, we can look back with satisfaction on six months of steady achievement.
We have given a successful launch to an historic process of enlargement that will change the face of Europe; delivered real progress on our people's agenda of jobs, the environment and the fight against crime and drugs; developed a clear sense of direction for reform of the common agricultural policy; and injected momentum into the Agenda 2000 negotiations. Furthermore, we are winning the debate in Europe on subsidiarity, with the result that at Cardiff, we can launch a discussion that will confirm Europe's future as a union of sovereign states, not as one single, centralised state.
That is a record of achievement in which the whole of Britain is welcome to share our pride, including even the Conservative party, if it chooses to come out of the bunker, blinking into the light of the modern Europe. It is against that solid record of achievement through our presidency that we go to Cardiff, confident that we have set the right agenda for a constructive exchange and that it is we, not the Conservative party, who represent Britain at Cardiff, because it is we who represent the views of the people of Britain on Europe.
5.48 pm
Mr. Michael Howard: May I begin with one of the few points on which I agree with the Foreign Secretary? I welcome the fact that the European Council is taking place in Cardiff, in my native land, and I place on record the fact that it is taking place there largely because of the influence exerted by my right hon. Friend the Leader of the Opposition when he was Secretary of State for Wales. Apart from that, I fear that there will not be a great deal on which I can agree with the right hon. Gentleman.
No one has ever accused the Foreign Secretary of false modesty, but the speech that we have just heard was one of insufferable complacency and self-congratulation, born more of his fantasies than of the real world. Let us now return to the real world.
A couple of weeks ago, he addressed the European Parliament. I, alas, was not present, but it was not necessary to be present to judge the impact of the speech.

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The very next day, Members of the European Parliament voted on a motion that congratulated the United Kingdom presidency on its achievements, a motion tabled by Labour Members of the Parliament, who form the largest group of the party of European Socialists. That party, and its allies, has an overall majority in the Parliament, so the prospects for the motion must have seemed auspicious. Yet such was the impact of the Foreign Secretary's speech that the motion was lost. The European Parliament declined to offer the UK presidency its congratulations.
The Foreign Secretary had done it again. The man who single-handedly bungled the royal visit to India, who caused grave offence during his visit to Israel and who has done more than anyone to bring the concept of ethics into disrepute had once more snatched defeat from the jaws of victory.
Mr. Roger Casale: Can the right hon. Gentleman say what sort of approval rating he might have had from the European Parliament if he had been Foreign Secretary over the past six months?
Mr. Howard: I cannot answer that, because I have never had the great privilege of holding that office, but I can approach an answer.
The Foreign Secretary is fond of comparing the Government's attitude to and record on Europe to the attitude and record of their predecessor. An instructive comparison is, indeed, to be made. This was not the first time that the European Parliament voted on a British presidency. The European Parliament was addressed by a Foreign Secretary—Lord Hurd of Westwell—during our last presidency in 1992. Then, too, there was a vote on the UK presidency on the day after the Foreign Secretary addressed the Parliament. Once again, the motion was tabled by Labour MEPs, and it criticised the UK presidency. On that occasion, too, the motion was lost. The European Parliament took a more favourable view of that Conservative presidency than of the current Labour one. I hope that the Foreign Secretary will add that comparison to the list of which he is so proud.
Mr. Donald Anderson: The right hon. and learned Gentleman is labouring his point. Perhaps he does not speak, for some reason, to Conservative Members of the European Parliament, but had he gone beyond the press reports he might have learnt that part of the reason for that vote was the view of many MEPs that the motion, a month before the end of the presidency, was premature. There was also concern about the European central bank fracas, which had nothing to do with my right hon. Friend the Foreign Secretary.
Mr. Howard: I shall have a word to say about what the hon. Gentleman describes as the European central bank fracas. His view that it had nothing to do with the UK presidency is by no means shared in the European Parliament or elsewhere in the councils of Europe.
The vote of the European Parliament two weeks ago was a humiliation for the Foreign Secretary. Behind that humiliation lies another truth: the presidency has been a flop. What a contrast with the high hopes set out six months ago. The Prime Minister and the Foreign
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Secretary were going to transform the continent. The Foreign Secretary told us that the presidency would provide
"a clear opportunity to demonstrate that Europe can deliver on the concerns of our people."
The Government, he said, were to offer
"active leadership in the world."—[Official Report, 4 December 1997; Vol. 302, c. 521–22.]
The Foreign Secretary was so full of the prospects for the presidency that he quoted from the European press, telling us that we should read what the European papers said about the new Labour Government. I am always keen to take the Foreign Secretary's advice, and I have been reading the foreign press. The French journalist Pierre Beglau, writing for the magazine Le Point, said:
"The British Presidency of the European Union is … one of the most timid and poor in recent years."
The Italian newspaper Il Sole Venti Quatre Ore discovered what we have long known. There seemed, it said,
"to be a growing disparity between proclaimed intentions and reality."
Nowhere was that disparity more marked than in the half-term report that the Government published in March. I am not surprised that the Foreign Secretary did not refer to that half-term report. The House will understand why in a moment. The report was a British innovation. There is no tradition of half-term reports, but the Foreign Secretary was so keen to trumpet his achievements that he was determined to break new ground. The report was introduced by the Prime Minister in typical fashion. Great progress was being made, he said, on a number of policy issues. He added:
"Robin Cook has done a brilliant job in bringing together Ministers quickly and reaching agreement to help sort things out rapidly."
What were the 45 successes attributed to the British presidency in that report? The Secretary of State for Education and Employment had chaired a meeting about life-long learning. The need for measures to lower telephone bills was highlighted. A seminar of Government press officers was held, at which agreement was reached to disseminate more information on the EU via the internet. And what of the Foreign Secretary? Well, he was praised for "injecting new impetus" into the middle east peace process. Not a lot of people saw it that way at the time.
The whole ludicrous, self-serving exercise was viewed with incredulity by our European partners. One German diplomat said:
"It's funny, we always thought the British style was understated."
It is little wonder that we are now told, and perhaps the Foreign Secretary will confirm it, that the Government have abandoned their intention to follow up the ludicrous half-time report with a full-time assessment of their performance. There is not going to be a full-time report. The Government have at last recognised the only appropriate verdict on their presidency—the least said, the better. That did not stop the Foreign Secretary producing a half-time report, but he is not producing a full-time report because there is very little to say.
It is little wonder that, instead of dwelling on the achievements of the UK presidency—only three weeks from its end—the Foreign Secretary chose to spend much

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of his time today on the problems of Kosovo. Those problems are, of course, acute, and I do not underestimate them for one moment. The whole House will want to join him in expressing our dismay at the emergence once more of violence, murder and rape in the Balkans.
However, the Foreign Secretary should have made a separate statement on Kosovo so that hon. Members could question him. I hope that he will do so next week. Meanwhile, I hope that the Minister of State will tell the House why, when we have known about that problem for so long, the military options for NATO have even now not been prepared. The Secretary of State for Defence talked on the radio this morning about the need for quick action, but it was known months ago that difficulties were likely to arise in Kosovo. Why was work not put in hand then to prepare options for action? When do the Government intend to approach the Security Council for authority to take action? What action do they have in mind? Will the Minister of State assure us that any such action will have clear objectives, and that the Foreign Secretary will return to the House to make a proper statement before action is taken?
Mr. Mike Gapes: Will the right hon. and learned Gentleman confirm that the situation in Kosovo dates back at least 10 years, and that there have been growing problems? It has until now been a peaceful conflict, without the kind of military intervention that we have seen in the past few weeks. There has been no fighting or incursions in the border area. The current situation is far more serious than when the right hon. and learned Gentleman was in government.
Mr. Howard: I thought that one of the tasks of the Foreign Office and the Foreign Secretary was to anticipate what might happen in the world. It has not taken genius to anticipate that, for a very long time, the problem in Kosovo could have burst into the kind of violence that we have seen in recent weeks. NATO should have been asked some time ago to prepare options for action. It is astonishing that we were told only a week ago that NATO might have options ready for those who need to take these most serious decisions by the end of this month. Given that the seriousness of the position in Kosovo has been known, and raised in the House, for months, it is astonishing that NATO was not asked earlier to put the work on options in hand.
Mr. Alan W. Williams: Will the right hon. and learned Gentleman contrast the situation in Kosovo and the meetings and preparations involved with those made by his Government two years ago, when there was civil war in Bosnia? For years, while tens of thousands of people were being killed, his Government remained inactive on the sidelines.
Mr. Howard: I do not recall the Labour party when in opposition calling for military action in Bosnia at an earlier date than that at which it occurred. I do not think that there was much dispute between the parties then about what should be done.
Mr. Robin Cook: I understand that the right hon. and learned Gentleman was busy running the Home Office and was not present in foreign affairs debates, but I assure him that, for two years, we persisted in
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demanding more robust action in Bosnia. Preparations on the options available for NATO have been made for some time. We have no intention of publicly announcing in advance what those options might be to prepare President Milosevic, but we have been preparing them. That is in stark contrast to the way in which the previous Government spent years before they finally geared themselves up to intervening in Bosnia.
Mr. Howard: I do not think that we want to turn this into a debate on Bosnia, although I am happy to do so. I am talking about Kosovo, which is a serious problem. It was mentioned by the Foreign Secretary in this debate. It is astonishing that we were told at the end of last week that NATO might have its options on military action ready by the end of this month. Given the time that we have had to anticipate the difficulties that have arisen in Kosovo, that is an extraordinary state of affairs, and those who are responsible for it have a good deal to explain.
Mr. Menzies Campbell: I congratulate the right hon. and learned Gentleman on the elegance of his language, but we should not allow our admiration for that to conceal the fact that he has not shared with the House his proposals on Kosovo.
Mr. Howard: I would dearly like to see the NATO options, as I am sure would the hon. and learned Gentleman. Alas, I have not seen them. Clearly, several steps could be taken. I hope that we will have a proper opportunity to discuss the matter and that the Foreign Secretary will come to the House to make a statement on it. We can then have an informed discussion. I hope that we will be told a little more about how he intends to proceed.
Let consider how the achievements of the presidency match up to its promises and examine the key areas, the themes set out by the Prime Minister six months ago. First, there is economic reform. Has a single job been created as a result of action taken by the UK presidency? Has even one of the 18 million people unemployed across the European Union benefited from the rhetoric of the Prime Minister and the Foreign Secretary? Unemployment in the UK is 6.4 per cent. That is still too high, but in Germany it stands at 11.4 per cent., in Belgium and France at 11.9 per cent., in Italy at 12 per cent. and in Spain at 19.6 per cent.
Even the Minister without Portfolio, speaking in Florence on one of his many forays into the Foreign Secretary's territory, recognised that job creation is the most difficult of all the issues that Europe faces. How can Labour speak with any authority on the subject when it embraces the job-destroying social chapter of the Maastricht treaty and when one of its close socialist allies in France sees the answer to the crippling unemployment from which it suffers in a 35-hour week?
What of the
"cost and waste of the Common Agricultural Policy"
which
"continue to grow year by year?"
Those were the words used by the Prime Minister when he launched the UK presidency in December. Not a word passed the Foreign Secretary's lips this evening about

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the CAP. There is no progress to report on the CAP, but the Foreign Secretary promised that its reform would be one of the key themes of the presidency. He said:
"We need a reformed CAP which gives a better deal all round—fair prices for consumers, flexibility for farmers, protection for the environment."
We all agree, but the CAP collapsed after the first meeting and member states have so far failed to find a common position to negotiate. Even the Foreign Secretary could not bring himself to claim that as one of the achievements of his presidency. CAP reform is buried in the small print of the half-term report.
What of enlargement? Labour's general election manifesto called it "a high priority". The Foreign Secretary said that getting it off to a good start was
"the step that will have the biggest impact on the shape of the European Union into the next century."
I agree. We regard enlargement of the European Union as the historic mission of our generation, but what evidence is there of progress?
The Prime Minister of Finland said that enlargement is
"looking more problematic than it did a year ago."
The truth is that we are going backwards, not forwards, in terms of progress on enlargement. Relations between the European Union and Turkey are at an all-time low. The Foreign Secretary completely failed in his efforts to persuade Turkey to attend the annual European Union-Turkey association meeting, yet he says that he is not disappointed. One shudders to imagine what would have to happen before he confessed himself discouraged.
The Cardiff summit will not be first European Union summit over which the Prime Minister has presided. He presided over the summit on economic and monetary union at the beginning of May, to which the hon. Member for Swansea, East (Mr. Anderson) referred. The Prime Minister's performance there did not receive rave notices. The Prime Minister of Luxembourg concluded that the summit proceedings were "absolutely shameful". The Italian Prime Minister, an ally in the Party of European Socialists, said that the Prime Minister was
"ill prepared for the negotiations".
The Austrian Chancellor, another ally in the Party of European Socialists, said that there were people much more experienced than he who said they had never seen anything like it. He added:
"We have now learnt how not to organise a summit."
That is the reality of the performance of the UK presidency, not the fantasy world into which the Foreign Secretary took us in his speech.
Nowhere has the gap between the Government's rhetoric and reality been greater than in the humiliation of the Chancellor of the Exchequer over the Euro X committee only a few days ago.
Mr. Alan W. Williams: Does the right hon. and learned Gentleman concede that, at the end of the day, a successful euro will be launched on 1 January next year with 11 member countries? One shudders to think what would have happened if the right hon. Member for Huntingdon (Mr. Major) had been president at the Brussels summit.
Mr. Howard: I do not agree. The truth is that the Prime Minister went to that summit pledged to ensure that there
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was no fudge and no fiddle. What happened was fudge and fiddle on a grand scale. It was fudge and fiddle not only in allowing member states that did not begin to comply with the criteria set out at Maastricht to join the single currency but in what was described by the hon. Member for Swansea, East as the fracas over the presidency of the central bank. To claim that summit as a success is to fly in the face of the facts, and it will convince no one.
Mr. Bill Rammell: The right hon. and learned Gentleman and his party have made much about the convergence of Belgium and Italy on the key criteria. I think that that is a fig leaf for attacking the single currency in principle. Had the Conservative party won the general election, and had you been in power at the summit, would you—
Mr. Deputy Speaker (Mr. Michael Lord): Order. The hon. Gentleman must try to use the correct parliamentary language.
Mr. Rammell: My apologies, Mr. Deputy Speaker.
Had the Conservative party been in government at that summit and succeeded in negotiating the exclusion of Belgium and Italy, would the right hon. and learned Gentleman have been satisfied to proceed with the single currency on the basis of nine nations?
Mr. Howard: Of course. It has never been the view of my party that, if other member states wish to proceed with the single currency in accordance with the criteria set out in the Maastricht treaty, they should not do so. Of course they are perfectly entitled to do so. All that we would have insisted on would have been a firm application of the Maastricht criteria. They were set out in that treaty and they should have been observed. The Prime Minister said that he would ensure that they were observed, yet he did not. That is not likely to be conducive to the success of the single currency.
Mr. Robin Cook: I would not dream of pressing the right hon. and learned Gentleman to tell us the circumstances in which he would join. My question is much more modest. He chides the Government for having taken too long at that particular summit meeting. Will he give the House some estimate of how long the meeting would have been had he been chairing it and telling a number of those countries that qualified that they could not take part?
Mr. Howard: The Foreign Secretary is entirely wrong. I never mentioned the length of the meeting. The criticisms of the way in which the meeting was conducted go far deeper than its length. That is made perfectly clear in the quotations that I have cited. The right hon. Gentleman does not need to take it from me. If the Austrian Chancellor says that this was an example of how a summit should not be run, he should be listened to with some respect.
I understand why that little flurry of interventions was designed to divert the attention of the House from the Euro X committee. It was the committee over which the Prime Minister fought such a public battle last year. As usual, he claimed a great victory. He said that he had got exactly what he wanted, that we would not be

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excluded from the committee's meetings and that all his aims had been achieved. What happened? When the Chancellor of the Exchequer turned up to chair the meeting, he was allowed to stay for an hour and then he was asked to leave. He was not even invited to dinner. Officials of the European Commission referred to him as a "gatecrasher".
That humiliation is the reality behind all the Government's claims to be leading in Europe. That is the reward for all those sacrifices of our sovereignty at Amsterdam. That is the background against which the Cardiff summit will take place.
In the past couple of days, we have witnessed an attempt by Chancellor Kohl and President Chirac to hijack the agenda for the summit. We have seen the patronising text of their letter to the boy Blair. We have seen how, under cover of lip service to subsidiarity, they make calls for further moves towards political union.
Mr. Gapes: Does the right hon. and learned Gentleman recall that, regularly over the past 10 years, the Christian Democrat leaders in Germany and the Socialist or Gaullist leaders in France have issued joint communiques prior to virtually every European summit, whether it was held in this or in another country? For example, President Mitterrand issued joint communiques with Chancellor Kohl. Will the right hon. and learned Gentleman confirm that that is a regular occurrence?
Mr. Howard: It is a regular occurrence, but if the hon. Gentleman looks back under previous documents of this kind, he will find that the tone is somewhat different. I want to draw attention to the way in which in this document, under cover of lip service to subsidiarity, those leaders make calls for further moves towards political union.
May we have an assurance from the Minister of State when he winds up the debate that any such calls at Cardiff for further political integration and union will be resisted? May we have an assurance that one last attempt will be made to achieve the goals of the presidency with which, as I said when we last debated these issues six months ago, we substantially agree? May we have an assurance that, this time, the Prime Minister will make a real effort to rescue the United Kingdom presidency from the ignominy into which it has fallen?
The Cardiff summit should be the crowning glory of the UK presidency. Instead, it is likely to be its farewell whimper. I hope that my forebodings are misplaced. I suspect that they will be amply justified.

ROYAL ASSENT
Mr. Deputy Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

Petroleum Act 1998

Audit Commission Act 1998

Community Care (Residential Accommodation) Act 1998

Late Payment of Commercial Debts (Interest) Act 1998

European Communities (Amendment) Act 1998

Cardiff European Council
Question again proposed, That this House do now adjourn.
6.14 pm
Mr. Donald Anderson: I join the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) at least in this: I welcome the fact that the Council is being held in Cardiff. I should have preferred it to be held in Swansea, but I concede that there is a stronger case for the Council to be held in Cardiff than there is for Cardiff to be the site of the assembly.
The right hon. and learned Gentleman made a number of points, most of which were rather petty. Clearly, he had trawled through a series of newspapers in Europe in the hope of finding some criticism of the Prime Minister. He emerged with one quotation from a right-wing French journal—hardly surprising—and one from an Italian journal which is very close to the Northern League—again, a rather right-wing journal. That is hardly an impressive result from what must have been an assiduous trawl by Conservative central office.
The right hon. and learned Gentleman criticised the Government for inaction over Kosovo. He hardly remembers that the real crisis there stems from 1989 when President Milosevic reduced the autonomy of both Kosovo and Vojvodina. The Government can hardly be criticised for the crisis or, indeed, for delays that come, understandably, from the hesitation of some of those in the contact group, such as Russia because of its close links with the Serbs.
The right hon. and learned Gentleman said that nothing was being done on the jobs front. Surely he recognises that the guidelines set out in the jobs summit in Luxembourg last November have been carried forward and that, for the first time, member states have produced action plans setting out how they are implementing those guidelines. In addition, a series of remarkable and new practical steps have been taken. There has been agreement on a package of venture capital support for small and medium enterprises, progress on setting priorities for the next generation of EU education, training and youth programmes, acknowledgement that the EU social fund should support national employment and lifelong learning strategies, demonstration projects and a series of meetings, including the Belfast meeting of Ministers, relating to the employability of women and issues such as child care, and a conference in Glasgow on work organisation. That is rather an impressive roll-call of initiatives on jobs.
My right hon. Friend the Foreign Secretary has set out a remarkable feast of achievements. However, a number of spectres were at the feast, and I intend to refer to some of them. Over the period of our presidency, there has been considerable success in terms of technical organisation. From a number of my European contacts, I have heard high praise for the quality of civil service support. The period from 1 January has been one of the busiest for foreign affairs in our peacetime history. That has imposed enormous burdens on Foreign Office Ministers, and Ministers in other related Departments. As my right hon. Friend the Foreign Secretary and the right hon. and learned Member for Folkestone and Hythe mentioned, there has been a record number of summits—relating to

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EU enlargement, the first Europe-China meeting, the Europe-Russia meeting, the second Asia-Europe meeting, and preparation for Lomé—which must have imposed enormous burdens on both the machinery and the personnel, not least my right hon. Friend himself.
The presidency must be seen in the context of far greater warmth towards the United Kingdom among our European colleagues. I found significant the comment made on Wednesday morning by the National Farmers Union spokesman, who said that, had an attempt been made at diktat rather than negotiation, as had been made in the past—clearly, he meant by the previous Government—there would have been no progress in respect of BSE. Like my right hon. Friend, I cannot help but wonder what would have happened during the UK presidency had it been presided over by the Conservative party, which, as was shown by the shadow Cabinet reshuffle, is being pushed further in an unrealistic Euro-sceptic direction. Our European partners, at least for the time being, are prepared to give us the benefit of the doubt, in spite of our absence—temporary, I hope—from the euro.
It is clear that several of the objectives set by the Government at the start of the UK presidency have been met. I was especially impressed that my right hon. Friend achieved an unprecedented agreement on an EU code of conduct on arms exports. The ethical dimension of the foreign policy is often derided by its critics, but that code of conduct marks a serious change.
There is increasing Euro-realism among many of the leaders in Europe. I used to deride the previous Government's claims that Europe was adopting our agenda, at a time when there was clearly increasing divergence; but, in the tone of the joint letter by Chancellor Kohl and President Chirac, we see a greater willingness to accept subsidiarity, which is a theme of the Labour party. That is a highly significant acknowledgement. It was seen towards the end of last year during the Amsterdam debate in the Federal Republic of Germany, when the lander asserted their own views. It was Minister-President Biedenkopf of Saxony and the leaders of Bavaria who ensured, through the lander, that there was greater constraint on the federal Chancellor. If, as is predicted, the Social Democrats win the federal elections in September, there may well be a further move by the German federal Government in a direction that is favoured by this country.
In the past, there have been attempts to put an obstacle between France and Germany and to attract either France or Germany into the British orbit, but those attempts were misguided, because there is a clear foundation, from the Adenauer-de Gaulle era, for Franco-German friendship. I believe that Britain now has a real opportunity to enter that dialogue, not only because of the warmth towards and the acceptance of this country, but because of the direction in which the European agenda is moving and the practical vision of my right hon. Friend the Prime Minister.
I was intrigued by what my right hon. Friend the Foreign Secretary said about the discussion to be held in Cardiff on the future of Europe. I understand that that is to be a lunchtime exchange of views, so it might have been a little overblown to speak of the future vision of Europe being decided between courses. Nevertheless,
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the discussion will be worth while and it will be interesting to see what political vision my right hon. Friend the Prime Minister will feed into that lunch.
We cannot claim overmuch for our presidency, because any presidency is part of a continuum. The baton on the jobs agenda was taken up and carried forward by the UK Government after the jobs summit in Luxembourg last November. In exactly the same way, the themes that we have moulded and adapted will be taken up by our Austrian colleagues on 1 July. In my contact with the Austrians, I have been impressed by the way in which there is now a seamless gliding move from one presidency to the next, as themes are accepted and developed.
Whether the theme is jobs, the environment, crime, fraud or drugs, the overall agenda is now a people's agenda. There is a greater acceptance in the EU of the lesson taught by the first Danish referendum, which showed that the European elites had moved away from an agenda that had relevance to the people. I am glad that our Government are bringing us back to an agenda that our own people regard as relevant to their lives.
I see the importance of the scoreboard of performance in respect of the single market, which shows the greater strength of implementation, even among our Italian colleagues. The UK presidency would have been seen as an historic one in any case, because of the major decisions that had to be made on enlargement and on the European currency, but the success with which both those major advances have been completed is worthy of note; for example, on enlargement, the pre-accession strategies and dossiers have been agreed.
I was disappointed that my right hon. Friend the Foreign Secretary did not dwell on the subject of Turkey. Although the snub to Turkey did not come during the UK presidency but in Luxembourg in December last year, Turkey had reasonable cause for dissatisfaction, and my right hon. Friend has tried hard to build bridges with Turkey. I hope that my hon. Friend the Minister of State, who is to reply to the debate, will say something about whether Turkey has so far indicated that it is prepared to enter a dialogue on the Commission suggestions on building bridges.
I also hope that something will be said about the meeting in Glasgow on Monday, in which a number of threats were made about delaying enlargement because of concerns about regional funds among those who benefit so substantially from them and who fear their loss, especially the Iberian countries, Greece and Ireland. Because of the German elections, I suspect that there will not be as much progress made in Wales as we might want on revision and agreement of regional aid.
It is fair to say that the euro was launched well, in spite of the fracas. The markets have spoken more eloquently than the politicians by responding favourably, then and now.
A month or two ago, it was assumed that the Cardiff Council would be one of consolidation and continued preparation for the Austrian and, subsequently, the German presidencies. Since then, an amendment has been moved in terms of the major foreign policy crises that have overcome the smooth functioning of the presidency. I recall a distinguished former Labour Foreign Secretary, Michael Stewart, telling me that his nightmare as Foreign Secretary was that, at any one point in the day, two thirds

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of the world was awake and capable of causing mischief. I fear that the Foreign Secretary must share that same nightmare.
There have been several crises over the past six months in respect of Iraq, Algeria and Indonesia, and I compliment the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Leeds, Central (Mr. Fatchett), on acting consummately and very sure-footedly in respect of each. Now, we must face the situation in Kosovo, nuclear tests and the middle east crisis—as well as, perhaps, the fact that Germany is raising questions over its financial contributions to the EU. The common theme is surely the absence of decisive leadership from the United States of America, whether on Kosovo, the middle east or elsewhere.
The challenge for Europe, particularly in respect of the Balkans, which is on our doorstep, is what we will do. If Europe is to be taken seriously in foreign affairs, as the common foreign and security policy apparatus is put in place following the Amsterdam treaty, we must ask ourselves whether the troika arrangement—in this case Luxembourg, United Kingdom and Austria—raises Europe's credibility and provides essential leadership.
In spite of the difficulties, the Government can take some considerable satisfaction from the way in which they have handled the presidency. They have ensured a smooth glide into the Austrian presidency. Lasting foundations for a stronger Europe have been laid.
6.31 pm
Mr. David Heath: It is curious that, despite being told that Europe is such a vibrant issue in this place, fewer than 20 hon. Members are present for this essential debate on the eve of the Cardiff Council. It is extraordinary that it attracts so little interest. Nevertheless, this is a very important and interesting debate.
I listened with care, as I always do, to the right hon. and learned Member for Folkestone and Hythe (Mr. Howard). I am in some difficulty because I share some of his elegantly phrased analysis of the British presidency, but, of course, I disagree with some of his conclusions. I find it extremely curious to suggest that the Conservatives, had they been in a position to do so, would have done better than the present Government. All recent history defies that proposition.
The right hon. and learned Member was right to draw attention to the start of the British presidency. The Government came in like a lion, but are going out rather like a lamb. There was the overblown hoo-hah, as the expression goes, of the advent of the British presidency. There were loud fanfares, loud assertions and even louder ties. Indeed, I see that the Minister with responsibility for Europe is sporting one.
It was probable that the rhetoric could never have matched the actions during the presidency, however successful Ministers were. That expectation has been justified by events. The British presidency has not achieved all the objectives set, and probably could never have done so. The rather offensive proposition—to many of our partner nations in Europe—that a newly elected Government would suddenly lead Europe has not been borne out by events.
The hon. Member for Swansea, East (Mr. Anderson), the Chairman of the Foreign Affairs Committee, suggested that there was a feast of achievement to
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celebrate. I must say that it is rather a jejune feast, although there have been successes, and it is right that we should pay tribute to them. The accession talks, for instance, were well managed. I am pleased that progress has been made.
It is probably unfashionable to do so, but I congratulate the Minister of Agriculture, Fisheries and Food on his activities in Europe. He has made a complete mess of agriculture at home, but in discussions in Europe to promote such matters as the lifting of the beef ban, he has done a fair amount of good work.
The European Union code of conduct on arms sales, which the hon. Member for Swansea, East mentioned, will be seen as the single most important achievement of the presidency. We were disappointed by the code's final form; it could and should have gone further and been a more transparent arrangement. Nevertheless, it is a signal achievement to have got so far—which makes it even more surprising that it was not mentioned in the Prime Minister's half-term report, which, as the right hon. and learned Member for Folkestone and Hythe said, was more of a half-baked report. It laid claims to great successes that amounted to no more than holding a meeting or having a half-formed idea of something that might be good in the short term.
The Government have some cause for celebration.
Mr. Donald Anderson: I hope that the hon. Gentleman would fairly agree that any criticisms about the inadequacies of the code of conduct should be laid at the feet not of the Government but of the attempts to gain consensus among more reluctant partner countries.
Mr. Heath: The hon. Gentleman is, of course, right in part; it was a process of negotiation. I believe that that process could have been taken forward had it been more open. Certain partner nations might have put rather more pressure on those more reluctant nations—let us not be mealy-mouthed—such as a particular one just across the English channel, which it might be said took a slightly different view. Nevertheless, let us simply accept that something has been done which should have been done, and a start has been made.
I agree with the Foreign Secretary that there is a record of environmental achievements; there have been tangible successes. There have also been moves towards more openness and accountability in EU structures—although not as quick as I would have liked. The baton of the Amsterdam treaty should have been picked up—without waiting for ratification—and taken forward on some suggestions which, under the treaty, require two years to be achieved. Nevertheless, some progress has been made.
Set against that background, there are the failures. The negotiations on European monetary union were a mess—by the Prime Minister's own admission. They did very little to promote the idea of a strong and stable arrangement which is consistent with the independence that is so crucial to the success of monetary union.
As far as I know, there has not been any success in cutting the costs of the EU. None of the range of options that we and others have put forward for cutting costs has been promoted or proceeded with. For example, it is a monstrosity that £700 million a year is spent on promoting the growth of tobacco—a substance which every member

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state's health department is actively trying to discourage people using. That needs to be addressed in double-quick time.
We have made very little progress on reform of the common agricultural policy and the common fisheries policy. The Agenda 2000 proposals are on the table, but no more than that. The most important thing that Ministers can achieve at the Cardiff summit is the establishment of a firm timetable for progress on talks concerning not just reform of the CAP and the CFP but of the structural cohesion fund and the institutions. Talks on each of those matters needs a firm timetable. Europe does not work without deadlines to meet. Those deadlines must be set if there is any hope of success.
I do not believe that we have seen a strengthening of common foreign and security policy across Europe. Indeed, some of the Government's actions over recent months have been retrograde in that respect. It cannot have been good for European cohesion for Britain to act on the difficult subject of Iraq as if it were a member of the permanent two rather than the President of the EU. Algeria is another example of the European Union signally failing to make the impact that it should have done on a significant problem on its doorstep.
We can set against that the position in Kosovo, on which the Foreign Secretary spoke at length. Liberal Democrat Members will give him every support in his proposals. I make two pleas to him: first, that he makes every possible effort to involve Mr. Primakov and the Russian Government in any demarche that is available to him. It is essential that the Russians use their influence on Mr. Milosevic, because no one else has the same reach. Secondly, he should consider carefully the position in the former Yugoslav Republic of Macedonia, which is in grave peril from an overspill of the problems in Kosovo, and the position in Montenegro, because there could be a serious destabilising effect on that country. We could witness further inflammation in the Balkans.
The right hon. and learned Member for Folkestone and Hythe was clear in his criticism about NATO's lack of preparation. I do not recall—he may correct me because he remembers his words better than I—his mentioning that point when we heard a statement on Kosovo a few weeks ago. I do not remember the right hon. and learned Gentleman making an explicit request—perhaps he did, or perhaps he has thought it up since then.
Mr. Howard: I made certain suggestions at that time—for example, concerning the stationing and reinforcement of United Nations troops in Macedonia—some of which have now been implemented. However, it never occurred to me that NATO had not prepared its options. There was no suggestion at that stage that it had not done so, and I assumed that it had. It was only when I read newspaper reports about a week ago that I had the first inkling that those options were, astonishingly, still under preparation.
Mr. Heath: Of course, I take it at face value that the right hon. and learned Gentleman made those implicit assumptions.
The Government have further failed in the parliamentary scrutiny of European Union matters within the United Kingdom. We heard from the Leader of the
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House earlier that proposals on that may be made shortly. I hope that they are, because it is essential that Britain has more effective parliamentary scrutiny of European affairs. There is a series of measures that would achieve that higher level of scrutiny.
The real opportunity in Cardiff, which has already been mentioned by several Members, is for the new start to the European institutions offered by the letter from Chancellor Kohl and President Chirac. It lays out important positions that the Government, by the happenstance of the UK presidency, have the opportunity to achieve. I am astonished by the language used in the letter, because some of it could have been written by members of my party's policy division. I see no difference between the subsidiarity proposals in the letter and the proposals that we have repeatedly made. It is interesting that the letter begins with the suggestion of
"an open and sober discussion at the European Council",
for which the lunchtime venue does not bode well.
The letter goes on categorically to state:
"It cannot be the goal of European policy to establish a European central state".
Hear, hear. It adds that
"some European institutions are becoming increasingly remote from the citizens and their day-to-day problems",
which is absolutely right. The letter also says that decisions should be
"taken as closely as possible to the citizen. Citizens will only become more strongly committed to the common Europe if decision-making processes are clearly understandable and transparent".
We have made precisely that point on many occasions. There is a need to reform Europe's institutions.
Perhaps it is now time to look beyond the rather flimsy protocol on subsidiarity that was appended to the Amsterdam treaty. I have criticisms of that: it was essentially a good thing, but it does not go far enough. We should consider a far more fundamental review of the levels at which decisions are made and, perhaps, try to achieve a concordat or protocol—call it what one will—that will establish once and for all where power is appropriately exercised in the different tiers of European Government, whether it is at the national tier or the regional and local tier.
We need a clear mechanism for ensuring that power does not gravitate to the centre, but is deployed at the lowest possible level. That is now a prerequisite for the development of a European Union that works for the citizens of Europe.
My criticism of the protocol in the Amsterdam treaty is that it is not an acquis communautaire; it leaves in place everything that has already been decided. We are talking about a new Europe with new problems and challenges. It is right that we consider whether what was decided in the past is necessarily right for the new Europe. The principle that Europe should do less, but do it better should commend itself to the House.
Finally, one outcome of the Cardiff Council must be a clear understanding on the timetable for the series of reforms that I have mentioned and a continuity beyond the British presidency into the Austrian, German and Finnish presidencies so that there is a continuum of reform that makes Europe a better place for its citizens. If Ministers can achieve that at the Cardiff summit, they will have served this country and Europe well.
6.46 pm
Mr. Alan W. Williams: I am glad to have the opportunity to take part in this debate on the eve of the European Council in Cardiff, and to add a Welsh voice to the proceedings.
I am delighted that we had the news yesterday from the European Commission that there are strong moves towards lifting the beef ban. Naturally, for my constituents in the very rural area that I represent, the beef ban has been a severe problem over the past two years. I follow these issues carefully and I know that, over the past months, the Minister of Agriculture, Fisheries and Food and his officials have worked hard in Brussels with the Commission to develop, first, the certified herd scheme and, now, the date-based scheme. If that scheme is passed by the veterinary committee and, eventually, the Council of Ministers, it will mean a lifting of the ban over the next few weeks and months. It may take years rather than months, but we expect to recapture the export markets that were once held by British beef. That will help to raise prices. I am pleased that that announcement was made yesterday. It forms an optimistic backdrop to the weekend's proceedings.
More generally on agriculture, there is progress—it is always very slow—on reform of the common agricultural policy. That is now driven by Agenda 2000 and the need, with enlargement, to devote relatively fewer resources to agriculture in those structural reforms. It is important that we move away from production-based subsidies. In the past few months, one of the problems in the disbursal of the £85 million that came from the Government last Christmas is that the small farmers, who needed most help, were receiving the least. Those with large stocks of animals received the most help, but needed the least. There is a perversion in the CAP, in that 80 per cent. of the money goes to the richest 20 per cent. of farmers. We need to move away from such production-based support to a system that is based rather on people or units of labour and the environment. Our farmers, especially in the upland areas, do an enormous amount of work to maintain the environment and to make the countryside attractive to tourists. The support structures must take account of that.
My hon. Friend the Member for Swansea, East (Mr. Anderson) referred to the importance of structural funds in the Agenda 2000 discussions. West Wales and the valleys are impoverished. The cases of Merseyside and South Yorkshire for objective 1 status have been accepted by the Commission. I hope that my hon. Friend the Minister will press hard for west Wales and the valleys to be recognised as eligible for objective 1 funding. Our gross domestic product per capita is below 75 per cent. of the European average, so we qualify and we need that support.
Mr. Wigley: Does the hon. Gentleman accept that the gross domestic product per capita of his county, Dyfed, at 68 per cent. of the European average, and of Mid-Glamorgan at 62 per cent. and Gwynedd at 72 per cent. of the European average, are all below the GDP per capita of South Yorkshire and Merseyside, and therefore should certainly be granted objective 1 status?
Mr. Williams: I am grateful to my colleague, the right hon. Member for Caernarfon (Mr. Wigley), for giving the latest statistics on our inheritance after 18 years of
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Conservative rule. We have lost much of our heavy industry in the industrialised parts of Wales, and west Wales has more difficulty in attracting inward investment such as Clwyd and south-east Wales have successfully attracted. Our case for European funding is strong, and I hope that it will be strongly argued by the Government.
When the history of the United Kingdom presidency is written, the most important single issue of the past six months—despite the difficulties of that weekend in Brussels—will have been the establishment of the single currency. It will start on 1 January 1999, with 11 countries signed up to it. I am disappointed, of course, that Britain is not a member. We could not join, because of our inheritance. In the discussions on the Maastricht treaty, the right hon. Member for Huntingdon (Mr. Major) achieved the opt-out from the social chapter and from economic and monetary union. A new Labour Government could not quickly join the single currency.
The Government are setting out the pathway. We are working with the public, the trade unions and business towards eventual membership of the single currency, which I hope will come early in the next Parliament. From the sidelines, we wish it well. Whether we are in or out, it is important for economic prosperity that the euro is a success. I note that, despite high unemployment, growth is returning to the economies of France and Germany. The latest figures are 3.5 per cent. growth in GDP in France and 3.8 per cent. in Germany. I hope that unemployment will soon start to fall in both countries.
In Britain, we must plan and work diligently for membership on 1 January 2002, pending a referendum. On that date, euro coins and notes go into circulation. That would be a reasonable time scale for us to join. If, as I am confident they will, our Government win the general election in 2001 or early 2002, we can hold the referendum to join by that date.
A major national debate is needed on the optimum value of the pound for joining the single currency. The pound is substantially overvalued. At DM3.10, it caused serious problems to farmers and manufacturing industry. The rate is now down to about DM2.92, but I do not believe that that is sustainable. If we joined at anything like that level, we should merely be repeating the sad experience of the exchange rate mechanism.
I do not know what the right figure is. I read all the economic commentators. I should be happy with DM2.70 or DM2.60. Some in the City favour DM2.50 or even as far down as DM2.30. There is a range of views. The Chancellor cannot give us his figure, because it is not conventional for the Chancellor to intervene in a matter that is so market-sensitive. The Confederation of British Industry, our leading businesses, trade unions, employers, chambers of trade and we as citizens should engage in a detailed debate to decide on a long-term sustainable value. For my part, it is below DM2.70. It is a critical decision, which we must get right over the next four to five years.
A further concern is the absence of any strategy to get our interest rates in line with those of France and Germany and those that will be set by the European central bank. The current interest rate of France and Germany is 3.5 per cent. Ours is 7.5 per cent. The Bank of England or the Treasury must develop a grand strategy over the next four or five years that would allow our interest rate to move from 7.5 to 3.5 per cent. Without

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creating a boom. If there was a rapid drop, there would be the danger of a house price explosion and of land values getting out of control.
We need a euro membership plan for 1999–2002, rather like the Chancellor's statement this afternoon on his fiscal strategy over the next three years, and the comprehensive spending review that will be published in July. Those critical background decisions are the Treasury's domain, but we must work on a larger national strategy for gearing ourselves to join the single currency.
We could be overtaken by events in the next year. Industrial corporations that do most of their trade on the continent will open accounts in euros. Banks will make it possible for farmers to have euro accounts. Ordinary citizens like us could open accounts in euros, instead of putting our money into building societies, for example. Indeed, there is the possibility next year of British citizens speculating against the pound by opening euro accounts, in the expectation that the pound will devalue as we approach membership.
I do not rule out the possibility of joining the exchange rate mechanism. We may need to consider that next year, if there is instability in the value of the pound. Perhaps we should join the exchange rate mechanism on 1 January 2000 at a negotiated rate. We would then be able to demonstrate stability for the two years before membership of the single currency.
Those are my thoughts on our relations with Europe. I am delighted that, despite last weekend's difficulties, the single currency will be launched on target on 1 January next year. I am convinced that it will be a great success and that we should join it. As the Foreign Secretary and the Chairman of the Foreign Affairs Committee, my hon. Friend the Member for Swansea, East (Mr. Anderson), said earlier, when we look back on our presidency, we can be proud of many achievements in the past six months. It was never going to be an easy task because of our inheritance of Euro-scepticism from the previous Government. Relations with our European partners were badly damaged during the period of non-co-operation over the beef ban, and we have tried to repair that damage in the past 12 or 18 months.
Let us look forward three, five or 10 years. I hope that there will be a change of Government in Germany and that the new Administration will be more centrist or centre left. The days of President Chirac in France are numbered, and I hope that we shall see a new social democratic or centre-left Government. In three or five years' time, I hope that the European Union will lean more to the centre left and will be very much in tune with the philosophy of the new Labour party. I believe that our influence will become stronger over the years and that we shall pull Britain back into the heart of Europe.
7.1 pm
Mr. Bowen Wells: In preparing my remarks for today's debate, I sought not to offend the Government because I want them to work enthusiastically towards achieving some objectives—particularly in development and including the renegotiation of the Lom é convention—before our presidency ends at the end of June. The Government set themselves the objective of agreeing the European
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Union's negotiating mandate for the renewal of the Lom é convention, which expires at the end of 2000. I understand that a ministerial meeting took place on Monday in an attempt to settle the matter, but I have not heard that real progress has been made. If it has, I hope that the Minister will inform the House what has been achieved. That is one item that I wish to highlight.
I was provoked by the speech of the Secretary of State for Foreign Affairs. I have rarely heard in the House such a self-satisfied and smug speech about the Government's achievements during our presidency. There has clearly been modest progress in some areas, but it is very modest. Let us take the issue of arms exports, about which we are all concerned. The Foreign Secretary heralded the agreement on the European Union's conduct of arms sales as a great achievement, but he over-egged the pudding. I suppose that we should be used to that from the Labour party, which trumpets the most modest progress to the press and the media as a great triumph.
I do not wish to upset the Government: they have tried, but they have made only a modest achievement. The Foreign Secretary did not give any details of that achievement. It has been agreed that, if any European nation refuses a licence to export arms, it must inform the other member states. That is progress—and we hope to build upon it—but it is very slight progress; we cannot claim that it is a huge advance. Let us be modest about it: we have a huge way to go in controlling arms sales and ensuring that arms are not sold to people with genocidal intentions or to countries that wish to control their populations by military means, such as Sierra Leone, Nigeria, Indonesia or anywhere else. We have a long way to go before we secure agreement on that matter, but some progress has been made.
The Foreign Secretary trumpeted the achievement of the subsidiarity letter of Kohl and Chirac. It is mind-boggling that we are asked to believe that that represents progress. The hon. Member for East Carmarthen and Dinefwr (Mr. Williams) and the Foreign Secretary extolled the virtues of economic and monetary union, but there is no more centralising policy adopted by the European Union than the decision to form a single currency. West Wales will rue the day that it had an advocate such as the hon. Member for East Carmarthen and Dinefwr, who believes in the single currency. If the people of west Wales think that they are isolated from economic decision making in Britain, they will be even more isolated in Europe.
The hon. Member for Somerton and Frome (Mr. Heath) and I are in passionate agreement about subsidiarity: we welcome it. However, the Amsterdam treaty allows the European Commission to veto the appointment of Commissioners. That is a huge accretion of power to the centralised bureaucracy and to the President of the European Union. Let us see these great declarations for what they are: a mechanism for controlling political activity in Europe that is hostile to the increasing accretion of power in Brussels. In France and in Germany, they say, "Don't worry, old chaps, we believe that decisions should be taken as near to the people as possible, but we won't do anything about it. We shall do the reverse." We should not be fooled by the great declarations.
I return to the question of the management of aid under the Lomé convention, the renegotiation of that convention and the mandate that we must give to our European Union

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negotiators. I share the Government's ambition to achieve agreement during the United Kingdom presidency. That aim has not yet been realised, but there is still time. The International Development Committee has published a report on the matter—which I commend strongly to the House—which suggests that the European Union's approach to the issue is seriously flawed. I hope that I am right in assuming that the Government have not made progress because there is serious disagreement about the way in which the European Union should negotiate with the African, Caribbean and Pacific nations, which are the other parties to the Lomé convention.
The trade proposals are particularly damaging. The European Union proposes to enter into trade agreements with some of the poorest countries—which are African, Caribbean and Pacific nations—only if it can enter reciprocal free trade areas. The Lomé convention gives European Union countries free trade access to the European market, but they are now demanding free access to other markets. It has been calculated that, if that occurs, the value of 40 per cent. of European Union aid to vulnerable countries will disappear.
Under the agreement, which it has proposed, the EU will achieve huge trade advantages in respect of those small countries. What will that do to those vulnerable countries? South Africa is not as vulnerable in trade terms as countries such as Mozambique and Rwanda, but we should consider the EU's negotiations with it. At present, they have taken three years, and there is still no agreement. The EU is to give only five years for all those countries to enter into free trade agreements, yet it has not reached agreement with South Africa in three years.
Let us consider a little homespun story: the EU subsidises the production of tinned tomatoes, which it over-produces. Subsidised tinned tomatoes are exported to South Africa, now that it has opened up its markets at the request of the EU. What has that done to the tinned tomato factories of South Africa, which have traditionally exported to this country, to Europe and around the world? It has closed one factory and put more than 400 people out of work. That is an example of what the EU is trying to negotiate, not only with middle-income countries such as South Africa, but with the poorest countries of this world.
There has been a serious reversal of the trade policy that this country has offered to certain countries, some of which have been associated with us for 450 to 500 years. The EU wants us to abandon them and wants to force them into integrated free trade areas. We would then negotiate from the position of what I would characterise as the EU's seriously imperial ambitions in such areas, turning them into dependent countries and reducing them to producing only primary products at prices dictated by the hugely powerful EU.
That is not the right way to negotiate with such vulnerable countries, and the report of the International Development Committee makes that clear. I commend the report to the House and to the Government, because if the mandate is allowed to be settled on such a basis, we shall have a settlement that will be damaging to the countries about which we should be most concerned—the poorest countries.
I particularly want to discuss the banana protocol. Agriculture Ministers and Foreign Ministers have said to the Select Committee that they want the completion of
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a new agreement safeguarding the small farmers of the Windward Islands from being overrun by the big companies in the banana world, such as Chiquita and Dole. Few people are involved in comparison with the number at Chiquita, Dole and Del Monte, the huge companies which dominate the world banana trade. We are dealing with a tiny number of people—in St. Lucia, St. Vincent and Dominica—whose livelihoods are based on the industry. The sale of relatively few bananas accounts for 70 per cent. of Dominica's export earnings.
We must safeguard that trade. It is no good calling on such countries to diversify—diversify into what? Drugs? No. Into other agricultural crops? No, because the competitors are much more efficient. It would be much more sensible and practical to find a way to produce a formula. I believe that Ministers had the ambition to do so and that EU officials think that they can achieve one, but none has been forthcoming so far. Therefore, I ask Ministers to make another effort in the next six weeks. In particular, I ask them not to accept the advice that they are receiving from their civil servants, who are saying that the agreement has to be compatible with World Trade Organisation criteria. It does not. If Ministers decided so to do as a matter of policy, they could apply to the WTO to be absolved from its general rules. That evidence was given to the International Development Committee by WTO officials in charge of trade with developing countries and is spelled out in the report.
The EU has it in its power to get a waiver from the WTO, if, politically, it wants to do so. In European Standing Committee B, the Minister of State was unable to answer a question on the waiver, about which I have had correspondence with him. He revealed in a letter that he is under advice from civil servants—not only from this country, but from Europe—that they do not want to go down the policy route of seeking a waiver, to safeguard banana producers in the Windward Islands. That policy is wrong, unless an agreement can be produced to safeguard those producers by other means. The current proposals would simply benefit large producers—Del Monte, in particular—on the west African coast and would exclude and eventually eliminate the banana trade from the West Indies. I beg the Government to consider that seriously.
In respect of the report on Lomé, we must ensure that the management of European aid is improved vastly. It is constantly the subject of adverse Court of Auditors reports, and delivery of aid is slow—way behind the Lomé IV target. Aid that we are supposed to be disbursing now has not even begun to be disbursed, because we have not fully signed up to Lomé IV. European offices in recipient countries are short of staff and have to refer every decision to Brussels, because ministerial meetings must decide every nuance of policy. That must be decentralised, and there should be more competent staff in the field.
The report also suggests that EU nation states' bilateral aid programmes should be co-ordinated and should work together with EU efforts. Tomorrow, we are meeting at Westminster the chairmen of the equivalents of the International Development Committee from 11 of the 15 nation states to discuss how we can do that. Mr. Rocard, the chairman of the European Parliament Development Committee, is also attending, so we hope to contribute to the co-ordination of aid policy and its efficient delivery. I ask Ministers to redouble their efforts to reach agreement on the negotiating mandate for the Lomé convention before the end of our presidency.
7.17 pm
Mr. Mike Gapes: It is a pleasure to speak after the hon. Member for Hertford and Stortford (Mr. Wells), who made an interesting reference to the World Trade Organisation. Although my right hon. Friend the Foreign Secretary did not refer to it in his speech, the European Union, under the British presidency, has moved to resolve the long-standing dispute with the United States about the Helms-Burton provisions, extra-territoriality and attempts, through American domestic legislation, to penalise European companies for trading with Cuba, Libya and Iran. Alone, this country or any other European country would not be able to achieve anything on that issue. We have made progress only through the strength of the EU, under the leadership of our Labour Government.
I shall refer to several matters that my right hon. Friend the Foreign Secretary mentioned. First, I draw attention to the prodigious efforts of Ministers over the past six months. This week, our Prime Minister has done a massive amount of Henry Kissinger-style shuttle diplomacy around Europe. He was in three Scandinavian capitals in one day. Yesterday, I met a senior figure from the Swedish Social Democratic party, who was in London and had been in Stockholm when the Prime Minister was there. That person said that, although the Nordic model had always strongly emphasised partnership between the private and the public sector, and although the Nordic model had many similarities with policies that we were pursuing, our Prime Minister's visit received enormous coverage. The visit was regarded as significant in the context of building a new alliance between the British Government and Sweden, Finland and Denmark—the three countries which were visited during one part of the tour that has taken the Prime Minister all over Europe during the past week or so.
The Kohl-Chirac letter has already been mentioned, but I want to emphasise its importance. Earlier, in an intervention on the shadow Foreign Secretary, I said that such letters were nothing new. When they had leaders in different countries, the Christian Democrats often organised joint initiatives before European summits. President Mitterrand organised joint initiatives with Chancellor Kohl before a number of such summits, including Maastricht in 1991. What is significant about this initiative is the presence of so many themes that are similar to the policies being pursued in this country under the British presidency, which will be submitted to the meeting of Heads of Government at the end of next week.
Under a Conservative Government, we were pleased to be the odd one out—because we had "Madame No" as Prime Minister, or because, as happened in March 1997 in the last Parliament, our then Foreign Secretary told the Foreign Affairs Select Committee that the British Government had a list of so-called show stoppers. That seemed to be a growing list: every time the Foreign Secretary answered a question, something was added to that list of show stoppers, designed to prevent any agreement at the Amsterdam summit. Those days seem very long ago.
I look around the Chamber—particularly at the Conservative Benches—and ask: where are the Euro-sceptics? I recognise the Opposition Whip, but I am not sure where the rest of them are. I have regularly participated in European debates during the past six years, and I do not think that I have missed many: I was present
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for the Committee stage of the Bill dealing with the ratification of the Maastricht treaty, and for our debates on the Amsterdam treaty. I remember speaking at midnight, and being berated by nine or 10 hon. Members who harangued me with intervention after intervention. Where are they today? I am waiting for them, but they are not here.
The fact is that the debate has changed. It has moved on. [Interruption.] The Opposition Whip should understand that the debate has moved on. The Euro-sceptics were partly routed at the last general election. I see that a Europhile has joined us: I am pleased that Conservative Europhiles are coming into the Chamber.
Euro-sceptics not only lost a number of seats; they no longer seem to have the arguments. The truth is that Europhobia and xenophobia are not popular policies with the British people. The British people want a pragmatic Government who get things done—a Government who co-operate with our European neighbours. That is what they have, and that means that, as the Austrian presidency takes over from the British presidency, there will be a very good period of co-operation between the two Governments during the transition. The Austrian presidency will continue to pursue many of the aims that we have pursued during the past few months, especially preparation for enlargement.
There is a lengthy agenda for the European summit. Many items on that agenda are very complex, and some, inevitably, are for the long term. It is ridiculous to think that any six-month presidency of an organisation such as the European Union, comprising 15 states, can make a massive difference to the process. With a bad presidency, things can go badly wrong; with a good presidency, things can be dealt with efficiently. What needs to be done can be done, and the agenda can be taken forward—which is what the British presidency has done, in a number of important ways.
I agree with my hon. Friend the Member for East Carmarthen and Dinefwr (Mr. Williams), who said that the country would incur costs by remaining outside the single European currency. I was pleased that, in his interesting statement today, my right hon. Friend the Chancellor of the Exchequer specifically said that the Government would
"meet the fiscal criteria laid down in the Maastricht Treaty."
That is important: it means that, when the time is right, there should be no arguments about unnecessary delays in regard to British engagement in, and membership of, the European single currency. I believe that, when we meet the necessary economic conditions, and have reached a political judgment that the time is appropriate and a popular mandate is there, we should join quickly.
As the letter from Chancellor Kohl and President Chirac points out, the issue that must be discussed—it is one of the issues that they want to be raised in Cardiff—is the further development of political union
"in tandem with the Economic and Monetary Union".
Discussions on that are proceeding now—informally—among a number of European Union countries. If we are not part of the formal process within economic and monetary union, there is a danger that, in the long term, political discussions and developments that may impinge on this country will go ahead, and we shall not be part of

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them to the extent that we could be if we joined the 11 who are in economic and monetary union, as well as being one of the 15 members of the European Union.
Let me also say something about relationships between European Union countries. The letter from President Chirac and Chancellor Kohl is a sign of the close bonds between Germany and France. Those close bonds have been built up for long-term historical reasons. We need to recall only a few dates—1870, 1914 and 1940—to appreciate the reasons why, after 1945, democratic politicians decided that that relationship had to be built for the future peace and stability of the continent.
It is a mistake—some commentators have referred to this—to think that it is in Britain's and Europe's interests to try to break the relationship between Germany and France. It would be very dangerous and short-sighted for us, as British politicians, to take the view that we should be friendly with either Germany or France. It is essential for Britain to play a full role—alongside Germany and France—at the motor of the European Union, while retaining our historically excellent relationships with other European Union countries such as the Netherlands and Portugal, and our good relationships with countries outside the EU. An example is Norway, which, unfortunately, made the wrong decision in its referendum.
The victory of Gerhard SchrÖder in September will be a great boost to the new centre-left politics in Europe. Philip Stephens, in the Financial Times, pointed out that a Chancellor SchrÖder in Germany would take a more Atlanticist and northern approach than the present German Government. That remains to be seen, but it raises an interesting point. There might be less tension if the British Government had excellent relations with the United States and improving relations with the European Union, and the German Government had a similar approach.
Our approach should not be at the expense of our relationship with Lionel Jospin and the socialist party in France. The two countries have a different electoral system, and there are differences in the nature of the majorities. Prime Minister Jospin has a difficult coalition to manage, yet many of his policies are similar—leaving aside the rhetoric—to those that we have been pursuing. Over the next three, four or five years there will be significant cross-fertilisation. We shall learn from each other's experiences and build together coherent and constructive policies to create a new, dynamic, open, effective, efficient and more democratic western European and all-European political structure.
One of the difficult areas that we shall have to consider and which will cause great problems in the enlargement negotiations is the nature of the institutional framework for an enlarged European Union. It is absurd to think that we could continue the present structure and have an efficient decision-making process in a European Union of 25 or 27 member states. Therefore, there must be serious change. Everyone is agreeable in principle to change, except when it affects what they perceive to be their own vital national interests.
At the moment, we have two Commissioners, because we are a large country. It has been argued that the weighted vote of larger countries should be increased, because the present undemocratic system gives Luxembourg a large vote in European Union institutions. The voting system bears no relationship to the population distribution in the European Union. If Cyprus, Slovenia,
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Estonia and Latvia accede to the European Union, the problem will be compounded. However, we shall face difficulties if we move too far down that road.
How can the democratic legitimacy of decision making reflect the diversity of the different nation states in the European Union? We are not creating a single, centralised Euro state. That is also the contention of Kohl and Chirac. They are calling for more subsidiarity, less regulation and decision making that is more sensitive to the needs of particular countries. I thought that that was the agenda of the previous Prime Minister, the right hon. Member for Huntingdon (Mr. Major), or so we were told. The best way to achieve that would be to use the process of enlargement to bring about the required institutional changes.
Mr. Robert Walter: Given that the Prime Minister came back from Amsterdam in great triumph, why was this matter not addressed in that treaty, because enlargement was on the agenda?
Mr. Gapes: I am grateful that at least one Euro-sceptic is present.
Mr. Denis MacShane: The hon. Gentleman is one of us.
Mr. Gapes: I apologise to the hon. Member for North Dorset (Mr. Walter). I have embarrassed him. I assumed that he followed his party's official policy. I am sorry if I have slurred him, and I withdraw that remark.
The previous Government were in office until 1 May 1997. The Amsterdam negotiations were to come to a conclusion some six weeks later. The process had reached an impasse. Amsterdam was designed as an interim development before the discussions on enlargement. The Amsterdam agreement stated that negotiations would open six months after the signing of the treaty. It was important to get an agreement at Amsterdam so as to open up the process for enlargement. If the Conservatives had still been in government, we should have had no agreement at Amsterdam, so enlargement would have been a purely theoretical, hypothetical, distant question for the future.
Difficult decisions will have to be taken in the next few years. There will be arguments about objective 1 status for our regions. Objective 1 money has been important in the highlands and islands, in parts of England and in Northern Ireland. Many people have become more positive about the European Union because they have had the economic benefits of funding from Brussels.
As the EU is enlarged, the funding formula will have to change. As unemployment in this country is falling, it is questionable whether funding for some of our regions will be maintained for the future. It is important to emphasise not just the economic arguments for European Union membership, but the vital arguments about stability, security, environmental co-operation and the political integrity and democracy that come from having an organisation that gives us such a peaceful continent.
Mention was made of the crisis in Kosovo. I shall not go into that, but I believe that it is vital that the European Union does not allow ethnic and religious conflicts once again to develop across our continent. Extremists and fanatics in various communities want to foster hatred and

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animosity. The Balkan region—from Kosovo to Macedonia and involving Turkey, Greece and Bulgaria—could become another cauldron leading to a generalised regional conflict. It is vital that we act economically, politically and, if necessary, militarily to contain, control and prevent such regional conflict. The European Union has a vital role in such developments, and I am pleased that our Government are playing such a positive role to strengthen the European Union over the coming years.
7.39 pm
Mr. Dafydd Wigley: I am glad to follow the hon. Member for Ilford, South (Mr. Gapes) and to pick up on his point about the importance of the European Union as a vehicle for peace. Twice in this century, this continent has torn itself apart in two bloody wars. The basic reason for the EU' s existence is to ensure that that never happens again. There are, of course, important economic arguments, but the political imperative brought that vision about. That is what we must always retain in our minds.
I welcome this opportunity to speak briefly in a debate before the European Council meeting in Cardiff, the capital city of Wales. I would rather, of course, that it was coming to Wales in its own right—that Wales was inviting the European Council and had the presidency. I may have to wait a little longer for that. In the meantime, the meeting is well worth having and I am glad, as are the overwhelming majority of the people of Wales, that it is happening now, at an important time in the EU's development.
In listening to the Foreign Secretary, what came home to me was that six months is a very short period and that one cannot expect miracles to happen. Perhaps he was dressing up many of the things that have happened to create a background of achievement by the Government, but no Government or presidency can be expected to change things overnight. Progress has been made on some issues. The most important issue has been brought out in this debate—indeed; it is brought out when we consider the hon. Members who are present. There has been a change in attitude towards the European Union and that can be only for the good.
There is no doubt that, in working with the grain of Europe, we have a greater chance of finding solutions to our problems—or at least acceptable compromises with which we can live—than we would if we just took Europe on, issue after issue. Whatever may have been the arguments in the 1980s for making a stand on certain issues, certain lessons must be learned.
In the opening comments of the debate, reference was made to the expansion of Europe. I am glad that we are considering the possibility of countries from the east coming in. I am glad that some of the small countries are coming in. Yes, there will be problems when Slovenia and Estonia come in, but they are part of Europe, and we have to adapt the structures to ensure that they have a proper place, while not disrupting the balance of current structures.
I hoped that progress might have been made with one or two of the other states that wish to come in, particularly Lithuania. I am sad that it is not in the tranche that is being considered. I should like to have seen Lithuania,
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Latvia and Estonia knocking on the door together. I hope that progress can be made in that direction as we look towards expansion.
The point about the dangers in Kosovo has been made. Surely we have learnt some lessons from the experience of Bosnia. There is a will in Europe to try to avoid an escalation of those conflicts. We should, if we have to, make a stand to try to ensure that no inch is given to undemocratic, totalitarian and fascist forces that may be using racist arguments to fan debates that would be better not heard. I hope that the European Union can take a positive lead in that direction—a more positive lead than was the case with Bosnia.
A little progress, which we welcome, has been made this week on an issue that has dominated the economic argument in large parts of Wales: the bovine spongiform encephalopathy crisis, which has led to a rural crisis, with a real-terms drop in farming incomes per head of 45 per cent; the actual figures have been quoted as over 90 per cent. Farms in Wales are small and family run. Farmers there are not barley barons who pull in hundreds of thousands of pounds; there is subsistence farming. Experiences such as those over the past couple of years can undermine the viability of those farms. A solution is desperately needed to the BSE crisis.
Good progress is being made on the date-based scheme. I hope that the veterinary committee that considers the matter next will support the moves, that support will then be found in the Council of Ministers, and that assurances to those in Germany and in other countries who are fearful about the quality of the food—one accepts those fears entirely—will be enough to ensure not only that we have the right to export, but that those other markets will have the confidence to want to buy our products.
In the meantime, not only beef farmers but dairy farmers need to take advantage of the resources that are available from the European Union for this financial year to compensate for the effect of the value of the pound against the green pound. There is no doubt that the agriculture sector is suffering enormously because of the pound's high level. It is suffering in terms of the value of aid coming through from Europe in subsidies. It is also suffering because countries such as the Republic of Ireland are selling their dairy produce to the United Kingdom, including Wales, and undercutting our produce with the benefit of assistance from the European Union, benefit that is available to our farmers, but which we have not taken up fully yet; it has certainly not been taken up in the dairy sector. I hope that the Minister and his colleagues will give thought to that as discussions take place in Cardiff.
The parity of the pound has been of concern not only to farmers but to manufacturers. In my constituency, some 30 or 40 jobs are in danger of being lost this week at the old Ferodo factory, the Dynamex factory as it is now known, which depends largely on exports. It is finding that its markets have been undercut because of the value of the pound. That underlines the need for us to move towards the European single currency. Unless we do so, this problem will continue and possibly be exacerbated in the coming period.
Large companies in Wales are already preparing to deal in euros. Companies such as British Steel, Sony, Toyota, Nissan and Pilkington are already preparing to do so. We shall find ourselves with parallel currencies. As they

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do that—for good reasons—they will want transparency in their dealings and all the rest of it, and they will put pressure on their suppliers to deal in euros as well. Therefore, companies that want to sell products, components and other items to the large companies will be under pressure to deal in euros. It is likely that parallel currencies will operate in the UK, as they do in central America, where large companies deal in dollars and small companies in the local currency.
There are dangers that, when the euro has started up and there is a lot of international money moving around, some dealers will want to hedge their bets and come into sterling because they are not too sure about euros. Sterling's value could go up in that period again, causing even greater problems for our agriculture sector and manufacturing industry.
Of course, I am conscious of the fact that, in areas such as Wales, where we have severe economic problems in the old coal-mining areas and where, recently, those problems have arisen in some agricultural areas in particular, the advent of the euro will restrict some of the tools that have traditionally been available to Government to help depressed areas, where economic performance has not been so good. There will not be the option of devaluation, of playing around with interest rates, of deficit budgeting and of some of the Keynesian approach that we have had in the past. That is what makes objective 1 funding so important, to follow up the point that has been made by the hon. Members for East Carmarthen and Dinefwr (Mr. Williams) and for Swansea, East (Mr. Anderson).
No part of Wales has ever been designated for objective 1 purposes despite the fact that the only criterion for objective 1 eligibility is to be below 75 per cent. of the average European GDP per head. Unemployment is not a criterion for objective 1 status. We need areas of national statistics—nomenclature of units of territorial statistics, or NUTS 2 areas—that fall below the 75 per cent threshold. As we have had a rather stupid map—a north-south map—in NUTS 2 areas in Wales, neither the north nor the south has qualified, although there are large areas in both that would qualify. The east-west analysis in Wales is much more meaningful in terms of economic problems and development. If a NUTS 2 map were accepted that was based on the two old counties of Gwynedd and Dyfed through the coalfields of west Glamorgan and Mid-Glamorgan to Gwent—areas that have common problems—that area would have 72 per cent. of average European GDP and would qualify for objective 1 funding.
Northern Ireland, the highlands and islands of Scotland, Merseyside and South Yorkshire have had objective 1 funding, and I wish them the best of luck, but areas in Wales that have a low income per head desperately need assistance.
Mr. Quentin Davies:The right hon. Gentleman should think carefully about his suggestion that the criteria for eligibility for objective 1 funding should include unemployment, rather than being based on GDP per capita. If such a criterion were imposed on the system, it would end up subsidising people and regions who might have priced themselves out of employment by demanding to high and unrealistic
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wages and penalising parts of the Union where labour markets were more flexible and people were prepared to work for more realistic levels of income.
Mr. Wigley: The hon. Gentleman has misunderstood me. I was referring to the current rules, and we have to work within the rules unless they are changed. The only relevant factor is GDP per capita. I am not advocating that unemployment should be a factor; I am saying that there is high unemployment in many areas, but the only criterion is GDP per head.
In the old county areas, three of the five counties with the lowest GDP per head in the United Kingdom are in Wales—Mid-Glamorgan, Dyfed and Gwynedd. Wales has the lowest GDP per head of any country or region in Britain, yet no part of Wales has ever qualified for objective 1 benefit which depends on the factor of GDP per head. Surely there must be something wrong.
I urge the Government, in their negotiations with our European partners and the agencies of government—from the Office for National Statistics, through to Eurostat in Brussels—to turn every stone to get it right. It is not that we have a begging bowl mentality. I hope that the economy of Wales develops in the same way as the economy of Ireland to a point at which we do not need assistance, but, at the moment, we most certainly do in order to overcome our problems. That is one of the themes that will come through from the people of Wales to our friends from various parts of Europe who meet in Cardiff. They will get a strong message that we need that assistance to overcome our problems.
I hope that everyone who comes to Wales has a constructive and happy time and leaves with a feeling of greater cohesion, a vision for the future of Europe, ready to deal with the difficult problems ahead in a positive and co-operative manner that will give greater hope to our continent.
7.52 pm
Mr. Alan Simpson: Earlier this week, I took part in a Radio 4 round-table debate about a publication by DEMOS. This trailed a series of extensive surveys into public attitudes towards the European project and attempted to explain why there has been falling interest in or support for that project in recent years.
The panel comprised a representative from DEMOS, the former European Union ambassador to the United States and myself. We all took different views. The DEMOS line was that Europe's leaders had lost touch with their populations about the European ideal, or the European dream, and had pursued priorities that appeared to be bureaucratic and remote from people's lives. It suggested that a new agenda was emerging, embracing concerns such as crime and the environment. The only thing lacking was a bit more enthusiasm and leadership in Europe. If leaders would lead, the public would follow.
The European ambassadors' line was that the European project's fall in popularity was really no more than a press conspiracy—that a sustained attack on everything European had resulted in the growth of scepticism and hostility. My response is that it is difficult to describe 18 million people out of work in Europe as a press conspiracy. It could be described as a tragedy or a scandal. It ought not be described as something marginal to the lives of people in the United Kingdom or any other part of Europe.

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I believe that the fall in enthusiasm was caused by a quite healthy doubt about the credibility and accountability of European institutions, and a legitimate concern that its economics do not work. I am looking forward to going to Cardiff as part of the alternative summit that has been organised on a broad, pan-European basis, bringing together trade unions, environmentalists and various non-governmental organisations. These all seek to take issue with what may be the agenda of the summit the leaders are addressing, and seek to define a different European agenda that is not narrowly nationalistic, xenophobic or anti-European. The alternative summit simply opposes the monetarism currently driving the European project and is anti-Maastricht in character.
Hon. Members have already warned about the dangers of unleashing new tides of xenophobia and, in that sense, the alternative summit is anti-xenophobic. This in itself is a minor tragedy as it echoes what happened last year around the Amsterdam summit, when I took part in organising marches from every part of Europe, including eastern Europe. We wanted to say that we were not at odds with each other; we are not each other's enemies. The real enemies of the European project are unemployment, social exclusion, job insecurity and environmental instability. The alternative summit in Amsterdam was structured around those key themes, and the alternative Cardiff summit will have the same agenda.
I should like to flag up four key issues that will be discussed in a pan-European context outside the main summit. The first is the presumption that the economics that are currently driving the European project are wrong. The single currency will either be inadequately underpinned or divisive and inherently unstable. The democratic deficit is rapidly turning into a democratic deceit, and the agenda for jobs, the environment and sustainability will be sacrificed on the altar of international competitiveness.
Many of us argue that Europe's economics are wrong because, although many of our debates, both on Europe and generally, are still being conducted on the presumption that inflation is the big threat to our economy, the world teeters dangerously on the edge of a global recession. Events in south-east Asia and the collapse in eastern Europe show a series of economies in deep crisis. Moreover, many aspects of the crisis in other parts the world will make their way to Europe and to the United Kingdom. This is the same crisis that has affected the strength of the pound, and damaged United Kingdom manufacturing and exports. As manufacturing and exports are hit, so, too, are people's jobs, earnings, sense of inclusion and confidence about the future.
In response to the crisis, around the world, many major political and economic thinkers have been saying that we have to begin to deal with the economics of reflation—that we should not be obsessed with convergence terms established in the Maastricht treaty. This will require a shift in thinking that parallels the tragic misjudgments made at the end of the first world war.
France provides an important lesson to us all. At the end of the first world war, France decided that it would never again be invaded by Germany. It would protect its land frontiers so that no similar invasion would ever again
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be possible. It invested in an enormous project. The Maginot line had reinforced concrete that was tougher than anything Europe had ever seen, and a services and communications infrastructure that was unparalleled in many of France's cities. However, at the beginning of the second world war, German aeroplanes flew over the line, and German troops went round it.
My fear is that monetarism will be the Maginot line of the end of the 20th century and the beginning of the 21st century. To squeeze ourselves into an economics of absurdity, we are putting at risk the whole sense of positive Europeanism. Rather than pursuing monetarist obsessions, we should go back and question whether those obsessions are leading us down sensible paths.
Monetarism is changing the way in which we perceive culture, society and economics. We have had many debates in this Chamber about the nature of public debt. Today's statement made it clear that the reconstruction of local government and changes in public spending and public debt are being undertaken to fit in with our Maastricht obligations. We have somehow blandly accepted that public debt is bad debt, that private debt is good debt, and that the private finance initiative is a way of taking spending off the books. We seem to accept that partnerships, which may leave the public sector with long-term financial obligations, will somehow be better if the debt is private rather than public.
I have to confess that I have never understood why having 40 or 50 per cent. of the economy in public debt—and thereby publicly accountable—should be a problem. I have always worried that more of the economy was not held to public account. The real risk arises when we push responsibility and accountability beyond public reach—which, under the terms of the Maastricht treaty, will happen when we are all left in hock to the private sector, and will cost us more.
It has never been cheaper to borrow personally and privately than to borrow collectively and publicly. Nevertheless, that is the ideology which is driving our view of the economy and society. We are all, therefore, part of the sacrifices demanded by Maastricht. The sacrifices have been called for on the presumption that—no matter how unpleasant the medicine—they will make everything better.
Before I was elected to the House, one of the last pieces of research I was involved in was on the sequence of invitations, expectations and deliveries in successive waves of the European jobs project. Beginning with the 1992 Ceccini report on the single European legislation, 1.8 million jobs were promised as part of the first wave of changes after the passage of that legislation. Although much fuss and publicity was given to Ceccini, two or three years later, the Neuberger report pointed out that rationalisation of European industry had caused massive job losses in smaller and medium-sized firms. We then realised that almost exactly the number of jobs promised by Ceccini were lost with passage of the Single European Act 1985.
We are now being promised that, if we can all pull together under the terms of Maastricht, Europe's 18 million unemployed people will disappear or be absorbed within the system. It is a wish, but it is not based on practical economics that will deliver jobs paying a living wage and offering secure prospects for the future.

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I am, therefore, deeply worried about the single currency—although I accept the good faith in which hon. Members on both sides of the House believe that the single currency will be the answer to European instability. It is, of course, possible for a single currency to work. A single currency works in America, and one works in Germany—where the former West Germany's amazing commitment to reinvesting in reunification has been underpinned by a massive solidarity tax of 7 per cent. The tax is raised in the west and transferred to the east, and will probably continue for another generation. It is an enormous tribute to Germany's commitment to that process.
If we are to make Europe work, we shall require a similar fiscal transfer system. In 1977, in the MacDougall report, the European Parliament made its first and only attempt to spell out what such a system would mean in the European context. The report set out the different stages Europe would have to undergo to reach a stable and integrated European theatre in which we all felt that we had a place.
I should like to deal with two aspects of the MacDougall report. The MacDougall committee's conclusions on the nature of an integrated Europe described two possible scenarios—one in which Europe had a small public sector, and another in which it had a more substantial and integrated public sector. The committee pointed out that the Community budget necessary for a small public sector on the Community level would be about 5 to 7 per cent. of Europe's gross domestic product. I should say at this point that the United Kingdom's current contribution to the Union is 1.27 per cent. of GDP.
The Macdougall committee stated that spending of about 20 to 25 per cent. of Europe's GDP would have to be spent to create a more integrated approach in Community provision, to deal with external shock or internal inequalities of economic impact. Although I do not object to those who wish such a scenario to be realised, I have yet to find a politician of any persuasion who will knock on his or her constituents' doors and say, "To create the single currency, we would like you to pay an amount that is a four-fold increase in Britain's tax contributions to the European Union. But that is the good news. If you want more provision from the European Union, you might have to pay a 12 or 20-fold increase in contributions."
If people want to pay for that, that is fine, but we should be honest about how we would have to fund the process. If we are not honest, we shall set people against one another because of the deficits that we build into the process. We cannot make something work on an economics that is based on a fraud. What terrifies me is that people who are not hostile to one another may end up saying, "If insufficiency is built into the common European pot, why the hell should we in Merseyside pay taxes so that jobs can be transferred to southern Spain?" People will see themselves stealing jobs from one another. Those who want to embrace a European ideal quickly have to be honest enough to say not only how they would achieve the ends, but how they would will the means of delivering those ends.
I am worried that that problem exists in the European Union even before it is expanded. Moreover, this applies against a backcloth of Germany having declared a desire to reduce its contributions to the European budget.
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My fear is that European states will end up locked in a fixed exchange rate mechanism, on the most suitable possible terms for the deutschmark, with fewer resources for fiscal transfers and a magnet effect that will suck resources into those areas that already have the greatest reserves.
That would be massively destabilising for a single currency zone. We must address the mechanisms of redistribution if the single currency is to have any prospect of working. Personally, I do not believe that it will be possible, given the different cultures and economies in Europe. There are, though, other very exciting ways in which these can be made compatible, just as a car has a clutch system that enables the gears to change. However, such compatibility will not be achieved in the context of a lumpen project that drives together and squeezes ideas in an assumption that if they can all somehow be put in the box, they will stay there for ever.
European institutions have been the central architects of the current proposals. When I was researching the resurgence of European racism and fascism, I spent some time in Brussels going through the commentaries on the re-emergence of far right organisations both within and outside the political system. The most interesting part of that experience was being inside the European Commission. Many people have spoken about the democratic deficit, but I was astonished by the fleet of corporate lobbyists who lay permanent siege to the European Union institutions. On one occasion during my time there, some trade unionists turned up. It was such a rare event that MEPs from the different parties of the left were really pleased. They rang one another up to say, "This is wonderful. Some trade unions are here; come and meet them."
We sometimes think that the House of Commons is inaccessible to the public, but the European institutions—the Commission and the Parliament—may as well be on another planet. That does not apply for corporate Europe, however, whose agenda is, I believe, putting at risk the agenda of civic Europe.
There are some interesting divisions of opinion on this. I pay a back-handed tribute to the work done by the European Round Table, an organisation pulled together by Agnelli of Fiat in the early 1980s. It comprises the chief executives of Europe's 45 biggest multinationals. The organisation has been engaged in a project systematically and insidiously to inveigle itself into the policy-making frameworks and decision-making structures of the European Union and of every Government in Europe. It has been incredibly successful in its aim. But what suits corporate Europe may be far removed from what suits civic and democratic Europe.
Divisions are opening up—I doubt whether the Cardiff summit will address them—between business and big business. Corporate demands are often in conflict with the interest of small and medium businesses, which underpin almost all our communities. Big business is becoming less and less interested in loyalty or obligation to the nation states in which they happen to reside. They are more interested in the subsidies they can secure from national Governments. When they receive a better offer, they hot-foot it to another country to pursue the cash waved in front of them.
Similar conflicts can be seen in agriculture. I am probably as non-rural as anyone can be, but in my discussions with farmers, many of whom have been

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committed to traditional farming practices, I have been told of the despair at the weighting of European policy in favour of big farming—agribusiness rather than agriculture—and at the incentives to overproduce and to overuse fertilisers, growth hormones and antibiotics, which increase the risks to all sections of our societies. That is part of the conflict that we are trying to address in the alternative summit.
On jobs and environmental sustainability, although I congratulate my right hon. Friend the Foreign Secretary and his European colleagues on banning the wall-of-death netting, I should point out that that is not the only big environmental issue that Europe has to address. In many ways, the real pressure is shown in the absence of a European challenge to the rise of companies such as Monsanto, which want to dump genetically modified crops in Britain and other parts of Europe. I congratulate Austria on being the one country so far to have adopted the precautionary principle and to have banned the import of genetically modified products. It is somewhat rare for me to occupy the same intellectual space as Britain's most famous organic gardener—the Prince of Wales—but his newspaper article has set the tone for the debate on the subject. The House should follow suit in recognising the dangers to European agriculture of being driven by a big business, rather than an agricultural, agenda.
We have an opportunity to create a different, inclusive Europe. We cannot do so without central reference to the 18 million people in Europe who are out of work. If we are to set an agenda through which they can find sustainable jobs, we shall have to challenge the pillars of free-market assumptions that are driving not only the Maastricht agenda, but the dialogue between Europe and the World Trade Organisation. If we are really serious about sustainability, we can find ways in which to create full employment in all our localities, and in all the European Union countries, without having to steal jobs from one another.
We need to create a politics and an economics of redistribution, not to remove the barriers to the private sector, to deregulate Europe's economies or to pursue international competitiveness so as to risk employment and environmental sustainability. I do not expect the Foreign Secretary to address that agenda, but I ask him to use his intellectual power and courage at least to remind the leaders in Cardiff this weekend of the people's Europe debate, which is taking place outside the summit. It is a debate waiting to be let inside.
8.19 pm
Mr. Robert Walter: I am delighted that at least one Euro-sceptic Back Bencher managed to catch your eye, Mr. Deputy Speaker, albeit from the Government Benches.
Mr. Simpson: I am not a Euro-sceptic, but a monetarist-sceptic and a Maastricht-sceptic. I am sceptic about—no, an opponent of—capitalism, but I am not a sceptic about Europe.
Mr. Walter: I stand corrected.
At several stages, I got the impression that this would be a Welsh debate. I strongly share the emotion of my right hon. and learned Friend the Member for Folkestone
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and Hythe (Mr. Howard), who expressed pleasure at the summit being held in the capital city of our country of birth, but I also echo the thoughts of the hon. Member for Swansea, East (Mr. Anderson), who expressed regret at its not being held in the city of my birth.
With 15 members of the European Union, the presidency does not come around that often. If nothing changed, it would be another seven and a half years before we occupied that position again. If, as I sincerely hope, we enlarge before then, it will be somewhat longer. What a disappointment, then, that so little has been achieved in the six months in which Britain has been able to set the European agenda.
There was much fanfare at the beginning of our presidency, with funny stars made of pizza, and ties for all those who wanted to be on message, but so determined were the Government to demonstrate the break with the past that they played down the 25th anniversary of our membership of the European Union, which fell just as we assumed the presidency. The failure to celebrate the silver jubilee of the great achievement of my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) in any meaningful way signified a break not with the past but with reality and with the realpolitik of today's Europe.
As we approach the summit, there is much shuttling between capitals, but the reality, which Cardiff will not address, is of a missed opportunity and the failure of Europe, led for the past six months by the Government, to address the great challenges of today: the consequences of enlargement; the reform of the common agricultural policy; and, for Britain itself, a response to monetary union and the single currency.
On enlargement, we all welcome progress in opening negotiations with the applicant states, but one has to regret the somewhat cynical assumption in some quarters that the negotiations will take so long that the consequences for the existing members need not yet be addressed. At Amsterdam, all the European Governments failed to address the institutional consequences of enlargement. Changes in the size of the Commission, voting rights and the Council of Ministers will all require another intergovernmental conference if we take the enlarged membership beyond a further five states.
The position of Turkey remains largely unresolved and must be linked with the negotiations with Cyprus. It would be totally unacceptable to negotiate with the people of only one side of the green line.
The greatest unresolved obstacle to enlargement is the common agricultural policy. Agenda 2000 fails to address the key reforms that are needed. I declare an interest as a farmer and a beneficiary of the CAP, but I echo what my right hon. and learned Friend the Member for Folkestone and Hythe said earlier: at the launch of the UK presidency in December, the Prime Minister criticised the
"cost and waste of the Common Agricultural Policy"
which
"continue to grow year by year".
My right hon. and learned Friend also quoted the Foreign Secretary, who, in Warsaw last November, said:
"We need a reformed CAP which gives a better deal all round—fair prices for consumers, flexibility for farmers, protection for the environment".
Agenda 2000, in either its original or its revised form, fails to cut the cost to the taxpayer. In fact, on the Commission's own figures, it ends up costing the taxpayer

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more. It fails to take into account the pressures on us in the next world trade round. The Foreign Secretary failed today even to mention that next round and what position the European Union will take in it. Agenda 2000 will be a building block, but I am not sure whether it will be one that is acceptable to those with whom we are negotiating.
If the Cardiff summit agenda were to tackle the key targets that the Government have set themselves, we could look forward to reading next week of a Europe genuinely making progress toward a realistic agricultural policy for the next century. Instead, we have a deceitful fudge: Agenda 2000 does not address enlargement, because there is a hope that, at best, the negotiations will last so long that the new states will not enter before 2006 or, at worst, a transitional arrangement will delay their accession to the common agricultural policy at least until after that date.
Agenda 2000 envisages a common agricultural policy costing more rather than less, because the Government, in setting their agenda, failed to convince the other member states that expenditure on agriculture has to be reduced. It may be that the forthcoming elections in Germany have made the subject sensitive. Well, so be it—with 15 democracies in the Union, tough decisions will always be inconvenient to one member state or another.
Those are internal matters. We must all wish for success in the next world trade round, but there can be no successful outcome with the kind of subsidised agriculture still envisaged in Agenda 2000. Over-subsidised agriculture serves no one well, least of all the efficient British farmer, who merely wants a level playing field.
The UK presidency and the Government have failed to deal with the consequences of the single currency for the United Kingdom. It has been said before that economic and monetary union is a reality. It will happen on 1 January next year: 11 member states of the European Union will merge their currencies and operate a single zone of monetary stability.
Those countries constitute our largest market, and the effect of the scheme will be the most significant monetary event since Bretton Woods. There are those in Britain who wish that it would go away, and those who are convinced that it will not work and that the original European Community Six, with some of the fastest-growing and richest smaller states of Europe, are rushing over the precipice.
There are those who so totally misunderstand the project that they do not believe that it starts until Frau Schmidt collects her pension from the post office in euros in 2002. The effect on Britain and British monetary policy will be greater than any of the post-war monetary shocks.
I am not advocating our joining on day one. I am warning that the effect of the monetary bloc on our nearest continent will give the lie to any concept of monetary sovereignty. That may seem to be the same old argument about Britain always getting on the train after it has left the station, and that is probably as true of monetary union as it was of many aspects of our post-war European adventure. However, that argument is not good enough for an intelligent electorate. Our press has failed to give the British people any guidance, save for rubbishing the whole project.
The Government must begin to rehearse for the electorate the arguments about why a single currency is a good or bad thing for Britain and for international trade, and for why economic and monetary union is the solution.
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I may differ from some of my right hon. and hon. Friends on the matter, but I approach it from a monetarist standpoint. What is money? More specifically in this context, what should money be? It should be a means of exchange and a store of value. The value of sterling since Bretton Woods broke down in the 1960s was a one-way bet until the late 1980s. We then manipulated the currency to an unsustainable level, and we joined the exchange rate mechanism at the wrong rate at the wrong time. The policy was not without benefits—inflation halved, and interest rates dropped from 15 to 10 per cent.—but the ERM ended in failure.
Today, we are back at an exchange rate that is unsustainable—perhaps, I should say unstable—against those of our major competitors, the problem being compounded by a not unrelated uncompetitive interest rate. I part company with those monetarists who believe that effective monetary policy and parliamentary democracy are somehow indissoluble, for the same reasons that I believe in an independent judiciary and would not want politicians to make clinical judgments in the national health service. In central banks that are independent of day-to-day political control, the central bankers should be accountable, but the experience of Germany and the United States shows that, when they are left to get on with the job, they have a much better effect than any succession of Chancellors of the Exchequer.
Why would the euro deliver the objective of independent monetary policy? Why not have a British solution? The Chancellor has attempted to answer that with the Bank of England's Monetary Policy Committee, but that solution is not sustainable. British industry lives by international trade. The firms that make things and sell them on the world market—unlike the retailers who import cheap goods from the far east, and who finance Labour party campaigns—demand monetary stability. The chief executive of a United Kingdom-based multinational said to me the other day that he has eight manufacturing plants in the European Union in five countries for 15 markets. Which currency should he use next year? He will be pricing and accounting in the euro. His case is replicated across British industry. The Confederation of British Industry admits that the most enthusiastic supporters of early entry are medium-sized manufacturing exporters.
Who cares if British industry uses the euro? Manufacturers, the City and agriculture are, by the nature of their business, already committed to using it. However, it is an odd kind of sovereignty to abdicate monetary policy that determines the activities of major sectors of the economy to foreign central bankers. Such an abdication did us no harm during the period of our greatest imperial and industrial glory, when we all used gold. However, the experience of the gold standard during the inter-war years should tell us that a successful economy must work within a sensitive monetary framework. An independent European central bank could provide such a framework at some time in future.
The Government have a duty to prepare the industry and the people of Britain for the consequences of EMU. There is still no serious, informed debate on British membership. The promise of the razzmatazz around the UK presidency has fallen very flat. I still hope—a little—that the Government will address some real issues facing Europe and Britain in the dying days of our presidency. I hope that they will place the consequences of

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enlargement high on the agenda, along with a real discussion of genuine reform of the common agricultural policy that will go further than anything envisaged in Agenda 2000. I hope that they will encourage a domestic debate on monetary union.
8.34 pm
Mr. Tam Dalyell: In the bygone world when I was a new Member of Parliament and the father of the Opposition winder up—the hon. Member for Windsor (Mr. Trend)—was a distinguished Cabinet Secretary, a debate such as this would have been absolutely packed. I want to register, as did the right hon. Member for Wales—I mean the right hon. Member for Caernarfon (Mr. Wigley)—that it is good to have a pre-summit debate. However, there was a time when Members of the House of Commons would have tumbled over each other to have some input to such a debate.
I understand well that the pressures of the presidency are such that the Foreign Secretary, who has Kosovo and other problems on his hands, cannot be here. However, I lay down a marker to the effect that, if there are further debates after we have given up our presidency, it will behove the Foreign Secretary and senior Foreign Office Ministers to listen to what the House of Commons has to say on such important matters. If they do not, they will dig at the root of the whole set-up of parliamentary democracy. That said, it is good that we are having the debate, which gives us an opportunity to ask a number of questions about what will be raised in Cardiff.
I listened carefully to the hon. Member for North Dorset (Mr. Walter), who raised matters of great importance on the world trade round and agricultural prices. The farmers in my constituency wonder about milk prices, and hill farmers wonder how the price of tups—sheep meat—which was £58 last year, has fallen to £32 this year. My question is general. What will happen to hill farmers and milk producers when the Community expands and we take on possibly massive obligations to the farmers of Poland and Lithuania? Has that been discussed and worked out? After Cardiff, some of us will ask what was said there about the strain on the agricultural kitty caused by expansion of the Community. We should start thinking about that now rather than later.
I do not often agree with nationalists, but what the right hon. Member for Caernarfon said about firms in Wales being already involved in the ecu also applies to firms in my constituency, including Motorola, Hewlett Packard, Sun Electronics, Nippon Electric and Quintiles, where my constituents and those of my parliamentary neighbour the Foreign Secretary work. The Foreign Secretary says that the decision will be made in the hard-headed economic interests of the British people, if I have quoted him correctly. I make no bones about being one of those who would, even now, go in at the first opportunity.
I want to ask a factual question about a most succinct report on page 16 of The Independent on 5 June, referring to 4 June, under the byline of Katherine Butler in Luxembourg. The headline was
"Euro club shows Brown the door".
I do not know whether it is true. If it is, it is very serious. if it is not true, we should be told in no uncertain terms that it is a load of rubbish.
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The report states:
"Gordon Brown, the Chancellor, subjected himself to formal humiliation last night as ministers from the 11 euro-zone countries gathered at a chateau in Luxembourg for the inaugural meeting of their single currency inner circle, Euro-XI."
I am very interested in the whole question of the crucial Euro X. The report continues:
"As representative of Britain's European Union presidency Mr. Brown was insisting on his right to attend the opening formalities at Senningen castle, but was told he would have to leave the room almost immediately. He was not allowed to attend a dinner that followed the first meeting of the new G8-style body which will co-ordinate economic policy in the euro-area."
Was he told to leave a dinner?
The report continues:
"Senior officials of the euro-zone countries expressed amazement at his decision to muscle in on the informal meeting in the light of Britain's decision to opt out of the single currency. It merely highlighted Britain's political marginalisation, they said."
Katherine Butler goes on: "'He"— that is the Chancellor—
"is a gatecrasher', said a Bonn source, 'he is bringing himself down to a level even ambassadors would not accept."'
Was that said? The report continues:
"Another senior EU diplomat described British strategy as 'naive' and said it reflected the difficulty London has had in understanding"—
Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The hon. Gentleman and I have had discussions before about reading full articles into the record. That is not what is required. He could perhaps give us an abridged version.
Mr. Dalyell: You are quite right, Mr. Deputy Speaker. I have said enough on that. Is there any question of British marginalisation? If there is, should not the matter be frankly addressed at Cardiff next week? It is not merely a question of going or not going in, but a decision whereby the world will be altered by what is happening in Europe.
I return to the fact that, in all our constituencies, firms are taking it into their own hands to trade in ecus. We are in a different position. This is a matter of enormous importance to jobs and prosperity. Part of the reason for my concern is that I was exiled for four years from this House to the European Parliament. I was a member of the budget committee and the budget sub-committee with colleagues such as Martin Bangemann, Erwin Langer and others, and I know how they react. If we are not going to be in the club, they will make sure that we do not attend its meetings. I want to know what exactly the position is at Cardiff. If the article that I quoted is factually wrong, no doubt the Minister will say so.
I should like to raise a third question. In November, a delegation concerned with the environment will go to Buenos Aires. I understand that we go as the immediate past-President and that the delegation will be led by the Austrians, who are very anti-nuclear. I am open about the fact that I am totally pro-nuclear. I am dismayed by what has happened on the north coast of Scotland. The press has been wicked in its descriptions of Dounreay, which is a whipping boy for everything. In fact, technically, the position is not nearly as bad as is being made out widely in Britain. Leaving that aside, nuclear energy is the only way to produce energy without large quantities of CO2being put into the atmosphere.

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Is policy for Buenos Aires going to be discussed at Cardiff? Unlike Kyoto, are representatives of the Department of Trade and Industry, who, it might be hoped, would put the nuclear side of the argument, going to go to Buenos Aires? When I first knew the Minister, he was an effective official of the GMB union, and many of his members are much concerned because they work in the nuclear industry. I should like a comment in his reply or by letter on Buenos Aires.
My fourth question concerns Kosovo. I listened carefully to the Foreign Secretary and agreed with what the hon. and learned Member for North-East Fife (Mr. Campbell) said about consulting the Russians. However, I do not think that I am wrong in saying that the military option was not ruled out because of the appalling things that are happening. Last May, I stayed with my former national service regiment, now the Royal Scots Dragoon Guards, in Bosnia. It was the tank regiment in Bosnia at the time. As one who never wanted us to go into Bosnia in the first place, I must say, having seen the situation, that we cannot possibly withdraw from Bosnia in the foreseeable future. I am not prepared to sit on green Benches and be involved in the former Yugoslavia without our having heavy armour there. Without it, there will be a repeat of what happened to the sappers who were taken hostage. Unless heavy armour is present, one does not have the perceived authority to carry out the job.
In the discussions in Cardiff, I hope that no one will think that air strikes will be at all effective. Air strikes are counterproductive. They simply unite those who are hit against those who are doing the striking. In Cardiff, will there be discussions, if action is to be taken in Kosovo, on sending armour? For Britain, that means sending what I understand from those who have to drive them in the way that I did 40 years ago, excellent Challenger tanks. I am told that driving the great, heavy Challenger tank is much easier than driving the Centurion, which some of us had to do, with mixed success.
Fifthly, there may be discussions of European policy on Iran. As one who was in Iran on holiday last October, I strongly hope that the Minister of State, my hon. Friend the Member for Leeds, Central (Mr. Fatchett), representing the European presidency, will go, if only to show support for the mayor of Tehran and the many other enlightened people in that country.
Sixthly, will there be a discussion of European policy towards the former Soviet republics of central Asia? My hon. Friend came to give an excellent speech to the Kyrgyzi delegation that was over here. He knows a lot about this and clearly takes an interest in this aspect of affairs. He will know how important it is that Europe has some policy towards the emerging republics, such as Kyrgyzstan, if I may put it that way.
Will there be a discussion of NATO expansion? I will not pursue the matter further if the Minister stands up and says that that is not on the agenda. Some of us think that it should be on the agenda, given the letter to the Prime Minister signed by Sir Hugh Beach, Dr. Helga Graham, Sir John Killick, Sir Michael Atiyah, Sir Michael Beetham, Frank Blackaby, Field Marshal the Lord Bramall, Field Marshal the Lord Carver, Sir Frank Cooper and many others—I have only reached the Cs—who are expressing extreme concern about the expansion of NATO to the Russian borders. Did I interpret the Minister as saying that that will not be discussed? I am not sure
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what the signals mean. The European Community must discuss the matter in relation to its own problems with the Soviet Union.
I warned the Foreign Secretary and others that I wished to raise the matter of European relations with Libya. I have had 14 Adjournment debates on the subject. It is not just a matter of obligations to the relatives; it is a matter of our whole relationship with the Arab world. This will be known to the Foreign Secretary because he has recently had meetings with Dr. Mudenge representing the Organisation of African Unity and, indeed, the African states.
On 21 December it will be 10 long years since that airliner went down over Lockerbie—10 long years of agony for the relatives and of increasingly festering relations not only with Libya but with many Arab countries. In these circumstances, should there not be a discussion, particularly with the Italians who have ceased to have any inhibitions about breaking sanctions? Italian Ministers have trade relations with Libya. Should not Europe discuss the whole position of the United States in relation to Lockerbie? After all, it is the United States that is driving the policy.
There is a growing belief among the relatives that certain leading Americans—Vincent Cannistraro, Buck Revell and Oliver North—had a kind of Faustian agreement with some unpleasant elements after the Vincennes shot down the Iranian airliner carrying pilgrims to Mecca. It may be most serious to say this in the House of Commons, but serious people believe that when Ali Akbar Mohtashemi, the Iranian Minister of the Interior at the time, raised the spectre of half a dozen, 10 or a dozen airliners being blown up in revenge for what the Vincennes had done, there was a tacit agreement that if one American airliner went down that would be tit for tat—the end of the matter. It would not be right to go in to all the details now and one has to be a professor of Lockerbie studies, but I would argue a case for this being taken seriously with any Foreign Office official.
Tonight, I ask that there be a frank discussion over lunch at Cardiff about how on earth the situation with Libya is to be resolved. It can be resolved, as Dr. Swire and Professor Black found out, by the Libyans sending those two alleged criminals—
Mr. Deputy Speaker: Order. It is one matter to say that European allies can try to help with Lockerbie, but to go into great detail about Lockerbie now is to go outwith the scope of the debate.
Mr. Dalyell: I do not wish to abuse the debate.
My final crisp point is this: at Cardiff I hope that this whole Lockerbie saga will be discussed with a view to resolving it.
8.55 pm
Mr. Michael Trend: I join those who paid tribute to Cardiff, especially the hon. Members for Swansea, East (Mr. Anderson) and for East Carmarthen and Dinefwr (Mr. Williams) and the right hon. Member for Caernarfon (Mr. Wigley), and I congratulate Cardiff on hosting this important event at the weekend and next week.
This evening's speeches have covered a wide variety of areas; I want to concentrate particularly on the road that the Government have taken to Cardiff. My hon. Friend the

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Member for Hertford and Stortford (Mr. Wells) made a splendid contribution and put a convincing case on the review of the Lomé convention and, in particular, economic relations with the West Indies. He is the House's expert on the banana regime and it was good to hear the subject raised again tonight. We have just heard a characteristically thoughtful contribution from the hon. Member for Linlithgow (Mr. Dalyell).
My right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) struck the right tone in his comprehensive and highly effective attack on what he rightly described as a flop of a presidency. He was spot-on in underlining several specific areas in which the Government have achieved little or nothing during their tenure of the presidency of the Council of the European Union.
On jobs, enlargement, human rights and reform of the common agricultural policy—the areas that matter for Cardiff—we remain at the same square one as when the Prime Minister embarked on his radiant, starry-eyed launch of the British presidency.
The road to Cardiff began at the PR launch for the British presidency. That was, we have heard, at Waterloo station. It was our first glimpse of the style-without-substance presidency. How many times have we heard the overworked metaphor about the necessity of being on the Euro train and not being left behind at the station, in the sidings or on the slow track? At Waterloo that day, the train finally turned up and it was a PR special. Two things hugely amused the Journalists that day: when the train turned up, it was empty; and when it left, it went nowhere. There was some powerful symbolism in that, so perhaps that was the last we shall hear of the wretched train.
The House will recall the rhetoric of that launch. The Prime Minister, ever mindful of the improvement that a group of children make to a photo call, was surrounded by the children who had painted the logo for the presidency. He told us:
"The children who produced the stars worked in teams. We want a Europe that works together as a team."
A new metaphor, one to replace the train, was born—the team. However, judged by that, the Prime Minister has not done well with his European partners in the six months of the presidency. According to the French Finance Minister, Britain—our team—has now been relegated to the second division. On another occasion, one of the Commissioners told the Prime Minister that he was no longer even in the game; he was on the touchline, and
"You cannot lead the game from the touchline."
During our debates, we have heard about the reception given to the Chancellor of the Exchequer at Senningen. He was deliberately left out of the team photograph, as the hon. Member for Linlithgow pointed out.
What has happened in the past six months is that reality has caught up with rhetoric, and the Government will pay a high price for a problem that is entirely of their own making. By exciting high expectations, but falling well below them, the Government have made a rod for Britain's back. It was not necessary to do that. More realistic ambitions and more tempered language would have served British interests much better.
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Let us return, for the last time, to those heady days, early in the new Government, when the Prime Minister said that he wanted to shape a new Europe. He told us that we were heading for a new era, a new millennium, a new Europe; Government insiders told the press that the children's logo was "very cool"; a think-tank was commissioned to "rebrand" Europe using focus groups. The message was: new Labour, new Britain, new Europe—next stop, new Jerusalem. That almost Messianic fervour inspired one Italian newspaper to declare the Prime Minister to be "Tony Blair Superstar"—perhaps Lord Lloyd-Webber is working on the musical.
Those were heady days—the days before the Prime Minister encountered the big players in Europe. The big players have cut him and the Government of this country down to size. The agenda was overblown; as the hon. Member for Swansea, East rightly said, any presidency is part of a continuum, which is why the Government made a mistake in making such claims in the first place. It was all part of the propaganda effort that is so characteristic of the Labour Government in all areas of activity.
I am glad to say that the spin doctors were also put in their place in Europe: The Sunday Times tells us that one Austrian journalist described Mr. Alastair Campbell as
"the tall, arrogant Brit with the coarse tone."
The overblown expectations encouraged by the Government's spin doctors and the arrogance with which they have approached their task in Europe were neatly summed up this week by Martin Walker in The Guardian, who wrote:
"Fair Europeans … conclude that the main problem was the inflation of expectations."
Marc Champion of The European said that, in his view, the UK presidency emerges from its six months
"bruised by a mix of hubris and political naivety."
We could not have put it better ourselves.
Another verdict on the presidency should not go unnoticed. Less than a month ago, at a conference in Brussels of the European Movement, the Minister without Portfolio, on another of his excursions to Europe, told his listeners:
"Europe lacks leadership and a sense of mission and too many people don't feel part of it."
Is that the Europe being led by his right hon. Friend the Prime Minister? Is that the view of a politician who plays a central role in the propaganda surrounding the Government? There was an opportunity for the Government to do something about leading opinion in Europe. There was an opportunity to bring forward policies that would force down the people's unemployment that so bedevils Europe. That opportunity is about to pass away at Cardiff and it is no use complaining or blaming others at precisely the moment when the Government have had a chance to do something—a chance to put forward or fight for a concrete idea.
Presidencies and Governments can have big ideas and two of the biggest in recent years came from Britain: the single market and subsidiarity, both of which came from and were driven by the Conservatives. Both are now taken for granted—indeed, they are trumpeted by the Labour Government and even by Chancellor Kohl, who has an appointment with the voters—but those ideas had to be

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fought for. That shows that real achievements are possible and that big ideas—real ideas—can be pursued. What a marked contrast with the current presidency.
Only today, the Foreign Secretary told the Daily Express that, at Cardiff,
"We are going to look at the future of Europe and address the big questions"—
about time too, we on the Conservative Benches say. That is what the Government should have been doing over the past six months.
I shall go into the lion's den on one issue, about which we heard earlier: the common agricultural policy. I should like to set the context. The Foreign Secretary, on numerous occasions—particularly in a speech at Warsaw, as my hon. Friend the Member for North Dorset (Mr. Walter) mentioned in his excellent speech—the Deputy Prime Minister, during the Queen's Speech, and the Prime Minister himself, in a speech at the Mansion House, all made considerable reference to reforming the common agricultural policy. They said that it would be a central aim of their presidency. What happened? On 1 April, The Daily Telegraph told the story:
"EU throws out farm reform plans".
Perhaps it is understandable that my right hon. and learned Friend the Member for Folkestone and Hythe and I missed the Foreign Secretary's reference to the CAP today. As it was such an important issue for the Government, we assumed that somebody in the Foreign Office would have written a section, a couple of paragraphs or a brief on CAP reform during our presidency. In fact, we heard less than a sentence—11 words—on the subject. I am told that the Foreign Secretary said that the Government have a
"clear sense of direction for reform of the common agricultural policy".
There are two things wrong with that. First, it is wrong, and secondly, does it really cover the importance of the Government's top priority? Is the throwing away of a handful of words in the middle of a speech the right response at the end of a presidency to a matter that was thought to be at the top of the agenda at the beginning of it?
Let us go to another matter: the appointment of the president of the European central bank. My right hon. and learned Friend cited a vast array of criticisms that were levelled at the British presidency at that time. It is astonishing that Britain's Government and Prime Minister were criticised by, among others, the President of the European Parliament, the Prime Ministers of Luxembourg and Italy and the Austrian Chancellor, who said:
"We have now learnt…how not to organise a summit".
That phrase will haunt the Government throughout their tenure of office.
The Government have fared little better in the press. As the Foreign Secretary will know, he had a very hard time when he visited Turkey and Italy—and when he went to Strasbourg, as well as when he did not go to Strasbourg, even though he was expected there in February. When he did go to Strasbourg, as we have heard, the fawning motion put before the Parliament was too clever by half, and it was lost. It was a spin too far for Members of the European Parliament.
I am sure that the Foreign Secretary will pack his bags for Cardiff with a huge sense of relief that the ordeal is almost over. I hope that he enjoys his brainstorming
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lunch, which appears to be the major feature of the occasion, for when the Government as a whole get to Wales this weekend, they will have very little to show for their presidency of the Council. I am sure that there will be many photo opportunities; it is always good to welcome President Mandela to our country. I am sure that it will not be unhelpful to the Prime Minister for the President of South Africa to join the President of the European Council for the cameras. It is probably a matter of great relief for the Government that they can hold the presidency only once in the lifetime of a Parliament, on a rota basis, rather as we get tickets for the Gallery.
The summit in Cardiff will be the last opportunity for the Euro-President Prime Minister to be centre stage. I am sure that the occasion will be made to work for all its worth. Many of the important issues that hon. Members have aired in this debate will not be touched on; many important concerns about the development of Europe will not be touched on. It will be a gigantic photo opportunity for the Prime Minister, and an attempt to paper over the cracks of the presidency.
We may well see a Welsh walkabout, which will, perhaps, be better organised than the visit by the Chancellor of the Exchequer and his partners to the great city of York, where he marched them up and down the street to the accompaniment not of the cheers, but of the jeers of the burghers of York, who know that many of the great figures of Europe are not exactly marching in tune with the peoples of Europe.
The Government's gigantic public relations exercise and their attempt to spin-manage Europe are getting Britain into serious trouble with our friends, partners and colleagues in Europe. That trouble is entirely of the Government's making. If that is how much influence Britain can wield and how much respect we can command in Europe while we hold the presidency, heaven help us when we are no longer in that potentially powerful position.
Whatever happens at Cardiff, it can only be a matter of time before the lessons learned about this Government in the past six months by the political leaders of Europe filter down to the people who matter most to us in this House—our constituents. Politicians cannot live by style alone. A realisation of the Government's failure in their presidency of the European Council, which mirrors a lack of achievement in so many aspects of their performance, will soon break through to the public at large.
9.10 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Doug Henderson): I welcome the hon. Member for Windsor (Mr. Trend) to his post and congratulate him on his appointment. I am not one of those politicians who like to give advice to other politicians, but if the hon. Gentleman is to stay in his job, he was misplaced in criticising Eurostar, because he may find that he has to avail himself of its services from time to time, as I shall tomorrow morning at 6.14 on my way to Brussels.
We have had a thoughtful debate, which is different from past debates on Europe in which I have taken part, both in this capacity and when in opposition. Previous debates were characterised by ideology and zealotry. I am pleased to say that today's debate heralds a new approach, and there have been many thoughtful contributions from

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hon. Members on both sides of the House. The absence of ideology on the Opposition Front Bench has not been too obvious, but several contributions from Conservative Back Benchers have examined the issues that we face in Europe. I find it interesting that the Opposition, of all people, should be fond of quoting the press in their defence. That is a strange reversal of a role that I have known some Conservative Members to adopt in the past.
My hon. Friend the Member for Swansea, East (Mr. Anderson) said that he believed that the presidency would be the busiest period for British foreign policy in peacetime. I do not know whether that is true, but it certainly feels as if it is. We have had an active and productive six months during our presidency, which has one or two weeks to run.
My hon. Friend the Member for Ilford, South (Mr. Gapes) said that my right hon. Friend the Prime Minister has been deeply involved in European issues, which is the protocol for European matters when there is a summit at the end of the six-month presidency. My right hon. Friend has visited all the countries in the European Union over the past two weeks to examine the issues relating to the development of the European Union that are considered important not only by the presidency, but by other partner states.
My hon. Friend the Member for Swansea, East said that he had detected more warmth in Europe towards the Government. I cannot resist saying that that is not a difficult achievement when one considers the temperatures that existed before 1 May last year. There is a new warmth and a feeling that everyone in Europe is in a family. That does not mean that everyone always agrees on every issue or that one does not fight one's corner hard, but there are many issues on which we must look beyond Europe and decide how we can best co-operate. That has been a strong theme during the past six months.
Mr. Howard: Is that why the Chancellor of the Exchequer was treated as he was, just a few days ago?
Mr. Henderson: The right hon. and learned Gentleman, like one of my hon. Friends, reads too much into newspaper reports. The rules on the relationship of the various nations to ECOFIN and Euro X were clearly defined at the Luxembourg summit, when there was no doubt that the major issues of macro-economic policy in Europe are determined by ECOFIN, and that the Euro X committee deals with the details of the currency and its relationship to other currencies. There are occasions when it is appropriate for the four non-members of the currency to be present, and other occasions when it would be inappropriate. The right hon. and learned Gentleman refers to a situation when it was recognised that the 11 members wished to discuss matters specific to the currency.
The main focus of the presidency, and a topic that will feature prominently in Cardiff, is the enlargement of the European Union. An historic decision was taken in Luxembourg and has been driven hard by the British presidency over the past six months. It will change the future shape of Europe, uniting a Europe that was previously divided.
There are different views on the issue. In his introductory remarks, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) expressed the
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view that we had gone backwards over the past 12 months. The hon. Member for Somerton and Frome (Mr. Heath) thought that the session had been well managed. Any objective person would recognise that the mandate that was given to the presidency by the Luxembourg summit has been fulfilled in its entirety.
That is the strong view of the states that want to join the EU. The Romanian European Minister said that it was an historic day and that the European conference had further added to that process. Indeed, some of the negotiators for countries that want to accede to the EU criticised me six or eight weeks ago because we had brought forward the screening process too quickly and they could not meet some of the detailed requirements set by the Commission officials. I pleaded guilty, because that is what they had asked for. They have worked hard, and I think that they are pleased now that considerable progress has been made on the screening process.
Mr. David Heath: When I said that the process was well managed, I meant that as a compliment. I hope that the Minister will agree that to start the accession process without a clear timetable for CAP reform, institutional reform and structural and cohesion fund reform is to invite the applicant countries to apply on the basis of a false prospectus. It is essential for the timetable to be in place.
Mr. Henderson: I am pleased that the hon. Gentleman is not retracting his support for the accession process. I agree that it is essential to recognise that the enlargement of the EU entails not just the changes that those countries must make if they want to accede to the EU; it also involves the changes that the existing members of the EU must make to respond to that challenge. That has been one of the important aspects of our presidency and will be discussed at Cardiff on Monday afternoon, when the leaders of the nations of Europe will seek a formula that will allow that process to go forward.
From a presidency position, we shall push forward the reform of the common agricultural policy, a key issue which several hon. Members raised. After the German elections in September, we shall be able to address the paper issued by the Commission for reform initially in cereals and beef. If carried through, that alone would save British consumers about £1 billion a year, so it is worth while. There is support for some of the proposals in the farming industry.
On structural funds, there is a need for reform if funding is to be available to assist the countries that want to accede to the EU. In the future, from the total pool of structural funds, there will be fewer resources available proportionally to be distributed to existing members of the EU. That is also recognised.
I shall return to the specifics of the structural funds, to which hon. Members on both sides of the House have referred. At Cardiff, we hope to make a commitment to work hard to try to bring those issues to a conclusion by March next year. The European Parliament, through its procedures, can then give assent to the aspects of any deal to which it is required by treaty to agree before the European elections next June. If the matter is not resolved by April, there will be no time to consider it until October or November—which is nearing the end of the existing structural funds regime. There are many reasons why we want to put the timetable in place, and we shall strive hard to do that in Cardiff.

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My hon. Friend the Member for East Carmarthen and Dinefwr (Mr. Williams) and the right hon. Member for Dyfed asked what reforms are taking place in structural fund procedures. There must be a fair system if there is to be acceptance and understanding on the part of the 15 nations that wish to accede to the European Union. Areas in Europe that have the same characteristics should receive the same sort of support, regardless of their location. As the right hon. Member for Dyfed—
Mr. Wigley: Caernarfon.
Mr. Henderson: I apologise. My geography of Wales tends to be a bit anglicised. I must do some homework, lest I get into trouble with the right hon. Gentleman and others.
As the right hon. Member for Caernarfon (Mr. Wigley) said, it is not simply a matter of the new structural funds regime—although that is important to the whole United Kingdom. In some places in Wales, England and Scotland, the description of the area is a key factor. The right hon. Gentleman explained how one can calculate different GDP per capita definitions depending on whether Wales is divided north-south or east-west. The statisticians at Eurostat and the Commission must deal with that matter on the basis of what is fair and reasonably objective.
We have given our people a mandate to negotiate, and we are seeking a fair system. We must be able to say that areas that are classified as objective 1 in the United Kingdom are, broadly speaking, comparable to similar classifications made in other European Union countries. If that is achieved, it will be a fair settlement. I do not wish to comment on the specifics of any areas while the negotiating process is continuing—I am sure that hon. Members will understand why. The Government take a firm view and will try to advance the process.
We have been active on many other issues during our presidency.
Mr. Donald Anderson: Before my hon. Friend moves on, will he refer to the proposals for institutional reform? Have the Government made specific proposals in respect of a conference concerning institutional reform? What are the prospects of that occurring?
Mr. Henderson: My hon. Friend is moving ahead of me. I shall turn to that issue. There will be a discussion over lunch involving the Heads of Government—[Interruption.] I assure hon. Members that lunches are not perks in a European context. It means that one gets indigestion while eating at a meeting—and the Heads of Government are no more exempt than my right hon. Friend or I.
There will be an open discussion during which any contributor may lay any issue on the table. There is a desire to explore to what extent further integration is necessary if there is to be effective decision making and to what extent subsidiarity must be redefined and worked out in a way that is acceptable to member nations and will serve us well in the future. Those are the philosophical parameters of the discussion. It may go into institutional issues such as the role of national Governments, of the European Parliament and of the Commission, the size of the Commission, the scrutiny process and many others.
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There is a wide agenda, and we shall aim to take it forward to the Vienna summit in December, where it could be progressed a little further along the line. Hon. Members on both sides of the House understand that there is no magic formula for reforming an organisation as complicated as the EU, and that reform does not happen quickly, because consent is essential for lasting agreement.
We have been active in many other areas, such as improving action against crime at an international level. On the environment, we have achieved discussion of the Kyoto obligations at the EU and practical decisions on new regulations on landfill and on drift nets. On the single market, there have been agreements on a research and development framework, which is important for British scientific institutes and universities, on mobile phones and on the introduction of a scoreboard system, so that we are not only saying that we are committed to the single market, but making everyone else aware of what we have done to achieve that. National obstacles to the single market will become transparent under the system, which is an important development.
Hon. Members will be pleased that there has been progress on beef this week, as was acknowledged in some of the speeches tonight. The Government will be pushing the Commission proposal through the various channels to achieve acceptance at the earliest stage.
The new arms code is a major achievement. The hon. Member for Somerton and Frome asked why it was not announced in the March half-time report. It was not agreed then, but only three or four weeks ago. I believe that it is a significant achievement and puts huge pressure on member states to play the game, not to act unreasonably and not to undercut foreign policy positions on those matters. That is an important move forward, which has been acknowledged by hon. Members on both sides of the House.
Mr. Dalyell: Is this a convenient point to ask my hon. Friend about Kosovo, or will he come to it later? If not, may I repeat my question about air strikes? Some of us feel strongly that if there is to be a military option, which has not been ruled out, it should not be air strikes, but infantry supported by armour, which is totally different from counter-productive air strikes. Can he say anything about the thinking on air strikes?
Mr. Henderson: I had hoped that hon. Members were satisfied with the response of my right hon. Friend the Secretary of State, who intervened on the right hon. and learned Member for Folkestone and Hythe to answer his points relating to those matters. Nothing is ruled out. We are considering the situation, and, as my right hon. Friend the Foreign Secretary said, there is a G8 Foreign Ministers meeting tomorrow and there has been a Defence Ministers meeting today. European Foreign Ministers will have an opportunity to discuss those matters at their lunch on Monday. There is a build up in the United Nations for seeking as much consensus as can be achieved to get the necessary resolution through.
Mr. Howard: May I bring the Minister back to the code of conduct on arms sales, which he was dealing with before he gave way to the hon. Member for Linlithgow (Mr. Dalyell)? Is not the most significant new feature that the EU code will introduce the obligation on a country to

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notify other countries when it has refused to grant a licence for the export of particular arms? Will that not present such an order, on a plate, to any other country that chooses to adopt a different interpretation of the code? For the first time, if a country refuses to grant a licence for an order, it will have to notify everyone else, and any other country could notify its industry to take advantage of the order.
Mr. Henderson: I understand why the right hon. and learned Gentleman is worried about that, but, given my understanding of the defence industry—I have been involved in it a bit; in fact, I once worked for Rolls-Royce— I can say that the main contractors are large-scale operators, who generally know who seeks what kind of purchase and the type of offer that will be made. I believe that they already have access to such information.
What the code of conduct does is inform those people and others that there is a reason why a sale has been rejected by one country, and that, if they are then going to undercut the politics of that decision, they will have to do so publicly, and justify their stance. I believe that that will have a major impact, in that, when there is a need to stop the sale of a particular weapon for a particular political reason, that reason will—hopefully—be upheld by those who were potentially alternative suppliers.
Mr. David Heath: At what point does the hon. Gentleman consider that it would be appropriate to return to the European Union negotiating table to strengthen the code of conduct, making it into something nearer what was originally envisaged?
Does the hon. Gentleman envisage any discussions with the United States about the code, with a view to reaching some agreement with the US about American arms manufacturers?
Mr. Henderson: I think common sense will suggest to the hon. Gentleman that we need to see how the code works. There is a commitment to review its procedures every 12 months.
It clearly makes sense to secure as much agreement as possible with the United States, so that the same policies are adopted by defence industries throughout the part of the world where there is the capacity to make the goods that we are normally discussing. We want to achieve that.
The hon. Member for Hertford and Stortford (Mr. Wells) referred to the Lomé mandate, which was discussed at this week's General Affairs Council. Considerable progress was made, and officials are now looking at some of the detail. The principles of the British position are as I described them to the hon. Gentleman when I gave evidence to the Select Committee, and we are pushing hard on them. The banana issue has been taken on board, but I must tell the hon. Gentleman that any decision must be consistent with World Trade Organisation rules. Otherwise, in the long term, it will not stick, and there will be problems. We shall return to that issue on 29 June, at the next meeting of the General Affairs Council. I hope that we shall be able to conclude the mandate then.
Much is expected of the weekend's proceedings in Wales. We are all looking forward to going to Cardiff. I always enjoy my visits to Wales, to see some of my old friends and some of my new friends. I believe that this will
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be a busy and productive summit. Important improvements will be made, and important progress will be made on economic reform, on enlargement and on Agenda 2000. There will be an important dialogue on the future of the European Union, and that that dialogue will concentrate on making the EU relevant to what people feel and to issues that they know are crucial to them. I believe that, at Cardiff, there will be a desire to provide continuity through to the Austrian presidency.
I must say that I think it was a little unworthy of the hon. Member for Windsor to demean the meeting between President Mandela and the Heads of Government. I think it very fitting that that meeting is taking place.
Mr. Trend: I am delighted that President Mandela is coming to the country: he is a hugely distinguished international politician. I merely sought to make the point that it was unlikely that he would not take advantage of a photo opportunity with the Prime Minister. I cannot help feeling that there may just be a slight amount of contrivance in this matter—but, as I have said, we shall be delighted to see President Mandela.
Mr. Henderson: I am grateful that we have managed to draw the tooth from the hon. Gentleman on that issue. It is fitting that President Mandela is meeting the 15 leaders of Europe. That is an important dialogue and an occasion to celebrate President Mandela' s great contribution to democracy and freedom in the 20th century. The values that he felt were important to fight for over his years of political life are the principles and values that will set the European Union in good stead for the future. I look forward to that occasion in Cardiff on Tuesday.
Ms Bridget Prentice: I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.

NORTHERN IRELAND (SENTENCES) BILL (PROGRAMME)
Ordered,
That the following provisions shall apply to proceedings on the Northern Ireland (Sentences) Bill.

Committee of the whole House
1.—(1) Proceedings in Committee of the whole House shall be completed at two sittings.
(2) The following proceedings shall be brought to a conclusion, unless previously concluded, in accordance with the following table:

Proceedings

Time, after commencement of proceedings in Committee at the first sitting, at which proceedings to be concluded.

Amendments up to page 2, line 22.

2 hours

Amendments up to page 2, line 47, other than amendments inserting words at the end of line 47.

4 hours

Amendments inserting words at end of line 47.

5 hours

Remaining proceedings on Clause 3 and proceedings on Clauses 4 to 7.

6½ hours

(3) Proceedings in Committee shall be brought to a conclusion, unless previously concluded, 3 hours after the commencement of proceedings in Committee at the second sitting.
(4) Standing Order No. 15(1) (Exempted business) shall apply to proceedings in Committee for any part of the periods of—

(a) 6½ hours, at the first sitting, and

(b) 3 hours, at the second sitting,

which fall after Ten o'clock.

Report and Third Reading
2.—(1) Proceedings on consideration and Third Reading shall be completed at one sitting and shall, unless previously concluded, be brought to a conclusion three hours after commencement.
(2) Standing Order No. 15(1) (Exempted business) shall apply to those proceedings for any part of the period of three hours after commencement which falls after Ten o'clock.

Conclusion of proceedings
3.—(1) For the purpose of concluding any proceedings which are to be brought to a conclusion at a time appointed by this Order, the Chairman or Speaker shall forthwith put the following Questions (but no others):—

(a) any Question already proposed from the Chair;

(b) any Question necessary to bring to a decision a Question so proposed;

(c) the Question on any amendment moved or Motion made by a Minister of the Crown;

(d) any other Question necessary for the disposal of the business to be concluded.

(2) Proceedings under sub-paragraph (1) shall not be interrupted under any Standing Order relating to sittings of the House and may be decided, though opposed, at any hour.

(3) On a Motion made for a new Clause or a new Schedule, the Chairman or Speaker shall put only the Question that the Clause or Schedule be added to the Bill.

(4) If two or more Questions would fall to be put under sub-paragraph (1)(c) on amendments moved or Motions made by a Minister of the Crown, or under sub-paragraph (1)(d) in relation to successive provisions of the Bill, the Chairman or Speaker shall instead put a single question in relation to those amendments, Motions or provisions.

Miscellaneous
4. Standing Order No. 82 (Business Committee) shall not apply to proceedings on the Bill.

5. No Motion shall be made, except by a Minister of the Crown, to alter the order in which proceedings on the Bill are taken.

6. If on an allotted day a Motion for the adjournment of the House under Standing Order No. 24 (Adjournment on specific and important matters that should have urgent consideration) stands over from an earlier day or to Seven o'clock—

(a) the bringing to a conclusion of any proceedings on the Bill which under or by virtue of this Order are to be brought to a conclusion after that time shall be postponed for a period equal to the duration of the proceedings on the Motion, and

(b) Standing Order No. 15(1) (Exempted business) shall apply to proceedings on the Bill for the period after Ten o'clock for which sub-paragraph (a) permits them to continue.

7.—(1) If a Motion is made by a Minister of the Crown to amend this Order and an effect of the Motion would be to provide a greater amount of time for proceedings on the Bill, the Question on the Motion shall be put forthwith and may be decided, though opposed, at any hour.
(2) If a Motion is made by a Minister of the Crown to supplement the provisions of this Order in respect of further proceedings on the Bill, the Motion may be proceeded with, though opposed, at any hour and the proceedings, if not previously concluded, shall be brought to a conclusion three-quarters of an hour after they have been commenced.
—[Ms Bridget Prentice.]

Professor David Lowery
Motion made, and Question proposed, That this House do now adjourn.—[Ms Bridget Prentice.]
9.35 pm
Mr. Michael Clapham: I am aware that some hon. Members have already had meetings about this case with the Minister of State, my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson). I have become involved because it transpires that Professor Lowery has a home in my constituency; if he were living in the United Kingdom, he would be in my constituency. Consequently, to all intents and purposes he is my constituent.
I discussed the matter with the Minister of State, my hon. Friend the Member for Leeds, Central (Mr. Fatchett) two or three weeks ago before his visit to Portugal. He was kind enough to tell me that he would try to ensure that the case was on the agenda, and that he would raise the matter if he got the opportunity. Unfortunately, in his discussions, he was unable to get to that item on the agenda, so the matter was not raised. I appreciate the fact that he tried to raise it.
I shall describe Professor Lowery's character by referring to his background. He is an academic; he graduated from Queen's university in Belfast in 1969. Since then, he has worked at a number of colleges in the United Kingdom, lastly at Warwick university where he worked with my hon. Friend the Member for Dudley, North (Mr. Cranston). After that, he left for America, and, while working at colleges and universities there, he was awarded a professorship. Since then, he has moved to work in Portugal.
I contend that my constituent is being treated unfairly by the Portuguese authorities, who have refused him bail on several occasions. They have even refused to contemplate house arrest. It is clear that he is being treated much worse than a Portuguese national would be treated; it seems that he is being discriminated against because he is a foreigner. I say that because we can make comparisons with similar cases in which Portuguese nationals have been treated differently.
I should like to bring to the House's attention the case of Pedro Caldeira, who was charged with white collar crime; it was a similar charge to the one that Professor Lowery faces. That man was given bail despite the fact that there was evidence that he might flee the jurisdiction, as he had previously absconded. I am told that the man even confessed to his crime on a national television programme. The Portuguese authorities saw fit to give him bail, whereas my constituent has been refused bail. Therefore, it appears that my constituent is being refused bail simply because he is a foreigner. From what I have been told by his legal advisers, there is a strong indication that he has not been treated as innocent until proven guilty, the concept that is supposed to underlie the Portuguese legal system.
My constituent was arrested in April 1997 and held for a year before charges were made. That is in accord with the Portuguese legal code; a person can be held for 12 months before charges are made. In this case, my constituent was charged on the 365th day. In such a situation, it becomes very difficult for defence lawyers because they are not able in that 12-month period to see

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prosecution evidence. Therefore, they are unable to mount—this was true of the lawyers in this case—a substantial challenge against a refusal of bail.
In this case, there have been five applications for bail, and five appeals have been rejected. My constituent's applications were accompanied on each occasion, I understand, by a statement from his doctors pointing out that he should be released on bail or on house arrest for health reasons. The prison doctor service has rejected that evidence. I am told by my constituent's legal advisers that it did so without even giving him a cursory medical examination. The medical evidence has just been disregarded.
No evidence has been provided by the Portuguese authorities that my constituent is violent, that he would be likely to flee the country if given bail or that he would interfere with the investigation. Those tend to be the reasons why a judge would decide against giving bail, but my constituent is not of that nature. It would seem, therefore, that there is no good reason to refuse him bail.
My constituent has already surrendered his passport, I am told. He has offered sureties and agreed to report frequently to a police station if given bail. Additionally, he has a genuine, long-standing relationship with a Portuguese woman, so he has every reason to remain behind to see this thing through. Therefore, there is no reason why he should have been refused bail.
As a result of the difficult situation that my constituent has been put in, he has become so frustrated that he has started the process of making a complaint to the European Commission of Human Rights, with the help of his legal advisers, Gudrun Parasie of the European legal advice service and Edward Fitzgerald QC. Those violations of my constituent's basic human rights seem to be legal in Portugal because, according to its penal code, a person can be held for a year, with no charges made until the 365th day, and there is no way in which his defence can have sight of prosecution documents. That tends to suggest a violation of human rights. I understand that it is on that aspect that the complaint will be made.
It seems that the contradiction within the Portuguese legal code comes about because of an outdated system, which needs to be thoroughly reviewed. I understand that it has been in place since the days of Salazar. One can understand why such a legal system operated in the days of that dictatorship, but it needs to be reviewed and brought into accord with the rest of Europe.
I am told that, although the Portuguese authorities have had a year to prepare their case, the documentation that has now become available has been shabbily put together, and there appears to have been a complete mix up. The prosecution evidence refers to no fewer than three individuals called David Lowery. What appears to have happened is that the Portuguese police asked Interpol and other police services for information on David Lowery without providing a date of birth. Consequently, the documents refer to three separate individuals. That does not inspire confidence that justice will be done.
I reiterate that, based on the information available, it appears that Professor Lowery is being discriminated against and that bail is being disallowed simply because he is a foreigner. When one bears in mind the mix up in the prosecution documentation, one fears that justice will
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not be done. It is all the worse for Professor Lowery because his health is failing. He is 54 years of age and the conditions in Portuguese prisons are notoriously bad. His family went out to visit him at the bank holiday and they are most concerned about him, although he has been seen by a doctor. They feel that his health is beginning to fail.
I am advised that the death rate in Portuguese prisons is 125 times the national average. The average age of prisoners is 30 and Professor Lowery is 54. Bearing in mind the conditions and the death rate in Portuguese prisons, and the age of Professor Lowery and the fact that he has a health problem, it is obvious why his family are extremely concerned.
Recently, the Portuguese newspaper Püblico likened a prison sentence in Portugal to a death sentence. That gives some indication of the severe and harsh conditions in Portuguese prisons. The case has attracted a great deal of attention because of the human rights violations that seem to be built into the Portuguese penal code, such as the right to hold a person for a year without bringing charges. A prominent English QC has written a 17-page report listing the human rights violations in this case alone.
In conclusion, Professor Lowery is 54 years of age. He is not very robust and his family feel that if he has to wait more years in prison, his health may fail. Therefore, I should be pleased if my hon. Friend did his utmost to raise the case of my constituent as a matter of urgency with his Portuguese counterpart, with a view to pressing for either bail or house arrest. Although house arrest would confine him to his home, he would be in an environment in which his health was not in jeopardy, as it is now. He could remain there until his case was dealt with.
9.49 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Derek Fatchett): I thank my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) for bringing Professor Lowery's case to the attention of the House. I should like to respond by explaining some of the background detail in the case, the way in which the Foreign Office has supported Professor Lowery, and, specifically, the role in it played by our embassy and consular staff.
I tell my hon. Friend that the Government are committed—as any United Kingdom Government would be—to supporting and helping all British nationals who are detained in overseas prisons. We shall ensure that we meet that broad commitment in the case of my hon. Friend's constituent, Professor Lowery.
The House might find it useful if I were to give some of the background to Professor Lowery's case. Although my hon. Friend briefly mentioned some of the points, hon. Members may gain a greater understanding of the case if I provide that background.
Professor Lowery was working in Portugal as the director of a company involved in buying and selling stocks and shares, collecting commercial information and conducting telemarketing. The company was called Paramount Portugal Consultadoria Commercial Limitada, and was established with the majority of the initial capital provided by Paramount Securities and Trust SA, of Switzerland, and the remainder by Professor Lowery himself.

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As my hon. Friend said, Professor Lowery was arrested on 22 April 1997, following complaints received by the Portuguese authorities from one or more investors in Ireland that share certificates marketed by Professor Lowery's company had been forged and were valueless. Professor Lowery was then detained in Caxias prison, pending police investigations into the complaints against him and the company.
Remand custody may be applied only if bail is considered inadequate, if there is a strong indication that a crime punishable with a maximum term of imprisonment of more than three years has been committed, and if the court considers that there is a danger that the defendant might flee. My hon. Friend has made some points on those criteria, but the court decided that, in this case, Professor Lowery came within some of those criteria. He was consequently held in detention without bail.
It might be useful if I were to explain some of the aspects of the Portuguese criminal procedural code. The code limits the length of custody on remand to six months, to allow the authorities to investigate accusations. The term can be increased to 12 months when the process is exceptionally complex because of the number of defendants, the number of plaintiffs or the highly organised nature of the alleged crime. The period can be lengthened also if crimes such as forgery of currency or credit instruments fraud are involved.
As my hon. Friend said, Professor Lowery was formally charged, in accordance with Portuguese law, on 21 April 1998. He was charged with criminal association, falsification of titles of credit, aggravated fraud and misuse of computerised data.
My hon. Friend may wish to know that the British embassy in Lisbon became aware of Professor Lowery's detention on 9 May 1997. The Portuguese authorities confirmed his arrest with the embassy on the same day. I am happy to report that consular staff sought immediate access, and visited Professor Lowery on 13 May. I can therefore tell my hon. Friend that—despite the points that he has made on legal procedures in Portugal and the nature of Portuguese law—consular staff were quick to respond as soon as they had information that Professor Lowery had been detained.
As my hon. Friend rightly said, it is now the responsibility of the Portuguese authorities to set a date for Professor Lowery's trial. Under Portuguese law, the maximum time that any prisoner can be held on remand is four years in total. In this case, that will include the time that Professor Lowery spent on remand before being charged.
That is the some of the background to the case. I am sure that hon. Members who are familiar with our consular role will be interested to know how we have responded to Professor Lowery's case. The job of our consular staff is to ensure that British prisoners overseas receive the same treatment as other prisoners, that they have proper and full access to a lawyer, that they have information about the legal and prison systems and that any medical problems are dealt with quickly. Moreover, if we learn of a justified and serious complaint about ill treatment, we take it up vigorously with the police or prison authorities. We are concerned that all British
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nationals who are detained overseas are dealt with in accordance with local laws; we take appropriate measures to ensure that they are.
As I have now answered a number of Adjournment debates on consular cases, I can tell my hon. Friend that we have responsibility—which we carry out—for looking after the well-being of British citizens in prison overseas and for ensuring that they receive their full rights in the context of the local law. However, as the UK Government, we cannot interfere with a country's legal system—in this case, the country is another member of the European Union.
It is crucial that we understand that the role of the consular service is to safeguard the welfare of British prisoners overseas. Our consular staff in Portugal aim to visit British prisoners on a regular basis. Consular staff in Lisbon have visited Professor Lowery four times since his arrest on 22 April 1997, most recently on 14 April this year. The ambassador in Lisbon has also agreed to visit Professor Lowery in prison; he will be in contact with him in the very near future about the proposed timing.
My hon. Friend referred to my recent visit to Lisbon. Unfortunately, because of the programme—I was there to visit Expo 98—I was unable to arrange to meet the Portuguese Foreign Minister, but I took the opportunity to express again to our ambassador in Lisbon the interest of my hon. Friend and other hon. Members in Professor Lowery's case. I know that the ambassador is keeping a close eye on the case, as is shown by the fact that he will visit Professor Lowery in prison, largely as a result of the excellent representation that my hon. Friend has made for his constituent; the embassy's commitment and interest are demonstrated by the fact that it is rare for an ambassador to pay a prison visit.
Since Professor Lowery's arrest, our consular staff in Lisbon have maintained close contact with the prison authorities and with Professor Lowery's legal representatives. I understand that Professor Lowery is in close contact with his family and is visited regularly by his friends. If he wants our consular staff at any time to pass on any information to his family, they will be glad to do so.
My hon. Friend talked about Professor Lowery's health, and we fully understand the problems. We know that Professor Lowery suffers from high blood pressure; he told our consular staff when they visited him on 20 January this year that he had developed two lumps in his throat and had seen a private doctor. Since being informed of that development, our consular staff in Lisbon have pressed the prison authorities vigorously to ensure that Professor Lowery receives the medical attention that he needs and deserves.
The ambassador in Lisbon has written to the Minister of Justice on three occasions about Professor Lowery's health. Professor Lowery has now been seen by a specialist; he has also undergone tests in a private clinic outside the prison. He has been seen at the prison on a number of occasions by his own doctor, and he has also been seen by a dentist. The ambassador also wrote to the Minister of Justice on 17 February—on a humanitarian,

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rather than a legal, basis—to express concern at the length of time that Professor Lowery had been detained without charge.
I hope that all those points will convey to my hon. Friend that the consular staff and the ambassador have been extremely busy and fully involved. The consular staff will continue to monitor Professor Lowery's case and to do all that they appropriately can to help.
Professor Lowery's case has to remain a matter for the Portuguese legal system. That is how such cases are dealt with. It is not right or proper for us to try to interfere in that process, as I am sure my hon. Friend will understand. The legal system is independent of the Government in the Portuguese system, so the question of bail or release is for that system. The role of the Foreign Office and our consular staff is to ensure that Professor Lowery gets all his rights.
It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.—[Ms Bridget Prentice.]
Mr. Fatchett: We will ensure that Professor Lowery receives all the support that he can from consular staff. If my hon. Friend feels that the professor's rights are being violated and that the embassy could help him, will he please let us know?
We heard what my hon. Friend said about possible legal action under human rights charters of the European Union, and we will be interested to see how that proceeds. We understand his concern, and will continue to take an interest in the case and do what we can to assist his constituent. We understand in particular the concerns about Professor Lowery's health and the prison conditions, and I assure my hon. Friend that the Foreign Office and our consular staff in Lisbon will be vigilant.
Question put and agreed to.
Adjourned accordingly at one minute past Ten o'clock.