Commons Sitting of 29 June 1998

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
  CULTURE, MEDIA AND SPORT
  The Secretary of State was asked—
  CULTURE, MEDIA AND SPORT

    Press Complaints Commission
    Mr. Clive Soley: What meetings he has had with the Press Complaints Commission to discuss the effectiveness of the PCC code. [46311]
    The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): I have had a number of meetings with Lord Wakeham, the chairman of the Press Complaints Commission. I welcomed the strengthening of the code of practice that was agreed on 19 December 1997, and I have made it clear that further changes should be considered to protect people in all walks of life.
    Mr. Soley: I welcome that answer, but I ask the Secretary of State to bear in mind the needs of children. For example, on 7 May the Daily Mail named and photographed a four-year-old child on its front page just because her mother had been sent to prison in unusual
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    circumstances. Would the PCC not be more convincing if it intervened after publication to point out to editors that such cases fall well below the standards expected both in normal life and under the PCC code?
    Mr. Smith: I know that my hon. Friend has corresponded with the newspaper concerned in that case. The PCC code agreed last December extends protection to children of school age, unless there is an overriding public interest in publishing details about them. Both the procedures followed by the PCC and complainants, and the nature of the public interest test require further consideration in the coming months.

    Tourism
    Mr. Christopher Fraser: What plans he has to encourage the growth of employment in the tourism industry. [46312]
    The Minister for Film and Tourism (Mr. Tom Clarke): The new tourism strategy which we are developing with the tourism forum will seek to ensure that tourism fulfils its enormous job-generation potential, while the new deal will help to solve the industry's skill shortages and recruitment problems. The tourism and hospitality industry already supports 1.7 million jobs, and it is forecast to need many more people in future.
    Mr. Fraser: I am interested in the Minister's professed interest in the tourism industry. Why has his Department consistently subordinated tourism to more glamorous and trivial matters?
    Mr. Clarke: The plain and simple fact is that we have not. When I gave evidence to the Select Committee on Culture, Media and Sport, it was unfortunate that the hon. Gentleman appeared only for the last two minutes of it. I am not, therefore, surprised by his total ignorance of the Government's absolute commitment to a vital industry.
    Mr. Gordon Prentice: Has the tourism strategy examined the valuable, but neglected, British

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    resource of historic buildings associated with the birth and development of the Labour movement? The Minister will be aware that the sole surviving Clarion house, which dates from the days of the old Independent Labour party, is in my constituency. It would encourage the people of Pendle if I could tell them that the Minister will take on board the development of a resource of which we have much in the north of England.
    Mr. Clarke: My hon. Friend makes an extremely relevant point. That part of our country's heritage is important in attracting tourists. I am delighted that my hon. Friend mentioned his constituency, which I look forward to visiting. I know that, when he returns to Scotland, he will pay a visit to Robert Owen at Lanark and to the Summerlee heritage park in my constituency, which meets my hon. Friend's excellent point.
    Mr. Cynog Dafis: What representations has the Minister received about the effect of the strength of the pound on the tourism industry? May I draw his attention to the profound gloom in the industry in Wales, which is combining with the collapse of livestock prices to lead to a crisis in the rural economy of Wales? Does the Minister accept that the combination of Government policies that are leading to the strength of the pound is having a serious effect on large parts of the country, and that the Government may have to pay a severe political price in the 1999 elections?
    Mr. Clarke: The hon. Gentleman raises an interesting point which was last discussed with me in Cardiff last Wednesday. The problems are transient, but I am happy to report that new figures show that expenditure by overseas tourists has declined by less than 1 per cent. on last year, which was a record year. Given the self-evident problems of the Asian market, the House will welcome the fact that expenditure from, for example, north America is up by 6 per cent. The Government are determined to build on those figures.

    Design Promotion
    Mr. Barry Sheerman: What role his Department is playing in promoting good design in (a) the media and (b) elsewhere. [46313]
    The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): I visited the Royal College of Art's design, communications and humanities students' exhibition last week and was very impressed by the skill and flair of the works exhibited there. My Department works closely with the Department of Trade and Industry and the Design Council in promoting our designers and the importance overall of good design.
    Mr. Sheerman: Does my right hon. Friend agree that, often, the media, energetically aided and abetted by the Opposition, sneer at anything that design contributes to this country? Is it not a fact that Government Members cannot be complacent, because we have to champion design in every industry and Government Department? If we are to be truly internationally competitive, good design is paramount.
    Mr. Smith: My hon. Friend is right about the importance of design and the quality of the Opposition.
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    It is no accident that, for example, there are 150 different car types on the road whose designs have had input from Royal College of Art students. That is a very good record for British designers and British design, and a strength on which we should build.
    Mr. Peter Ainsworth: Does the Secretary of State recognise that good design is about not only presentation but content? Is not his problem that he is so obsessed with pinning designer labels on everything that moves that the real issues are ignored? While he publishes airy rhetoric about design and goodness knows what, the tourism industry faces uncertainty, the arts are in crisis, the Royal Opera house is a shambles, the heritage has been designed out of the English language, and sport, music and design are being downgraded in our schools. Through all this, the Secretary of State dithers and does nothing, except cave in to the Chancellor of the Exchequer, which I agree he is good at. The right hon. Gentleman is known to be decent, so why does he not do the decent thing and go before he is pushed? He would bring immense relief to his friends, and might even find time to write a proper book.
    Mr. Smith: I had hoped that the hon. Gentleman's first question as Opposition spokesman would have been more accurate and have better content. He knows that his analysis of the arts, opera, design and the creative industries would have held true 13 months ago but does not now.

    Tourism
    Mr. Bob Blizzard: What support he is giving to encourage tourism as a means of economic regeneration for seaside towns. [46314]
    The Minister for Film and Tourism (Mr. Tom Clarke): The future of our seaside resorts has been a key consideration for the domestic tourism working group, whose final report, containing specific proposals, we received recently. These will be reflected in the tourism strategy to be published later this year.
    Mr. Blizzard: I thank my right hon. Friend for that reply and for his support for tourism in my constituency through his recent visit to Lowestoft to present the national blue flag beach awards and open our new marina, which was built with European funding. On the Agenda 2000 proposals for reform of the structural funds, will he press the President of the Board of Trade to support the inclusion of problems faced by seaside towns as a new criterion for objective 2? Will he ask the arts lottery board to take into account the capacity of projects for economic regeneration in considering applications? Lowestoft is submitting a bid for a spectacular glass monument to mark its position as Britain's most easterly point, which would be of great economic benefit to the town.
    Mr. Clarke: I very much enjoyed my visit to my hon. Friend's constituency. I now understand—if I needed to learn—how popular he deservedly is. I am sure that my hon. Friend the Minister for Arts listened to the second part of my hon. Friend's question.
    Tourism has already greatly benefited from European regional development fund money for projects that support and develop tourism and cultural attractions.

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    The total value of objective 1, 2 and 5b programmes for the period 1994 to 1999 is expected to be more than 3 billion ecu, or £2 billion. As the Minister responsible for tourism, I can assure my hon. Friend and others that I shall press for that support to continue.
    Sir Teddy Taylor: Is the Minister aware that Southend is a superb centre of tourism which he would do well to visit as soon as he can? Is he aware that some areas of high unemployment are included in travel-to-work areas of low unemployment, with the result that no funding can be provided for their special problems? Will he have a look at the unfair effects thereby created for some superb seaside towns such as Southend-on-Sea?
    Mr. Clarke: I have not yet had the privilege of going to Southend, but I do look forward to it. I am sure that it is almost as attractive as Cathcart.
    Unlike at least one Conservative Front-Bench spokesman, the hon. Gentleman makes serious points—in this case, about employment. Seaside resorts are an extremely important issue for us, discussed time and again at our tourism forum—which has not been mentioned once by Tory Front Benchers. I thank the hon. Gentleman for his fair point, and assure him that, as tourism provides 7 per cent. of all employment, I should like it to offer constituents such as the hon. Gentleman's still more employment, especially via the new deal.
    Mr. Lawrie Quinn: Does my right hon. Friend agree that areas such as mine need economic development not just at the seaside but more widely in the rest of the region? The region, after all, feeds the local tourism economy. Does he propose to have words with the regional development agencies, once they are set up, to stimulate regional tourism and the local economy by allowing local people an input?
    Mr. Clarke: My hon. Friend is absolutely right. The tourism industry in Great Britain needs a closer working relationship between the regional tourist boards and, in due course, the RDAs. I know that my hon. Friend has contributed thoughtful ideas in that respect; I can assure him that the membership of the forum is much concerned with his excellent point.
    Mr. Ronnie Fearn: How closely is the Minister working with the Heritage Lottery Fund on obtaining funding for piers, not just in my constituency but in many other places? I know that he will say that he has nothing to do with influencing such funding, but surely the Department can make recommendations.
    Mr. Clarke: The hon. Gentleman, for whom I and all hon. Members have a great regard, has both asked and answered his question. Of course we cannot intervene in lottery allocations; the problems affecting his pier, and of expenditure elsewhere in England, were made considerably worse by the reckless and inadequate policies of the Conservative party. Over the past 10 years, the Tories reduced public expenditure on the English tourist board from £25.8 million to a mere £9.9 million a year. They should hang their heads in shame.
    Mr. Gordon Marsden: Does the Minister accept that many Labour Members are extremely
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    supportive of and grateful for the Government's work on the new deal and appreciate their responsiveness to the particular problems of seaside towns and seasonal employment? What further representations has he received from the tourism industry in support and in respect of the new deal?
    Mr. Clarke: I am happy to say that support for the new deal has been absolutely massive—[Interruption.]—as those who really work in their constituencies and in the industry understand. Would Conservative Members challenge Tim Bartlett, chief executive of the English tourist board, who said:
    "We…believe that our industry can make a major contribution to the New Deal, and that the tourist boards can offer a practical access route to over 15,000 members—mostly small or medium sized businesses—throughout the country"?
    That is very positive. It appeals to us, but of course it would not register with Conservative Members.
    Mr. Peter Ainsworth: We have been told that a planned series of ministerial visits to seaside resorts this summer has been cancelled on the advice of officials. It was to have been called the seaside rock tour, or some such nonsense. Is it surprising that Ministers are afraid to show their faces at seaside resorts, given that all they have delivered so far to the United Kingdom tourism industry is a tide of European Union regulation and threatened abolition of the English tourist board? Was the Select Committee on Culture, Media and Sport not right to say that tourism is insufficiently glamorous for the current Secretary of State? Is it not true that, far from getting a kiss-me-quick on the promenade, any Minister who is rash enough to visit a seaside resort this summer is likely to be told where he can stick his rock?
    Mr. Clarke: I know that Jonathan Aitken is not around these days, but one would think that the shadow Minister might have got a better scriptwriter. The fact is that my right hon. Friend the Secretary of State and I fully intend to visit many parts of the country; indeed, as the hon. Gentleman must know, we have already started. As for the speculation in which he indulges, it is that and no more. He encourages us to visit seaside resorts and we shall visit, with absolute delight, Labour Scarborough, Labour Blackpool, Labour Hove and many other resorts which will continue to return Labour Members of Parliament.

    Sport (Social Exclusion)
    Mr. David Lock: How his Department is working with the social exclusion unit to ensure sport plays a role in combating social exclusion. [46315]
    The Minister for Sport (Mr. Tony Banks): My Department is working closely with the social exclusion unit. The last meeting took place as recently as 16 June. We see great potential for sport to play a part and we have already announced that we are working on a comprehensive strategy on sport which will, among other areas, address the problems of social exclusion. Sport is a great motivator, as we can see at the moment; it has a role to play in youth social inclusion.
    Mr. Lock: Does my hon. Friend agree that the Football Association has taken great strides over the years to foster

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    social inclusion through having schools of excellence for young footballers in clubs throughout the country? However, will he join me in expressing dismay at the FA's recent decision to limit schools of excellence to premiership and league clubs, thus leaving conference clubs such as Kidderminster Harriers in my constituency out in the cold? The 165 boys at that club will have no school from next year. Will my hon. Friend join me in urging the FA to think again and use his office to encourage it to take a broad approach towards tackling social exclusion in football through schools of excellence?
    Mr. Banks: Obviously, football has a great role to play in programmes for social inclusion and I share my hon. Friend's disappointment that the Kidderminster Harriers club was not granted a licence to operate as an FA centre of excellence. However, that is a matter for the FA, and the technical control board that is responsible decided, for a variety of reasons, that it would not recognise Kidderminster Harriers' scheme.
    I know that my hon. Friend has been campaigning, and I am more than ready to use my good offices to bring together my hon. Friend, the Football Association and Kidderminster Harriers so that we can explore that matter. We want football to flourish in Kidderminster and elsewhere. It was a great disappointment that, three years ago, Kidderminster was unable to join the football league because of its inability to meet the ground requirements. I shall certainly use my good offices to assist my hon. Friend and his club, and he is doing a great job in assisting it in the House today.
    Mr. Nick Hawkins: Is the Minister not embarrassed by the fact that, last week, the Secretary of State introduced a new form of potential social exclusion—the social exclusion of those who are keen on test cricket, who may well be unable in future to watch it on terrestrial television? As someone who, as a Back Bencher, was a scourge of the tabloidisation of British politics, does the Minister not recognise that two days of adverse headlines have resulted in a wanton act of appeasement of the main proprietor of the tabloid?
    Mr. Banks: I could never be disappointed in the actions of my right hon. Friend. The hon. Gentleman has a strange approach to this issue. Sky Television criticised my right hon. Friend's decision, while the British Broadcasting Corporation broadly welcomed it. Most importantly, the England and Wales Cricket Board welcomed the decision. Hon. Members must understand that the problem is how we get more resources into cricket while maintaining the maximum access through television. The money that the ECB will receive through Sky if the deals go ahead will enable cricket to be developed at school, county and local levels, which is why the Secretary of State made the right decision. It was a brave decision, but I am sure that it will lead to the development of greater cricketing ability in this country, which, as I am sure the hon. Gentleman agrees, we desperately need.

    2006 World Cup
    Ms Claire Ward: What discussions he has had on the 2006 world cup bid; and if he will make a statement. [46316]
    Mr. Banks: I hold regular meetings with the Football Association. I have discussed the 2006 bid with key
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    members of the FIFA executive committee, here in London and in their home countries, and the Government will continue to play a full part in the 2006 campaign.
    Ms Ward: Does my hon. Friend agree that the criminal activities of drunken hooligans must not be allowed to knock off course England's world cup bid? Does he deplore the decision by the authorities in St. Etienne to allow all-day drinking, particularly in the light of the statement by the spokeswoman for the prefecture in Lens that the ban on alcohol was the main reason for the relative lack of trouble in that town?
    Mr. Banks: I condemn unreservedly the behaviour of the small criminal element that caused trouble in Marseilles. When those who were imprisoned arrive back in this country, they will be dealt with using further restriction orders. Those who think that they may have got away with crimes in Marseilles should know that footage is still being examined. The French authorities will take action against them, and we support them entirely in that.
    I cannot join in my hon. Friend's criticism and condemnation of decisions about drinking that might be taken in St. Etienne. It is amazing that a police officer in France, who said that the French want to keep their bars open so that they can keep the world cup festivities going, was condemned here by our tabloids as a lunatic who has escaped from an asylum, as if it is French people's fault that some of our fans cannot hold their drink. Drinking a lot is no excuse for trashing a town or beating up people. The French must be concerned about their town and their welfare, and I am happy to let them make their own decisions. I understand that there will be a press conference later this afternoon and the French authorities may change their decision. We should undoubtedly welcome that, but what a sad comment that is on the minority of English fans who still cannot mix football with drink.
    Mr. Michael Fabricant: But will the Minister be any more effective in getting the world cup to come to the United Kingdom in 2006 than he has been in trying to get more than the derisory 2,000 seats for the next football match in France?
    Mr. Banks: That is very good, but I am not Tone the Tout; I do not actually have tickets at my disposal. As hon. Members will know, I took a decision not to go on the ground that I somehow knew that this situation would develop. Obviously, the ticket allocation for England's match in St. Etienne is derisory, but the arrangement was made some time ago.
    The blame lies with FIFA for allowing 60,000 tickets to go to French nationals, who clearly have not taken up their allocation but instead have sold them on the black market. A number of national associations did not need their tickets, but, instead of sending them back to FIFA so that they could be passed on to countries such as England, Germany, Holland, Japan and Argentina which needed them, they dumped them on the black market.
    Hon. Members should not blame me. I would have loved to be responsible for ticket allocations. I might even have found one for the hon. Gentleman—or not, as the case may be. We must ensure that, after this is over,

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    FIFA carries out a thorough investigation so that this shambles is not repeated either in 2002 or in 2006, when England will host the world cup.

    Heritage Lottery Fund (Access Fund)
    Laura Moffatt: What plans he has to ensure that the Heritage Lottery Fund's access fund benefits projects targeted at disadvantaged people. [46318]
    The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): I am delighted to welcome the museums access fund, which will improve access to museums and galleries and will, of course, as part of its work, support access for those who are disadvantaged. I have recently issued new policy directions to the Heritage Lottery Fund, giving increased emphasis to the need to use lottery funding to promote access to the heritage for people from all sections of society and to take into account the scope for reducing economic and social deprivation.
    Laura Moffatt: Does my right hon. Friend agree that access is not just about physically getting into a building? The many access groups throughout the country will be very willing to assist with this new direction, which I know they welcome very much. If we are truly interested in fairness for those on low incomes, the unemployed and those with young children, we must ensure that they can get into these wonderful buildings. If we are truly interested in equality, we must pay particular attention to that.
    Mr. Smith: My hon. Friend is absolutely right. Getting as many people as possible to enjoy the riches in the great storehouses of this country is one of the major objectives of Government policy. It is why, for example, we were delighted to announce at the time of the Budget that we were maintaining free admission for everyone to great national collections such as the national gallery, the Tate and the British museum.
    Mr. James Gray: In that case, will the right hon. Gentleman confirm that the British library will not charge for admission?
    Mr. Smith: The hon. Gentleman may not have heard my speech at the opening dinner of the British library last week, when I welcomed the fact that access to the reading rooms for ordinary readers would be free.
    Mr. Bill O'Brien: I thank my right hon. Friend for his support and encouragement for help for disadvantaged people from the lottery fund. Is he aware that many of our local communities would like to help disadvantaged people in any way they can? Will he give them some advice on obtaining lottery funding to help disadvantaged people? It is important that we consider what is happening within our communities and what assistance should be given to them.
    Mr. Smith: In a few months, we will be launching a pilot scheme in the east midlands, where the lottery distributors will join together to provide a fast-track scheme for local community organisations that wish to
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    put in bids for small grants to help their own neighbourhoods and communities. I hope that that scheme will roll out nationwide from April next year.

    Broadcasting (Impartiality)
    Dr. Julian Lewis: If he will make a statement on the (a) provisions in the charter and agreement and (b) legislation which require the British Broadcasting Corporation and independent television and radio to treat politically controversial subjects with due impartiality. [46319]
    The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): The Independent Television Commission and the Radio Authority have a statutory duty to do all that they can to ensure that broadcasters in the commercial sector report news accurately and treat matters of political and industrial controversy with due impartiality. The BBC governors have equivalent obligations under the BBC charter and agreement. The regulators set out detailed requirements guidelines in their programme codes.
    Dr. Lewis: I thank the Secretary of State for reminding the House about the statutory and other duties laid on the BBC and ITV to treat politically controversial subjects impartially. Is he aware of the fact that, on one of the most politically controversial subjects of the day—British entry into economic and monetary union—in a recent poll, 65 per cent. of people declared themselves against it, 33 per cent. in favour and only 2 per cent. undecided? In the light of that, will he agree that, if the BBC or ITV, in the months ahead, persist with pursuing a Euro-federalist propaganda initiative in their broadcasts, they will be behaving not only undemocratically, but illegitimately?
    Mr. Smith: I see no difficulty in the true impartiality with which those matters—as all political matters—are dealt with by BBC and ITV journalists, in a truly professional manner. I notice that it has not stopped the hon. Gentleman, who was once a member of the Labour party in Newham, from doing a perfectly competent job at making a fool of himself on the Tory Benches.
    Mrs. Gwyneth Dunwoody: One way in which the BBC can escape its responsibilities is simply not to broadcast Parliament or any of its hearings—in other words, to substitute programmes in which political journalists interview other political journalists. What effort is my right hon. Friend making to monitor the correct reporting of Parliament?
    Mr. Smith: I am very concerned to ensure that the BBC and other broadcasters continue to report Parliament fairly and effectively. I know that my hon. Friend, Madam Speaker and other hon. Members have made strong representations on that matter, and they will continue to monitor how the BBC performs.
    Mr. Robert Maclennan: Bearing in mind the BBC's reluctance to listen to those who have made representations about its change of policies on the broadcasting of politically controversial issues, will the Secretary of State throw his weight behind proposals to establish an election

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    commission, which would be independent and would be capable of bringing under its purview the whole issue of broadcasting and fairness, in respect not only of elections but of referendums, with which we are becoming more familiar?
    Mr. Smith: I am not sure that an election commission is needed to establish the clear principle of impartiality in all such matters, be they parliamentary elections, other elections or referendums. The BBC and other broadcasters must remain impartial; that principle is clearly established, and I emphasise that it is the duty of the governors and of the ITC to ensure that that impartiality is upheld.

    Football (Racism)
    Mr. Derek Wyatt: What steps the football task force is taking to combat racism in football. [46321]
    The Minister for Sport (Mr. Tony Banks): The football task force has completed an excellent report into racism in football and made numerous practical recommendations to combat this blight on the game. I have written to all the organisations identified in the report as having a role to play, asking them how they intend to implement the recommendations relevant to them. I am very pleased with the positive responses that I have received from those organisations to date.
    Mr. Wyatt: I thank my hon. Friend for that reply. While we are waiting for a gap in the legislative process, could I persuade my hon. Friend to publish a league table of worst offenders in soccer, so that we can shame the clubs, and their shareholders?
    Mr. Banks: On waiting for a gap in the legislative timetable, the House should be aware that the Government will amend the Football (Offences) Act 1991 to make racist abuse by individual spectators an offence, and that we want to do so as speedily as possible. My hon. Friend dangles before me an interesting and tempting proposition. I shall consider it in due course, and I may come back to him with a more considered response.

    Millennium Commission Grants (North-west Region)
    Helen Jones: What proportion of the funding available to the Millennium Commission will be spent in the north-west region. [46322]
    Mr. Banks: To date, the Millennium Commission has awarded grants totalling just over £93 million to 15 capital projects in the north-west region, from a national total of just under £1.24 billion. The north-west will also benefit from the £100 million millennium festival fund and the millennium awards scheme for individuals.
    Helen Jones: I thank my hon. Friend for that reply. However, is he not aware of the great disquiet in constituencies such as mine over uneven distribution of funds from the Millennium Commission? Will he undertake to do all in his power to persuade the commission to consider favourably applications from
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    areas that have not yet received any millennium funding—which just happen to include my own constituency?
    Mr. Banks: Yes, I accept that, for my hon. Friend, that is a bit of a bummer. We all like to see money coming into our constituency.
    Mr. Nicholas Soames: The hon. Gentleman is a statesman.
    Mr. Banks: I like to move around.
    I tell my hon. Friend the Member for Warrington, North (Helen Jones) that a series of projects in the north-west will be of enormous benefit to the entire region. She will understand that, because of changes that we are making to lottery administration in the National Lottery Bill, a fairness test will be possible, to consider strategically how funds are spent across the country. One wants there to be greater evenness and fairness in distributing lottery funds, and I think that my hon. Friend can look with some hope to the future in respect of her constituency and large amounts coming from the lottery.

    Creative Industries
    Mr. Martin Linton: What assessment he has made of the job creation potential of Britain's creative industries. [46323]
    The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): The latest job survey figures produced on behalf of the Department for Education and Employment by the Office of National Statistics show that some 1.5 million people are employed in the creative industries. I intend shortly to publish the results of an exercise undertaken on behalf of the creative industries task force to map in greater detail the wealth and job-creation scope of the creative industries.
    Mr. Linton: Is my right hon. Friend aware that that 1.5 million figure, coupled with the 1.7 million figure comprising those working in the tourism industries, mean that he is responsible for two of the largest industries and biggest earners of foreign exchange in the United Kingdom? Is he aware that those industries have constantly to be replenished with new talent? Will he therefore discuss with employers in the theatre, film and television industries how they can make the new deal available to young self-employed artists, especially through open learning, in the same way as the music industry has made the new deal available to young musicians?
    Mr. Smith: The answer to my hon. Friend's specific question is yes. We are already in discussion with those parts of the world of the arts to ensure that they can take full advantage of the new deal. On the general point, not only are those sectors of enormous economic importance but they are currently growing at twice the rate of the overall economy. That is why we take those parts of our economy seriously—although, from their earlier comments, it is quite obvious that Opposition Members do not.

  MINISTER WITHOUT PORTFOLIO (MILLENNIUM EXPERIENCE)
  The Minister was asked—
  MINISTER WITHOUT PORTFOLIO (MILLENNIUM EXPERIENCE)

    Millennium Experience
    Mr. John M. Taylor: How much money from the private sector has been raised so far for the millennium experience at Greenwich. [46342]
    The Minister without Portfolio (Mr. Peter Mandelson): Over £100 million of private sector sponsorship has been identified so far. The New Millennium Experience Company is in active discussion with a number of companies, and is on course to achieve the target of £150 million by the end of the year.
    Mr. Taylor: Can it be true that the Minister is spending £500,000 trying to find out what makes us British? Will he accept it from me that one of our finest manifestations is the English language, which he is murdering by calling the British zone "UK at Now"?
    Mr. Mandelson: I am not quite sure what that question has to do with private sector sponsorship of the millennium dome. I should have thought that the hon. Gentleman—before moving on to a different matter, with which I shall deal in a moment—might have congratulated the company on its success in identifying that amount of money to date. One year ago, not one penny of private sector sponsorship had been identified by the previous Administration. I have read, with interest, the same articles as the hon. Gentleman on the national identity zone. However, I have to say that, just last Friday, as I visited the design company and team working on the zone, I did not recognise much in the reports that was true. As for the specific issue of the opinion poll—which will not be costing £500,000—I should prefer to see in the dome what the British people themselves regard and express as their national identity. I am rather more interested in the views of the British people than I am in those of any team of designers, the millennium organisers or the Minister without Portfolio.
    Mr. Ivor Caplin: Has my hon. Friend seen the report by the English tourist board, which suggests that the millennium experience and the dome will be a huge boost for jobs in the south-east, which will have a direct impact on my constituency and the outlying areas of Sussex and Kent?
    Mr. Mandelson: My hon. Friend is absolutely right. The report by the English tourist board is extremely encouraging and confirms one reason—employment creation and its benefit to the British economy—of the many for going ahead with the millennium project in the first place. In addition, the British Tourist Authority has said that, on a conservative estimate, the experience will generate £300 million to £500 million of overseas revenue, and the true amount could be double that—£1 billion could be the economic halo effect for Britain of our holding this millennium experience.
    Mr. Peter Ainsworth: I am not entirely sure that the hon. Gentleman has finally crossed his t's
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    and dotted his i's in terms of the sponsorship that he claims but, be that as it may, I want to be helpful about the dome—[HON. MEMBERS: "No!"] Oh yes, I want to be helpful. Is not the single biggest impediment the fact that, in the hands of the Minister without Portfolio, the project is increasingly being seen as a party political bandwagon, albeit one that has already lost a couple of wheels? Would not the most helpful thing be for the Minister now to give way to a non-political person of real independence and stature who can get to grips with the project and pull in the remaining sponsorship that is so badly needed?
    Mr. Mandelson: The hon. Gentleman says that he wants to be a little more supportive. He may not have noticed that the question that he has just asked is exactly the question asked by his predecessor, not only at the previous session of oral questions, but at the one before, so the hon. Gentleman seems to be stuck in a bit of a rut. I am surprised because the hon. Gentleman was a member of the Government and of the National Heritage Department team that originally developed the proposals for the millennium experience in the first place. I hope that, on that basis, we can look forward to a little more encouragement and support for the excellent work being undertaken.
    Mr. Barry Sheerman: Will my hon. Friend point out to the House that the private sector companies investing in the millennium dome are this country's world-class companies? It is a tribute to them that they see it as an opportunity to sell their wares and the talents and skills of this country. It is difficult these days to ask a question in support of the millennium dome because of the awful attitude of the Opposition; some London Labour Members who do not know what is a good investment in their own backyard; and The Daily Telegraph, which calls us sycophants if we show any support, but does my hon. Friend accept that he has our support and will continue to have it because the project is good for Britain and good for our future?
    Mr. Mandelson: I am grateful to my hon. Friend for that support. The fact is that no comparable event has raised such a large sum of money so quickly in private sector sponsorship, or so far in advance of the event taking place. That is absolutely unprecedented and very encouraging. As my hon. Friend points out, our best and most forward-looking companies are picking up the challenge because they see their commercial interest coinciding with the national interest. We are on course to meet our ambitious sponsorship target. It is very ambitious indeed, but I am confident that we shall meet it by the end of the year. I look forward to announcements of further substantial sponsors quite soon.

    Spirit Zone
    Mr. Tim Loughton: If he will make a statement on the progress of preparations for the spirit zone. [46346]
    The Minister without Portfolio (Mr. Peter Mandelson): Details of the design for the spirit zone of the millennium experience were made public on 24 February this year. Since then, the New Millennium Experience Company has been working closely with

    15
    the Lambeth Consultation Group, which comprises representatives of the main Churches and other faith groups, to ensure that the zone reflects the spiritual values identified by the Lambeth group. Copies of the group's document setting out its approach have been placed in the Library of the House.
    Mr. Loughton: Will the Minister suggest how a Christian visitor to the dome—celebrating, after all, the birthday of Christ—may enjoy spiritual contemplation in the spirit zone with the roar of the Blackwall tunnel below, the clamour of the Cirque du Soleil just yards away six times a day, and not a crucifix in sight?
    Mr. Mandelson: The Lambeth group, on which the Churches are represented, has agreed the design brief and the approach that is being taken by the company to the construction of the zone and to the millennium experience. I am sorry that the hon. Gentleman, from his close examination of the proposals, is disappointed, but, when he comes to the dome, as I hope that he and his family will, he will be as excited as other Christians and members of other religious faiths. If, however, he does not want to come to the dome, he might bear it in mind that the Churches are organising a full programme of events in that year, focused on Pentecost 2000 on 10 and 11 June, and the millennium affirmation, which it is also sponsoring. There will also be national church services to mark the passing of the millennium. If that is not enough, the New Millennium Experience Company has already said that there will be a place in the dome for private prayer.
    Mr. John Maxton: Has the British Humanist Association been involved in the discussions in relation to the spirit zone, to ensure that the growing number of people who have no belief in any religion, but who do believe there is a spiritual nature to mankind, are involved in the spirit level?
    Mr. Mandelson: My hon. Friend touches on an important point, which is that, although the dome should reflect the important contribution that the Christian Church has made to our history and society, we also want the millennium experience to be open to members of all faiths and of none. I am sorry that some Conservative Members do not share that view. They think that it should be an exclusive event—only for those who go to church. It will be enjoyable and appealing to those who go to church, but it will also be appealing to those of all faiths and of none, and that is precisely what it should be.

  The hon. Member for Middlesbrough, representing the Church Commissioners, was asked—
  CHURCH COMMISSIONERS

    Overseas Investments
    Mr. Brian Jenkins: What is the value of the commissioners' assets invested abroad. [46351]
    Mr. Stuart Bell (Second Church Estates Commissioner, representing the Church Commissioners): The commissioners have £350 million invested in overseas equities, representing approximately 10 per cent. of their total assets.
    Mr. Jenkins: I thank my hon. Friend for that answer. As he must be aware, newspaper reports in recent months have shown quite heavy losses in the far east. What is the extent of those losses to the Church's holdings? Will he take a message from me to the Church Commissioners? Will he remind them of the old adage, "In God we trust. Others pay cash"?
    Mr. Bell: I am grateful to my hon. Friend for his supplementary question. In 1997, a total return of 10.6 per cent. was achieved on overseas equities, which compared favourably with the UK pension fund universal return of 7.5 per cent. That result has contributed to the commissioners' overall performance, which placed it in the top 1 per cent. when compared with other UK pension funds.
    In relation to the far east, we are all aware that we live in a global economy, and one with a thatched roof. If there is a fire in the far east Asia part of the roof, it has some impact. However, I am happy to say that the impact on the Church Commissioners' money has been very limited. Our assets have moved from £2.1 billion in 1992 to £3.5 billion in 1997.
    Mr. Nicholas Soames: After a bad experience quite a long time ago, have not the Church Commissioners done a remarkable job in the past few years? Should we not all be pleased about the turnaround in their fortunes, which is a great tribute to the integrity and effort of the people who look after the money for them? Will the hon. Gentleman—just to reassure the hon. Member for Tamworth (Mr. Jenkins), who clearly does not understand—confirm that a portfolio of that size, by its nature, has to be invested throughout the world? I am sure that the Church Commissioners have taken whatever steps they need to take to respond to the crisis in the far east.
    Mr. Bell: I am grateful to the hon. Gentleman for his comments, which will be greatly welcomed by the Church Commissioners and their staff, who spend an enormous amount of time investing £3.5 billion. The valuation loss from our far eastern equities has been proportionately minor compared with those of other institutional funds because of our relatively low exposure to those areas.

    Spirit Zone
    Mr. Peter L. Pike: What steps the Commissioners are taking to finance the spirit zone in the millennium dome. [46352]
    Mr. Stuart Bell (Second Church Estates Commissioner, representing the Church Commissioners): The commissioners will not be providing finance for the spirit zone. They are required by law to use their income for the stipends, pensions and housing of the clergy of the Church of England. However, I have made it clear to the New Millennium Experience Company that, as Second Church Estates Commissioner,

    17
    I am willing, with others, to assist the company in opening discussions with potential sponsors who see the importance of that essential element for the zone's success.
    Mr. Pike: I thank my hon. Friend for that answer. Press reports have said that several million pounds are needed to finance the spirit zone in the millennium dome. Is he confident that the money will be raised through sponsorship and that the zone will be ready when the dome opens?
    Mr. Bell: I am grateful to my hon. Friend for that supplementary. My hon. Friend the Minister without Portfolio, the New Millennium Experience Company and the Churches, through the Lambeth Consultation Group, have demonstrated their determination to have a spirit zone in the dome and to make it a success. For what it is worth, I add my determination and commitment to ensuring that the spirit zone and other Church events referred to by my hon. Friend the Minister without Portfolio will be a success.
    Mr. Peter Viggers: Is the hon. Gentleman aware that many of my constituents have expressed concern that, while previous generations have built soaring cathedrals, we are building the dome? Given that we are officially a Christian country, will the hon. Gentleman confirm that there will be a place in the millennium experience for the celebration of the anniversary that the millennium is all about?
    Mr. Bell: I am grateful to the hon. Gentleman for that supplementary. The Church has gone to great lengths to ensure a full Christian dimension in the spirit zone. The Archbishop of Canterbury went to see the millennium dome and missed the England-Romania game—greater love hath no man. He is content with the Christian element of the spirit zone, as is the Lambeth group. When it is fully revealed to the public and to the hon. Gentleman's constituents, I am sure that they, too, will be content.
    Mr. Simon Hughes: Will the hon. Gentleman assure us that the Church Commissioners will use the opportunity of the millennium for a review of the assets of the Church of England? In some places, we have five churches where one would do. We have vicarages and houses that are inappropriate for our generation. Church plants are often made away from where the people are. One of the most useful things that we can do to get across the message of the Christian faith is to ensure that the money that we are spending is used wisely, economically and, above all, in the right place.
    Mr. Bell: I am grateful to the hon. Gentleman. As the House knows, we passed the draft National Institutions Measure two weeks ago, creating an Archbishops Council. No doubt, the council will wish to consider the hon. Gentleman's question to see whether the Church's finances can be better focused and streamlined. As the hon. Gentleman knows, there are many sources of finance in the Church. No doubt, the Archbishops Council will want to consider his suggestion.

    Ethical Investments
    Mr. Paul Flynn: If he will make a statement on the Church Commissioners' 30 per cent. threshold for ethical investments. [46353]
    Mr. Stuart Bell (Second Church Estates Commissioner, representing the Church Commissioners): Precise benchmarking criteria are not operated. The benchmark that we use is whether the restricted areas represent a sufficiently limited proportion of the whole group, rather than the absolute size.
    Mr. Flynn: How do the Church's investments in weapons of warfare advance the work of the prince of peace?
    Mr. Bell: I am always grateful for helpful supplementaries, of which that is one. The Church welcomes the new European Union code of conduct on arms sales, which should tighten the laws on arms sales to repressive regimes. We work closely with the ethical investment working group of the Church Commissioners, which has developed a dialogue over the past two years with companies that manufacture arms. We ensure that companies always operate under Government licence and within the ethical guidelines of the Church Commissioners.

    Clergy Funding
    Sir Sydney Chapman: If he will make a statement on the work of the Church Commissioners during the past year in respect of funding clergy. [46354]
    Mr. Stuart Bell (Second Church Estates Commissioner, representing the Church Commissioners): In 1997, the commissioners' total expenditure on behalf of the Church was £130.6 million—£82 million on clergy pensions. We contributed £24.6 million towards the total stipends bill of £159.7 million.
    Sir Sydney Chapman: I thank the hon. Gentleman for that answer. In commending the commissioners and their advisers on the great and welcome increase in the returns recently secured on their investments, will the hon. Gentleman give an assurance that a large proportion of it will benefit clergy, stipends and pensions through the dioceses?
    Mr. Bell: I am grateful to the hon. Gentleman. The commissioners' aim is always to achieve sustainable expenditure so that we can continue to meet our principal objective of supporting ministry in the neediest diocese. As part of that plan, as he will know, we aim to provide minimum support of £20 million for parochial ministry in the foreseeable future. On the dioceses, to which he referred, it is important that parishioners meet a growing proportion of needs of the Church through stipends costs and, of course, the cost of future service pensions. I am sure that he appreciates the floor of £20 million a year.

Opposition Day
[15TH ALLOTTED DAY]
Opposition Day

  The Economy
  Madam Speaker: I have selected the amendment in the name of the Prime Minister.
  3.30 pm
  Mr. Francis Maude: I beg to move,
  That this House notes that the last Government left a golden economic legacy of low inflation, steady and sustainable growth and falling unemployment; that, since the General Election, there have been 17 tax rises and 6 increases in interest rates, leaving the typical family £1,000 a year worse off; that the economy is becoming dangerously unbalanced, with manufacturing in recession, the claimant count rising and the savings ratio falling to its lowest level since 1990 as a result of the Government's attack on pensions and savings; further notes that, at the same time, inflation has risen to its highest level for six years and believes that the Chancellor's decision to abandon control of public spending and to reverse his plans to repay national debt risks adding further inflationary pressure; concludes that the Government has created boom and bust at the same time; and deplores the Government's mishandling of the economy.
  For the avoidance of doubt, I declare my business interests as set out in the register—all companies with an interest in the well-being of the British economy.
  I have here a fax from the Chancellor of the Exchequer, which my office received at four minutes past 2 o'clock this afternoon. It reads thus:
  "As President of ECOFIN, I must appear before the European Parliament's Economic and Monetary Affairs Committee at the beginning and at the end of the UK Presidency to give a report on the Presidency, and to answer questions from members of the Committee.
  The Committee has arranged to meet today at 3pm in Brussels"—
  four minutes before I received the fax, given the time difference. That was clearly a very urgent appointment. It says much about the Chancellor that it was more important to him to appear before the European Parliament—not even the whole European Parliament, but one of its committees—than to appear before the House of Commons to defend his handling of the British economy. We appreciate that the meeting might be only one of the few European meetings at which he is still welcome, but it is lamentable that he has failed to show up to defend what he has done.
  Several hon. Members rose—
  Mr. Barry Gardiner: Will the right hon. Gentleman give way?
  Mr. Maude: I should like to get started. If the hon. Gentleman will contain himself in patience awhile, I shall give way to him.
  Mr. Barry Sheerman: On a point of order, Madam Speaker. Just in case the House is being misled, the right hon. Gentleman should clarify whether the Chancellor is speaking to a committee of the European Parliament, as he suggested, or to the Finance Ministers of all member states. The right hon. Gentleman led us
  20
  to believe that the meeting was of some minor European Parliament committee. I think that he is misleading the House.
  Madam Speaker: That is not a point of order; it is a matter of argument. I am sure that the right hon. Member for Horsham (Mr. Maude) will make the position absolutely clear.
  Mr. Maude: I did make it absolutely clear.
  Mr. Sheerman indicated dissent.
  Mr. Maude: If the hon. Gentleman listens, I shall tell him the answer. The meeting is of the European Parliament's Economic and Monetary Affairs Committee; it is not ECOFIN.
  Mr. Sheerman: The right hon. Gentleman said that it was ECOFIN.
  Mr. Maude: I said that it was the Economic and Monetary Affairs Committee of the European Parliament; I read the whole thing out verbatim. [Interruption.]
  Madam Speaker: Order.
  Mr. Maude: It is a matter of regret that the Chancellor of the Exchequer does not feel that it is important to defend his handling of the British economy in the House of Commons.
  Because of the central importance of the Treasury and of the Chancellor in the Government, on his decisions are placed the hopes and fears of millions of people. It is for that reason that the House must examine carefully what he has done, how it has affected the economy and how it matches the solemn pledges that he and the Prime Minister made, to secure their election.
  I start with a prediction about the course of the debate. Madam Speaker, you should expect a succession of interventions—
  Mr. Gardiner rose—
  Mr. Maude: In fact, the first may be on his feet already.
  The interventions will come from pre-programmed Labour Back Benchers, who will parrot out—[Interruption.] It is nice to hear that they are limbering up already.
  No one should expect—
  Mr. Gardiner: Will the right hon. Gentleman give way?
  Mr. Maude: I shall give way to the hon. Gentleman in a moment.
  No one should expect Labour to talk much about today's economy and about its prospects over the next few years. I predict that today the Chief Secretary will pound out the Chancellor's familiar mantras, and will do everything that he can to avoid talking about the current economy.

  21
  It is strange that while Labour was basking in the glow of the golden economic legacy that it inherited, it cheerfully took the credit for all that occurred.
  Mr. Gardiner: The right hon. Gentleman alluded to "pre-programmed Labour Back Benchers". I wish to reassure him that I am a pre-programmed Back Bencher. However, from a fax addressed to the right hon. Francis Maude from Andrew Tyrie MP, which came to my office not long ago—I presume by mistake—it is apparent that the right hon. Gentleman had raised questions with the hon. Member for Chichester (Mr. Tyrie) on the very point of the economic legacy. For example, he asked:
  "Are we saying that the public finances are strong or not?"
  The answer was:
  "Yes. Our legacy."
  The right hon. Gentleman then asked:
  "If yes, is this because we left them strong, or because Brown has been an Iron Chancellor?"
  It continues in the same vein.
  How does the right hon. Gentleman have the gall to come before the House and talk about the "golden economic legacy" and question the Government's programme, when he does not seem to know about those matters and has to question junior Conservative Back-Bench Members?
  Mr. Maude: I am delighted that the hon. Gentleman raised that. He has referred to a document that was produced before the Chancellor came to the House two weeks ago, to set out what the real state of public finances is. I shall deal with exactly the questions that the hon. Gentleman raises. He might not find it quite so enjoyable when I do.
  It is worth reminding ourselves just what the legacy was—not in dry numbers, but in terms of what was said about it. Labour Members may not remember this, because they have short-term memories, but it is worth reminding ourselves of what the International Monetary Fund said in 1996. It stated that
  "recent economic performance"
  in the UK
  "has been enviable. Since 1992, output growth has rebounded, unemployment declined markedly and inflation been brought down to the lowest levels in a generation. The strong overall performance is a product of sound economic policies—the unfettering of market forces initiated in the 1980s and the medium term and stability oriented cast imparted to fiscal and monetary policies".
  That was then, but what about now? Now that the trickle of bad news threatens to turn into a torrent, do not expect to hear so much about it today. If the Chief Secretary talks about it, I predict that it will all turn out to be somebody else's fault.
  Let us start by recalling what Labour promised. Let us look at the early pledges. Labour said that it would
  "set…rules for government spending and borrowing; ensure low inflation;"—
  that is a good one—
  "strengthen the economy so that interest rates are as low as possible."
  Mrs. Helen Brinton: Will the right hon. Gentleman give way?
  Mr. Maude: Those are the only pledges that the hon. Lady supported.
  22
  What do they mean? What did the Labour manifesto say? In fact, it said:
  "We will provide stable economic growth with low inflation, and promote dynamic…business and industry at home and abroad."
  Then there was that unequivocal promise not to raise taxes. I shall quote directly from the Prime Minister.
  Mrs. Brinton: Will the right hon. Gentleman give way?
  Mr. Maude: The hon. Lady will probably want an opportunity to listen to the Prime Minister's words. He said:
  "We've no plans to increase taxation at all."
  We are all becoming familiar with the way in which the Prime Minister says the first thing that comes into his mind at the Dispatch Box, whether it is true or not, but what does the Chief Secretary think he meant by those words? Which of those words is in any way ambiguous? Is it "we"? Is it "have"? Is it "no"? Is it "plans"? Is it "increase"? Is it "taxation"? How can the Government claim that that was somehow a non-operative promise? [Interruption.] If any Labour Member wants to explain how that pledge is compatible with the fact that the Government have raised taxes 17 times, I shall give way.
  Mrs. Brinton rose—
  Mr. Maude: If the hon. Lady wants to intervene on that specific point, I shall give way.
  Mrs. Brinton: I thank the right hon. Gentleman for giving way. He seems to have some difficulty in mastering his new brief. Will he explain why, under the Conservative Government, this country suffered the two worst recessions since the second world war and the slowest period of growth?
  Mr. Maude: It is nice to know that the pre-programming works. I said to the hon. Lady that I would give way if she was going to talk about the Prime Minister's pledge, which has clearly been broken time and again, but Labour Members do not want to talk about today's economy or the pledges that they made and then broke.
  The Government's performance has turned out to be rather different from what the pledges suggested. Inflation has risen, interest rates have risen, the pound has risen, taxes have risen and unemployment has begun to rise. At the same time, the balance of payments has fallen, manufacturing output has fallen, investment growth has fallen, productivity has fallen and savings have fallen. The Government claim that they have cut welfare spending, but every welfare reform that they have introduced has cost more, not less, and will bring more people into welfare.[Interruption.] I hear the sounds of dissent, but Labour Members should look at their plans—every reform will cost more and bring more people into welfare. What a dismal record of failure.
  We know what the Chief Secretary will say; he will say, "It's all someone else's fault." The promise on inflation was not only a pledge, but in the Prime Minister's handwriting. It is a pity that the Government have missed that pledge 12 months out of 13. The Government inherited inflation at 2.5 per cent., and it is

  23
  now at 3.2 per cent. That is an increase not of 10 or 20 per cent., but of no less than 28 per cent. We shall be told not to worry, however, as that is someone else's fault—it is the fault of the Bank of England, or of British businesses, which are, we are told, paying their staff too much.
  Does the Chief Secretary have any idea how ridiculous he and the Chancellor make themselves when they—who do not have a day's business experience between them—strut around lecturing Britain's most successful companies on how much they should be paying their excellent staff? Do they not understand that, in the real world—not the cloistered world in which they move—people who face an increase in the cost of living because the Government have raised taxes on cars, houses, pensions, mortgages and marriage will ask for more pay? In the Government's never-never land, inflation is the fault of Marks and Spencer, which pays its staff too much.
  The Chief Secretary may not have noticed that the Government are railroading through legislation to force many other companies to pay their employees more. We look forward with keen interest to hearing how he will reconcile lecturing Marks and Spencer on paying its people too much with ordering many more companies to pay their staff more.
  Mr. Geraint Davies rose—
  Mr. Maude: If the hon. Gentleman wants to intervene on that point, I shall give way.
  Mr. Davies: On the very point of inflation rates at the factory gate, does the right hon. Gentleman agree that, in terms of RPI(Y)—the underlying inflation rate, which does not take account of taxation and interest rates—the rate is down on average? RPI(Y) was at 3 to 3.5 per cent. between 1995 and 1997, but is now going down.
  Mr. Maude: We have actually got someone to talk about what is happening today. The problem is that the hon. Gentleman took the wrong measure. The Government have failed to meet the Chancellor's chosen measure and target, and that is what they have to explain.
  So far, we have had six interest rate rises, and the Governor of the Bank of England is predicting another this month, but that is someone else's fault, too. Does not the Chief Secretary realise that, by raising taxes, the Government have increased the cost of living and created pressure on earnings? Does he not understand that, by attacking savings, they boost spending? As interest rates have been pushed higher than they need have been, the pound has reached levels that cause intense pain to manufacturers and exporters.
  The Government have committed themselves, in dogmatic principle, to scrapping the pound at the earliest opportunity, but do they have to choose such a painful way of setting about it? Is it surprising that we now hear talk of an ancient phenomenon that I barely recollect from my distant youth in the days of the previous Labour Government—the spectre of stagflation? We all thought that that word had disappeared, but it is reappearing among economic commentators—the spectre of stagflation again stalks the land.
  Ms Claire Ward: Is not the truth that the real reason for the interest rate increases was that the
  24
  previous Government played politics with interest rates and refused to raise them in the last year before the general election to stem inflation, and so forced this Government to take the necessary action and give that power to the Bank of England? Is not the real reason the Tories' failure when they were in government?
  Mr. Maude: It is always someone else's fault; it is never the fault of this Government. It has nothing to do with them; they are merely the Government and they merely take the decisions. How have they managed that with the balance of payments figures heading sharply into the red—just the faintest whiff of a balance of payments crisis? With our economy turning down and the European economies starting a gradual recovery, this should have been the time at which the balance of payments turned decisively in our favour, but it is doing the reverse.
  What has happened to our export-led recovery? Last week, the Confederation of British Industry figures showed export orders for May and June at their lowest for 15 years. The Government have blown it already—after only a year, they are frittering the legacy away and it is all coming apart. Therefore, it is not surprising that manufacturing is already in recession, with falling production in the past two quarters and jobs lost day after day.
  Maria Eagle rose—
  Mr. Maude: I have already given way several times, so I shall continue for a while. Day after day, jobs are lost, investments are cancelled and businesses are going bust.
  Several hon. Members rose—
  Mr. Maude: So many hon. Members are cheerfully trying to take part that it is hard to choose among them. Today, the CBI survey shows that business failures are up nearly 10 per cent.
  Mr. Gordon Prentice rose—
  Mr. Maude: The hon. Gentleman should listen to these figures, as he might want to talk about the effect on his constituency. I am talking about business failures the length and breadth of the country. Small business failures are up nearly 25 per cent., and that is from new Labour, which claims to be the party of new business. However, for those small businesses, which have failed because of the Government's policies, the party is over now.
  Will the Chief Secretary tell us today whether he still stands by the growth forecast set out in the Red Book? Does he still believe the figures that he and the Chancellor put in it? Will he guarantee that Britain will not go into recession during this Parliament? More and more commentators are asking not whether we shall have a hard landing but when. Let us hear now what the Chief Secretary has to say about that.
  What did the Government say about savings? Oh yes, they said that one of their tax principles would be to promote savings and investment. They have made a difference, and for the many, not the few, they have made the situation much worse. In the Red Book, the Chancellor predicted that the savings ratio would fall to 9 per cent. during this Parliament. He must be feeling pleased with

  25
  himself as he has nearly got there already. The figures show that the ratio was already down from 10.1 to 9.1 per cent., just in the first quarter of this year. Is that what the right hon. Gentleman meant by an early pledge? To cut savings by 10 per cent. at the point in the cycle when the Chancellor should be encouraging saving took some doing. In case the Government have forgotten, yes, we told the right hon. Gentleman so.
  Surely the Chancellor should have been able to work out that, if one raises a £5 billion-a-year tax on pensions and follows it with an attack on tax-exempt special savings accounts and personal equity plans, it will tend to discourage people from saving.
  In case the Chief Secretary still clings to the old Labour belief that it is greedy and selfish to save for one's own and one's family's future, does not he understand the relationship between saving and investment? Even the current Treasury Ministers could not exclude entirely from the Red Book—it was tucked away in an appendix on page 94—the tell-tale number that shows growth of private investment falling in each of the years ahead.
  Before the general election, investment-led growth was one of Labour's mantras, but investment and growth are both slowing down; it is all coming apart. That is not surprising, when one remembers what the Government have done to taxes. They said that they would not put them up at all—no ifs, buts or caveats—but they forgot to add—[Interruption.] Labour Members might want to listen to this, because their constituents will hold them to account. The Government forgot to add to their pledge, "unless you have a pension, a car or savings; and unless you are married, have a house or own your own business". It is not surprising that the average family is £1,000 a year worse off since May last year.
  Not everyone, however, is average. We all remember the Chancellor's famous photo-opportunity at the children's party on the eve of the Budget. He may not realise it, but at children's parties these days everyone has to have something to take away: it is the party-bag culture.
  Mr. Gardiner: On a point of order, Madam Speaker. Is it in order for the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) to wake up the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg)?
  Madam Speaker: I did not hear anyone snoring.
  Mr. Maude: That famous party was held at the house of Mr. Gavyn Davies, one of the partners at Goldman Sachs. He is a lucky chap and did very well in the party-bag handout: a change in capital gains tax will leave him £16 million better off. What about the small business man and the farmer? There was no special treatment for them. They were clobbered by the Finance Bill. What was that phrase about help for the many, not the few?
  Mr. Ivor Caplin: Will the right hon. Gentleman outline why members of his party appear to have voted in Committee on the Finance Bill for about £6 billion in tax increases, which would be about 3p on income tax?
  Mr. Maude: I make no apology for the Conservative party voting against tax increases, and I am grateful to
  26
  the hon. Gentleman for pointing out the central difference between the Labour and Conservative parties: we believe in low taxes, Labour in high.
  Mr. Caplin: Will the right hon. Gentleman give way?
  Mr. Maude: If the hon. Gentleman wants to point out something else to his disadvantage, I am glad to hear from him.
  Mr. Caplin: I am not surprised that the right hon. Gentleman tried to misinterpret what I said; he has done it before and no doubt he will try to do it again. I said that his party had voted for tax increases amounting to 3p in the pound—and he knows it.
  Mr. Maude: The hon. Gentleman is totally wrong. The fact is that the Government have repeatedly increased taxes since the general election, in complete breach of their clear pledge not to do so.
  We heard all the tough talk about spending, but that is all that it is: talk. We now know from the summer spending statement that the Chancellor never meant it. One does not need to rely on a hostile commentator to make the point. On the Chancellor's own figures, spending is due to increase by 2.75 per cent. a year for the rest of this Parliament, and by more than 3 per cent. if we count back in the numbers that the Government have fiddled out.
  Last week, Mr. Irwin Stelzer, Mr. Murdoch's economic guru, wrote:
  "Then came the numbers that belie the rhetoric, the Chancellor's parliamentary statement setting out his public spending plans for the next three years. Off with this New Labour facade, on with an Old Labour suit…Little wonder that the monetary policy committee of the Bank of England feels it must keep raising interest rates."
  No doubt that is why the Chancellor has been summoned halfway across the globe next week to account for himself—another unbreakable appointment—when he addresses the Murdoch empire in, appropriately enough, Sun valley.
  For all the brave talk of reducing debt, what do we find? Even on the Chancellor's own most lavish spending option, the Red Book in March showed a debt repayment. In his Budget statement, the Chancellor was at his most thunderous on the subject:
  "Stability also requires a commitment to prudence in fiscal policy. The Chancellor is above all the guardian of the people's money."
  He added:
  "By 2000, the Budget is forecast to be in balance."
  He also said:
  "To balance the Budget for one or two years and then let it run out of control in the years that follow is simply to fail those who depend on public services … So this, more than ever, is the wrong time to…compromise our commitment to long-term fiscal stability."—[Official Report, 17 March 1998; Vol. 308, c. 1009.]
  Mr. Malcolm Bruce: Will the right hon. Gentleman give way?
  Mr. Maude: In a moment.
  That was March; this is now. The Government now plan, even on their hugely optimistic growth projection, to repay not a single penny of debt. They are committed to a permanent Budget deficit. For all their talk of a balanced

  27
  Budget, the Chancellor will not reach balance even in a single year. In every year at the peak of the cycle, the Government will add relentlessly to Britain's national debt. Compare that with the same point in the cycle 10 years ago.
  The Chief Secretary to the Treasury (Mr. Alistair Darling): Does the right hon. Gentleman recall that in the six years from 1990—during two of which he was Financial Secretary to the Treasury—the Tory Government doubled the national debt, with the result that we are paying £25 billion a year just to service that debt?
  Mr. Maude: That is all looking into history. If the right hon. Gentleman wants to examine history, the right time to consider is the same point in the cycle 10 years ago.
  Fiona Mactaggart: Will the right hon. Gentleman give way?
  Mr. Maude: I should like to finish my point because of what the Chief Secretary said.
  At the same point in the cycle 10 years ago, the then Government were repaying debt at the rate of £40 billion in today's terms. They were also increasing spending in real terms on priority services, and cutting taxes. Today, it is tax, tax, tax, and spend, spend, spend. Labour cannot be trusted with the public finances, and admits it.
  Mr. Malcolm Bruce: The right hon. Gentleman suggests that the Government are being profligate. Does not he agree with figures in the House of Commons Library showing that over this Parliament, and allowing for the Government's increase in expenditure, public service expenditure will increase by less than half the increase during the previous Parliament? What spending increase would the right hon. Gentleman allow, and how deep would the cuts be if he were in control of policy?
  Mr. Maude: Perhaps it is a mistake to rely on Government figures, but that is what I am doing. The Government's figures provide for an increase in public spending of 2.75 per cent. above inflation over the rest of the Parliament, and, if the numbers that they have fiddled out are counted back in, it comes to more than 3 per cent. The Chief Secretary to the Treasury and the Labour party have claimed to find a magic potion, an elixir, that will provide the secret of perpetual motion. It was Labour who said that the circle could be squared so that we could have absolute fiscal rectitude and increased spending. Labour said that the way to do that was to cut welfare spending, but the Government have, on their own admission, failed to do so.
  Fiona Mactaggart: The right hon. Gentleman suggests that we look back 10 years to the glorious work of the previous Government. However, he will recall that interest rates were exactly the same as now, inflation was 4.2 per cent, as it is now, and there was substantially greater unemployment than there is today. Within a year, the right hon. Gentleman's Government managed to double both interest rates and inflation, and made no
  28
  serious inroad on unemployment. Does he accept that we should take no lessons from a party that wants us to look back to that?
  Mr. Maude: I merely make the comparison that Labour Members invited us to make. At the top of the cycle, we had strong public finances. This Government are not even planning, on their own optimistic growth projections, a Budget that gets into balance in a single year. It was all phooey about repaying debt and getting back to a balanced Budget. They do not even do it in a single year.
  Dr. Nick Palmer rose—
  Mr. Jim Murphy rose—
  Mr. Maude: I have given way often and am drawing to a close.
  We always said that Labour cannot be trusted with the economy. After only 14 months, it is coming apart. Its economic policies are in disarray and the public finances are unravelling. In a moment, the Chief Secretary will begin the old familiar rant. He will chant that we will have no more stop-go or boom and bust. He will do it not once but time and again, in the inane new Labour belief that if a mantra is repeated often enough, it becomes more plausible. When Labour dreamt up the phrase, "No more boom and bust," it must have meant no more boom followed by bust, because we have boom and bust at the same time. Boom-bust, stop-go, stability, security, and the long term were just mantras.
  Mr. Michael Fabricant: Will my right hon. Friend give way?
  Mr. Maude: No, I am coming to an end.
  Those phrases were just mantras to persuade people that Labour could be trusted with the economy and the public finances. It is time for Labour to take responsibility for its actions and stop blaming everyone else. This is the Government's strategy. These are their choices and decisions. As the economy flags, it will be the Government's fault. It will be a downturn made in Downing street.
  4.1 pm
  The Chief Secretary to the Treasury (Mr. Alistair Darling): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
  "notes that the Government inherited an economy in which the current Budget was in deficit by £21 billion, inflation was set to rise because of the failure of the previous Government to take the necessary action on interest rates and nearly one in five households of working age had nobody working; recalls that the previous Government presided over a boom and bust economy with interest rates peaking at 15 per cent. and the two worst recessions since the war, doubled the national debt in the 1990s, doubled unemployment during its time in office, worsened inequality and failed to tackle the weaknesses in the British economy; commends the actions of the Government in its first year, which has established a credible framework for monetary policy that has led to the lowest long-term interest rates in 33 years, set two clear fiscal rules which provide for both prudent public finance and strong public services in the years ahead, taken action to reduce government borrowing such that the current Budget was in surplus by £1 billion in 1997–98, supported British business through cuts in corporation tax and small

  29
  business tax to their lowest levels ever, launched the New Deal, the biggest employment programme for decades, reformed the tax and benefit system to tackle the unemployment and poverty traps and invested in education and skills; and notes that Britain now has a government which will ensure that the country does not return to the boom and bust and 15 per cent. interest rates of the late 1980s and early 1990s and instead has an economic policy based on stability, enterprise, employment and fairness.".
  I am grateful to the right hon. Member for Horsham (Mr. Maude) for telling the House that he was about to come to the end of his speech. I congratulate him on getting in what might pass as a soundbite just before he sat down.
  Mr. Peter Viggers: On a point of order, Madam Speaker. The House should not take lightly the absence of the Chancellor of the Exchequer. In a parliamentary democracy with an unwritten constitution such as ours, there are unwritten rules that Ministers accept their responsibility to Parliament. When the Opposition table a motion naming the Chancellor and complaining about a range of Government action and he chooses not to attend, it shows an arrogance to Parliament that we should not accept. Is there any way in which we can oblige the Chancellor to appear before us if he behaves with such insouciance?
  Madam Speaker: That point was made earlier by the right hon. Member for Horsham (Mr. Maude). I am sure that both his remarks and those of the hon. Gentleman have been noted by the Government.
  Mr. Darling: I was going to allude to the shadow Chancellor's reference to my right hon. Friend the Chancellor. The Chancellor and I discussed at length which of us should reply to the Opposition. He was upset that, in his capacity as representing Europe and the European Finance Ministers, he felt that it was appropriate to attend the European monetary affairs committee, which is traditional at the beginning and end of each country's presidency. The previous Government would have done that when they held the presidency. We believe that the Government should honour our international obligations.
  The Pavlovian response of the Conservatives every time that Europe is mentioned is interesting and instructive. They cannot conceal their hostility to anything to do with Europe or any idea that a Minister of the Crown might represent Britain in Europe and thereby further our interests there. They really cannot stand it.
  Instead of spending about seven minutes skirting around the subject as he taxied to the end of the runway, so to speak, before delivering his attack on us, the shadow Chancellor really ought to have considered whether the point was worth the trouble he went to. My right hon. Friend is doing precisely what the country would expect him to do: representing Britain in Europe—which is what the Conservative party did not do.
  Sir Peter Tapsell rose—
  Mr. Darling: I know that Europe always provokes a response from the hon. Gentleman, so let us hear it now.
  Sir Peter Tapsell: In all seriousness, cannot the Chief Secretary understand that it is not just a question of a Pavlovian response to Europe? Some of us are
  30
  Euro-sceptics, some are not; but most of us believe passionately in the sovereignty of the House of Commons. That is such an essential element of all our proceedings that if Ministers are not prepared to respect it, democracy in this country is at risk.
  Mr. Darling: I can assure the hon. Gentleman that he will see and hear plenty of my right hon. Friend the Chancellor in the Chamber in the not-too-distant future.
  I want to deal first with the points that the Conservative motion raises—in particular, with this golden economic legacy which keeps reappearing. I then want to deal with the measures that the Government have taken, and with the one glimpse that we have had of where Conservative thinking, if that is what it can be called, is taking us.
  The Tories have done this before. For 18 years, they tried to delude us into thinking that they had achieved economic success. Today, they carry on with that by claiming that they left something called a golden economic legacy—this, as my hon. Friends have pointed out, from the party which used to proclaim the economic miracle of the 1980s, which became the economic disaster of the 1990s. This is the party which delivered two of the deepest recessions since the war. The United Kingdom was one of the most unstable of all the industrialised countries. And there was a legacy of boom and bust: 15 per cent. interest rates, and interest rates in double figures for four consecutive years. There were 1 million home owners with negative equity, and record repossessions.
  The right hon. Member for Horsham tells us that the right period of history to look at is 10 years ago. It is indeed an instructive time to look at, as my hon. Friend the Member for Slough (Fiona Mactaggart) said. After 1988, when the then Chancellor Lawson started his unsustainable boom, within two and a half years inflation had doubled to nearly 10 per cent., and interest rates had risen to record levels. There were 22 tax rises to try to contain the debt that the previous Government began to pile up. Is that a golden legacy? Are these people in any position to lecture us?
  Mr. Andrew Tyrie: The Government's intention to abolish boom and bust has already been surfacing. Do the Government think that the economy is in an upswing or a downswing—or has Labour abolished the business cycle?
  Mr. Darling: As we have often made clear, we are putting in place measures to ensure long-term, sustainable stability—that is what the Conservative party never managed. The Tories talk about unemployment. They are remembered for the mass unemployment of the 1980s. They left us with a country in which one household in five containing people of working age had no one in work. They talk about tax rises. This is the party which doubled VAT in 1979, having said that it would not. The Tories put VAT on fuel in 1993, having promised not to.
  The golden legacy was a national debt that doubled in six years to more than £400 billion, costing us £25 billion a year to service. The Conservatives left us with a borrowing requirement of some £23 billion, a figure which we have had to get down.
  Today, the Conservatives are at it again. I note that the Conservative attack was unveiled, it seems exclusively, to a national newspaper—but the bogus claims are the same

  31
  as they always were. The Tories claim that a middle-income family will be worse off. It is a spurious calculation; the structure of the family chosen is far from typical, and it has changed since its last outing. A few weeks ago, the family did not smoke; now it does.
  The Conservatives complain about the increases in road fuel duty, but they introduced the fuel duty escalator at 5 per cent. When the right hon. and learned Member for Rushcliffe (Mr. Clarke) introduced it, he said:
  "Any critic of this Government's tax plans who claims also to support the international agreement to curb carbon dioxide emissions will be sailing dangerously near to hypocrisy."—[Official Report, 30 November 1993; Vol. 233, c. 939.]
  The tax rise faced by the family in the article includes rises in tobacco duty, which we have continued to impose because we, like the previous Government, believe that we should discourage smoking as a matter of public policy. It was the Conservative party which introduced that tax increase: are Conservatives now saying that they will reduce or do away with the duty, that they want to encourage smoking, and that they want to continue to damage the environment? How are they going to pay for that removal? What is their position? If they are going to criticise those measures, let them tell us what is the alternative.
  As ever, the Conservatives have been highly selective. They might have told the family about some of the other measures in our Budget: the increase in child benefit for the eldest child worth £130 a year for 5.5 million families with children; the reduction in employee national insurance contributions, worth £66 a year; and the working families tax credit and the child care tax credit. All those measures will benefit families and help to make work pay. The measures in the last Budget will mean an average increase in disposable income for many families of about £100. As usual, the Tories have not given the full picture.
  Mr. Edward Davey: Will the Chief Secretary give way?
  Mr. David Winnick: Will my right hon. Friend give way?
  Mr. Darling: In the spirit of cross-party co-operation, for the moment at least, I shall give way to the hon. Member for Kingston and Surbiton (Mr. Davey) first.
  Mr. Davey: I am grateful to the right hon. Gentleman for exposing Tory hypocrisy, but why have the Labour Government abolished the series that was released for 18 years under the Tories, showing the direct and indirect personal tax burden? When will a new series be ready?
  Mr. Darling: The hon. Gentleman and his colleagues have been asking a series of parliamentary questions about those figures, and we answer those questions as quickly as possible. We have no difficulty in making available to the House the position on tax and spending.
  Mr. Winnick: My right hon. Friend is dismissing the Tory claims in a characteristically robust manner, but, while he is on the subject of income and rightly showing
  32
  that families have by no means been disadvantaged over the past year, will he take this opportunity to condemn the increase in income of directors of Yorkshire Water, which might act as a signal to other companies? Is it not disgraceful that people who already receive a very substantial income have increased it by at least 30 per cent? Should not that be condemned? Why not show those greedy pigs the real way by introducing another windfall tax?
  Mr. Darling: My hon. Friend makes the point that people sitting in boardrooms are in no position to lecture those on lower incomes about the need for restraint when they do not show restraint themselves. The right hon. Member for Horsham, who was kind enough to declare his interests, which he said were in the national interest, defended some of the people who have awarded themselves exceptionally high increases. My position and that of the Government is that people sitting in boardrooms must show exactly the same restraint as they expect others to show.
  In the newspaper article, the Conservatives complained about two items relating to taxation that I find interesting. First, they criticised our decision to reduce the rate at which married couple's allowance is given. That is odd because, in 1993, Norman Lamont, who was then the Chancellor of the Exchequer, said that that allowance was something of anomaly and that, because of the need to raise extra revenue, the rate was to be reduced. Given the Conservatives' action throughout the 1980s to reduce the married couple's allowance, it is curious that they should now criticise such action.
  The same applies to the cuts in MIRAS, about which the right hon. Member for Horsham complains. I read what he said in 1994, when he was out of Parliament, having lost his seat in 1992. He said:
  "In one of my first speeches in the House of Commons… I argued for the full abolition of mortgage interest relief. As Financial Secretary in 1991, I was proud to take through the Finance Bill that among other things restricted relief to the basic rate.
  Yet I believe it now could and should be abolished, and there would be barely a squeak of protest."—
  presumably, not a squeak from himself. He added:
  "The sooner it happens, the better."
  What is his position? Would he abolish mortgage interest relief, or was that idea suitable only when he was outside the House? He should tell us his view.
  Mr. Maude: I believe in Governments doing what they say they will do. The Government said in opposition that they would not raise taxes at all—there was no if, no but, no maybe and no caveat—and they broke their word.
  Mr. Darling: I shall take the right hon. Gentleman at his word. He has given a solemn pledge in saying that the sooner MIRAS is abolished, the better. Now we know that that will be the Conservative party's policy at the next election.
  Mr. Derek Twigg: Will my right hon. Friend give way?
  Mr. Darling: In a moment.
  I wonder whether the right hon. Member for Horsham stands by something he said last week which completely

  33
  undermines his complaint today. He told a Conservative party gathering that
  "measured in any way you like, taxes are lower in Britain."
  How on earth can he complain as he has done today? He cannot have it both ways—either taxes are lower, or they are not. The right hon. Gentleman might have thought long and hard before making his remarks last week or his remarks today, because he has used two different arguments in two weeks.
  Mr. Maude: I am grateful to the right hon. Gentleman for drawing attention to the good legacy, which the Government inherited from us, of taxes that are much lower than those elsewhere in Europe, and I am delighted that the Government have not yet managed to narrow that gap as much as they no doubt plan to do. The gap is narrowing not because others are reducing their taxes, but because the Government are increasing our taxes.
  Mr. Darling: We have honoured our promises on taxation. In particular, we have made sure that where we have increased taxes, we are directing help where it is needed; for example, through the working families tax credit to families on low incomes for whom we want to help to make work pay.
  Dr. Palmer: Does my right hon. Friend agree that, far from narrowing, the gap between the UK rate of corporation tax, which businesses pay, and the European rate has widened since the election?
  Mr. Darling: It has, and I would be less than fair to the right hon. Member for Horsham if I did not commend him for having pointed that out to his audience last week. He said that corporation tax was low, which we achieved through our reform of the corporation tax system.
  We have taken other steps to help to put the economy on a stable footing. We have set out two clear fiscal rules that will provide prudent public finance and strong public services in the years ahead. We have taken action to reduce Government borrowing, and we have put in place a more credible framework for monetary policy, which has been praised by the OECD. We have the lowest long-term interest rates for more than 33 years, as the right hon. Member for Horsham knows well. He said last week that the UK's
  "long-term rates are very low. Indeed our 10-year rate is lower than Germany's."
  We remember that, 10 years ago, we were being lectured by the Conservative Government and told that they wanted to surpass Germany's achievement. Yet it is under a Labour Government that the UK has the lowest long-term interest rates since before England last won the world cup.
  Mr. Nick Gibb: The right hon. Gentleman mentioned the two rules that the Government have introduced. Does he accept the view of Professor Buiter, a member of the Monetary Policy Committee, who said:
  "The Golden Rule…has no merits as a guide to optimal borrowing"?
  Mr. Darling: Professor Buiter made several comments. I strongly believe, as do most commentators, that the
  34
  Government's commitment to fiscal prudence will be of the utmost importance in the years to come because, time and again, successive Governments—Conservative and Labour—have found that any attempt to expand the economy has been undermined by capacity constraints. All too often in the past, an increase in public spending has had to be reigned back as soon as the economy begins to turn the other way.
  We believe that stability is the essential foundation for public services and long-term economic growth, which is why, among other actions, we cut borrowing, gave the Bank independence—which has achieved those long-term interest rates—and significantly tightened the fiscal stance by some 2.5 per cent. of national income. We have taken action to tackle the long-term weaknesses in the British economy by supporting British business, making cuts in corporation tax and setting up the new deal—
  Several hon. Members rose—
  Mr. Darling: If hon. Members can contain themselves, I will give way in a moment.
  The new deal is the biggest employment programme in this country for decades. Taken together, the tax cuts and the structural reforms will stand this country in good stead for the future. That essential foundation is necessary if we are to support the public spending that hon. Members on both sides of the House want.
  Mr. Ian Taylor rose—
  Mr. Darling: I will give way to the one Conservative Member here who is not a Euro-sceptic.
  Mr. Taylor: I am grateful to the right hon. Gentleman, who rightly identifies me as not being a Euro-sceptic. Given that the Government are committed to endeavouring to join the euro some time at the beginning of the next century, will he clarify what effect that will have on the fiscal balance?
  Fiscal prudence sounds of virginal character, but, in reality, there will be some tough decisions on the fiscal balance if there is a single monetary zone in Europe. There will be problems with, for example, trying to ensure that mortgages do not explode as interest rates fall when we join the euro. Will he abolish MIRAS? Will he raise taxation as a lever to control the balance of the economy in a fixed monetary zone? He is avoiding all those questions.
  Mr. Darling: It is not the Labour Government who want to abolish MIRAS; the hon. Gentleman should have a word with his right hon. Friend the Member for Horsham. The steps that we have put in place are good for the British economy, whether or not we join the single currency. Those fiscal rules are essential for this country and its long-term economic development. We would be adopting this fiscal stance and rules whether or not there was any question of joining the euro after a referendum.
  Mr. Nick St. Aubyn: Will the right hon. Gentleman give way?
  Mr. Darling: Not just now, if the hon. Gentleman does not mind. I want to make some progress, and many hon. Members want to take part in the debate.

  35
  I want to explore the Opposition's approach to public spending, which appears to be confused and contradictory. It is not clear whether they believe that we are spending too much or too little; and, if we are spending too much, what would they like to cut. What taxes would they like to put up? We know that the Tory Front Bench has moved to the right. As we have seen this afternoon, it is more hostile to Europe than ever before.
  This week is the 50th anniversary of the national health service—one of the greatest achievements of the Labour Government of 1945. In the view of many people, it was the foundation of the welfare state. Yet look at what the shadow Chancellor has said—we must assume that he speaks for all the Tory party, because we know that it is united now. In 1995, he said:
  "There is a powerful case that the growth of the Welfare State in the first half of this century went a long way towards destroying a flourishing movement of private provision of education, health, pensions and housing."
  He said that at the Hayek memorial lecture—where else? It highlights the difference between the new right-wing Tory party and the Government.
  The NHS embodies our values. It is more efficient, effective and fair to contribute to a health service that is there when we need it, on the basis of need and not on the ability to pay. I should be interested to know how the right hon. Gentleman squares that with what he said in 1995.
  Mr. Maude: It is reassuring that the right hon. Gentleman has spent so much time reading my old speeches. There is a great deal for him to learn from them. Does he accept that the analysis that I set out in that lecture is precisely the analysis that the Minister for Welfare Reform has been putting forward?
  Mr. Darling: It is no part of what my right hon. Friend the Minister for Welfare Reform has been saying. He does not believe, as the right hon. Gentleman does, that the provision of public education and health services is harmful. He would not want to go back—
  Mr. Maude rose—
  Mr. Darling: I will let the right hon. Gentleman intervene in a moment.
  Mr. Maude: The right hon. Gentleman is misrepresenting me.
  Mr. Darling: I shall let the right hon. Gentleman intervene in a moment. In 1995, he was saying that the growth of the welfare state in the first half of the century went a long way to destroy what he described as
  "a flourishing movement of private provision of education"
  and
  "health".
  The clear implication is that he would like to return to that. Indeed, I have read some of his other speeches, in which he gives the distinct impression that the Conservative party is still wedded to private provision in education and health, and that public provision would
  36
  simply be residual, for those who could not afford to pay. That is the precise inference that I take from his speech—a position from which, I believe, he has never departed.
  Mr. Maude: The right hon. Gentleman has obviously been studying my speeches at great length, which is terrific, but he must not draw improper conclusions from them and certainly must not misrepresent them. The fact that the private provision and the mutual provision—the self-provision—of many of those services was harmed by the introduction of the welfare state in the first half of this century is incontrovertible. If he can provide evidence that that is not the case, let him do so. [Interruption.]
  Mr. Darling: As the Economic Secretary to the Treasury and many of my other hon. Friends are saying, thank goodness for that in the health service, because a national health service to which everyone contributes, and which exists on the basis of need, not ability to pay, is the hallmark of a decent, fair and just society. If the right hon. Gentleman disagrees, I shall just have to put up with that.
  I do not know whether the right hon. Gentleman was complaining or complimenting me on reading his speeches, but I read some more, and I noticed that, at the Tory party conference last year—probably the best place for such a speech—he made an interesting observation:
  "when a right of centre party moves to the right it can become more popular."
  I suppose it is worth trying anything in the Conservative party. That seems to conflict with what Michael Portillo told the same conference; he seemed to suggest that he wanted to regain the centre, and that the Tories should be more compassionate.
  I wonder what the shadow Chancellor's position is on public spending. Last year, at the Tory conference, he said:
  "There is no moral content in voting for more public spending."
  I wonder whether that is the view of the entire party. Let us hear it from someone more on the wing of the Conservative party than the hon. Member for Esher and Walton (Mr. Taylor).
  Sir Michael Spicer: It is flattering of the right hon. Gentleman to spend so much time on the Conservative party's policies, but the sad fact is that he is Chief Secretary; he is in government. Now that he is in the public expenditure section of his speech, surely it is fair for him to say something about the implications of his public spending plans. Does 2.75 per cent. growth in spending mean higher taxes? If not, does it mean higher borrowing? Does higher borrowing mean higher interest rates? Let us have some answers on the implications of his expenditure policy.
  Mr. Darling: I had always thought that one point of an Opposition day was to examine what the Opposition had to say, and I was thoroughly enjoying doing so. Only a week ago, my right hon. Friend the Chancellor set out our position at length in the Economic and Fiscal Strategy report and when, shortly, we set out the conclusions of the comprehensive spending review, the difference between the Government and the official Opposition will be clear for all to see.

  37
  However, I want to explore the point that the shadow Chancellor made when he said that there was
  "no moral content in voting for more public spending."
  I wonder whether everyone in the Conservative party is fully on board, because it seems to me that one or two Conservative Members are off-message. The shadow Chancellor says that we have gone soft on public spending, but, given what some of his colleagues have said on health, perhaps he should tell that to some of his colleagues.
  The hon. Member for Rutland and Melton (Mr. Duncan) said:
  "The key point is that spending under this Government is less than it would have been had the Conservative party stayed in office."—[Official Report, 16 June 1998; Vol. 314, c. 183.]
  So there would have been more spending under the Tories! It is not true, of course, because we have increased spending on the health service.
  The shadow Health Secretary, who surely could not be accused of having no moral content in what she does, said:
  "The effect that underfunding has had on the health service is now visible"—[Official Report, 16 June 1998; Vol. 314, c. 140.]—
  so she wants more money to be spent.
  When we announced £2½ billion more in the education service, the right hon. Member for Charnwood (Mr. Dorrell)—who, sadly, is no longer on the Front Bench—said,
  "Today's announcement of extra money…represents a sticking plaster"—
  so he wants to spend more public money.
  The former chairman of the Tory party, the right hon. Member for Sutton Coldfield (Sir N. Fowler) agrees that there should be more public spending. He said that
  "there is an unanswerable case for more police on the ground".—[Official Report, 15 June 1998; Vol. 314, c. 3.]
  He wants more spending—despite the fact that we are still dealing with the spending plans fixed by the previous Government.
  The shadow Chancellor says that there is too much public spending, whereas his colleagues say that there is too little. As my hon. Friends have pointed out, the shadow Chancellor—I know that he is new to the brief—really should have a word with his Tory colleagues serving on the Committee considering the Finance Bill. They voted for no less than £6 billion of extra spending—which is 3p on tax. They make the Liberal Democrats look a model of fiscal responsibility. The Liberals want to increase tax by only 1p to cover their modest list of promises—
  Mr. David Heathcoat-Amory rose—
  Mr. Darling: In one moment.
  The Tories have already committed themselves to 3p. I shall certainly give way to the guilty man. Although I was not there myself, I understand that, because of a breakdown in relations between the Whips, the right hon. Member for Wells (Mr. Heathcoat-Amory) was dragged back, to appear in his nightgown and hat to participate in an all-night debate. Perhaps that is why he voted for so many spending commitments.
  Mr. Heathcoat-Amory: The Chief Secretary was a Committee member, but—as he has just reminded us—he
  38
  could not be bothered to turn up. As I was a member and did turn up, may I remind him that, yes, we did vote and speak to reduce the tax rises in the Finance Bill? We make no apology for that. If he wants to characterise that as a tax or expenditure increase, I can only say that he has not understood the content of his own Bill.
  Mr. Darling: The right hon. Gentleman still has to deal with the point that, if he votes for measures costing £6 billion, he will have to tell us what taxes would go up to replenish that revenue or, alternatively, what expenditure he wants to cut. However, he cannot do either, because it is a tax-and-spend policy without the tax.
  Mr. Gibb: Will the right hon. Gentleman give way?
  Mr. Darling: No; I want to make some progress.
  When one examines what the Conservatives say on public spending to one audience and what they say about it to another audience, their confusion and contradiction become apparent. The shadow Chancellor wants to move the Conservative party to the right—to make it even more popular than it is today. He seems to be hostile to the welfare state—which, he says,
  "erodes the bonds of duty and compassion that hold society together."
  I believe that the welfare state reinforces those bonds and that compassion.
  The shadow Chancellor says that there is no moral content in voting for more public spending. So his colleagues have no moral content? However, although they want to spend more, they will not tell us how they will pay for it. It is all very confused and very contradictory.
  As I told the hon. Member for West Worcestershire (Sir M. Spicer) a moment ago, the Government will state our proposals in the not-too-distant future. Step by step, we are implementing our manifesto promises. We are modernising the welfare state; making work pay; reforming the labour market; and promoting enterprise and business success.
  We have a fair tax system. As we have seen, today's tax claims by the Tories fall apart when we examine their actions in government and their comments in opposition. Again, the shadow Chancellor said that
  "measured any way you like, taxes are lower in Britain."
  The Government are providing investment and reform, and sustainable and affordable public services. We are providing £2.5 billion for education, and £2 billion for the national health service. We are investing in transport. We are taking the tough decisions that are necessary for the future.
  We shall publish soon the conclusions of the comprehensive spending review, which will set out the Government's priorities for this Parliament and beyond. It will offer the United Kingdom a new direction, standing in stark contrast to the divisions, confusions and contradictions that represent the Conservative party today.
  4.33 pm
  Mr. Malcolm Bruce: Listening to the shadow Chancellor's opening speech, one rather got the impression that the Tories were not only expecting a

  39
  downturn, but positively hoping for one. One really does wonder whether it is the job of the Opposition to try to talk the country into economic problems rather than to help it to get out of them—particularly as, contrary to their motion, the Tories contributed to creating some of the problems that we are now facing.
  The Liberal Democrats are not surprised by the current state of the economy. I remind the House that, last July, my right hon. Friend the Member for Yeovil (Mr. Ashdown) warned the Chancellor:
  "Instead of shackling businesses, he should have restrained the consumer, in order to prevent the higher interest rates, higher inflation and less competitive sterling that will surely follow."—[Official Report, 2 July 1997; Vol. 297, c. 325.]
  In November 1996, when responding to the last Tory Budget, my right hon. Friend said:
  "Within three months, interest rates will go up…if they do not, the only reason will be the fact that the Government have an election coming. Within a year, tax cuts will be reversed, and within 14 to 18 months inflation will be rising sharply again."—[Official Report, 26 November 1996; Vol. 286, c. 183.]
  All those predictions have come true.
  The principal reason for the present situation, which makes the Tory motion so cynical and absurd, is the decision of the previous Government to keep policy so lax before the general election, as the hon. Member for Watford (Ms Ward) rightly said. The previous Government cut personal taxes in spite of record consumer windfalls, a matter which was discussed in the House and in the Treasury Select Committee, and which the then Chancellor chose to discount. They kept interest rates down in spite of buoyant consumer demand, and they refused to accept the advice of the Bank of England about the risks to inflation.
  It seems a long time ago now, but there was regular speculation about the Ken and Eddie show. The argument was about who was right—Ken or Eddie. It is unfortunate that the right hon. and learned Member for Rushcliffe (Mr. Clarke) is not here because at this point, he usually makes an ebullient intervention claiming that he is always right, always has been and always will be. He presumably believes that the Bank of England was always wrong and that the Government were always right.
  The fact is that the results of keeping policy too easy two years ago are now coming through in high inflation, wage pressures and capacity constraints. The previous Chancellor was clear that policy worked with a lag, and that the success or otherwise of his policies would have to be judged after the passage of time. Well, time has passed and the results are now clear—Eddie was right and Ken was wrong. The Tory motion draws attention only to the legacy of the party's own policy failure and the bad old days, when interest rate policy was determined by the short-term priorities of politicians and not by the long-term interests of the country.
  I find it astonishing that when operationally independent central banks are in place the world over—in almost every country in the free world—it is only the British Conservative party that wants to go back to the political manipulation of interest rates. That gave us entry into the exchange rate mechanism at the wrong moment—Black Wednesday—and the inflationary pressures under the previous Government, yet the Conservative party
  40
  wants a return to the right of politicians to meddle in the short-term, day-to-day management of the economy and so damage the national interest.
  In this context, the current Chancellor is to be congratulated on giving operational independence to the Bank of England and on his code for fiscal stability which, we hope, will entrench sensible rules for public borrowing. Both those changes should provide greater economic stability, lower inflation, lower interest rates and higher employment. Certainly, that is the justification for putting them in place.
  As I argued on behalf of the Liberal Democrats before and during the last general election, long-term interest rates have already fallen directly because of expectations of lower inflation, which has resulted from the operational independence of the central Bank. If we secure lower levels of public borrowing, it means that when shocks to growth do occur—continued steady growth cannot be guaranteed—there is greater flexibility for fiscal policy and less risk of destabilising policy adjustments.
  We welcome the changes—not surprisingly, as most of them were in our own manifesto. [Interruption.] They were, and I welcome the fact that the Labour Government have implemented policies that were in our manifesto. Indeed, it demonstrates that it is possible for an Opposition party to be influential. The only thing that was slightly odd was the inability of the Labour party during the election to acknowledge that it intended to do what we had specifically promised, but that does not in any way devalue the fact that we welcome the decision to move forward. Labour Members are happy to tease and challenge us, but, on occasion, it would be nice for the Government to acknowledge that there has been some agreement and congruence of policy, and not to try to manufacture a difference of opinion that does not exist.
  As my hon. Friend the Member for Kingston and Surbiton (Mr. Davey) has said, one slightly worrying factor is that, on all the main series of statistics, the Government are clearly trying to manufacture discontinuity so that it will not be possible to monitor the progress of this Government and the performance of their predecessors in a like-for-like way. That is disturbing. They wish to rewrite history and draw a line at 1997.
  Mr. Christopher Leslie: I know that the hon. Gentleman is trying to stop other people from pointing out differences between the parties, but this is important. May I ask him his opinion? The hon. Member for Kingston and Surbiton (Mr. Davey)—50 per cent. of the Liberal Democrat party representation in the Standing Committee—made an important comment on the Finance Bill. He said that the Liberal Democrats wanted to consider equalising the income tax allowance with the capital gains tax allowance, moving it up to £6,800, which would cost £17.5 billion, equivalent to 8p on the rate of income tax. Is that Liberal Democrat policy?
  Mr. Bruce: The Liberal Democrats are trying to ensure that both the capital and income tax systems fall equitably and fairly according to ability to pay. We wish to lower the burden on people who have low capital gains and low income. That is a perfectly reasonable policy.
  Apart from the discontinuity of statistics, there have, of course, been some controversial reactions to Government policies. Some have argued that the Bank of England,

  41
  given its operational independence, has put up interest rates too sharply. Others say that the rise has come a bit too slowly. Personally, I take the latter view, but the important thing is not to second guess the authorities each month, or to criticise each twist in decision making.
  There will always be controversy. Indeed, with a Monetary Policy Committee of nine members all expressing their opinions in public, we know that that debate will be carried out openly. It will be months or even years before the clear outcome of those policies can be determined, but the important thing is that monetary policy is now being run to meet the Government's inflation target, not the previous Prime Minister's re-election target, as happened two years ago. That has to be a welcome development.
  Although the Chancellor has deservedly been praised for this new framework, particularly the monetary framework, he cannot entirely escape blame for our current economic problems. Although the post-election period has seen a big change in the structures, there has been much economic policy continuity, too. What was known as Clarkeism has given way to Brownism. As The Economist has argued, there is an element of continuity. I think that my hon. Friend the Member for Kingston and Surbiton described that as Clownism in the conduct of policy.
  On fiscal policy, the deficit has come down, but the same relaxed approach to the taxation of consumption has continued. On the single currency, I get the feeling that the commitment to eventual EMU entry is shared more widely in the present Government than has been made public. Nevertheless, the wait-and-see strategy, or what I described once as the wait-and-wait-and-wait strategy, lives on. As a result, we suffer from the overvaluation and instability of the pound; that strategy is a substantial factor in that.
  Of course, for the first two years of this Parliament, the Government's spending plans have remained fixed, preventing new measures to invest in education to start to tackle the skill shortages that are pushing up wages and threatening to abort the recovery. Education is vital not just for the quality of our society, but for our economic well-being, yet, on the Government's own figures, the proportion of gross domestic product that is spent on education has fallen from 4.9 per cent. before the election to 4.7 per cent. after, despite the fact that the Prime Minister said that education spending would increase in real terms as a percentage of GDP year on year under Labour—clearly a broken promise.
  On that issue, I feel that both the Prime Minister and Treasury Ministers cannot go on getting away with trying to pretend that Liberal Democrat policies and priorities should be frozen in aspic as of 1 May last year, while Government spending and Government information are updated. We have, of course, made it absolutely clear that, on the basis of our commitments and the revisions that we have applied to those in the light of information that has become available since the general election, this party supports very much more substantial investment in education—and in health as well—than anything that the Government have pledged.
  Mr. Darling: I do not like to interrupt this congruence of policy to which the hon. Gentleman has referred, but I cannot let him get away with what he has just said. What
  42
  is undoubtedly true is that Liberal Democrat policy is not frozen in aspic—if, indeed, that is what people do with aspic—because every time we announce an increase in spending, the Liberal Democrats call for even more. We are spending more now, despite the fact that we said that we would hold to the inherited expenditure totals in the first two years. We are spending £2.5 billion more on education, educational maintenance and new building than the Liberal Democrats promised. It is true to say that, since then, they have upped the ante, and I expect that they will continue to do that. The difference between us and them is that we have to finance it and we are capable of financing it. I doubt whether the hon. Gentleman is.
  Mr. Bruce: I must take absolute issue with the right hon. Gentleman on education. Our commitment on education is several times what the Government have so far pledged—[Interruption.] No; it always was. The commitment to put the equivalent of 1p on income tax for education over the entire Parliament is a substantially bigger commitment than the Government have made. That is a fact on which I stand firmly.
  On the updating, the Chief Secretary to the Treasury is right. Of course, I accept that it is not credible to make pledges unless we are prepared to demonstrate where the money should come from, but, in the light of the improving finances that the Government have benefited from, we have certainly said that some of that money could and should have gone into health and education, whereas the Government have stuck to a policy of keeping the squeeze on those services in the first two years and then throwing substantially more money at them later, which we believe is damaging and may yet prove inflationary.
  Already, the inflationary figures on which the Chief Secretary's forecasts are based have proved to be unrealistically low. He is running at a higher rate of inflation than the Chancellor's first Budget forecast and the inflationary pressures are upwards. If that continues, what will be the real effect on the commitment on expenditure on public services? Perhaps I could put it the other way around. At what point will the Government recognise that they have to review what their commitment will deliver? The argument is about not just who will spend more money—that is sterile and unproductive—but what we wish to deliver.
  I accept that the Government are right to identify specific outputs or inputs, such as reduced class sizes and reduced waiting lists. Our contention is that, first, those have not been delivered and it may be difficult to deliver them. Secondly, they are modest aspirations which we wish to improve on. We have identified the fact that most people would like class sizes to come down well below 30 throughout the primary school sector, not just in the first three classes. Most people want hospital waiting times to be shorter, not just waiting lists. Those are all things that will require resources and the motivation of highly qualified, highly skilled people, who will not be retained in the public services if they face pay cuts year on year, which is this Government's policy.
  Mr. Geraint Davies: Does the hon. Gentleman accept that the latest figure in the national accounts for quarter one GDP, year on year, is up 2.9 per cent., which is above the long-term GDP trend of about 2 per cent? The economy is booming above and beyond the rate set of

  43
  2.75 per cent. for public expenditure, which was mentioned by the Opposition. The problem is keeping the economy on a stable, growing footing, not the problems that the hon. Gentleman mentions.
  Mr. Bruce: The hon. Gentleman is right in the sense that, at the moment, the economy is doing well. There are clear concerns on the horizon about whether that can be sustained. There is so much that the Government can do; there are things that are outside their control. Our contention is that it would have been wiser to have a more even flow of funding into public services, rather than to keep the stranglehold on—and then attempt to push money into them perhaps faster than they can absorb, and when the economy may be experiencing greater inflationary pressures.
  The Chancellor is very keen to squeeze boom and bust out of the management of the economy, and he has adopted policies that he believes will lead in that direction. We agree with him on that. Unfortunately, his policies on the public services run the risk of creating a bust and boom that may prove equally unsustainable. Our critique of the situation bears some examination, and I stand by our record.
  To tackle our economic problems, we must invest more in education and training. Without that, each recovery burns itself out on higher wages and inflation. The pressures are appearing already, despite still high unemployment, particularly in certain regions.
  The Chancellor has made grave mistakes on fiscal policy. He raised taxes substantially and predictably after the election. Had the Conservatives won the election, I suspect that taxes would have gone up in the same way, although they did not say that they would do that either. Sensitive to the promises made on tax, the Chancellor has put the burden almost wholly on hard-pressed businesses and on savers rather than on high-spending consumers. The only consumer tax rises have been modest. The balance that the Chancellor has struck has not helped to bear down on inflation, which is his main problem.
  Dr. George Turner: One of the tax changes that the Government introduced was the windfall tax. Its key objectives were to ensure that we had a better-trained work force and to give people opportunities. The Liberal Democrats opposed the tax. They want the spending, but they oppose the means. Does the hon. Gentleman support the spending, and how would his party have raised the money?
  Mr. Bruce: It is fine for the hon. Gentleman to say that, but I can reverse the challenge. We were committed to putting money into education and putting 1p on income tax, which his party opposed. As a consequence, education has been chronically underfunded. There is a legitimate debate between parties about priorities. We have made ours clear and the Government have made theirs clear. Some of the new deal spending from the windfall tax is not delivering all the results that were promised, not least because the situation is changing under the Government's feet.
  I am conscious that the debate finishes at 7 o'clock, so I shall bring my remarks to a close soon. Relying on interest rates, which is the consequence of the
  44
  Chancellor's fiscal stance, has forced the pound up further and unbalanced the economy even more. The one issue on which I agree with the shadow Chancellor is that we are creating a boom and a bust at the same time—a boom in the consumer sector and a bust in manufacturing. The Government's economic policies are undermining our wealth-creating base. A clear commitment to the single currency would have helped the Government and our exporters by stabilising the pound at a more competitive level and easing pressures on interest rates. It is not too late for the Government to take such issues on board.
  Where the Chancellor has genuinely put the economy first, he has done well. The operational independence of the Bank of England is the best example. Where politics have come top, economic policy has been blown off course. There has been no fiscal tightening for the consumer, to avoid frightening new Labour voters. There has been no stability for the pound, to keep Mr. Murdoch, sweet. There has been no extra investment in education, to stick to Tory spending levels for political reasons. The Tories are not in a strong position, given their record, their pre-election economic policy and their lack of an agenda since the election. However, the Chancellor has to strengthen his nerve if he is to tackle the problems head-on. He must adopt a less relaxed fiscal policy, make a real commitment to education and deal with exchange rate stability, which he always refuses to talk about. Those issues must be addressed if we are to secure sustainable, long-term growth, which Liberal Democrats and the Government want and the country needs. The Liberal Democrats have set out their policies. The Government have acknowledged and adopted some of them and would do well to consider others to help secure the stability, long-term success and prosperity that we all want.
  4.54 pm
  Ms Helen Southworth: The Opposition have called the debate in the hope of re-creating themselves in the public eye. They want to rewrite history, pretending that the Tory Government created a golden age and a dynamic economy. Maybe they are even pretending that they created a fair society. They seem to be hoping for collective national amnesia on a grand scale. They hope that we shall all join them in the land of make-believe. I am afraid that they are away with the fairies; they are in never-never land. Tory Britain was never how they say that it was, and they will never get the British people to believe them.
  Let us look at the reality of what the Tories did to the economy when they were in power. The defining moment of the previous Tory Government was 16 September 1992—Black Wednesday. The Chancellor, the Prime Minister and the Government panicked. They took interest rates up by 2 per cent., immediately followed by a further 3 per cent. rise. While they were losing their heads, they were losing billions of pounds for this country. They provided management schools round the world with a text book case of how to cause chaos, then how to make it worse.
  Then, in the 1993 Budget, the Tories were desperate to make up the money that they had wasted. They started raising taxes and put VAT on fuel, when Britain had more winter deaths among old people from hypothermia and cold-related illnesses than any other European country. That showed Tory priorities. Then they declared a beef war with the European Union over its response to the BSE crisis

  45
  that their mismanagement had created. They called the war off a month later with nothing gained, leaving British beef farmers and taxpayers paying the cost for years. The Tory Government brought the dreaded words "negative equity" into common parlance, which haunted middle-income families. One thousand homes a week were repossessed during the last months of their Government.
  During the Tory years, Britain's manufacturing base declined from 58 to 28 per cent. of the economy, and the Conservatives took no effective action to restructure, reskill and stabilise industry. While the right hon. Member for Huntingdon (Mr. Major) was Prime Minister, more than 8 million British people experienced unemployment at least once. Job insecurity became endemic. That is what people remember about Tory Britain.
  Another first: until the right hon. Member for Huntingdon became Prime Minister, all the Governments in the history of the United Kingdom had borrowed a cumulative total of £190 billion. Despite receiving £120 billion from North sea oil and £80 billion from asset sales, the Government of the right hon. Member for Huntingdon added more than £180 billion to the national debt in less than six years. That is a phenomenal and appalling achievement—truly one to remember. British taxpayers have to spend £25 billion a year on repaying the interest on that debt alone and they are still feeling the consequences.
  The Tories were in government for 18 years and gave us the most unstable economy in the developed world, growth rates below those of every other European country and the two deepest and longest recessions in post-war history. The right hon. Member for Horsham (Mr. Maude) was querying boom and bust. He could not remember what it meant. The Tories had boom and bust, constantly changing policies, repeated rows over Europe, no plans, no strategy and no vision. When business was asking for urgent action on the skills gap, the previous Government reduced the training budget by£34 million in real terms. When business was asking for investment, they crossed their fingers and hoped that something would happen. When business was asking for action on transport, they came up with the cones hotline.
  Just before last May's election, The Economist said of the right hon. Member for Huntingdon:
  "his chief problem is that he leads a party which has taken leave of its senses."
  This afternoon, that party is in its proper place: on the Opposition Benches. It has a new leader, but it is the same party. Who are the Tories in opposition? They are newborn babes; they have no recollection of the mess that they created. They are innocents who bear no responsibility for Black Wednesday, the skills gap, the investment gap, the doubling of national debt, the billions of pounds that were wasted and the millions of people out of work.
  When it comes to the present economic strategy, what do these people say? They look at our public spending review and say that we must cut public spending. They look at our Finance Bill and say that we must increase public spending. They oppose reforms to close tax loopholes, but say that we must do more to close such loopholes.
  Mr. Gibb: The hon. Lady was a member of the Committee that considered the Finance Bill. Will she give an example in that Committee of an occasion on which the Opposition called for a public spending increase?
  Ms Southworth: I would be very happy to send the hon. Gentleman a list of the many more than 20 occasions on which Tory amendments would have increased public expenditure and reduced Government income.
  We do not know—who does?—what the Tories say about Europe; that changes by the minute. In opposition, as in government, the Tories do not know where they are going; they have no coherent plan, no vision and no agreement among themselves. On top of that, it seems that, in the Finance Bill Committee, they could not add up. They were not credible as a Government and they are not credible as an Opposition. If they hope that the electorate will not notice, Conservative Members, like their new leader, will catch a cold.
  By radical contrast, this Government are putting in place an overall economic strategy with discipline and effectiveness. Our central economic objective is high but stable growth with greater job opportunities, so that everybody can share in higher living standards. We are rebuilding the economic infrastructure, creating new partnerships between Government and industry to address the problems of instability that we inherited and to build prosperity. Our policies are clear. We are securing economic stability by ensuring low inflation and sound public finance. We are encouraging work, providing employment opportunities for all and making work pay. We are raising productivity by improving skills, increasing investment, ensuring that markets are accessible and competitive and encouraging research and development.
  Mr. Tim Loughton: Will the hon. Lady give way?
  Ms Southworth: If you are still in you seat, you cannot be asking me to give way.
  Mr. Deputy Speaker (Mr. Michael Lord): Order. The hon. Lady must not refer to the Chair in that way.
  Ms Southworth: I apologise, Mr. Deputy Speaker. I meant to say that the hon. Member for East Worthing and Shoreham (Mr. Loughton) cannot be asking me to give way if he is still in his seat.
  Mr. Loughton rose—
  Ms Southworth: I will not give way at the moment.
  Current economic indicators show that our strategy is already beginning to take effect. Public sector borrowing, excluding the windfall tax, was £5.9 billion in 1997–98—down to 0.7 per cent. of gross domestic product. Next year, it is projected to be £1.3 billion—0.2 per cent. of GDP, compared with the massive borrowing of 8 per cent. in 1993–94. Despite increases in short-term interest rates, long-term interest rates have fallen sharply since the Government introduced the new policy framework in May. The rates are now at their lowest level for more than 30 years. Real personal disposable income is up by 5 per cent. on last year.
  I should like to comment on some examples of the effectiveness of the Government's management of the economy that are particularly important to my constituents. Over the past year, I have discussed priorities with the Confederation of British Industry, the Federation of Small

  47
  Businesses, chambers of commerce and business people in my constituency. Business people in small and medium businesses right through to multinationals know that people are the key to success. They all recognise the drag on business, profitability and growth caused by the skills gap.
  The Tory inheritance meant that, in Britain, less than half the number of students attained good grades at GCSE than in France or Germany. We were 42nd in the education league. Thousands of young people were trying to find jobs without basic literacy and numeracy skills. Such young people have the right to decent education and a decent opportunity in life. This Government—my Government—are tackling the skills shortage with imagination and vigour. Our careful and coherent plans for managing the economy are inclusive, and they draw on the experience and expertise of business. The new deal for young people has been designed with the active support and co-operation of industry and business. It is already working to give young people a step up the skills ladder.
  Mr. Geraint Davies: My hon. Friend will be interested to know that, in Croydon, only on Friday, I spoke to an audience of more than 100 businesses that are interested in the Government's new deal. That is symptomatic of the new partnership between the Government and business to get our people back to work.
  Ms Southworth: As my hon. Friend would expect, I am very pleased to hear that. Indeed, I heard the same message in a business breakfast this morning.
  We know that the new deal is effective because 60,000 young people have joined it since January. Indeed, we are already receiving an enthusiastic and interested response to today's launch of the new deal for over 25s. We are also investing £100 million in opening 40 centres of technical excellence. We are training 20,000 people to tackle the millennium bug which, as one of my constituents said, is one of those normal problems that will not go away, which small and medium businesses need the Government's help to tackle, and which the previous Government ignored.
  We are creating a culture of lifelong learning with an infrastructure that helps people access knowledge and skills. In addition—an issue that is brought up constantly by my constituents who are business people—we have committed £2.5 billion extra to education, and will increase that spending year on year as the economy grows.
  That brings me to another area of exceptional importance to many of my constituents. After the Warrington bombing, local people worked hard to support a framework for peace in Northern Ireland. They have raised £1 million in the past three months to build an international peace centre for young people from north and south Ireland and England. A peaceful future for Northern Ireland really matters to us. The £315 million invested in the renewal and modernisation of Northern Ireland, which the Government have allocated to build economic and political stability, get people back to work, equip them with skills and create an infrastructure for a modern economy, effectively shows the Government's priorities. Economic growth and social cohesion are working together to build a better present and a better future for the people of all these islands.
  5.7 pm
  Sir Peter Tapsell: The House has just heard a most powerful, fluent and charmingly delivered speech from the hon. Member for Warrington, South (Ms Southworth), to which I listened with great interest. It used to be a tradition in the House that one replied to the previous speaker, so I shall deal first with one or two of her points.
  The hon. Lady is quite wrong in thinking that none of us Conservatives has a recollection of events leading up to British entry into the exchange rate mechanism and those flowing from it. I was strongly opposed to, and argued strongly against, joining the ERM. During the two years that we were in it, I continually urged that we should leave. To this day, I regard so-called black Wednesday as one of the most fortunate events in post-war British economic history. However, throughout the late 1980s, day-in, day-out, the Labour party strongly urged the then Conservative Government to join the ERM. I remember Neil Kinnock, then Leader of the Opposition, and John Smith, then shadow Chancellor, urging in the twice-weekly Prime Minister's Question Time—Prime Ministers used to come to the House twice a week—that Britain join the ERM.
  I may say in an aside to the Liberal economic spokesman, the hon. Member for Gordon (Mr. Bruce), that the Bank of England was also strongly in favour of our joining the exchange rate mechanism, as was much of the City of London and the great international firms. In other words, exactly the same people who were then in favour of our joining the ERM are now urging us to join the single European currency, and for the same reasons.
  One of the extraordinary things about the highly intelligent remarks of the hon. Member for Warrington, South is that she seems not to appreciate, given the very things for which she was criticising the Conservative Government in the past—I fully recognise that it was a terrible mistake for us to join the ERM—that her Government are now seriously contemplating making exactly the same mistake again.
  Mr. Nigel Beard: Is it not the case that, when the Conservative Government went into the exchange rate mechanism, they went in at too high a rate and with a take-it-or-leave-it attitude that meant that we had no friends in the arrangement when the crisis arose? If anything, that was an example of the way in which the Conservative party dealt with the European Community throughout its period in office. The disaster that followed was the sort of disaster that would follow any policy that the Conservative Government took up, with that sort of bullying manner.
  Sir Peter Tapsell: I fully accept—events demonstrated it all too clearly—that we joined the ERM at the wrong rate of DM2.95 to the pound. However, there will never be a right rate at which to join any fixed exchange arrangement. The essence of international currency markets, as we have seen in the relationship, for example, between the yen and the dollar in the past month, is that currencies can fluctuate dramatically from day to day and week to week. That is one of the great safety mechanisms in the international trading community. When we remove that mechanism, we are in serious trouble.

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  That is one of the reasons why the whole of Asia is now in chaos. The countries involved were operating on quasi-fixed exchange rates throughout so they did not devalue and did not change their exchange rates until they were in a desperate situation. In my view, that is exactly what will happen in the European Union in the course of time.
  Mr. Geraint Davies: Does the hon. Gentleman accept that the high level of sterling is a symptom of international business confidence in the British economy? Given what his colleagues have said about getting the exchange rate down, how would he suggest reducing the confidence of the international business community in the British economy so as to push down exchange rates, which it appears the Conservative Opposition want to do by some sort of whim?
  Sir Peter Tapsell: I am being delayed in getting on with what I really want to say. However, I am much more interested in the subjects that are being raised.
  It is true, to some extent, that the great strength of sterling today is due to the high regard that the international community has for the state of the British economy at present, as a result of 18 years of Conservative government. However, it is not true that the whole British economy is very confident at present. The exporting element of the economy has a lower confidence than at any time since 1983, as the latest CBI report proves.
  Much of the strength of sterling is due to the fact that people are anxious about the future of the euro. A great many rich Germans have been moving out of deutschmarks into the Swiss franc, the United States dollar and sterling. To a considerable extent, the strength of sterling is due to anxieties about the euro by the international community.
  The other thing, while I am on this subject—having referred to it, I shall conclude on the question of the past, as it were, and the euro—is that it is not possible to say what would be the right rate at which to join the euro, if the Labour Government eventually decide to join and the British people are unwise enough to vote yes in a referendum. At the moment, the exchange rate with the deutschmark is significantly higher than when we joined the ERM. It was 3.02 this morning, not 2.95. No one who looks at these matters has ever seriously considered that we should join the euro at a higher rate than 2.65, and many would put it at 2.60, or even lower.
  As my hon. Friend the Member for Esher and Walton (Mr. Taylor), who does not always share my euro-sceptic enthusiasms, mentioned earlier, we are talking about a problem that the Labour Government seem not to have considered. Certainly they do not discuss it in public. If they decide to join the euro and they are to avoid the mistake that the Conservative Government made of joining at much too high a rate, how will they get sterling down from DM3 to the pound to 2.60 without greatly increasing inflation? They would have to reduce interest rates—the experts guess that it would involve a reduction in interest rates of 3 or 3.5 per cent. It is said that that would involve a huge increase in income tax to offset the inflationary pressures that would ensue. Even if we
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  decided in theory that we wanted to join the euro, it seems to me that there are almost insuperable technical problems just about that aspect of it.
  Mr. Geraint Davies: Is it not the case that, in the middle of May, the exchange rate slipped from DM3.10 to the pound to 2.90 due to the agreement of leaders in Europe to set a date for the start of the new currency? Is it not therefore obvious that, if the currency is successful following its launch at the beginning of next year, the rate for the pound will converge down towards 2.65 anyway?
  Sir Peter Tapsell: I do not think that anything is ever certain about the movement of currencies. I have earned my living in this sector, often with some difficulty, for 40 years. If one even knew what the exchange rates of the world were to be tomorrow, one could become another Soros overnight. It is absurd to project forward months ahead what would be the possible rates at which the great currencies would relate to one another.
  I turn to the terms of the motion of censure that my party has rightly put on the Order Paper. The Chief Secretary advanced the rather curious and, I should have thought, entirely novel constitutional proposition that an Opposition censure motion was an opportunity for the Opposition to set out their policies. I have listened to a great many Opposition motions over the past 40 years in the House and it has never seemed to me that that was the object of the movers of such motions.
  I have always thought that a censure motion on a Government was exactly what it said, and that it set out the criticisms that the Opposition of the day have of the Government. The Government are then expected to defend their policies and answer in detail the criticisms that have been made. There has been no attempt to answer our criticisms in detail and the Chancellor of the Exchequer has even pushed off to continental Europe. It is extraordinary. It is not surprising that the Chief Secretary wants us to start behaving as though we were the Government, which I have no doubt that we shall be again in a few years' time.
  When the economic historians come to study the reasons for the failure of this Government, I believe that they will point to the origins of the failure arising on the fourth day of the Government's life, when they suddenly announced the new arrangements for the Bank of England. The whole of that episode will be of great fascination to political and economic historians. That immensely important decision, incidentally, reversed at a stroke a Labour Act of Parliament, not a Conservative one. It reversed the Bank of England Act 1946, which was introduced by the post-war Labour Government.
  The decision was taken furtively and in a tremendous hurry. The policy was not in the Labour party's manifesto, and, in the campaign before 1 May, no Labour Front Bencher said that such a decision would be taken. Indeed, I understand that it was not even discussed and approved by the Labour shadow Cabinet before 1 May. However, it was one of the most important constitutional and economic decisions of this century—indeed, since the reign of Charles II, as anyone who knows the history of the Bank of England will accept—and it was taken in what David Smith, the economics editor of The Sunday Times, described yesterday as a frenetic hurry. It will have

  51
  tremendous implications for the duration of the Labour Government and will, I believe, have very adverse effects on the British people.
  The effect of giving the Bank of England independent operation on interest rates is—as I have said repeatedly in the House from the moment that it was announced—to separate fiscal and monetary policy. The hon. Member for Gordon (Mr. Bruce) pointed out that a number of major countries separate fiscal and monetary policy, but sometimes the number is exaggerated—Japan does not separate the two, although I do not want to use Japan as an example for us to follow. People are usually thinking of the United States and Germany, but we should consider the effects of that separation on those countries' recent economic history.
  Nye Bevan, who was the best speaker that I have heard during my time in the House, was fond of saying that one did not have to look into the crystal ball when one could read the book. Recent books show that the United States ran a slack fiscal policy and a tight monetary policy in the 1980s, and that Germany did so in the 1990s, after the Berlin wall came down. The slack fiscal policy in Germany required a tight monetary policy as a counterpoise, which was the cause of all our difficulties as a member of the exchange rate mechanism. The fact that interest rates had to be high in Germany meant that they were inappropriately high in Britain at a time when we were entering deep recession, which—or the reverse—is exactly what might happen if we were in a single European currency. An economy can be organised much more efficiently if elected Ministers are responsible for both fiscal and monetary policy.
  Mr. Beard: Is it not the case that, immediately after the Monetary Policy Committee took control of interest rates, long-term interest rates fell? That fall, which was the result of the policy about which the hon. Gentleman complains, had a direct impact on one of the longest-standing problems of the British economy—the lack of investment.
  Sir Peter Tapsell: Treasury Ministers have often made that point, but I do not think that they understand—any more than I think that the hon. Gentleman understands—the significance of long-term interest rates. It is perfectly true that long-term interest rates in this country are exceptionally low—they are at 6 per cent. In the United States, however, which has a totally different system and is not preoccupied with the things that we are discussing, long-term interest rates are 5.5 per cent.—that is almost a post-war low. One can, this afternoon, buy the 30-year US long benchmark bond on a 5.6 per cent. yield. In Japan, which also faces a totally different set of circumstances—it is in technical recession, perhaps moving into slump—long-term interest rates are even lower.
  There can be a variety of reasons to explain the fact that long-term interest rates are low. People may fear a recession and savers may not be spending. There are many influences on long-term interest rates, and it is a great mistake to make deductions of the kind that the Government make from the fact that our fixed interest yield curve is more or less flat and that our long-term
  52
  interest rates are low—one would have to make a close and scholarly comparison between Britain and the United States if one wanted to draw such academic conclusions.
  The fact that the Government sacrificed control over monetary discipline—they can no longer determine it—means that the Chancellor can pursue a laxer fiscal policy than he otherwise could. I suppose that he was so keen to give the Bank of England independence over interest rates because he knew that, sooner or later, political pressures would force him to increase public expenditure, contrary to the pledges that he gave before the general election—he wanted to be able to blame another body for the increase in interest rates. There have already been six increases in interest rates since the general election, as the motion points out, and there are undoubtedly more to come. The effects of those increases are serious and extremely damaging to our exports. Indeed, I fear that sterling will become even stronger and that the high pound will persist for many months. The impact of that on the green pound will have a tremendously bad effect on British agriculture. We always talk about this problem in terms of exporting, but I represent an agricultural constituency and I know that farmers are having a desperate time as a result of Government policy.
  The Chancellor has now announced a 2.75 per cent. increase in public expenditure per annum, but, when he is challenged on it, he says what I have heard Chancellors say time and again over the years—the deja vu that I experience in listening to him and the Chief Secretary is uncanny. Last Thursday, in response to a supplementary question, the Chief Secretary said:
  "When the Tories … accuse us of going on a spending spree or of having too loose a fiscal policy, they really must tell us, what do they want us to cut? Are we spending too much on health, too much on education, too much on transport? They must answer those questions."—[Official Report, 25 June 1998; Vol. 314, c. 1161.]
  No Opposition have ever answered those questions, but I tell the House who has—first, between 1964 and 1967 under the Wilson Government, they were answered by the international community, which forced the 1967 Callaghan devaluation of the pound, and secondly, between 1974 and 1976, when Lord Healey was Chancellor, they were answered by the International Monetary Fund, which told the Labour Government how the show was to be run.
  I am sorry that the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who was a Treasury Minister at the time, is temporarily not here, as he could confirm that, after the IMF had told the Government what to do, the quartet of Labour Treasury Ministers imposed the most savage cuts on all the public services. The Chief Secretary asks what services Opposition Members would cut and reads out all the popular public services on which the Liberals ask him to spend more. Those were precisely the services—health, education, transport and so forth—that the IMF cut most savagely under the last Labour Government. No new hospitals or roads were built: new building was cancelled—the whole thing.
  I hope that we shall not have to listen for another three or four years to Treasury Ministers saying, whenever they increase public expenditure, "What would you cut?" I have never been one of those Conservatives who opposed public expenditure in principle. I am a Keynesian—I believe in public expenditure when it can be justified. One has to be careful not to increase public expenditure too quickly or out of line with GDP indexes.

  53
  Indeed, until his extraordinary statement on the matter a fortnight ago, I thought that the chief message that the so-called iron Chancellor had for the country was that public expenditure had to be kept under the tightest possible control. However, because of a few minor revolts by a few Labour Members whom the Government are now trying to strike off their candidates list, that iron Chancellor was panicked almost overnight into announcing that restraints would be considerably eased. We shall wait to find out how long it is before the IMF starts to take an interest.
  The shadow Chancellor said the other day that we have boom and bust at the same time, which is true. The Organisation for Economic Co-operation and Development said only last week that our latest increase in interest rates might well tip this country into recession, and I share that view. On 27 November last year, in a supplementary question to the Chancellor of the Exchequer, I asked:
  "Has it occurred to the Chancellor of the Exchequer that by 1999 the danger of inflation may be rather less than the danger of deflation?"—[Official Report, 27 November 1997; Vol. 301, c. 1082.]
  That is my view, and I said that before the Thai baht collapsed and before the chaos in Indonesia and the economic crisis in Asia. The dangers of deflation are demonstrably much greater now than they were in November, and the latest increase in interest rates by the Bank of England was a mistake.
  The Bank will make further mistakes, which brings me back to my opening remarks. I do not have much confidence in the new Monetary Policy Committee that has been set up to run such affairs instead of the elected Government. Members of the MPC are mostly respected economists, but they do not have wide business experience—certainly not in exporting—and they are not at all preoccupied with employment levels as far as one can tell.
  When the Chancellor announced the new Bank of England set-up, he said that its chief obligation would be to keep inflation at 2.5 per cent. If Labour Members are right that he felt when he came to office that he had inherited from the Conservatives far too lax a monetary policy and that an inflationary danger was building up so that a 2.5 per cent. inflation target had to be announced, surely he must have understood the implications. If one suddenly introduces a 2.5 per cent. target at the beginning of an inflationary splurge—this is what Treasury Ministers are now trying to pretend that they thought—one is, in effect, asking the Bank of England to take severe monetary measures indeed, which will dramatically affect employment levels. It is worth remembering that the level of unemployment under every one of the five previous Labour Governments has been higher when they left office than when they took it, and I am certain that that will again be the case.
  Maria Eagle: Does the hon. Gentleman recall the effect of Conservative economic policies on manufacturing employment between 1979 and 1981, particularly in Liverpool, which I remember well at the time? They destroyed 24 per cent. of manufacturing jobs and one sixth of all jobs in Liverpool.
  Sir Peter Tapsell: I remember that clearly because I resigned as a Treasury Front-Bench spokesman on the
  54
  issue and spent the period from 1979 to 1981 attacking Lady Thatcher's Government and Lord Howe's chancellorship precisely on the grounds that their monetary policy was far too tight. I publicly described the 1981 Budget on the day that it was delivered as being economically illiterate. When Sir Alan Walters was eventually appointed as her economic adviser by Lady Thatcher, his first report to her confirmed exactly what I said and she changed her policies.
  Getting things wrong once is not a good argument for getting them wrong a second time. We made great mistakes over the exchange rate mechanism and excessive monetarism, but, apparently, this new Government have learnt nothing. They are the Bourbons of modern times—they have learnt absolutely nothing—and, as the Talleyrand of the House, I am trying to remind hon. Members that we faced some of those problems before, and the wrong answers were given. For goodness' sake, do not let us do so again.
  One of the great problems is that people develop a commitment to a general theory. During my time in the House, the theories have changed. First, we had socialism, then corporatism, then monetarism and now we have Euro-federalism. One of the great advantages of an Oxbridge training, which is under considerable attack from Labour, is that it develops in one a mood of intellectual scepticism at an early age. I was deeply sceptical about all those four "isms". We really should aim for a situation in which all "isms" are "wasms" and in which we concentrate on good, sound Government by experienced Ministers rather than thinking that all the world's problems can be solved by one theory.
  Finally, every Government ought to aim at four things simultaneously. I am thinking of the 1944 all-party White Paper at the end of the war. People go on as though the Labour Government invented everything after 1945 and one would not think that there had been a Beveridge report on the social services, a Willink report on the health service or anything of the sort. George Isaacs and Nye Bevan did a good job, but a lot of work was done for them beforehand. They inherited the blueprints for the post-war welfare state, including the educational structure, which was based on Rab Butler's Education Act 1944, and it was built on plans that had been drawn up under Churchill's wartime Government, largely by Conservative Ministers.
  The 1944 White Paper on employment stated that one must aim simultaneously for stable prices, a high level of employment, a healthy balance of payments and an expanding economy. If one gives a particular instruction to the monetary authorities—now the Bank of England—as this Government have and tells them that they have to give a 2.5 per cent. rate of inflation overriding priority, those other three aims will all be put at risk and this Government will come to the ignominious end that I am longing to see.
  5.39 pm
  Mr. Michael J. Foster: It is perhaps in the nature of debates on a censure motion, but Ministers will be grateful to the hon. Member for Louth and Horncastle (Sir P. Tapsell), and the faces of Opposition Front Benchers show that they were not too keen to hear his relatively interesting contribution.
  The Government are hoping to achieve long-term economic stability. Businesses share that aim; they want to avoid boom and bust, with the peaks and troughs of

  55
  economic activity. I think that everyone in the House will understand the analogy of a small ship that does not want deep, heavy waves, because there might be the occasion when one rides the crest like a surfer and has super-success but, more often than not, businesses will be wiped out when the wave crashes down.
  Between 1991 and 1993, nearly 70,000 companies were liquidated: wiped out. In the same period, there were 170,000 business failures.
  Mr. Gibb: Will the hon. Gentleman comment on the Dun and Bradstreet report, published today, showing that business failures among small companies have increased by 25 per cent. under the Labour Government?
  Mr. Foster: The popularity of the new Labour Government among business people is as high as it has ever been.
  Stability in the economy is a great aid to planning. Certainty is essential when we plan long-term investment in new technology, in research and development, or even in people. That is why I welcome the news that long-term interest rates are at historically low levels. We must acknowledge the fact that there will be some variation in our economy. We are not operating in a closed economy. The essence of good government is to avoid economic shocks and destabilisation.
  The motion refers to
  "6 increases in interest rates",
  but those increases have raised the base rate only 1.5 percentage points, from 6 to 7.5 per cent. As regrettable as that may be, we should consider what happened when the Conservative Government were in charge of the economy. In one day alone, they raised interest rates first by 2 per cent., and then by a further 3 per cent. The base rate was in double figures for four consecutive years; in 1989, it peaked at 15 per cent., remaining between 13 and 15 per cent. throughout 1989 and 1990, yet Conservative Members have the brass neck to criticise the Labour Government, under whom interest rates have peaked at only 7.5 per cent.
  In Worcester, business has welcomed the new Labour Government. On our first anniversary, BBC Television came to find out what Worcester woman, Worcester man and Worcester business people thought. Mr. Noel Duffy, finance director of Dolphin Computer Systems, said how much he applauded what the Government were doing for business.
  A stable economic environment will be essential in addressing the fundamental problems that we inherited from the previous Government. The most obvious problem is that economic growth is more often than not associated with wage-push inflation. That effect is caused partly by skills shortages, as workers can bid for higher wages when they know that their skills are in demand and there is no competition from other skilled workers.
  The Government are addressing that serious supply-side problem. A Japanese-owned manufacturing tool company, Mazak, has its European headquarters in Worcester. It has great difficulty in explaining to its Japanese owners that, when it takes on new workers, productivity does not immediately go up and it takes six
  56
  months before there is any noticeable increase. That is because the workers who are being taken on do not have the skills or education standards of their German or Japanese counterparts.
  I am pleased to say that the Government are addressing such problems. The university for industry will enable people in work to train and to develop their skills, and will give access to the best possible management practice. Individual learning accounts will enable people to take the time to bring themselves up to speed with new skills. That is good for their motivation, for the business, which will benefit from greater productivity, and for the economy as a whole. The new deal will give quality training to unemployed people and bring them back into work, not only making work pay for them but making taking on workers pay for businesses.
  We have endeavoured to improve education standards across the board, with nursery provision for all four-year-olds; the pledge on small class sizes for five, six and seven-year-olds; a focus on literacy and numeracy; and encouragement for more young people to go into further and higher education. That is all absolutely essential if we are to solve the problems that we inherited.
  For many years, the economy has been troubled and unable to grow without causing the bust part of the business cycle to come into play. We intend to tackle that problem through a stable economic plan and I hope that, after 20 years of Labour government, we shall be able to look back on what will truly be a golden legacy.
  5.47 pm
  Mr. Shaun Woodward: It is incredible that the Chancellor has chosen to be elsewhere for such an important debate. That shows some contempt for Parliament, and may say a great deal to businesses that have been looking to him for leadership. Everywhere, we see signs that the economy is in severe difficulties, but he cannot be bothered to come to the House.
  Over the past few weeks, report after report, including the most recent one from the Organisation for Economic Co-operation and Development, has warned of real danger in the economy, yet the way in which the Government and their Back Benchers have responded this afternoon shows complete contempt for the warnings that have been offered. The economy is in real peril. While the Chancellor fiddles, the economy burns.
  It is an extraordinary fact that inflation has almost doubled in the past year, yet Government Members want to talk about history. The reality is that the economy requires leadership and attention today, but the Government are deaf to all pleas. Mortgage interest payments have increased by almost 30 per cent. since the Government came to power, but they are deaf to our arguments. We have seen excise duties increase by nearly 20 per cent., but Labour wants to talk about tax rises under the previous Conservative Government. We have seen dramatic increases in council tax bills, but the Government choose to ignore the consequences.
  It is hardly surprising that the result of all those increases is that wage settlements have increased. The average family must pay nearly £1,000 more a year because of the Government's tax increases, and the only way to fund that is to ask for more money. Meanwhile, the Governor of the Bank of England tells us that the economy is closer to overheating than it has been for a

  57
  long time. Do the Government pay any attention? No. They prefer to talk about history than take responsibility for dealing with the economy now.
  The Governor is not alone. Other members of the Monetary Policy Committee say the same. Soon—probably on 9 July—interest rates will rise once again. The inflation target has been missed 12 times out of 13—a pretty impressive record. Yet the Government prefer to talk about the time before they came to power instead of taking responsibility for their appalling economic choices over the past year. That is why headline inflation is up from 2.4 per cent. last April to 4.2 per cent. today.
  Mr. David Borrow: I have listened with interest to the hon. Gentleman's arguments, but my right hon. Friend the Chief Secretary said that in the Standing Committee on the Finance Bill, the Conservatives supported increases in taxation and expenditure equivalent to £6 billion. That would add £6 billion to the public sector borrowing requirement, and that is what the Conservatives supported. How does that fit in with the Governor of the Bank of England's concern that the economy is overheating? To put £6 billion more into the economy would surely add to overheating, and would add to, rather than reduce, pressure for increased interest rates.
  Mr. Woodward: The reality is that running the economy requires prudence. The Chancellor likes to borrow the language of prudence, but shows none. There are areas in which the Finance Bill should be amended, and we shall debate them over the next two days. However, the action that should have been taken by the Chancellor—the United Kingdom's Chancellor, alas—has not been taken. He pretends to be an iron Chancellor, but he is in reality in the vein of old Labour Chancellors. He wants to spend, spend, spend.
  The UK faces two futures. In the first, and better, our economy will soon give way to a very hard landing. In the other, more worrying scenario, which we can read about in every newspaper and every forecast, our economy is on course for recession. In either case, there will be a downturn, and that is bad news for Britain. Both scenarios were created in Downing street by the Chancellor's poor choices and bad judgment. He may not want to be here today, but they are his fault, arising from his decisions, for which he must bear responsibility. The Chancellor does nothing but allow the economy to slide into downturn or recession.
  Mr. Borrow: Will the hon. Gentleman give way?
  Mr. Woodward: I shall not. I have given way once to the hon. Gentleman. If he wishes to make a speech, the House will look forward to hearing from him.
  The Chancellor wants to wear the clothes of prudence, and wanders round the country telling us how prudent he is. In truth, however, he is about to set off on a huge spending bonanza that every commentator says should not happen. Soon, the Chancellor will preside over public spending of nearly £1 billion a day, and it will be upward from there. Why does he claim prudence? Why not admit to being a giveaway Chancellor? He has been dazzled by his legacy, and by the tax revenues that he has received. In February, he let himself believe, from what his Treasury
  58
  officials said, that his Budget would balance. In true Labour speak, with the help of the spin doctors, out he went to claim that that was all his doing because of his prudence.
  As the Chancellor has claimed to be prudent in the past, he must accept responsibility now for what he has done. Consumer spending has been, and remains, out of control. The march of consumer spending has been closely followed by a battalion of pay rises. If the Chancellor had asked what had really gone wrong with the economy, and what was the real reason why tax revenues were going up, he would have learnt that they were consequences of the market's marching ahead, and had nothing to do with him. The economy is overheating, and it has been for a long time. He has refused to take the right action. He should have reined expenditure in, but he is about to let it go. The economy is overheating, and the Chancellor is in the kitchen stoking up the flames.
  Monetary policy can, of course, be used to rein in the economy, but the consequence will be higher interest rates. Tell that to a single person in manufacturing, exports or farming, the people who suffer the consequences of the Government's disastrous interest rate policy. The Chancellor claimed that he would end boom and bust, but he inherited a boom and the evidence suggests that he is taking Britain towards being bust. Our balance of payments plunged into the red for the first three months of this year; after a year and a half of surpluses, the deficit for the first three months of 1998 was £3.2 billion. Is that prudent? Of course not. The trade deficit has widened by £500 million, and our exports are falling. Earnings from Britain's stock of overseas assets have declined by £600 million.
  The Government seem complacent. They tell us about history, and will not accept responsibility for their policies of the past 14 months, which are driving Britain headlong towards recession. Industries, businesses and farmers are going bust, but the Government arrogantly deny that anything needs to be done. They pretend that everything is fine. The consumer boom continues, not funded by exports as our recovery was, but because spending is being funded by a massive plundering of savings. To the left of him, to the right of him, in front of him and behind, the Chancellor is surrounded by people who say that the economy is in trouble. Yet he cannot be bothered to come to the House to answer legitimate questions.
  The Chief Secretary has shown the same contempt for what we say, but what we say is what others are reporting all over the country. The latest evidence from the OECD warns that rising inflation, tight labour market conditions and upward pressure on earnings will mean a bumpy landing and a "serious challenge". Where is the leadership from the Chief Secretary, which would show that the Government take that challenge seriously, or even that they recognise it? All we hear from Government Back Benchers is what they read on their pagers, readings that tell them that everything is fine.
  The hon. Member for Worcester (Mr. Foster) talked about businesses in the midlands doing well, but today's Dun and Bradstreet report shows that all is not well. Perhaps the hon. Gentleman would do well to learn from the mistakes that were made by the Conservatives when we were in government. It is vital to listen to businesses on their problems, and businesses are screaming with the pain of the Labour Government's policies.

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  The truth is that, as the Financial Times said, Britain is stumbling towards recession. The reality is there to be seen if people are prepared to look, but the Government continue to paint another picture. They talk about getting rid of boom and bust, but they are the ones bringing back the bust to this country. As my right hon. Friend the Member for Horsham (Mr. Maude) said, the spin doctors tell them that if the mantra is rehearsed often enough, people will come to believe it. The problem is that the same people will soon join the unemployed. This month, for the first time in years, the number of unemployment benefit claimants rose. It rose because of this Government's policies. It is the fault of the Chancellor and the Government. If they believe that soundbites are a substitute for policies, this country will come undone.
  Mr. Geraint Davies: The number of claimants rose by 1,000 in May, but it went down by 35,000 in the quarter to May. In the first quarter of this year, business investment went up 10 per cent. and the annualised growth rate was 2.9 per cent. against a trend rate of 2 per cent. Things are growing; people are investing. We are in a boom and things are looking good. There is pressure in the labour market because people are getting jobs. That is not a recession but success.
  Mr. Woodward: I am grateful for that intervention. As every newspaper points out, under the new way in which the Government wish to calculate the unemployment figures, one could argue that this month was as good as the previous one. Under every other method of calculation, more people are losing jobs than for years. That will not be assisted by the minimum wage, which the Government introduced for perfectly honourable reasons. No one wants people to live in bad conditions. A minimum income yes, but a minimum wage is a guaranteed route, as shown by what has happened elsewhere in the world, to throwing people on to the unemployment scrap heap. That is not the right way forward for a prudent Chancellor. When the Government took power from the Conservative party last year, they inherited falling interest rates,falling unemployment and falling inflation, yet today they are rising. If the hon. Gentleman seriously thinks that the economy can be in a better condition because of those appalling reversals in our economy, he should think again.
  What will happen when the impact of the problems in the Asian market starts to hit this country at the end of the year? Presumably the Chancellor will blame someone else, because he believes that it is always someone else's fault. The Chancellor and the Government must learn what the Conservative party learned painfully last year. Ultimately, when they are in No. 10, they are in charge. The Government must recognise that they must take responsibility. It is a reckless Government who continue, as do this Government, not to recognise the signs of economic disaster, yet the Chancellor refuses to face the problems.
  Mr. Beard: If there is such havoc in the economy, why do the international markets demonstrate such confidence in the Government and their policies that the pound has risen since the day they took office?
  Mr. Woodward: That intervention is extraordinary. The reality is simple. If one continues to push up interest
  60
  rates in the way that the Government have allowed policy to be prosecuted, the pound will rise. The consequence for manufacturing, farming and the service sector, which is beginning to suffer, is disaster. If the hon. Gentleman went around the country and heard people's worries, he would learn that the so-called encouragement of investment because of high interest rates is not so good for Britain. That is what we are talking about: the right thing to do for Britain.
  Only last week, the Financial Times reviewed the Government's policy and said:
  "The economy lies stranded in treacherous territory. Every indicator…says that the business cycle cannot be wished away."
  However, the Government believe that if they practise the mantra of the day, it can be wished away. While the Government continue to believe in spin doctoring as a substitute for policy, Britain moves from a possible to a probable recession.
  The Chancellor says that he wants a strong, competitive pound. He has a strong pound, but it is not competitive. Ask anyone in manufacturing or business whether they believe that sterling at its current level is the right thing for Britain and they will say no. The villain of the piece may be sterling, but the father of the villain is the Chancellor. He may wish that long-term policy frameworks could banish short-term problems. An independent Bank might allow him to lay the blame for high interest rates elsewhere today, but tomorrow the country will blame him. The sums show that Britain is teetering on the edge of a serious recession. The party is over.
  Mr. Beard: The Conservative party.
  Mr. Woodward: It does not behove the hon. Gentleman to say that. It shows ruthless disregard for the evidence. It is not our evidence, but that of every commentator. Labour Back Benchers fail seriously to address what people who have worked in business say. Most Labour Members have pursued honourable professions, but few have worked in or run a business. That lack of experience is beginning to tell in the way that they run the economy.
  Tomorrow, Britain will face real problems. Inflation is at its highest level in six years. On 9 July, interest rates may rise again. The Government continue to be complacent. The Chancellor goes elsewhere and pursues his interest in Europe. That is fine, but the problem is that Britain still needs to be run by its national Parliament here. His absence is serious and shows utter contempt for running the economy in a responsible, proper way.
  While Rome burns, the senators of this Government are at play, spending here and there and clocking up their new plans for the future. It is totally irresponsible, given the condition of the economy. Ultimately, Britain will pay, and pay heavily. The next rise in interest rates will force all those who have to borrow to pay even more dearly.
  Next year, two futures lie ahead. Either the Chancellor will be here telling us about his package of cuts and postponements or he will not be here at all. To save his own skin, the Prime Minister, a man who likes to be characterised as tough on crime, tough on the causes of crime, will find the villain of this crime. The Chancellor may find that he has different responsibilities.
  6.7 pm
  Mr. Christopher Leslie: I am glad to follow a speech so full of bonhomie, wit and joviality. It was interesting to hear an attack on the Government, because attacks have been conspicuous by their absence so far.
  I have listened carefully to the debate. The shadow Chancellor, who is not in his place, did not get to grips with what is going on. His main beef seemed to be the absence of the Chancellor. As we are debating a motion in the name of the Leader of the Opposition, perhaps it is important that he is not here. Where is he? That is equally pertinent. What a flagrant abuse of democracy. What contempt for the House of Commons.
  Mr. Heathcoat-Amory: On reflection, the hon. Gentleman may want to apologise for what he has just said—or perhaps he is embarrassing himself by not knowing that the Leader of the Opposition is in hospital.
  Mr. Leslie: I did not realise that. Of course I apologise if the right hon. Gentleman is indeed incapacitated, but the deputy leader of the Conservative party has also signed the motion and he is not here either. Lots of people who signed motions today are not here, so it is a little hypocritical to start criticising others for their absence.
  This idea of a golden legacy is a wonderful piece of revisionism—the rewriting of history. Some golden legacy it was: interest rates at 15 per cent., inflation at 10 per cent., public sector borrowing and national debt costing, because they doubled in six years, £25 billion in interest payments—[Interruption.] The Tories do not like to hear about that—which is intriguing—but the public know it.
  The Conservatives seem not to realise that they lost the election because of their abysmal failure to manage the economy. People looked at their claim to a golden economic legacy and laughed at it.
  Mr. Gibb: The hon. Gentleman mentioned revisionism. What did the leader of the Labour party mean when he said, in 1996 during the lead-up to the election, Labour had no plans to raise taxes?
  Mr. Leslie: The hon. Gentleman knows full well that the Labour manifesto set out my party's plans and policies on taxation and spending in black and white, whereupon we were elected by an overwhelming majority. We are keeping every single one of our pledges—a concept with which the hon. Gentleman is unfamiliar. That is why his party lost the election: it could not keep its promises, meagre though they were.
  It has been interesting to see, in the Standing Committee scrutinising the Finance Bill, the amendments the Conservatives have tabled. As we have heard, they do not deny that they were going to abolish mortgage interest tax relief—earlier, my right hon. Friend the Chief Secretary hammered that point home. We have also seen in Committee the Tories committing themselves to reducing public sector income by astronomical amounts. Where would they find the savings? From putting up taxes—even income tax? From cutting vital public services? Or from adding to the national debt?
  Taken together, Conservative amendments proposed in the Standing Committee amount to a staggering £5.8 billion in reduced spending. With their proposed
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  amendment to the social security bill of £1.5 billion and their commitment to abolish capital gains tax, at a cost of £1.3 billion, they would leave an £8.5 billion black hole in the national finances and wipe out the public sector debt repayment that the Chancellor has proposed for 1999–2000.
  Mr. Borrow: Does my hon. Friend agree that if we followed the advice of the Conservative party and increased the public sector borrowing requirement by as much as £8 billion, we would only repeat the mistake made by the Chancellor of 10 years ago—a mistake that led to the boom of the late 1980s and the bust of the early 1990s?
  Mr. Leslie: My hon. Friend is correct. It is clear that the Conservative party has learnt nothing from its defeat as it continues to table profligate amendments to the Finance Bill, espousing reductions in tobacco tax and bingo tax, for instance. The Tories have not as yet proposed any reductions in income tax—it will be interesting to see whether they do. We want to know where all the money will come from.
  Mr. Gibb: There is a limit to how much one can stand of this nonsense. It is the Labour Government who have raised taxes although they said before the election that they could fund all their spending programmes by reducing spending on social security. The fact is that they are spending a mammoth amount more on social security, not cutting it. When will the hon. Gentleman apologise for misleading the public during the election about how Labour would fund its spending pledges?
  Mr. Leslie: That was a brave attempt by a stalwart member of the Finance Bill Standing Committee to defend ill-thought-out Conservative amendments. He deserves full marks for trying. The hon. Gentleman should know that the Government are reducing the welfare sector's consumption of public money over the lifetime of this Parliament by means of initiatives such as the working families tax credit and welfare to work, which will take people off benefit and into work, thereby reducing social security expenditure. It is that sort of fiscal prudence which will ensure sound long-term public sector finances.
  Mr. Woodward: Does the hon. Gentleman think that all the reports being written about Britain heading for a probable recession are wrong?
  Mr. Leslie: The hon. Gentleman's reading glasses are obviously tinted a certain shade of blue. Not all the reports predict such doom and gloom. The Chancellor has done a remarkable job of striking the right balance between the sort of depression and recession being experienced by Singapore, Indonesia and Korea—in the space of one year their economies have shrunk by between 8 and 20 per cent.—and the enormous rates of growth, perhaps unsustainably high, in America.
  Mr. Loughton: Why is a booming economy in America not a problem for inflation there, whereas in this country, uniquely, inflation is rising and has hit 4.2 per cent; indeed, the underlying rate is well above the Chancellor's target? How does the hon. Gentleman explain that dichotomy?
  Mr. Leslie: Perhaps it has something to do with the national minimum wage in America. Perhaps we need to

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  look into how the Americans operate it in such a way that their inflation stays low. It proves, at any rate, that it is not impossible to combine a minimum wage and low inflation.
  I want to reiterate a point I made earlier about the Liberal Democrats' spending commitments. The hon. Member for Gordon (Mr. Bruce) did not deny the Liberals' commitment, made in the Finance Bill Standing Committee, to a policy of, effectively, an extra 8p on income tax. That derives from the £17.5 billion involved in equalising the personal income tax and capital gains tax allowances.
  Mr. Edward Davey: The hon. Gentleman pulls his fantasy claims out of the air, but fails to explain his party's policies or what they would cost. For example, the Chancellor is on record as proposing a 10p income tax rate. If that were introduced tomorrow, it would cost billions.
  Mr. Leslie: I am sure that any proposals the Chancellor introduces will be fully funded and costed, just like all the other Government proposals so far. The hon. Gentleman said:
  "We should consider making the income tax allowance and the CGT allowance the same…In the next few weeks and months, my party will put on record the cost of our proposals for an increased income tax allowance."—[Official Report, Standing Committee E, 16 June 1998; c. 799.]
  We await that announcement with bated breath. I look forward to hearing how the Liberal Democrats propose to fund their commitments—it always appears easy for them to spend, spend, spend in a way that the Conservative party is learning to do, but they never say where the money will come from and that is what we need to hear. A bit more responsibility from Opposition Members would not go amiss.
  On fiscal policy, it is important to highlight the way in which the Government have been working towards reducing the national debt and the public sector borrowing requirement, so ensuring that that burden around the necks of taxpayers is reduced. The hon. Member for Louth and Horncastle (Sir P. Tapsell) claims to be a Keynesian; I wonder what Keynes would have to say about the astronomic levels of national debt created by the Conservative Government. I was interested to hear Opposition Members' rather contradictory arguments on that point.
  Sir Peter Tapsell: Keynes was in favour of deficit financing during a recession.
  Mr. Leslie: And, boy, we certainly had recessions—not just one, but two. We are glad that the hon. Gentleman has reminded us of that.
  I also want to highlight the way in which the Government have chosen to prioritise capital and infrastructure investment. That announcement, made in the past few weeks, has not yet been fully appreciated: the state—the great oil tanker—has begun to be turned around. Year on year, taxpayers' money was consumed at the expense of investment in capital infrastructure in schools, hospitals and transport networks.
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  Capital infrastructure helps to improve the quality of the economy and helps business by ensuring that we have long-term infrastructure available throughout the economy to support the industrial capacity we need for future generations. The Government's well-placed policies to give tax breaks through the working families tax credit and the lowest ever corporation tax rate are also welcome; and the acclaim with which many in the business community have greeted the Government's policies has been alluded to.
  In monetary policy, the Government have struck the right balance by depoliticising interest rates and passing decisions to the Monetary Policy Committee of the Bank of England.
  Mr. David Ruffley: Before the hon. Gentleman reaches the end of his list, will he explain why, under the Chancellor's economic stewardship, the savings ratio has fallen from 12.7 per cent. in the second quarter of 1997 to 9.1 per cent. in the first quarter of this year?
  Mr. Leslie: The hon. Gentleman was not listening to me—it might be useful if he made his own speech. My point in respect of monetary policy relates to the depoliticisation of interest rate decisions and their removal from the scope of political intervention of the sort seen under the Conservatives. In the run-up to the election, they took great risks with the economy at the expense of long-term investment in their attempt to front-load the economy and make it appear as sweet as possible to the electorate. They failed abysmally and, as a consequence, the new Labour Government had to clear up the mess they left.
  Mr. Geraint Davies: Does my hon. Friend agree that the reduction in the savings rate is a symptom of a buoyancy and confidence in the economy which, as the motion tells us, we last saw in 1990, during the boom years of the Lawson era? It is a symptom of confidence and it is not necessarily linked with tax changes, as has been spuriously argued.
  Mr. Leslie: That is right. Commentators have talked about consumer confidence.
  Mr. Loughton: Given the hon. Gentleman's comments about how right it is that the House is no longer in charge of setting interest rates, will he applaud the Bank of England if, on 9 July, it puts up interest rates for the seventh time, with the result that mortgage rates rise for many of his constituents and mine?
  Mr. Leslie: The hon. Gentleman falls into the trap of the previous Government. Politicians have always tried to make decisions about technical and important economic indices, but I prefer to leave such matters to the intelligent and informed views of the members of the Monetary Policy Committee of the Bank of England, who are in a far better position to take such decisions than I am as a politician.
  The hon. Gentleman likes to think of himself as an expert on such matters—I am sure that his ambition is to be Chancellor one day. He has been impressive as a member of the Finance Bill Standing Committee, making many long and intricate speeches—and he certainly has

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  the braces for the role. I am sure that the country prefers experts to make decisions on such important matters, and the Chancellor's depoliticisation of monetary policy has been widely acclaimed. However, it is not wholly outside the realm of the Government to influence monetary policy; it is important that we deal with inflation and try to achieve targets when and where we can.
  Something that has disappointed me most as Member of Parliament for a Yorkshire constituency is the ridiculous boardroom excesses of companies such as Yorkshire Water. This week, the board of directors of Yorkshire Water awarded themselves a 30 per cent. pay rise. Kevin Bond, the chief executive, has, in one year, awarded himself a 69 per cent. increase in salary, taking it to £298,000. The salaries of the board of directors now total almost £1 million, with increases of 69 per cent. at the helm and 30 per cent. as a whole—but what are they going to say to Yorkshire Water's employees when they come seeking pay increases for the new year? Are the directors going to tell the employees that they are not important? Are they going to give them 30 or 69 per cent. pay increases? It will be interesting to see what they do. It is vital that company directors across the country act responsibly, recognise that they must set an example and show pay restraint.
  Mr. Woodward: As the hon. Gentleman has such high moral views on the subject, will he comment on the remarks made earlier today by my right hon. Friend the Member for Horsham (Mr. Maude)? Having castigated those involved in the water industry, what is his response to Mr. Gavyn Davies's reaping a £16 million benefit from changes that the Labour Government have made to capital gains tax? Does the hon. Gentleman applaud Mr. Davies for doing that, or does he think that he should hand the money back, as he would have those working in the water industry do?
  Mr. Leslie: The hon. Gentleman lists in the Register of Members' Interests a shareholding in Sainsbury and, although he might no longer do so, the shadow Chancellor, the right hon. Member for Horsham (Mr. Maude), has declared a directorship in Asda. I should be interested to know what were the pay awards to the directors of those companies. [HON. MEMBERS: "Answer."] Perhaps the shadow Chancellor will tell us what pay was awarded to him as a director of Asda—
  Mr. Woodward: The hon. Gentleman cannot answer my question.
  Mr. Leslie: It would be interesting to discover whether the award was within the inflation target or above it. [Interruption.]
  Mr. Deputy Speaker (Mr. Michael J. Martin): Order. We should not have all this noise.
  Mr. Leslie: Thank you, Mr. Deputy Speaker. It is important that company directors set an example by showing restraint. The same applies to all people in a position of responsibility.
  Throughout today's debate, we have watched an Opposition who have not got their act together. They attack the Government for not spending enough in some respects, but say that we spend, spend, spend in others. It
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  is difficult to know whom we should believe. We have had an interesting look at the history of the Conservative party in office, and the House has been reminded of the exchange rate mechanism debacle. That has been very instructive in reminding us of the mess that the Conservative party created. It is clear that the legacy that it calls golden is an outrageous, appalling mess, and it is left to us to help to clear up the problem and put the economy on a sound footing, ensuring that we focus on the long-term interests of the people and businesses of the country.
  6.29 pm
  Mr. David Heathcoat-Amory: In this debate, Government Members, particularly the Chief Secretary to the Treasury, have talked about every period of economic history except the past year. They were willing to debate every policy except their own. It seems that, after only a year, Labour Members are already terrified about talking about what the new Government have done. We can understand their embarrassment, but it does not excuse the failure of the Chancellor of the Exchequer to answer the debate or at least be present to answer for his policies.
  We understand the Chancellor's discomfort, because he has created two economies in this country. We heard in the debate about the boom economy affecting the City, the service sector and consumer expenditure, but there is another economy for manufacturing and exporting, which is going into recession. That ought to worry Government Members. Instead of making platitudinous remarks about how everything is wonderful in their constituencies, they should start to take note of the letters that we know they are receiving from businesses in their constituencies which tell a different story.
  We know that Labour Members are receiving those letters because businesses have begun to copy them to Conservative Members on the Standing Committee on the Finance Bill. My hon. Friends will confirm that we are receiving letters from businesses exasperated by the failure of Labour members of the Committee to speak up about the gathering recession in their constituencies.
  Mr. Woodward: Does my right hon. Friend agree that it was extraordinary during the Committee stage of the Finance Bill that Government Back Benchers had letters from their constituents that were copied to Conservative Members, but they consistently failed even once to speak on behalf of their constituents and simply allowed themselves to be railroaded by the Government Whips?
  Mr. Heathcoat-Amory: My hon. Friend was a member of that Committee, and he knows that the Forum of Private Business copied to us letters written by businesses represented by Labour Members, who were entirely silent about the difficulties that those businesses faced as a result of tax increases. It was up to us, as it always will be, to defend the interests of working Britain.
  The reason for that distortion and the two economies that the Government have created is that this country has not one economic policy, but two. Indeed, one could almost say that we have two Chancellors, or a single Chancellor in two disguises. One Chancellor is panicked

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  by the broken promises on waiting lists and class sizes into reverting to the tax and spend policies that Labour Chancellors always follow.
  Mr. Geraint Davies: Will the right hon. Gentleman give way?
  Mr. Heathcoat-Amory: If the hon. Gentleman will forgive me, I will complete this point.
  The other Chancellor is a stern monetarist. He is in favour of higher interest rates, a tightening of monetary policy and suppression of wage rises. However, that policy is not working, for the reasons so well outlined by my hon. Friend the Member for Louth and Horncastle (Sir P. Tapsell) in a notable speech. He showed that one cannot have a sensible economic policy that pulls in two directions. There is a mismatch between monetary and fiscal policy, which we pointed out last year and which is causing damage.
  The mistakes were first made almost exactly a year ago in the Government's first Budget, in which they broke all their promises on tax, as has been amply demonstrated. The average family are now enduring an extra burden on their budget of £981 a year because of the tax and mortgage increases that they have suffered. However, not only have there been 17 tax increases, but the Chancellor deliberately took the opportunity to target savings. He carried out a £5 billion a year raid on pension funds, which is exactly what the economy did not need. The economic damage will be with us for many years.
  Mr. Beard: The right hon. Gentleman made the charge, which has so often been repeated, that the abolition of advance corporation tax was a hit on pension funds. The aim was to give an incentive for profits to be put into investment and research and development rather than distributed, so that the economy would be put on a proper foundation. Nothing could demonstrate more the difference in economic policy between Conservative and Labour Members. We are concerned about the real economy, and Conservative Members' sole concern is manipulating money.
  Mr. Heathcoat-Amory: The hon. Gentleman makes that remark from the comfort of a protected parliamentary pension scheme. That sophistry does not go down well with the millions of pensioners and contributors to pension funds, all of whom know perfectly well that there was a £5 billion a year hit on their savings by a Government whose rhetoric was all about the need to build up long-term savings and increase personal self-reliance. They will never again trust the Government on savings. My economic point is that that is exactly what the economy needed least.
  One does not need to be an economist to know that if one taxes savings, there will be less savings. The Government figures support that. I hope that the hon. Member for Bexleyheath and Crayford (Mr. Beard) will at least heed the Chancellor's Budget statement. Page 91 clearly shows that the savings ratio is due to fall this year, next year and even further the following year. Instead of building up savings, the Chancellor is predicting that there will be a further drop in savings. He has made that worse
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  with his botched attack on TESSAs and PEPs—the most successful savings vehicles of all time—which the Government are simply abolishing.
  The Bank of England is now left with the job of salvaging something from the anti-inflation strategy. Its only response can be to put up interest rates, which it has had to do again and again. There have been six rises since the general election. The Bank is now required by statute law to give overriding priority to the Government's inflation target, which is being missed month after month. Policy will not work as long as there is a mismatch between the tax and spend policies of the Treasury and the monetary policy enforced by the Bank of England.
  That tale of two economic policies gets worse.
  Mr. Geraint Davies: Will the right hon. Gentleman give way?
  Mr. Heathcoat-Amory: If the hon. Gentleman will forgive me, I will not give way, because I am conscious of the time.
  A new chapter has been opened in that tale of mismatch. Two weeks ago, the Chancellor announced a dramatic further loosening of expenditure policy. Expenditure is now due to rise by at least 2.75 per cent. above inflation each and every year. The rise is greater if all the fiddles and changed definitions are added in—a point which my hon. Friend the Member for Witney (Mr. Woodward) made well in his speech.
  What is particularly shocking is that the Bank of England, which is supposed to be in charge of counter-inflation policy, was not even told of that development. The Governor said rather lamely that he had been informed by the Treasury that nothing in the Chancellor's statement would affect the economy for two years. That is untrue—the Governor was misled. The brakes come off expenditure from 1 April next year. Either the Treasury representative on the Monetary Policy Committee was kept in the dark or he failed to inform the Bank of England about what the Chancellor had in mind.
  Frankly, there is already enough confusion about interest rates, without this further failure to co-ordinate monetary and fiscal policy. We already know that, at its May meeting, the MPC voted 7:1 against raising interest rates, but in June it raised interest rates. Now, the Governor of the Bank of England has signalled a further increase. The Bank of England is not to blame. It has been given an impossible task—trying to make sense of the Government's economic policy, which is muddled and contradictory.
  There have been two economic policies, one pursued by the Treasury and the other by the Bank. That has created two economies, one in boom and the other in bust. The Government's achievement is that they have done both at the same time. That is why the inflation target is being missed month after month. The Chancellor's only response is to blame firms for paying workers too much— and that from a Government who are trying to intervene in the labour market to get those same firms to pay other workers more.
  In the non-boom parts of the economy, it is an entirely different story, as I am sure Labour Members truly know. Unemployment is rising, and there is a yawning and growing balance of payments deficit. Bankruptcies are up 10 per cent. in this quarter over the last quarter,

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  and investment is down. Again, Labour Members only have to read their Chancellor's statements on investment. We have heard a great deal about the need for investment, but I refer hon. Members to page 94 of the Red Book, which shows that investment in the whole economy is falling this year compared to last, is due to fall again next year and is due to fall even further in the year after. With business investment, the fall is even steeper.
  If Labour Members do not believe the Treasury's statistics, I refer them to Goldman Sachs, which said in its recent circular that
  "the rise in net capital spending to 1.4 per cent. of GDP by the year 2001/02 is less than the average of 1.6 per cent. of GDP achieved during the last Parliament."
  After all the huffing and puffing, future investment will be less than we achieved in the last Parliament.
  It is not just the economy today that is going wrong; the Government are storing up problems for the rest of this Parliament. I believe that, in their hearts, Labour Members believe that. That is why, in the debate, they have talked about everything except the past year. Apart from the feeble attempts to justify their record in their constituencies, their bleepers have quite clearly told them, "Keep off the economy."
  I am sure that both sides of the House know—certainly the country does—that the Government inherited the strongest economy in Europe, with steady growth, stable inflation and falling unemployment, all confirmed by the statistics. It took considerable determination by the Chancellor to mess up that legacy, but he has done it in less than a year. He has done it through a series of policy mistakes, all of them preventable and all of them pointed out to him at the time. All our warnings have turned out to be true.
  Hon. Members who served on the Finance Bill Committee will remember one particular moment when it was shown, again by their constituents, that the abolition of retirement relief and its replacement by a highly complex and probably unworkable system of tapering capital gains tax was highly regressive. It is all very well if one is a partner in Goldman Sachs and enriched by, it is estimated, £16 million simply by one clause in the Finance Bill£but it is not quite so rosy for small entrepreneurs planning for retirement, especially as they would have had to pay no capital gains tax under the Conservative Government's provisions.
  The reality is always different from the rhetoric. The reality is that the Finance Bill that we will be discussing tomorrow and the next day is in practice highly regressive. It was an interesting glimpse of new Labour priorities that the Government make the rich very rich and the smaller entrepreneurs—
  Mr. Leslie: No, we did not.
  Mr. Heathcoat-Amory: Yes, the Government did. The hon. Gentleman voted for this regressive provision and he will be getting letters from small businesses in his constituency. If he wants anything done about them, all he has to do is pass them over to us.
  The golden economic legacy has turned into a boom-bust economic derailment. It is not surprising that the Chancellor has chosen to address a committee of the European Parliament rather than defend his policies in this House. That is a disgraceful affront to the privileges and
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  rights of the House—but, in his absence, we judge him and, in our motion, we condemn him. I invite the House to vote for that motion.
  6.45 pm
  The Economic Secretary to the Treasury (Mrs. Helen Liddell): I deeply regret that my right hon. Friend the Chancellor is not present this afternoon, because he could not possibly believe just how bad the Opposition have been. The debate had made being savaged by a dead sheep seem like a stimulating experience.
  The right hon. Member for Horsham (Mr. Maude) began his attack on the Government's economic policy by saying that my right hon. Friend the Chancellor was addressing a committee of the European Parliament. As my right hon. Friend the Chief Secretary pointed out, there is a Pavlovian response from Conservative Members at the mere mention of the word "Europe". What galls them even more is that, after 14 months in government, Britain at last has a respectable position in Europe. The Government are acknowledged by the British people to be carrying out their responsibilities in Europe. It is a measure of the extent to which this country was undermined by the previous Government that we had a beef ban.
  The Opposition are thoroughly ashamed of their record; otherwise, why would they be so frightened of our going back over their record of 18 years in government? I can tell hon. Members who are new to the House that, in 1997, the previous Government were very fond of casting minds back to 1979. Is it not interesting that they were prepared to count back 18 years, but object to our counting back 18 months. We have to live with the consequences of their economic incompetence, which was so graphically exposed by my hon. Friends earlier.
  Mr. Tyrie rose—
  Mrs. Liddell: I will come to the hon. Gentleman later. After all, he is giving seminars to his Front Bench on whether the public finances are sound.
  It is no wonder that hon. Gentlemen and hon. Ladies—in fact, no hon. Ladies took part in the debate; perhaps they have too much good sense in these matters—are ashamed of the previous Government's record. We have only to look at their performance: whole economy investment fell by 16 per cent. from its 1989 peak to its 1993 trough; business investment fell by 20 per cent. from 1989 to 1993; manufacturing investment fell by 27.7 per cent.; labour force survey unemployment rose by almost 1 million, but they laughed at rising unemployment—[Interruption.]
  Mr. Deputy Speaker: Order. The House must come to order. We cannot have conversations all over the Chamber. The hon. Lady should be heard.
  Mrs. Liddell: Thank you, Mr. Deputy Speaker. I am not surprised that Conservative Members do not want to hear about their record in government. It was a shameful record. Indeed, it is clear from some of the performances that they have learnt nothing from the arrogance of their years in government. They should have come to the House tonight and apologised for the state in which they left the

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  economy. They talk about the golden legacy, but it is fool's gold. We are now having to deal with an economy that has inherent structural problems caused by the incompetence of the previous Government.
  Talk of a golden legacy is nonsense. Thanks to the boom-bust policies of the Conservative party—policies which have damaged growth, held back investment and cost jobs—in the past 20 years we have had the two deepest recessions, and one of the largest booms, since the war. We must set the economy to rights, because it affects ordinary people.
  Let us consider some of the structural problems that have been caused by the performance of the Conservative party. Productive investment has fallen. We badly need to boost productivity in our economy, for the simple reason that, from day one of the Conservative Government in 1979, government was characterised by short-termism and a lack of attention to the fundamentals of the economy.
  Mr. Tyrie: By how much did the British economy grow under the last Labour Government, and by how much did the British economy grow, on average, during the 18 years of Conservative rule?
  Mrs. Liddell: I thought that we were not supposed to look back. The last Labour Government was 18 years ago, and we are now setting right the errors of the Conservative Government. [Interruption.] As Conservative Members want me to talk about the Labour Government's performance, I am happy to do so. Gross domestic product growth in the first quarter of 1998—[Interruption.]
  Mr. Deputy Speaker: Order. I do not expect anyone to shout at the hon. Lady while she is speaking.
  Mrs. Liddell: Thank you, Mr. Deputy Speaker. Shouting is usually the way in which Conservative Members try to get through these arguments; they want to introduce irrelevancies because they do not want to talk about facts.
  Mr. Maude: If productivity and investment are so important, why do Government figures show that productivity, which was rising, is now falling, and why does the Red Book show business investment falling consistently in future years?
  Mrs. Liddell: Perhaps the right hon. Gentleman should have another seminar from his hon. Friend the Member for Chichester (Mr. Tyrie) about the impact on productivity of the previous Government's performance. There is a fundamental requirement to make basic structural changes in the economy. Structural changes are about improving education and skills, and about putting back to work people whom the previous Government abandoned on the dole queue. From their patrician standpoint, the Conservatives do not care about the ordinary people who were thrown on the scrap-heap by their policies. Labour Members lived daily with the consequences of their economic performance.
  Less than two years into a Labour Government, GDP growth in the first quarter of 1998 was 3 per cent. higher than a year earlier. Whole-economy investment in the first
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  quarter of 1998 was up 8.6 per cent. on a year earlier. Over the same period, business investment was up 10 per cent. In March, employment was up 429,000 on a year earlier. The International Labour Organisation figure for unemployment in April was 264,000 lower than a year earlier.
  Conservative Members do not like those facts; they have gone quiet because they cannot deny the impact that we have had on the economy. With our long-term policies, we shall restructure the economic policies and economic performance of the country. We want to do that partly because we want to ensure that the people of the country enjoy a much better life style.
  There was an interesting vignette as the Chief Secretary was talking about the national health service. This is a week of extreme importance to Labour Members, as we mark the 50th anniversary of the national health service. Fifty years ago, the Conservative party opposed that national health service. During earlier exchanges, my right hon. Friend pointed out that the shadow Chancellor had said that the national health service—and the welfare state—was responsible for a downturn in private provision of medical services. Yes, it was—and thank goodness, because, where I come from, before there was a national health service, young and old people died. Day in, day out, we lived with the consequences of the objections that the Conservative party has to public funding of the health service.
  In 1998, the Government are proud of the national health service, and our policies are designed to ensure that we will maintain—[Interruption.]
  Mr. Deputy Speaker: Order. I have already appealed to the House to come to order.
  Mrs. Liddell: That noise was a measure of the contempt that Conservative Members have for the national health service and for ordinary people.
  I shall discuss some of the arguments that have been made.
  Mr. Owen Paterson: Will the Minister give way?
  Mrs. Liddell: No; I want to make progress.
  The shadow Chancellor failed to take into account his hon. Friends' performance in the Committee of the Finance Bill. They utterly failed to acknowledge the responsibilities of a responsible Opposition. Conservative Members, who cannot even decide whether they support higher public expenditure, would have spent £6 billion more than the Government.
  In the seminar provided for the shadow Chancellor, he could not make up his mind whether the country's finances were in a good position. He has yet to respond to the challenge that the Chief Secretary made to him about MIRAS. As Financial Secretary to the Treasury, the right hon. Gentleman condemned mortgage interest rate relief. He repeatedly refuses to address the key issues for the people of this country.
  I am grateful for some of the things that the hon. Member for Gordon (Mr. Bruce) said in recognition of Government economic policy, but we differ on some points. Listening to his colleagues' performance, in the

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  Committee on the Finance Bill and elsewhere, one would conclude that they want £17 billion of additional expenditure. They know how to spend, but not how to tax. The hon. Gentleman asks us for fiscal tightening when the Government are tightening the economy by 2.75 per cent. and yet, whenever we introduce a measure requiring fiscal tightening, the hon. Gentleman's colleagues vote against it. He must decide which side he is on.
  Mr. Malcolm Bruce: On many occasions we have supported—as did the Conservative party—fiscal tightening, especially on anti-avoidance measures.
  Mrs. Liddell: What about all the other measures? The hon. Gentleman wants reports to Parliament; he wants to delay implementation of measures that the Government have introduced for fiscal tightening.
  If we study Conservative Members' performance during the passage of the Finance Bill, we see an Opposition who do not even know how to oppose. As a Government, they did not know how to govern; as an Opposition, they do not know how to oppose. They are as useless as an Opposition as they were as a Government.
  Mr. Paterson: Will the Minister give way?
  Mrs. Liddell: No; I will not. In the debate, there were a number of—[Interruption.] The hon. Gentleman has not even been in the Chamber all day. At one point, there were only five Opposition Members in the Chamber, two of whom were from the other Opposition parties. Indeed, I began to think that something might be going on elsewhere in the House.
  My hon. Friend the Member for Warrington, South (Ms Southworth) made sound points about Conservative Members' performance. She made the telling point that 1,000 homes a week were being repossessed as a consequence of Conservative policies.
  Mr. Alasdair Morgan: The hon. Lady should not criticise the Conservatives, as the current Government are in danger of emulating them. In the past year, in Scotland, house repossessions have increased by 16 per cent., and half of that increase took place in the last quarter.
  Mrs. Liddell: That is the representative of the party whose Treasury spokesman, on Friday, defined its economic policy as hoping for the best—the fingers crossed school of economics. The only growth industry in an independent Scotland would be the selling of lucky white heather. That is the economics of the Scottish National party.
  In a speech that reminded us of the great divisions in the Conservative party, the hon. Member for Louth and Horncastle (Sir P. Tapsell) spoke about the effect of the establishment of the Monetary Policy Committee on long-term interest rates. In April 1997, long-term interest rates were 7.6 per cent; today, they are 5.87 per cent. For someone who has been an hon. Member for 40 years, he should be well aware that that is a very good indicator of the future of British business.
  The hon. Member for Witney (Mr. Woodward) complained about the Government's "spending bonanza".
  74
  Perhaps he would care to have a conversation with the hon. Member for Rutland and Melton (Mr. Duncan), who said that
  "spending under this Government is less than it would have been had the Conservative party stayed in office."—[Official Report, 16 June 1998; Vol. 314, c. 183.]
  Conservative Members cannot even make up their minds on the nature of their attack on the Government. I therefore commend to the House outright opposition to the ludicrous motion tabled by Conservative Members, who have not even deigned to provide this debate with some rational argument.
  The policies that the Government are pursuing to ensure long-term economic stability will set right the structural problems that have been created by the economic illiteracy and incompetence of the previous Government. It is no surprise that they are so horrified at the prospect of our alluding to their record in Government.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 139, Noes 310.

  Division No. 316]

  [7 pm

  AYES

  Ainsworth, Peter (E Surrey)

  Gill, Christopher

  Amess, David

  Goodlad, Rt Hon Sir Alastair

  Ancram, Rt Hon Michael

  Gray, James

  Arbuthnot, James

  Green, Damian

  Atkinson, David (Bour'mth E)

  Greenway, John

  Baldry, Tony

  Grieve, Dominic

  Bercow, John

  Gummer, Rt Hon John

  Beresford, Sir Paul

  Hamilton, Rt Hon Sir Archie

  Blunt, Crispin

  Hammond, Philip

  Body, Sir Richard

  Hawkins, Nick

  Boswell, Tim

  Hayes, John

  Bottomley, Peter (Worthing W)

  Heald, Oliver

  Brady, Graham

  Heathcoat-Amory, Rt Hon David

  Brazier, Julian

  Hogg, Rt Hon Douglas

  Brooke, Rt Hon Peter

  Horam, John

  Browning, Mrs Angela

  Howard, Rt Hon Michael

  Bruce, Ian (S Dorset)

  Howarth, Gerald (Aldershot)

  Burns, Simon

  Hunter, Andrew

  Cable, Dr Vincent

  Jack, Rt Hon Michael

  Cash, William

  Jackson, Robert (Wantage)

  Chapman, Sir Sydney (Chipping Barnet)

  Jenkin, Bernard

  Johnson Smith, Rt Hon Sir Geoffrey

  Chope, Christopher

  Clappison, James

  Key, Robert

  Clark, Rt Hon Alan (Kensington)

  Kirkbride, Miss Julie

  Colvin, Michael

  Laing, Mrs Eleanor

  Cran, James

  Lait, Mrs Jacqui

  Curry, Rt Hon David

  Lansley, Andrew

  Davies, Quentin (Grantham)

  Leigh, Edward

  Davis, Rt Hon David (Haltemprice)

  Letwin, Oliver

  Day, Stephen

  Lewis, Dr Julian (New Forest E)

  Dorrell, Rt Hon Stephen

  Lidington, David

  Duncan, Alan

  Lloyd, Rt Hon Sir Peter (Fareham)

  Duncan Smith, Iain

  Loughton, Tim

  Emery, Rt Hon Sir Peter

  Luff, Peter

  Evans, Nigel

  MacGregor, Rt Hon John

  Faber, David

  McIntosh, Miss Anne

  Fabricant, Michael

  MacKay, Andrew

  Fallon, Michael

  Maclean, Rt Hon David

  Forth, Rt Hon Eric

  McLoughlin, Patrick

  Fowler, Rt Hon Sir Norman

  Madel, Sir David

  Fox, Dr Liam

  Major, Rt Hon John

  Fraser, Christopher

  Malins, Humfrey

  Gale, Roger

  Maples, John

  Garnier, Edward

  Maude, Rt Hon Francis

  Gibb, Nick

  Mawhinney, Rt Hon Sir Brian

  75

  May, Mrs Theresa

  Steen, Anthony

  Moss, Malcolm

  Streeter, Gary

  Nicholls, Patrick

  Swayne, Desmond

  Ottaway, Richard

  Syms, Robert

  Page, Richard

  Tapsell, Sir Peter

  Paice, James

  Taylor, Ian (Esher & Walton)

  Paterson, Owen

  Townend, John

  Pickles, Eric

  Trend, Michael

  Prior, David

  Tyrie, Andrew

  Randall, John

  Walter, Robert

  Redwood, Rt Hon John

  Wardle, Charles

  Robathan, Andrew

  Waterson, Nigel

  Robertson, Laurence (Tewk'b'ry)

  Wells, Bowen

  Roe, Mrs Marion (Broxbourne)

  Whittingdale, John

  Rowe, Andrew (Faversham)

  Widdecombe, Rt Hon Miss Ann

  Ruffley, David

  Wilkinson, John

  St Aubyn, Nick

  Willetts, David

  Sayeed, Jonathan

  Wilshire, David

  Shephard, Rt Hon Mrs Gillian

  Winterton, Mrs Ann (Congleton)

  Shepherd, Richard

  Winterton, Nicholas (Macclesfield)

  Simpson, Keith (Mid-Norfolk)

  Woodward, Shaun

  Soames, Nicholas

  Yeo, Tim

  Spelman, Mrs Caroline

  Young, Rt Hon Sir George

  Spicer, Sir Michael

  Spring, Richard

  Tellers for the Ayes:

  Stanley, Rt Hon Sir John

  Mr. John M. Taylor and

  Mr. Tim Collins.

  NOES

  Adams, Mrs Irene (Paisley N)

  Cann, Jamie

  Ainger, Nick

  Casale, Roger

  Ainsworth, Robert (Cov'try NE)

  Chapman, Ben (Wirral S)

  Alexander, Douglas

  Chaytor, David

  Allan, Richard

  Chidgey, David

  Anderson, Donald (Swansea E)

  Chisholm, Malcolm

  Anderson, Janet (Rossendale)

  Clapham, Michael

  Armstrong, Ms Hilary

  Clark, Rt Hon Dr David (S Shields)

  Ashton, Joe

  Clark, Paul (Gillingham)

  Atkins, Charlotte

  Clarke, Charles (Norwich S)

  Austin, John

  Clarke, Rt Hon Tom (Coatbridge)

  Ballard, Jackie

  Clarke, Tony (Northampton S)

  Banks, Tony

  Clelland, David

  Battle, John

  Clwyd, Ann

  Bayley, Hugh

  Coffey, Ms Ann

  Beard, Nigel

  Cohen, Harry

  Beckett, Rt Hon Mrs Margaret

  Coleman, Iain

  Begg, Miss Anne

  Connarty, Michael

  Bennett, Andrew F

  Cook, Frank (Stockton N)

  Benton, Joe

  Corston, Ms Jean

  Bermingham, Gerald

  Cotter, Brian

  Berry, Roger

  Cousins, Jim

  Betts, Clive

  Crausby, David

  Blears, Ms Hazel

  Cummings, John

  Blizzard, Bob

  Cunliffe, Lawrence

  Blunkett, Rt Hon David

  Cunningham, Rt Hon Dr John (Copeland)

  Boateng, Paul

  Borrow, David

  Cunningham, Jim (Cov'try S)

  Bradley, Keith (Withington)

  Dalyell, Tam

  Bradley, Peter (The Wrekin)

  Darling, Rt Hon Alistair

  Bradshaw, Ben

  Darvill, Keith

  Breed, Colin

  Davey, Edward (Kingston)

  Brinton, Mrs Helen

  Davey, Valerie (Bristol W)

  Rt Hon Nick (Newcastle E)

  Davidson, Ian

  Brown, Russell (Dumfries)

  Davies, Rt Hon Denzil (Llanelli)

  Bruce, Malcolm (Gordon)

  Davies, Geraint (Croydon C)

  Buck, Ms Karen

  Davis, Terry (B'ham Hodge H)

  Burden, Richard

  Dean, Mrs Janet

  Burgon, Colin

  Denham, John

  Burnett, John

  Dobbin, Jim

  Byers, Stephen

  Donohoe, Brian H

  Cable, Dr Vincent

  Doran, Frank

  Caborn, Richard

  Dowd, Jim

  Campbell, Alan (Tynemouth)

  Drew, David

  Campbell, Mrs Anne (C'bridge)

  Dunwoody, Mrs Gwyneth

  Campbell, Menzies (NE Fife)

  Eagle, Angela (Wallasey)

  Campbell, Ronnie (Blyth V)

  Eagle, Maria (L'pool Garston)

  76

  Edwards, Huw

  King, Andy (Rugby & Kenilworth)

  Ellman, Mrs Louise

  Kingham, Ms Tess

  Ennis, Jeff

  Ladyman, Dr Stephen

  Etherington, Bill

  Lawrence, Ms Jackie

  Fatchett, Derek

  Leslie, Christopher

  Fearn, Ronnie

  Lewis, Terry (Worsley)

  Fitzpatrick, Jim

  Liddell, Mrs Helen

  Flint, Caroline

  Linton, Martin

  Flynn, Paul

  Livingstone, Ken

  Foster, Rt Hon Derek

  Lloyd, Tony (Manchester C)

  Foster, Don (Bath)

  Lock, David

  Foster, Michael Jabez (Hastings)

  Love, Andrew

  Foster, Michael J (Worcester)

  McAllion, John

  Foulkes, George

  McAvoy, Thomas

  Gapes, Mike

  McCafferty, Ms Chris

  Gardiner, Barry

  McCartney, Ian (Makerfield)

  George, Bruce (Walsall S)

  McDonnell, John

  Gerrard, Neil

  McFall, John

  Gibson Dr Ian

  McGuire, Mrs Anne

  Gilroy, Mrs Linda

  McIsaac, Shona

  Godman, Dr Norman A

  McKenna, Mrs Rosemary

  Godsiff, Roger

  McNulty, Tony

  Goggins, Paul

  Macshane, Denis

  Golding, Mrs Eileen

  Mactaggart, Fiona

  Gordon, Mrs Eileen

  McWilliam, John

  Grant, Bernie

  Mahon, Mrs Alice

  Griffiths, Jane (Reading E)

  Mandelson, Peter

  Griffiths, Nigel (Edinburgh S)

  Marsden, Gordon (Blackpool S)

  Griffiths, Win (Bridgend)

  Marsden, Paul (Shrewsbury)

  Grocott, Bruce

  Marshall, David (Shettleston)

  Grogan, John

  Marshall, Jim (Leicester S)

  Gunnell, John

  Marshall-Andrews, Robert

  Hain, Peter

  Martlew, Eric

  Hall, Mike (Weaver Vale)

  Maxton, John

  Hanson, David

  Michie, Mrs Ray (Argyll & Bute)

  Harman, Rt Hon Ms Harriet

  Milburn, Alan

  Harris, Dr Evan

  Miller, Andrew

  Harvey, Nick

  Mitchell, Austin

  Heal, Mrs Sylvia

  Moffatt, Laura

  Heath, David (Somerton & Frome)

  Morgan, Ms Julie (Cardiff N)

  Henderson, Ivan (Harwich)

  Morgan, Rhodri (Cardiff W)

  Hepburn, Stephen

  Morley, Elliot

  Heppell, John

  Morris, Ms Estelle (B'ham Yardley)

  Hewitt, Ms Patricia

  Mudie, George

  Hill, Keith

  Mullin, Chris

  Hinchliffe, David

  Murphy, Jim (Eastwood)

  Hoey, Kate

  O'Brien, Bill (Normanton)

  Home Robertson, John

  O'Brien, Mike (N Warks)

  Hood, Jimmy

  Olner, Bill

  Hoon, Geoffrey

  Öpik, Lembit

  Howarth, Alan (Newport E)

  Osborne, Ms Sandra

  Howarth, George (Knowsley N)

  Palmer, Dr Nick

  Howells, Dr Kim

  Pearson, Ian

  Hoyle, Lindsay

  Pendry, Tom

  Hughes, Ms Beverley (Stretford)

  Pickthall, Colin

  Hughes, Kevin (Doncaster N)

  Pike, Peter L

  Humble, Mrs Joan

  Plaskitt, James

  Hutton, John

  Pope, Greg

  Iddon, Dr Brian

  Pound, Stephen

  Illsley, Eric

  Powell, Sir Raymond

  Jackson, Ms Glenda (Hampstead)

  Prentice, Ms Bridget (Lewisham E)

  Jamieson, David

  Prentice, Gordon (Pendle)

  Jenkins, Brian

  Primarolo, Dawn

  Jones, Mrs Fiona (Newark)

  Prosser, Gwyn

  Jones, Helen (Warrington N)

  Purchase, Ken

  Jones, Ms Jenny (Wolverh'ton SW)

  Quinn, Lawrie

  Radice, Giles

  Jones, Dr Lynne (Selly Oak)

  Rammell, Bill

  Jones, Martyn (Clwyd S)

  Rapson, Syd

  Jowell, Ms Tessa

  Reed, Andrew (Loughborough)

  Keeble, Ms Sally

  Reid, Dr John (Hamilton N)

  Keen, Alan (Feltham & Heston)

  Robinson, Geoffrey (Cov'try NW)

  Keen, Ann (Brentford & Isleworth)

  Khabra, Piara S

  Kidney, David

  Kilfoyle, Peter

  77

  Roche, Mrs Barbara

  Sutcliffe, Gerry

  Rooker, Jeff

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Ross, Ernie (Dundee W)

  Rowlands, Ted

  Taylor, Ms Dari (Stockton S)

  Roy, Frank

  Taylor, Matthew (Truro)

  Russell, Bob (Colchester)

  Temple-Morris, Peter

  Russell, Ms Christine (Chester)

  Thomas, Gareth R (Harrow W)

  Ryan, Ms Joan

  Timms, Stephen

  Salter, Martin

  Tonge, Dr Jenny

  Sanders, Adrian

  Touhig, Don

  Savidge, Malcolm

  Trickett, Jon

  Sedgemore, Brian

  Truswell, Paul

  Shaw, Jonathan

  Turner, Dr Desmond (Kemptown)

  Sheerman, Barry

  Turner, Dr George (NW Norfolk)

  Sheldon, Rt Hon Robert

  Twigg, Derek (Halton)

  Simpson, Alan (Nottingham S)

  Twigg, Stephen (Enfield)

  Singh, Marsha

  Tyler, Paul

  Skinner, Dennis

  Vaz, Keith

  Smith, Rt Hon Andrew (Oxford E)

  Vis, Dr Rudi

  Smith, Angela (Basildon)

  Walley, Ms Joan

  Smith, Rt Hon Chris (Islington S)

  Wareing, Robert N

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Watts, David

  White, Brian

  Smith, Llew (Blaenau Gwent)

  Whitehead, Dr Alan

  Soley, Clive

  Wicks, Malcolm

  Southworth, Ms Helen

  Williams, Alan W (E Carmarthen)

  Spellar, John

  Willis, Phil

  Squire, Ms Rachel

  Wilson, Brian

  Starkey, Dr Phyllis

  Winnick, David

  Steinberg, Gerry

  Wood, Mike

  Stevenson, George

  Woolas, Phil

  Stewart, Ian (Eccles)

  Wright, Anthony D (Gt Yarmouth)

  Stoate, Dr Howard

  Wright, Dr Tony (Cannock)

  Stott, Roger

  Wyatt, Derek

  Strang, Rt Hon Dr Gavin

  Straw, Rt Hon Jack

  Tellers for the Noes:

  Stringer, Graham

  Mr. Jon Owen Jones and

  Stuart, Ms Gisela

  Jane Kennedy.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
  MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House notes that the Government inherited an economy in which the current Budget was in deficit by £21 billion, inflation was set to rise because of the failure of the previous Government to take the necessary action on interest rates and nearly one in five households of working age had nobody working; recalls that the previous Government presided over a boom and bust economy with interest rates peaking at 15 per cent. and the two worst recessions since the war, doubled the national debt in the 1990s, doubled unemployment during its time in office, worsened inequality and failed to tackle the weaknesses in the British economy; commends the actions of the Government in its first year, which has established a credible framework for monetary policy that has led to the lowest long-term interest rates in 33 years, set two clear fiscal rules which provide for both prudent public finance and strong public services in the years ahead, taken action to reduce government borrowing such that the current Budget was in surplus by £1 billion in 1997–98, supported British business through cuts in corporation tax and small business tax to their lowest levels ever, launched the New Deal, the biggest employment programme for decades, reformed the tax and benefit system to tackle the unemployment and poverty traps and invested in education and skills; and notes that Britain now has a government which will ensure that the country does not return to the boom and bust and 15 per cent. interest rates of the late 1980s and early 1990s and instead has an economic policy based on stability, enterprise, employment and fairness.

  Class Sizes
  Mr. Deputy Speaker (Mr. Michael J. Martin): I must point out that Madam Speaker has selected the amendment in the name of the Prime Minister.
  7.14 pm
  Mr. David Willetts: I beg to move,
  That this House notes that primary class sizes have increased since the Government came to power, and that almost half a million pupils at Key Stage 1 are now in classes of 31 or more; condemns the Government's failure to deliver its early pledge to reduce infant class sizes; believes that while reducing class sizes is a desirable objective, this should not be done at the expense of parental choice or by creating more mixed-age classes; and condemns the Government's inability to implement its pledge in a way consistent with raising educational standards.
  We have tabled this motion because we are still waiting for the Government's first annual report on how they have performed since they were elected on 1 May 1997. In particular, we are still waiting to hear from Ministers an account of how they have performed in respect of their five early pledges, which not only appeared on the credit cards that were distributed to the electorate, but were even stamped on coffee mugs distributed at the Labour party conference. One of those pledges was on class sizes. If the annual report were being produced by a company, that company would soon be in breach of its statutory obligations—the report is so delayed that the company would soon find itself hauled before the courts.
  We hope to see the Government's report soon, and we hope that it will explain why, despite the pledge to reduce class sizes, the number of children studying key stage 1 in classes of more than 30 has gone up since the election and why the number of children in primary schools in classes of more than 30 has gone up since the election. That is exactly the opposite of the pledge on which the Government were elected.
  Mrs. Anne Campbell: I am grateful to the Minister for giving way—I mean the shadow Minister. Does he accept that local authorities have not been very co-operative, especially Conservative-controlled Cambridgeshire which was allocated an extra £9.5 million by the Government to spend on education but failed to do so? Indeed, £1.6 million of it was allocated to other services. [Interruption.] I am sure that the hon. Member for South Cambridgeshire (Mr. Lansley), who is sitting immediately behind the hon. Gentleman, will confirm what I have said.
  Mr. Willetts: My hon. Friend the Member for South Cambridgeshire (Mr. Lansley) was saying that Cambridgeshire was spending above its standard spending assessment. I do not have my hon. Friend's expertise on Cambridgeshire, but had the hon. Lady been at the annual conference of local education authorities last week, as I was, she would have heard LEA members of a variety of political persuasions agree on one thing—that it was not practical to deliver the Government's pledge on class sizes, something to which I shall return in a moment.

  79
  The Government's record compares unfavourably with our record. When we left office, a smaller proportion of pupils was taught in classes of more than 30 than when we came to office in 1979.
  Ms Rachel Squire: Rubbish.
  Mr. Willetts: The hon. Lady shouts "Rubbish", but I assure her that these are figures from the House of Commons Library.
  Ministers' response to the embarrassing predicament of twice having to announce increases in class sizes was to say that they were going to bring forward the delivery of their pledge. Previously, the plan had been that it should be delivered by 2002. As evidence of how serious the Government were about delivering it, they said that it would be delivered in 2001. However, when the electorate were voting for an early pledge, they did not believe that "early" meant 2002. People do not seriously believe that delivering it in 2001 means delivering it earlier than they had been led to expect by the Government.
  For Ministers now to say that there is no prospect of delivering their pledge until 2001 is a failure to deliver on the expectations that they were happy to excite among the electorate in order to get themselves elected. Their interpretation of "early"—namely, that they made the pledge early on, not that it will be delivered early on—is not an interpretation that one single member of the electorate ever understood.
  What are the Government going to do about delivering their pledge? The Department for Education and Employment will have to make every effort to ensure that the Government can retrieve the position after the embarrassment of their first 15 months in office. What will their efforts to deliver this pledge mean in practice?
  Dr. George Turner: In Norfolk, it will mean that 1,000 pupils who would have been in classes of more than 30 will not be. Could we have a better debate than we had this afternoon—a debate on the facts? Does the hon. Gentleman not recognise that that very pledge card said how the pledge would be delivered and that the Bill to abolish the assisted places scheme—the Education (Schools) Bill—was among the first Bills that this Government introduced? It is obvious that, until we have delivered on that, we cannot spend the money.
  Mr. Willetts: All I can say to the hon. Gentleman is that—I have the copy of the relevant page of the Labour manifesto here—it was described as an early pledge, and I do not regard delivery in 2001 or 2002 as an early pledge. It was also described as being financed by using money saved from the assisted places scheme. We have already seen the new deal money for capital expenditure raided because it was clear that the assisted places scheme was not going to be able to raise enough money to deliver the pledge, so it does not seem that the Government are in any way sticking to the assurances that they gave before the election.
  The Minister for School Standards (Mr. Stephen Byers)rose—
  Mr. Willetts: I will give way to the Minister, and then I shall try to make some progress.
  Mr. Byers: I am grateful to the hon. Gentleman for giving way because, like my hon. Friend the Member for North-West Norfolk (Dr. Turner), I hope that the debate can be based on facts. Will the hon. Gentleman confirm that not a single penny of the new deal capital money has been used for the reduction of class sizes? Additional resources, provided by the Chancellor in the Budget of March this year—an extra £40 million—were made available, but that is over and above the new deal money that was announced in July last year. Will the hon. Gentleman confirm that that is the case?
  Mr. Willetts: This is, admittedly, a murky area, but what we seem to have is, first, money from the abolition of the assisted places scheme not being sufficient to finance the delivery of this pledge, for the simple reason that the pupils who would otherwise have participated in the assisted places scheme still need to have an education. They do not disappear off the face of the earth, which seemed to be the basis on which the Labour Government were working. Secondly, we have had some new deal money from the capital allocation and, thirdly—I am happy to concur with what the Minister has just said—the Chancellor has found extra money on top of the assisted places money and on top of the new deal; that is further money which was announced in the Budget. The Government are unable, on the Minister's own words, to deliver the pledge by using simply assisted places scheme money.
  Mr. Byers: On the facts—and the record will show that the hon. Gentleman said that the new deal money had been raided to fund the reduction of class sizes—will he confirm that that is not the case, but that a further £40 million has been made available over and above the new deal money to support the reduction in class sizes? Therefore, there has been no raid on new deal money.
  Mr. Willetts: We are getting bogged down here. Of course the Minister is correct to say that there was a further £40 million in the Budget, but it was on top of the money from the abolition of the assisted places scheme. It was made clear that one of the purposes that the Government wanted the capital expenditure under the new deal for schools to go on was reducing class sizes, so the Minister is having to raid three pots, rather than financing the policy simply out of the assisted places scheme. That seems to be the position.
  What we are now going to see is the slow and painful process of a shift from what seemed to do well in the focus groups. I am sure that there are parents throughout the country who want their children to be educated in smaller classes; of course we understand that that is what parents want. It became a pledge, but now it is in the process of becoming a law, and soon it will be unlawful to carry out active education in a class of more than 30.
  At that point, the problems will begin. Something that is, indeed, desirable as one of the many ways in which to raise educational standards will instead become the be-all and end-all of education policy. Parents throughout the

  81
  country who would have liked the idea of their children being educated in smaller classes will find themselves paying a very high price for a rigid, obsessional commitment to delivering that objective, to the exclusion of all the other things that can deliver high-quality education for our children.
  Mr. Desmond Swayne: My son is educated in a class with more than 30 pupils and I have no complaint about that; he receives a perfectly adequate and proper education. My fear is that, once requirements are laid on the school to provide for smaller classes, that will make it a target—a marginal school, in the eyes of the education authority—for closure.
  Mr. Willetts: That is a good point, which I hope to turn to later in my speech.
  One of the reasons why we wanted this debate is that there is widespread concern among teachers, people in local education authorities and parents about the implications of this policy for parental choice. The Minister regularly asserts simply that he can implement this policy with no reduction in parental choice, but assertion will not do. He has to provide the evidence to explain how it is possible to implement this policy without any reduction in parental choice. There are popular schools that have been accepting children, even though it will take their class sizes above 30. It is impossible to implement the Government's pledge without parents, whose children could have been educated by teachers who believed that they could deliver high-quality education in schools that were getting high-quality Office for Standards in Education reports, not being able to get their children to those schools.
  I have studied the documents that the Government have sent to local education authorities on this; the outline regulations are out for consultation. The Minister, or his officials, asked for much information from LEAs. They say that the information to be provided must include:
  "Details of how plans are consistent with the enhancement of parental preference".
  They also ask for the
  "arrangements LEA is making for circumstances where there is no suitable school within reasonable distance".
  They expect LEAs to answer an impossible question. How can LEAs develop plans that will always be consistent with the enhancement of parental preference, where there is no suitable school within reasonable distance of a popular school that is over-subscribed and has been taking classes of more than 30? What the Minister is doing is asking LEAs to deliver a variety of inconsistent objectives.
  Last week, the Minister spoke at the conference of the Council of Local Education Authorities in Derbyshire; I was there myself. After he had given his now standard performance, when he says, "I can absolutely assert that there will be no reduction in parental preference," the LEA conference promptly passed a motion that "constraints on parental preference" are essential to reducing class sizes, so it did not find him very persuasive. The chairman of a Labour-controlled education authority—Lewisham—said:
  "You shouldn't make pledges if you aren't in a position to carry them out. The Government has made two pledge, on class sizes and parental choice. It is in danger of failing to deliver on either".
  82
  The Minister failed to persuade his own allies in local government that he could credibly assure them that there would be no reduction in parental choice, and we all know why. There are popular schools that are taking children in classes of more than 30 and where there is no practical scope for building new classrooms. It may not be physically possible. They are going to have to turn away parents, when they would have been happy to educate their children.
  However, it is not just a matter of the constraints on parental choice. What will happen about mixed-age classes? The most serious work that we have had on the implications of the Government's policies has come not from the Department—all that we have had from the Department and the Minister have been assertions and questions—but from Coopers and Lybrand, for the Local Government Association. It says:
  "In our view the policy of reducing class sizes is likely to result in a rise in the incidence of pupils in mixed age classes in primary schools".
  That is not a Conservative spokesman speaking. That comes from the most expert review of the subject, carried out for the Local Government Association.
  Just at the time that the Government are going to force more pupils into mixed-age classes, their commitment to literacy and numeracy has been described by Ofsted as requiring that there be fewer mixed-age classes, and that children be taught with children of as close an age to them as possible, and at a similar stage of development. Therefore, the Government are not going to be able to deliver their pledge without making it more difficult for teachers to deliver their literacy and numeracy targets.
  Ministers sometimes say that at least the parents who get their children into classes of under 30 will gain, but they are unwilling to say what will happen to the number of teaching assistants. They do not appear to realise that schools are funded largely on a per capita basis. Telling a school that has been educating children in classes of 35 that it can have classes no bigger than 30 will result not just in five unhappy parents losing the school of their choice, but in the school having a smaller budget. Teaching assistants will be laid off, resulting in fewer of them supporting teachers. How does the Minister plan to avoid that?
  There will also be heavy-handed intervention in the affairs of schools throughout the country. The Minister has talked about a light touch on the management of schools, but instead there will be remorseless pressure from the centre—another expression that Ministers have used from time to time. As the local education authority report said:
  "Essentially they"—
  head teachers—
  "are handing back to the LEA the management and organisation of Key Stage 1."
  To answer the intrusive and heavy-handed questions and deliver the requirements that Ministers have placed on them, LEAs will have to return to an old-style, command-and-control relationship with their schools, when one of the most healthy developments in British education in the past 20 years was a more sensible relationship between LEAs and their schools. The implementation of the policy will push that back.
  There are many other questions that Ministers have to answer. Many of my hon. Friends are keen to ask those questions, so I shall not pursue detailed issues about,

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  for example, children with special educational needs. For some extraordinary reason, the only serious exception to the pledge is that classes can be larger than 30 if they include children with special educational needs. Most of us would have thought that smaller classes were particularly necessary in such circumstances. I shall not ask about the distributional impact of the pledge, but it looks as though it will have the extraordinary result of shifting resources to more affluent areas, where larger classes are concentrated. Labour Members do not appear to understand that there is nothing in the policy for inner-city schools. It will give more money to Bromley; it has nothing for Tower Hamlets.
  Helen Jones: How can the hon. Gentleman maintain that argument when, from September, 800 children in Warrington—which definitely does not consist of leafy suburbs—will benefit from smaller class sizes?
  Mr. Willetts: The Coopers and Lybrand report clearly states that the policy will shift resources to more affluent areas. I am surprised that Labour Members have not considered the implications of their policy. If they had thought for a moment about where popular schools and larger classes were, the implications would have been obvious.
  I saw an interesting story on the front page of The Daily Telegraph today, which may have had something to do with the Minister's preparations for this debate. It announced that there would be capital funding for 100 Church schools to deliver the class size pledge. There are 3,557 Church schools taking children in infant classes. An estimated 46 per cent. of those have infants in classes of more than 30. That is a rough estimate and if the Minister can improve on it, I should be happy to be corrected. Based on that estimate, there are 1,600 such Church schools. If he believes that his announcement of special assistance for 100 of them will go any way towards dealing with the widespread anxieties in denominational schools throughout the country about how they will be affected by the pledge, he has another think coming.
  There are not many aided schools in my constituency. St. Alban's is a popular and well respected Church of England primary school, which has taken 35 children in each year hitherto. It has good Ofsted reports and the parents in Havant who want their infants to have a denominational education have only that school to opt for. The head teacher wrote to me, saying:
  "This will mean that five children who would have been admitted to this school in the past will not be offered places, although they have chosen a Church of England school, and will probably have a church reference to back up their application. I am aware that there are schools in the area who will be able to admit these children"—
  those are the surplus places that the Minister is so keen to get rid of—
  "but parental choice will be limited."
  At the moment, those classes have one teacher and two teaching assistants. When I visited the school, I met some very despondent and confused teaching assistants, because one teaching assistant in each class would have to be sacked because of the reduction in the per capita funding to the school. That will be the reality on the ground when
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  what began as an attractive pledge goes into law as a rigid commitment to be implemented whatever the practical implications for schools.
  Since the Government launched the policy, we have heard no more than assertions that the problems that are widely feared in the educational world will not occur. We hope to hear more than assertions and talk about money tonight. We want to hear a practical example of what will happen to a popular school with a good Ofsted report that is taking 35 children, but does not have the physical capacity to expand. How will the pledge be delivered in that area without a reduction in parental choice or an increase in mixed age classes? The duty on the Minister is to offer a clearer and fuller explanation than he has done so far.
  7.36 pm
  The Minister for School Standards (Mr. Stephen Byers): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
  "congratulates the Government on the excellent progress it has already made towards honouring its pledge that no child of 5, 6 or 7 will be in a class of over 30 by the end of this Parliament, which will mean that 100,000 fewer infants will be in large classes from this September and the pledge will be met ahead of schedule by September 2001; and notes the Opposition's continuing hostility to class size reduction, having presided over year-on-year increases since 1988.".
  The Conservatives' central charge is that the Government have failed to honour one of the key pledges that we put before the electorate in the run-up to the election. We take that as a serious charge, because we intend to honour and discharge our commitment to the electorate by ensuring that those pledges are met. I welcome the opportunity provided this evening—thanks very much—by the Opposition to outline how the Government intend to honour that pledge. I should like to go beyond that and explain how the pledge can be met by not just maintaining, but enhancing, existing parental preference, and how the implementation of the pledge will ensure that we can deliver on our standards agenda. We believe that smaller class sizes help to improve the standard of education. That stands in stark contrast to the assertion of the hon. Member for Havant (Mr. Willetts) that there is no correlation between class sizes and educational achievement. I shall outline why we disagree with the hon. Gentleman on that.
  The motion talks about
  "the Government's failure to deliver its early pledge to reduce infant class sizes".
  The hon. Member for Havant made little reference to exactly what we pledged. The Labour party manifesto says, on page 7:
  "We will reduce class sizes for five, six and seven-year-olds to 30 or under, by phasing out the assisted places scheme".
  Our pledge card, which every loyal Minister keeps in his or her top pocket, says almost exactly the same:
  "Cut class sizes to 30 or under for five, six and seven-year-olds by using money from the assisted places scheme."
  That is the pledge. We made a clear link between the phasing out of the assisted places scheme and the reduction of class sizes.
  Mr. Don Foster: Is the Minister telling the House that there never was a commitment to fund

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  class-size reduction solely from the phasing out of the assisted places scheme? The House will recall some of his earlier remarks suggesting something very different.
  Mr. Byers: I shall come to the timing of the delivery of the pledge. The hon. Gentleman will see that we always intended that it would be delivered by the end of the Parliament. The additional resources provided as a result of the Chancellor of the Exchequer's Budget, particularly the £40 million capital, enables the pledge to be delivered early. That is why the additional resources are necessary. I hope that the hon. Gentleman would support the Government in providing additional spending in order to deliver on the pledge.
  Mr. Foster indicated assent.
  Mr. Byers: I am delighted that the hon. Gentleman supports the Government in our efforts to reduce class sizes.
  We felt that it was important to demonstrate how revenue spending on the assisted places scheme could be used to employ more teachers and to reduce class size. That is exactly what the pledge states, and that is exactly what we shall do—showing that the Government act for the majority of our children and not just the few.
  It is worth reminding Conservative Members that the assisted places scheme provided independent sector places for 38,000 young people and that the revenue from phasing it out will provide smaller classes for nearly 500,000 five, six and seven-year-olds. That is a clear demonstration of the Government's priorities, which are in clear contrast to policies of the Conservative party, which represents the vested interests of the few—that is its historical role—but denies good quality opportunity to the majority.
  Mr. Graham Brady: I find it rather bizarre that the Minister is accusing us Conservatives of standing up for the vested interests of poor children in the inner cities, whom I see being denied places in schools such as Manchester Grammar and William Hulme. I am quite happy to be accused of standing up for their vested interests. I thought that the Labour party used to try to stand up for such vested interests. It is clearly now failing to do so.
  Mr. Byers: We do. The great difference is that we believe that those children should be provided with good quality education in the maintained sector and should not have to rely on the independent sector. Our view is that we can make far better use of the more than £100 million of public money a year that was spent on the assisted places scheme.
  Mr. Brady: Will the Minister give way again?
  Mr. Byers: I want to make some progress.
  We could not phase out the assisted places scheme by Executive action; we needed primary legislation. Once in office, we acted with speed and commitment to introduce the Education (Schools) Bill, which phases out the assisted places scheme and releases the money spent on it so that we can use it for the benefit of far more young people. Within 21 days of the general election,
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  the Education (Schools) Bill was published and given a First Reading. The Second Reading was on 2 June, and Royal Assent was given on 31 July. It was one of the first Bills to reach the statute book under this Government.
  As a result of the fact that the pledge was about phasing out the assisted places scheme—which required legislation—and using the liberated money to benefit the majority of our young people, the first element of the money will not become available until September. That was made very clear—
  Mr. Nick St. Aubyn: Will the Minister give way?
  Mr. Byers: I want to make this point. The earliest time at which the money released from the phasing out of the assisted places scheme, which is to be devoted to, and ring-fenced specifically for, cutting class sizes, can have an impact is September. In September, it will have an impact.
  Mr. St. Aubyn: Will the Minister confirm that the abolition of assisted places was only a money-saving measure? Does he therefore accept the amendment that was passed in the House of Lords, with cross-party and cross-Bench support, which will allow schemes such as that in Surrey to go ahead? That scheme does not have financial implications, but it will benefit the education of children in the county that I represent.
  Mr. Byers: I am still awaiting details of the Surrey scheme. I have on several occasions asked the hon. Gentleman and the director of education for them, but still have not seen them. I await with great anticipation this much-vaunted Surrey assisted places scheme. When I see it, I shall judge it accordingly—not on dogma but on its practical realities and implications.
  From September, £22 million will be available as a result of the phasing out of the assisted places scheme. That money will be used to employ 1,500 more teachers, ensuring that more than 100,000 five, six and seven-year-olds will be taught in classes of 30 or fewer. Such benefits do not extend just to the leafy shires, as the hon. Member for Havant implied. Nine thousand youngsters in Derbyshire and 8,900 youngsters in Lancashire, as well as those in places such as Gateshead and in inner-city areas throughout the country, will benefit as a result of our class-size reduction proposals.
  More money will come on stream. Next year, £61 million will be used specifically for reducing class sizes. In 2000, £80 million will be used, and by September 2001, when the pledge will be delivered in full, £100 million will be available from the phasing out of the assisted places scheme. Of course, many local authorities and schools will benefit before September 2001. It is crystal clear that the pledge will be met—and under the terms that, clearly, were put to the electorate.
  Mr. Damian Green: Will the Minister give way?
  Mr. Byers: I want to move on to the issue of parental choice. I want to address square on the very important point raised by the hon. Member for Havant.

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  The class-size policy could be implemented in a way that would be detrimental to parental choice. The thrust of the speech of the hon. Member for Havant was that popular schools would be forced to turn children away, and that empty desks at less popular schools would be filled. If that were the intent, the policy would merely be an administrative shuffle of children around the system. Such a policy would have very limited or no cost. We would not need the £100 million in 2000 from the phasing out of the assisted places scheme. We need that money because that is not the way in which we shall go about matters. We shall target the money that is released from the assisted places scheme—as well as the extra money that my right hon. Friend the Secretary of State has got from the Chancellor on capital for this year—on schools that are popular with parents.
  Mr. Willetts: Will the Minister give a pledge that no parent will fail to get their child into the school of their choice as a result of his policy?
  Mr. Byers: I shall come shortly to how the policy will not only maintain parental preference but enhance it. I hope to be able to demonstrate that to the hon. Gentleman in just a couple of minutes.
  The School Standards and Framework Bill, which is before the House of Lords, will require local education authorities to draw up plans for the implementation of the class-size reduction pledge in their areas. Those plans must be submitted to the Secretary of State for approval. I can inform the House that the Secretary of State will not approve plans that fail to demonstrate that the LEA has given due regard to the exercise of parental preference. However, we want to go further. When submitting their proposals to reduce class size, LEAs should plan on the basis of enhancing the exercise of parental preference. What does that mean in practice?
  First, no child should have to travel an unreasonable distance to school as a result of the policy. Secondly, surplus places in poor schools should not be filled by keeping children out of schools that offer higher standards and a better quality of education. Thirdly, where extra places are needed, they should be created in popular, over-subscribed schools with high standards that have been demonstrated by key stage 1 or key stage 2 assessment results—which might be valued added—or reports of the Office for Standards in Education.
  Fourthly, and this takes up the point raised about the Church school in the constituency of the hon. Member for Havant, the proportion of denominational provision for any denomination shall not be reduced. Finally, local education authorities should seek to increase the proportion of provision in popular over-subscribed schools with high standards. Plans that fail to meet those criteria will not be approved by the Secretary of State.
  Mr. Willetts rose—
  Mr. Don Foster rose—
  Mr. Byers: I shall give way first to the hon. Member for Bath (Mr. Foster).
  Mr. Foster: The Minister has told us that he is making these announcements to the House for the first time this
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  evening. First, will he confirm that every one of the points that he has listed comes directly from the consultation document? Secondly, will he confirm that local education authorities were required to comment on that document by 12 June, only about two weeks ago? Thirdly, will he tell the House whether all those who responded to the consultation document said that it was possible to deliver what it contained? Did the consultation responses all support the particular points to which the Minister has referred?
  Mr. Byers: The hon. Gentleman is absolutely right. We have consulted on many of those points. The House should be made aware of them because they were not referred to by the hon. Member for Havant when he introduced the motion. The issue is whether we should go along with the views expressed as a result of the consultation. Some reservations are held in some quarters. There are some people, and no doubt some in local education authorities, who say that what we propose cannot be done. Will the hon. Member for Havant say why they say that it cannot be done? I will tell him why that is said; it is because what is proposed will interfere with LEAs' planning processes for places. It will make it more difficult. Yes, I accept that it will make it more difficult, but this Government are not about making life easy for local government; we are about delivering high-quality education for parents and children.
  It was interesting that, yet again in a contribution from the Opposition Front Bench in an education debate, the interests of parents, children and high standards were not put first. Once again, we heard about the difficulties that would be experienced by local government. That is regrettable. However, we shall put the interests of parents and children first. We shall not cave in to the vested interests of local authorities.
  I read with great interest the speech made by the hon. Member for Havant at the Council of Local Education Authorities, where he talked about the time coming for Conservatives to build bridges with local government. The hon. Gentleman said that things had changed and that the authorities could forget 18 years of local government being denigrated, with its powers reduced, by the Conservatives. He suggested that, somehow, there was a new dawn, a new renaissance for local government.
  Mr. Willetts: Will the Minister give way?
  Mr. Byers: I will in a moment.
  I have to tell the hon. Gentleman that there should be a new dawn in terms of central-local government relations. The relationship should be one of real partnership, a partnership that puts the interests of children first.
  Mr. Willetts: I shall tell the Minister why we find ourselves in an extraordinary position. There is an improving relationship between Conservatives and local education authorities. That is quite simple; the LEAs cannot believe that the Minister is serious when he makes those assertions. The factor is not the self-interest of LEAs, as I tried to explain. The Minister cannot have been listening to me. He has not explained how he can deliver on his assertions when a school physically does not have the capacity to build more classrooms—many schools do

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  not have the space to do so—and is currently taking children in classes of more than 35. The hon. Gentleman produces long lists of criteria, but he does not explain how, in practice, in the real world, they can be delivered. That is why LEAs, schoolteachers and parents are losing confidence.
  Mr. Byers: As for losing confidence on issues such as reducing class sizes, the way in which the hon. Gentleman's political colleagues in the other place have tried to block legislation that will reduce class sizes is an example of measures that will continue to cause loss of confidence in the Conservative party. The hon. Gentleman's party is standing in the way of a desirable policy that parents want, which is a reduction in class sizes.
  Earlier, the hon. Gentleman was scornful of the front-page story in today's edition of The Daily Telegraph about the fact that we intend to give money to Church primary schools to help them with their capital costs. For the first time—
  Mr. John Hayes: How many?
  Mr. Byers: I shall deal with the figures in a moment.
  For the first time, a Government have been prepared to say to the Churches that, if it would help them, we shall fund 100 per cent. of their capital costs. That was never done under a Conservative Government. All right, it will involve 100 schools—actually, more than 100 when the announcement is made by my right hon. Friend the Secretary of State on Thursday. In any event, it will be 100 more than under the Conservative Government. That is the reality.
  I agree that there are many Church primary schools with high class sizes. How many of them need capital money? The hon. Member for Havant did not address that in his contribution. He confused revenue, and the need for teachers, with capital. The reality is that the applications that we have received from Church authorities are being supported. The details will be made available on Thursday. It will be good news for many more than 100 Church primary schools, and they will be able to join in the crusade to reduce class sizes. I am sure that they will be delighted at that.
  Mrs. Theresa May: Will the Minister confirm that the announcement that will be made on Thursday on Church schools will be yet again a change in Government policy? In a debate in Committee on that specific point, when I challenged the hon. Gentleman on the resource implications for Church schools, he said that the Churches were quite happy because they would be able to meet the resource implications. We now find that they cannot meet those implications and that the Government will have to move in.
  Mr. Byers: Unfortunately, the hon. Lady did not specifically refer to the dates of our exchanges in Committee. Off hand, I cannot remember them. However, I think that they would have pre-dated the Budget statement of my right hon. Friend the Chancellor of the Exchequer. Therefore, I would have been unable to say—[Interruption.] If the hon. Lady will wait for a moment,
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  I shall let her know exactly what the Churches were invited to respond to. The letter that went out from the Department explained to the Churches that, if they wanted to, they could have the 15 per cent. made up by central Government, and that, if they chose not to, that was fine. It was a choice for the Churches themselves to make. The majority of them have responded positively to that choice, saying, "Yes, it is a Government initiative that we want to be part of in reducing class sizes." As a result, well over 100 Church schools will benefit from the additional capital that we are making available.
  The reduction in class sizes should not be seen as a one-off step to improve the standards of education that we are offering. We believe that the reduction will make an important contribution. That is because we believe that smaller class sizes, especially in early years, make a difference to the quality and standards of education that can be offered.
  Mr. Andrew Lansley: Will the hon. Gentleman give way?
  Mr. Byers: I want to make some progress.
  In reducing class sizes, we have the support of Her Majesty's chief inspector of schools, Chris Woodhead, who said in 1996:
  "Our class size report"—
  Ofsted's class size report—
  "looked at whether there was any connection between the number of children in the class and the quality of education. With early years, that is 5 to 7 years of age, we agree: there was a connection."
  He gave some advice, saying:
  "And we think"—
  Ofsted thinks—
  "that if this government"—
  that was the Conservative Government—
  "or any subsequent government is going to find more money it ought to invest that money in early years education."
  That is exactly what the Government are doing.
  That stands in stark contrast to the Conservative Government's approach. The then Secretary of State, the right hon. Member for South-West Norfolk (Mrs. Shephard), said that there was
  "no accumulated evidence to link class size with attainment."
  The hon. Member for Havant, in that little red book entitled "Why Vote Conservative?", states that
  "there is little evidence of any correlation between class size and educational achievement."
  It would be interesting to know whether he still holds that view. We did not hear during his contribution whether that was the case. Now that the hon. Gentleman speaks for the Conservatives on education matters, it would be helpful to know whether he still subscribes to the view that he expressed in that pamphlet.
  Mr. Willetts: I shall tell the Minister how this can be resolved. All that the hon. Gentleman needs to do is to publish the results, school by school, of the national curriculum tests at the end key stage 1, and in the same information publish the class sizes in those schools. That would finally resolve a question about which educationists

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  have different views. I should be happy if the Minister cast some light on that subject, but, so far, he has refused to publish the information.
  Mr. Byers: I am delighted that the hon. Gentleman has confirmed that he still subscribes to the belief that he expressed in "Why Vote Conservative?" That will be one of the numerous reasons why people will not vote Conservative—they see a clear link between class sizes and standards.
  The Government believe that cutting class sizes will not, on its own, be enough to raise standards in the way that we want—if the hon. Gentleman said that, he would be on far stronger ground. From September, there will be a revolution in primary and early years education. At long last, there will be a place for every four-year-old whose parents want it. A daily literacy hour will be introduced as part of our £50 million national literacy strategy. All primary school teachers will receive in-service training on how to improve the teaching of basics. Those in teacher training must follow a new national training curriculum in English and maths, so that they, too, will be effective in teaching the basics.
  The Tories were in power for 18 years, but did absolutely nothing to tackle the scandal of ever-increasing class sizes—indeed, they presided over year-on-year increases. Hundreds of thousands of our children were the innocent victims of the Tory Government's neglect and indifference. Now, the chapter of increasing class sizes is coming to an end. This September will be a new beginning. There will be 1,500 extra teachers and hundreds of additional class rooms, so that more than 100,000 infants will be in smaller classes.
  Let the House be in no doubt—we are on course to deliver our pledge on class sizes, and we shall deliver it in a way that will enhance parental preference and play a key part not only in raising standards in our schools, but in ensuring that education becomes a valuable learning experience rather than a matter of crowd control. Our children deserve the best possible start in life, which means a high-quality education—under this Government, that is exactly what they will have.
  8.1 pm
  Mr. Don Foster: Like the Minister, I, too, found listening to the hon. Member for Havant (Mr. Willetts) somewhat surreal. It was almost as if he was trying to persuade us that 1 May 1997 was year zero and that nothing had existed before then. He seemed to be saying that the Conservative party of 1998 had no connection with those nasty Conservative Governments of the 1980s and 1990s, and that any similarity was purely coincidental.
  We must remember what the Conservative Governments did—everything that Conservative Members have said tonight, and their apparent concern about class sizes, will not wipe away that record. In particular, we must remember that, in their final years in government, the Conservatives presided over year-on-year increases in class size—indeed, in every year of the Major Government, class sizes continued to rise.
  The Minister was uncharacteristically unkind to the right hon. Member for South-West Norfolk (Mrs. Shephard). He will recall the leaked memorandum
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  that she sent to her Cabinet colleagues, in which she begged for money, saying that if schools did not receive more resources, class sizes would continue to rise. Of course, her request was rejected—there was no additional money for schools, so class sizes continued to rise.
  It was no surprise that the Conservatives showed no real interest in class sizes. We have heard the views of the hon. Member for Havant, but we should not forget that Conservative Ministers expressed similar views. I am sure that the House will recall the comments of the right hon. Member for Bromley and Chislehurst (Mr. Forth), who said in 1994 that
  "there is no proven causal connection between class size and educational output."—[Official Report, 13 December 1994; Vol. 251, c. 767.]
  I hope that at least one thing has become clear from this evening's debate—that we all agree that class sizes really matter. Recently, I was fortunate enough to join a number of my colleagues from the Education Sub-Committee of the Select Committee on Education and Employment, on a visit to the canton of Zurich. We were impressed by much of what we saw, but what impressed us more than anything else was, I think, the impact of small class sizes on educational output.
  Mr. Hayes: I do not disagree with much of what the hon. Gentleman says, but does he at least acknowledge that, in other parts of the world, such as the far east, schools with class sizes much larger than those in this country achieve equally strong educational success?
  Mr. Foster: According to some statistics, that is true—in some countries, children are crammed into classes and can still achieve reasonable results in some tests of their ability. However, I hope that the hon. Gentleman will accept that the quality of education must be measured on something more than reasonably good raw scores in basic tests.
  In the canton of Zurich, we were able to see the educational benefits that small classes could bring, as classes there were almost always of 20 or 22—they were certainly never more than 25. The Liberal Democrats have long recognised those benefits, which is why we have long advocated a reduction in class sizes. Indeed, the House may be interested to know that I was born in 1947—[Interruption.] I know that that is surprising. I was particularly interested to find out what the policies of one of our predecessor parties—the Liberal party—were in that year. At the 1947 party conference, a resolution was passed that claimed:
  "The most immediate need is to reduce the size of classes in primary schools."
  We have a long track record of believing that class sizes should be reduced.
  The House will also be aware that, at the general election, Liberal Democrats committed themselves to class size reduction. Indeed, we went further than the Labour party. We proposed, and explained how we would fund, class size reduction for pupils not only in infant classes, but in junior classes. We believe that all primary school pupils should have the benefit of smaller classes.
  The Government propose to reduce class sizes for the approximately 500,000 children in key stage 1, who will, of course, benefit from that. However, the trouble with that proposal is that it will leave, in England alone,

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  more than 800,000 pupils in key stage 2 in classes of more than 30—indeed, many tens of thousands will be left in classes of more than 35. We believe that those children, too, deserve a better deal.
  Sadly, the Labour Government, because of their adherence to the previous Government's spending plans, have been timid in their response to the educational problems created by large class sizes—indeed, they could have started to reduce class sizes earlier. Unlike the Conservative Government, they have at least started to take action, which we support, but they seem to have been concerned—I have heard nothing in this debate to allay my fears—only about whether the headlines are right, so that they receive credit for class size reduction; they have not done their homework on the details. As a result, a number of problems are coming to light. I shall not repeat the concerns expressed by the hon. Member for Havant; I want to raise other questions, to which I hope the Minister will give some answers when she winds up.
  Evidence that the Government have not thought this through can even be found in the pilot scheme. The House will recall that, in September, local education authorities were invited to bid for the standards fund grant 5 moneys as pilots for class size reduction. They were notified of the outcome in February, but were not notified until 20 April—with precious little time to get all the preparation done for implementation in September—that they would get the money for a whole academic year. From February until April, it was uncertain whether they would get seven twelfths of the money or money for the whole year.
  Even now, the pilot authorities do not know whether—presumably subject to meeting some agreed criteria about which they have not yet been told—the money will continue into subsequent years. I hope that the Minister will listen and perhaps respond on that. Also, will they be allowed to bid for additional funds to reduce class sizes for pupils who are still in over-large classes?
  Mr. Byers: I may be able to help the hon. Gentleman. The class size reduction for this September is not being carried out with a statutory underpinning—that will come through the local education authority plans, which will be submitted in the autumn. Provided that the plans from the 65 authorities that will get money from this September are satisfactory, the money will roll through into subsequent years.
  Mr. Foster: The local education authorities involved in the pilot will definitely welcome that assurance, although they were not given it until that moment.
  The hon. Member for Havant mentioned another concern that illustrates that the homework has not been done—funding. The Minister will not deny that he clearly said tonight that he accepts that assisted places money alone would not have been sufficient to deliver the pledge. Of course, we welcome the additional money from the Chancellor, but, without those additional sums, there is no evidence that the Government would have been able to deliver their pledge.
  When I looked at the calculations, I was worried whether there would be sufficient money even with the additional funding. For example, the Minister told us in the Standing Committee on the School Standards and Framework Bill that, to deliver the pledge by 2001, 5,000
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  extra teachers would probably be required. To date, none of us has seen an explanation of how that calculation was made. The Minister told us—it is clearly on the record—that 500,000 key stage 1 pupils are in classes of more than 30. If all of them were put into new classes of 30—this is a simple calculation—16,500 additional teachers would be required. We accept that some of those pupils will go into classes of fewer than 30, but even if one assumes that half of the 500,000 will do so—how that can happen when the Minister has told us that parents will be able to choose the most popular schools I do not know—and only 250,000 have to be put in new classes, it will still require not 5,000 but more than 8,000 additional teachers. I confess that I do not understand how the sums add up.
  Another example of how the figures do not add up is obvious from the departmental press release of 22 May, which many hon. Members will have studied and which categorically told us that the £22 million was being allocated
  "from the Standards Fund to recruit around 1,500 new teachers which will ensure that over 100,000 infant pupils will be kept out of large classes from this September."
  I checked the figures carefully with the Library, as I do not claim to be a better mathematician than the Minister. To the starting salary for a new teacher I added the appropriate superannuation and national insurance costs and discovered that the starting figure from 1 December, when the new teachers will be in post, is £17,595 per annum. I divided that sum into £22 million, expecting the answer to be 1,500, but it came to only 1,250. Therefore, there is no money to provide for 250 of the additional teachers the hon. Gentleman is promising us.
  The Minister also needs to consider some of the other concerns mentioned to him during the consultation period. As he was able to give such a clear statement about what he will do about the various criteria announced earlier in the light of the consultation, perhaps he will tell us what he can do about the concerns of local education authorities over information technology. The additional IT skills and the work necessary to produce all the data for the Department will require additional staff, unless staff are taken away from their existing activities—that is, improving standards. Will additional money be made available to help LEAs with that task?
  Leaving aside the money, another question is whether, in certain parts of the country, we shall be able to find the teachers to carry out the tasks that will be required. For example, LEAs in the inner London weighting pay area collectively have a smaller percentage of pupils in classes of more than 30 than those in other parts of the country, but nevertheless face the problem of existing vacancies, which have increased to 3.6 per cent. in the past two years. They will need to find additional teachers to reduce their class sizes, but there are already a large number of vacancies in their primary schools. The Government are convinced that all that will be delivered, but how do they expect that problem to be resolved? The problem is made worse by the fact that authorities in suburban London have the largest percentage of pupils in classes of more than 30—in Bromley, it is 56 per cent. and in Kingston, 62 per cent.—and will need a large number of extra teachers. The worry is that they will suck teachers out of the inner-London authorities where it is less popular to teach, which will make life there difficult indeed.

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  We have heard mention of the problem of what to do about popular schools. The Minister has stated that, following consultation, the extra places that are needed should be created in popular, oversubscribed schools with high standards shown by key stage 1 and 2 assessment tests, which is straight out of the consultation document. If that is to be the approach, I find it difficult to reconcile with some of the other Government requirements of local authorities, not least for the provision of best value. It seems to mean that the number of vacant school places throughout the country will increase. It is difficult to know whether that is the case, because consultation has not finished on the Government's admission policies.
  The hon. Member for Havant mentioned mixed-age classes; I look to the Minister for a clear answer tonight. What will happen in the case of a mixed-age class that has pupils from key stages 1 and 2—that is, both seven and eight-year-olds? May we have a clear assurance that none of the pupils will be in a class of more than 30? I assume that the Minister will say categorically that the answer is yes. After all, the pledge clearly states:
  "No child aged 5, 6 or 7 will be in a class of more than 30 pupils from September 2001 at the latest."
  The answer would have to be yes, but the very first paragraph of the consultation document that was issued to LEAs on 27 April says:
  "A class is covered by limits on class sizes if the majority of pupils in that class are in the relevant age group."
  That means that if only a few pupils are seven and most are eight, the class can have more than 30 pupils, so the seven-year-olds will lose out. That is not compatible with the pledge and will cause confusion for the local authorities bidding for funds to reduce class sizes.
  Has the Minister read her own document, "The National Literacy Strategy, Module 1, The Literacy Hour", which says that schools are required to organise classes so that there are no more than five groups of children, with no more than six in each group? Like the Minister, I am not brilliant at maths, but I can multiply five by six and get 30. How can that maximum number of pupils in a class for the literacy hour be achieved when even the Government do not expect class sizes for key stage 1 to get down to 30 for this September? Key stage 2 is not even covered, so we need to know how that all adds up.
  The Government have failed to do anything about school space standards. The Minister was extremely critical when the previous Government decided to abolish the minimum space standards. It is a great pity that those standards have not been reinstated, especially as many new classes will be created in the drive to reduce class sizes. We need to have an assurance that those classes will not be created in inadequate spaces.
  I am well aware that the ministerial answer will be that if there are no requirements, at least there are recommendations, which appear in building bulletin No. 82, "Area Guidelines for Schools". I seek an assurance that, in the creation of new classes, there will be an absolute requirement that those recommendations be adhered to by local education authorities and schools.
  Class size reduction is vital if we are to raise standards. Frankly, it is hypocritical of the Conservative party, which presided over huge and rising class sizes, to berate the
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  new Government, so we cannot support the motion. Equally, although we welcome the Government's determination at least to get some class sizes down, we cannot whole-heartedly congratulate
  "the Government on the excellent progress it has already made",
  as the amendment says, because that would be to ignore the numerous unanswered questions and the failure to start early enough and to go far enough.
  8.22 pm
  Helen Jones: I confess to being somewhat puzzled by the Opposition's choice of subject. For Conservative Members to initiate a debate on class sizes is like King Herod wanting to debate child welfare. If there were educational prizes for effrontery and sheer brass neck, they would certainly be at the front of the queue.
  To hear the hon. Member for Havant (Mr. Willetts) speak, one would think that Conservative Members were born guiltless on 1 May 1997. They would have us believe that they are without a past, but they are not, and it is right for the House to be reminded of that past, not because we want to evade responsibility for our actions—we shall be happy to be judged on them—but because it is important that the size of the task facing the Government, and their success in taking it on, should be put into context.
  Mr. Brady: I, of course, am completely guiltless and blameless. I wonder whether the hon. Lady regards herself and the Labour party as free from blame for the incompetence of many Labour local education authorities, which have been responsible for such bad performance in education throughout much of the country.
  Helen Jones: The hon. Gentleman is very selective in his references. Perhaps he would like to look at recent reports on the failing schools in Westminster before pointing the finger at Labour LEAs.
  Conservative Members would have us forget that, before the Labour Government took office, we had 18 years of Conservative mismanagement of the education system. I am sure that the whole country would like to forget that, but it happened. Those 18 years left 477,000 five, six and seven-year-olds in classes of more than 30. During those years, pupil-teacher ratios rose consistently and the previous Government continued to deny that class sizes had any effect on education.
  The hon. Member for Bath (Mr. Foster) rightly quoted the right hon. Member for Bromley and Chislehurst (Mr. Forth), who said:
  "there is no proven causal connection between class size and educational output."—[Official Report, 13 December 1994; Vol. 251, c. 767.]
  Mr. St. Aubyn: Is the hon. Lady aware that, although there are large class sizes in Bromley, there are also outstanding academic results? That may suggest that my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) knows what he is talking about in his own patch.
  Helen Jones: Perhaps it suggests that the right hon. Gentleman had not read the research.

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  In Committee on the School Standards and Framework Bill, Conservative Members appeared to change their stance. The right hon. Member for Charnwood (Mr. Dorrell) said:
  "We do not contend—and nor did the previous Government—that class size, for infant classes in particular, is wholly irrelevant."—[Official Report, Standing Committee A, 20 January 1998; c. 31.]
  That was backtracking on previous comments. Conservative Members felt no guilt in government, because they were conscious of no obligation. Never once did they express any outrage about what was happening to children in our schools.
  It is possible that the sinners have repented, and I believe in the possibility of redemption—although that belief has been sorely tested by daily contact with the Conservative party in opposition—but if they had learnt the error of their ways, why did they oppose the Bill to abolish the assisted places scheme and use that money to reduce class sizes? Why did they consistently argue that the money should be spent on a small minority of children, while children in constituencies such as mine continued to suffer large class sizes? Why did they table amendments that would have made the pledge on class sizes totally unworkable? It is no use their posing as defenders of lower class sizes now, when they sold the pass a long time ago.
  By contrast, the Labour Government not only desire the end, but are prepared to put in place the means. The Conservative party found reasons why class sizes should not be reduced, but we are prepared to build for success, because we believe that many of the problems in our schools stem from a failure to devote enough resources to the education of very young children at the beginning of their school life.
  I taught not in primary but in secondary education, but I believe strongly that our policy of reducing class sizes is a key part of raising standards and that money put into the education of children at the beginning of their school life will pay dividends later and prevent many of the problems that secondary school teachers now deal with. The Government are delivering on their commitment.
  In my town, 800 children in what is not by any means a leafy suburb will find themselves in smaller classes in September because of money put up by the Government. That is the effect for a single local education authority in a single town. My hon. Friend the Minister has made it clear that £22 million will go to the rest of the country in September, to keep 100,000 pupils out of oversized classes. Opposition Members have opposed that at every possible stage.
  In future, there will be more money. The £40 million in capital funds to be allocated to schools has already been referred to, but there will be £100 million from phasing out the assisted places scheme by 2001–02. We are determined to use that money to reduce infant class sizes, and to ensure that LEAs will not be able to do so in any way that restricts parental choice. LEAs will have to expand popular schools that have high standards, and we have consulted them on the best way in which to do that. We are no longer prepared to tolerate the failure that existed under the previous Government, when half our 11-year-olds failed to reach expected standards in English and maths, and when the reading standards of seven-year-olds were falling.
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  Research in the United Kingdom and in the United States has convinced us that lower class size in the early years is a key factor in raising education standards and allowing children to acquire basic skills. Parents know that. Teachers know it, too. The only people who do not appear to know it are the Opposition, whose decisions in government gave us the large class sizes that exist today, and which our Government are reducing. That is the difference between the Conservatives and Labour. They favour lower class sizes for those who can buy their way out of the state system, while we favour lower class sizes for all our children. For too long, children suffered a second-class education under Tory Governments, so that they were destined to be second-class citizens.
  Most Opposition Members do not use the state education system. If large class sizes are not good enough for their children, for whose children do they think large class sizes are good enough? The Opposition's motion is a piece of political chicanery, and an attempt to dodge the consequences of their past actions. The people will not be misled. I urge the House to vote against the motion.
  8.32 pm
  Mr. Nick St. Aubyn: I bring bad tidings for the Minister from my constituency. Since the class sizes debate began, I have visited my local schools as a Member of Parliament, and as a member of the Select Committee on Education and Employment, and I have not once heard a positive welcome for the Government's policy on reducing class sizes. At one school, I was told that if class sizes must come down, the library will have to be used as an extra classroom, removing a resource available to the entire school. Another school fears that the reduction in class sizes will use the money that has previously been put into a reading recovery programme.
  At the school in the village where I live, we opened a new porch in the school entrance only the other day—built with money that the Government were not responsible for finding; it was raised by the efforts of the local community. That school hopes to raise class sizes, and I asked whether the class size policy would help the school by encouraging more parents to send their children there, which would raise the numbers to 30. I was told, however, that the policy would not help the school; in fact, classes of more than 30 would be welcome as more resources would go into the school, and could be directed towards the children who most need them.
  The hon. Member for Bath (Mr. Foster) told us of his recent trip to Zurich. The hon. Member for Don Valley (Caroline Flint) and I also made that trip, and what the hon. Gentleman did not mention was that during 18 years of Conservative Governments here, the difference in income between the people of Switzerland and the people of the United Kingdom narrowed. People in Switzerland used to have a per capita income 60 per cent. higher than that in the UK; now it is barely 20 per cent. higher. The trend of the past 20 years has been one of economic success for the UK, which is why people in Zurich are looking to our education system to learn lessons for their own system.
  We went to Zurich in a spirit of cultural exchange, intending to learn from the Swiss, but we found that the Swiss were interested in learning from us. What is more, in order to produce an education system closer to ours,

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  they were prepared to contemplate an increase in their class sizes. Class sizes are not regarded in isolation in any other part of the world. It is a great mistake to do so here.
  Mrs. Louise Ellman: Will the hon. Gentleman clarify the Opposition's position on reducing infant class sizes? In government, the Conservatives increased class sizes. In opposition, they voted against the means to reduce class sizes. Their motion equates the reduction of class sizes with a reduction in educational standards. Will he clarify their position?
  Mr. St. Aubyn: I hope to get across to the small class of Members here tonight the message that the education system will be damaged if the Government isolate one aspect of policy and make it an overriding priority. It is, of course, desirable to have smaller classes, but all education research demonstrates that unless very low sizes—well below 20—are achieved, there is no significant impact on teaching. There are other ways in which the ability and strength of a school can be improved. Lower class sizes are clearly desirable, but they cannot be sought in isolation, at the expense of other important matters.
  Mr. Bob Blizzard: We have heard many times of the hon. Gentleman's support for the assisted places scheme, which he wants to continue in special form in Surrey. Does he support that scheme so that a few people can seek desirable small class sizes in private schools?
  Mr. St. Aubyn: I am grateful to the hon. Gentleman for raising the issue of what the Minister has said. We already knew that the Minister could not multiply, but we have learnt that he cannot add up either. He told us that the saving from the assisted places scheme would be £100 million a year, but everyone who has examined the matter knows that it will be £40 million a year. The cost of his programme may be £100 million a year, and the cumulative saving after three years will be £100 million, but the Minister should check his sums carefully, because he has got them wrong again.
  The abolition of the assisted places scheme, which, like many right-thinking people, I regret, has nothing to do with class sizes. The Government's class size priority will, as the Minister has admitted, cost a great deal more than the £40 million annual saving from the assisted places scheme. The cost of the new capital programme could not be announced until the Chancellor's statement—an admission by the Minister that he had put forward a policy that he did not know he could afford. The cost of that programme, and of reducing class sizes without significantly damaging parental preference or undermining the quality of teachers, will be a great deal more than will be saved from the abolition of the assisted places scheme.
  It is significant that when the assisted places scheme was discussed in another place a couple of weeks ago, the Government's policy on having a say over policies on assisted places was cut down by one vote, with support from Cross Benchers and Liberals and not because of a resurgence of Tory backwoodsmen. In areas such as Surrey, where we have our own scheme which local
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  people understand and can vote on, policy should be determined by local people. We should not have to justify it to the Secretary of State if we are not relying on additional central Government money to implement it.
  Helen Jones: The hon. Gentleman mentioned the Surrey scheme and said that people had been able to vote on it. Does he accept that the Government had an overwhelming mandate for their policy of reducing class sizes by phasing out the assisted places scheme, and that they have a duty to implement it?
  Mr. St. Aubyn: No one is denying the Government's right to withdraw the £40 million cost of the assisted place scheme, but, on 1 May last year, the people of Surrey also gave an overwhelming mandate to the Conservative party to take back control of Surrey county council and follow sound Conservative education policies in the interests of Surrey. We object to the centralised control that lies behind both the new regulations on partnership schemes and the Government's class size plans.
  We welcome any efforts to improve education. Smaller class sizes have a role to play, but, as we have heard already, in many ways the Government's scheme is too expensive and too costly, especially in terms of parental choice. How is it fair to tell parents with a child at a school that a sibling cannot go there because it would increase the numbers going into a class? How will the Minister respond? Will he say that he is prepared to sanction the building of an extra classroom in that school for siblings? Even if he were prepared to do that, at tremendous cost if it were done across the country, how could he possibly achieve it in time to deliver on his promise to satisfy the needs of those children? Many families' children will be split up or will have to travel further. Where I live and in my constituency, the problem of traffic on the roads when children are travelling to and from school will be accentuated by the Government's policy.
  We have not yet heard where the extra teachers will come from. The Government have offered no incentive to teachers, and their golden economic inheritance means that there is greater demand for teaching skills in other sectors of the economy. With such a problem of teacher supply, about which our Select Committee has already warned them, how will the Minister deliver quality teachers? When I put that to the National Union of Students and the National Association of Head Teachers there was concurrence that teacher quality is as important, if not more so, than class sizes. Parents and teachers would rather have children in slightly larger classes taught by first-rate teachers than in mathematically correct classes that underperform because the quality of the teacher available is not up to the standard that children and their parents have a right to expect.
  Mr. Hayes: My hon. Friend develops an interesting line of argument. Does he accept that, contrary to what was said by the Minister, Ofsted acknowledged exactly that point in its comments on the issue in 1996? Ofsted said that class size was a factor, but not the sole determinant of the quality of teaching and learning; the Labour party, however, has irresponsibly created the opposite perception among our people.
  Mr. St. Aubyn: I am grateful to my hon. Friend. I have the latest Ofsted report. I read carefully its section

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  on primary schools. In the priorities for action listed by Ofsted, there is not one mention of class sizes. There are important issues for our primary schools that should be addressed, but for the Government to be hung up on a soundbite—an early pledge that will be delivered late—is a betrayal not only of the children but of the trust that passed from our party to theirs on 1 May last year.
  It is regrettable that, behind the smirks and self-satisfied looks of Labour Members, there have been no real answers tonight. We will leave the Chamber knowing that the Government are concerned only with presentation and not with the practical effects of their proposals or the high cost for the people whom I and my colleagues represent.
  8.45 pm
  Mr. Bob Blizzard: We all know that it is the job of the Opposition to oppose, but it is revealing that, on a topic of their choice on one of their set-piece days, only six of them have turned up to oppose. That is not strong evidence that the Conservative party feels strongly about the issue.
  It is the job of the Opposition to oppose, but there is a difference between opposition and disingenuous opposition. What we have heard tonight is disingenuous opposition. Their first complaint was that the Government's pledge was not happening early enough, but they know, because some have served on education committees and, I hope, know something about schools, that the pledge cannot be implemented any quicker. They know that classes are set up at the start of each school year, and that only then can one alter their configuration. They know that the classes that children are in now—the ones referred to in the survey mentioned by the hon. Member for Havant (Mr. Willetts)—are the same as those set up in September 1997, and the same as those planned and organised, and for which staffing arrangements were made, back in May and June 1997, based on the budgets of April 1997 set by the previous Government.
  We have always made it clear where the money would come from. My hon. Friend the Minister read out from our plastic pledge card that it was always linked to the phasing out of the assisted places scheme. Last June, we discussed the Education (Schools) Bill, which received Royal Assent in July. That was a fast pace. We could not have moved any faster, but the dates did not permit activity on class sizes to fulfil the pledge until September 1998.
  The Education (Schools) Act 1997 honoured the assisted places that had already been organised for September 1997. Do the Opposition now suggest that we should not have honoured them, but should have told the children that they could not take up their assisted places in 1997 because we had to move more quickly and wanted the money right away? If so, it is the very opposite of what they argued for during the passage of the Bill, when they tabled a raft of amendments to a short, seven clause Bill—the purpose being to slow down the phasing out of the assisted places scheme. They asked for more time, for more youngsters to be kept on until the age of 13, for more of everything. In short, they wanted to delay the implementation of the class size pledge.
  I made my maiden speech during the debates on the Bill, and I followed the right hon. Member for South—West Norfolk (Mrs. Shephard), whose main point was that the Bill was being rushed through without enough thought
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  being given to it. At the time, the complaint was that we were going too fast; tonight, the complaint is that we are going too slowly.
  The fact is that there was no possibility of fulfilling the pledge in 1997: September 1998 will be our earliest opportunity. Would the Opposition have us disrupt classes in the middle of the academic year? If so, I wonder what parents would say. Alternatively, we could have put in additional resources besides those liberated by abolishing the assisted places scheme. Even so, taking action by September 1997 would have been extremely difficult—schools make their plans in May. In any case, we have heard time and again that the Opposition do not want any more money spent. They have argued that the whole idea should be called off owing to a lack of money from abolishing the assisted places scheme. Indeed, they have never argued for extra resources for education.
  This September, we will see the beginnings of children benefiting from the Government's policy. That would never have happened under the Conservatives. The real horror for the Opposition, of course, is that they can see that the pledge is being acted on. They can see, too, that phasing out the AP scheme is delivering the money and that the pledge will be fulfilled. So they are trying to muddy the water by confusing people about the timetable for implementation.
  The second example of the Opposition being disingenuous is that they are criticising the Government for allegedly not doing something with which they wholly disagree anyway. They spent years denying that class size had anything to do with education standards. Throughout their 18 years in government, I was teaching in the classroom. Nothing infuriated teachers, parents and pupils more than hearing various Conservative Ministers say that class sizes were irrelevant. The Minister referred earlier to crowd control. Anyone who has taught large classes knows that there are times when teaching feels like crowd control—and the way to control a crowd is to reduce its size. That is, after all, the selling point of the private schools.
  As my hon. Friend the Member for Warrington, North (Helen Jones) has said, we witnessed some spectacular somersaults by Conservative Members in Committee—I note that they are not here today. The new Tory move to suggest that class size did count was led by the right hon. Member for Charnwood (Mr. Dorrell) and by the hon. Member for Tiverton and Honiton (Mrs. Browning). Indeed, the right hon. Member for Charnwood said:
  "there is some evidence that class size has a strong influence on educational attainment for children aged five to seven."—[Official Report, Standing Committee A, 20 January 1998; c. 31.]
  Mr. Hayes: The hon. Gentleman will acknowledge that I spent many years as a county councillor and always acknowledged that class size was a factor. Would he agree, however, that it is most important for children with special needs? If so, does he agree with the Government's exemption from the pledge of children with special needs?
  Mr. Blizzard: Class size is a factor in all types of education, mainstream and special needs. The point is that unless the Government take steps to do something about

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  class size, nothing will happen. That is what happened for 18 years under the Conservatives, when class sizes never came down.
  Mr. Hayes: It is time to nail this one. Class sizes were at their peak in 1978; Library figures show that they were higher then than in 1997. I seem to recall that we had a Labour Government in 1978.
  Mr. Blizzard: It is easy to come up with all sorts of figures, depending on the starting and finishing points.
  The Conservative conversion to the cause of smaller class sizes has now vanished. The right hon. Member for Charnwood and the hon. Member for Tiverton and Honiton have disappeared from the Front Bench. I have to say that we questioned their conversion at the time, when amendments were tabled to ensure that no movement was made on class sizes. One incredible amendment was designed to enable parents to choose whether to put their child into a class of 30. The result would have been that 30 parents could choose the legal-sized class of 30, but the 31st parent could come along and insist on a class size of 31. That is a good example of the sort of amendments that we had to put up with in Committee.
  The revised Conservative policy evidenced in the motion is that smaller classes are desirable, but that nothing should be done about that. At the time of the Standing Committee's deliberations, my survey of my constituency showed that we had 25 classes of six and seven-year-olds containing more than 30 pupils—involving a total of more than 800. Thanks to the new Act, that will change during this Parliament.
  As in Committee, the hon. Member for Bath (Mr. Foster) has again expressed his strong vision for education. He asked the Minister some probing questions about how the Government's plans will be implemented, but he was very weak on the specifics of his own party's plans. When he began describing Liberal policy back in 1947 or thereabouts, I thought he was going to say that his party put an old penny on income tax for education—but had since made progress because that was 1/240th of a pound whereas now 1p is 1/100th of a pound.
  I read in the local press this week that the Conservatives have begun to listen to the electorate. Indeed, the local paper announced that the hon. Member for Ashford (Mr. Green) had turned up in my constituency while I was at Westminster—he made page 63 of the Lowestoft Journal, which shows just how successful his visit was. Had he really listened to parents in my constituency, he would have heard them asking not why smaller class sizes were being imposed but when it was their turn to have them. For as long as the Conservative party refuses to listen, it will remain unpopular, because people do not like a disingenuous Opposition.
  8.57 pm
  Mr. David Amess: I congratulate my hon. Friend the Member for Havant (Mr. Willetts), who made his case well—although that does not take much doing because there can be no doubt that, under the Labour Government, class sizes have increased. I do not doubt the sincerity of Ministers, but I profoundly disagree with their approach to this and other policies.
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  I am sick to death of attending in the Chamber and listening to Labour Members talk about the 18 years of Conservative government. Essex county council has been controlled by the Conservatives for only seven weeks and the leader of the Labour party jumps to the Dispatch Box and blames them for all ills, but, after 15 months of a Labour Government, no one seems to want to take responsibility.
  When hon. Members speak, they tend to draw on their personal experiences, which is what I shall do. First, I shall talk about my experience as a Member of Parliament.
  Mr. Byers: What—about Basildon?
  Mr. Amess: If the Minister wants me to talk about my former constituency and what the Labour party did on a private matter relating to education, I shall be happy to speak publicly on the subject. In the years that I have been a Member of Parliament, I have taken a great interest in education matters—
  Mr. Tony McNulty: In Basildon.
  Mr. Amess: Yes, in Basildon. It should be to the eternal shame of the Labour party that when my wife and I decided to send our son to a non-selective, not grant-maintained Church school outside my former constituency because there was no such school in the constituency, the then former Member of Parliament for Basildon, who was at that time the leader of Havering council, decided to make a big issue of the matter and to interfere with our private lives, yet several people who now have responsibility in the Government send their children to highly selective schools. The Minister attempts to chide me about Basildon, which is now represented by two Members of Parliament, one Conservative, one Labour, but he and other Labour Members should ensure that they are better informed than they appear to be at the moment.
  As I was saying, I take a great interest in education and in the schools in my constituencies, past and present. I go around schools all the time. If Ministers think that the public are pleased with what they have done in education for the past 15 months they are very wrong. Only weeks ago, not in my constituency, but in the London borough of Bexleyheath, the Conservative party won by-elections, and Bexley is now controlled by the Conservatives. I am informed by the chairman of the education committee, Mrs. Sharon Massey, that education was a leading issue on the doorstep. In May, we took seats from both the Labour party and the Liberal Democrats.
  I also draw on my experience as a teacher in a primary school in the east end of London dealing with children with special educational needs. That is why I was interested in what my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) had to say about the need for class sizes for children with special educational needs to be limited to 30. In addition, while I realise that Labour Members think little of playing politics with their own children—the hon. Member for Dunfermline, West (Ms Squire) shakes her head, but I can assure her that the Labour party in Basildon did exactly as I described earlier—I have five children, all in state schools, so I am deeply involved in and conscious of their experiences.

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  I represent the constituency of Southend, West. At Question Time a few weeks ago, the Under-Secretary of State for Education and Employment, the hon. Member for Birmingham, Yardley (Ms Morris), said that there was no problem with the size of classes in Southend and that we had spare capacity. She is quite wrong, and I shall prove that shortly. All the classes and the schools in my constituency are full, and what is happening in Southend is a disgrace.
  Southend is controlled not by the Conservative party, but by the Liberal Democrats and the Labour party working together. That is why I was appalled by what the hon. Member for Bath (Mr. Foster) said about education. The Labour party's promises have not been borne out and the Liberal Democrats' claptrap at the general election about the 1p on income tax to be spent on education will never be borne out. They have controlled Essex county council for the past four years and they should be ashamed of their record. At the moment, they control Southend-on-Sea borough council.
  All schools in Southend are operating at full capacity. A document written by the Conservative spokesperson, Mrs. Sally Carr, says:
  "The restriction of class sizes to no more than 30 will require an absolute restriction on admissions once class sizes have reached 30".
  That is what the council has decided, which is stating the obvious, but when the Minister replies, will she tell us how on earth schools in Southend will achieve that? There is no room for Portakabins. All our classes are full—they have more than 30 pupils.
  I know that some hon. Members were laughing at my hon. Friend the Member for Guildford (Mr. St. Aubyn). Someone said that he is an old Etonian. My hon. Friend represents a constituency and he is entitled to give his view on behalf of his constituents. I thought that he made his case very well. Is it the case that, under this Government, if one happens to be a Conservative Member, the people one represents do not count? I hope not.
  In Southend, 25 per cent. of schools have classes in excess of 30 pupils and that proportion will rise over the next year. I shall give three examples. At Prince Avenue school, which is in a challenging catchment area, the average class size for key stage 1 is 32 and increasing. The head teacher is already having to turn down pupils for next September, and many of their mums and dads are coming to my surgery. At Westleigh junior school, the average class size for key stage 2 is 32 and increasing. In year six, there is even a class of 37 pupils.
  I raised the subject of Westborough school with the Minister a few weeks ago. With 800 pupils, it is the largest primary school in Essex. I sought a meeting with the Minister for School Standards about the issue, which I shall come to at the end of my speech. The school is so crowded that there is no room for any more children and the head teacher does not even have an office from which to operate. The average class size is 33 and the largest class has 35 pupils. There are four mixed classes. At present, the school can afford to employ some teaching assistants to help staff, but it will be unable to continue to do so if class sizes are decreased and alternative funding arrangements are not found.
  Westborough, which is in a very challenging part of my constituency, has an acute funding problem. I had a long chat with the headmistress this afternoon. The chairman
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  of the governing body is a Liberal and the chairman of the education committee in Southend. The headmistress and the governors do not know where the money will come from. When the Under-Secretary winds up, will she tell me—if she does not have the time, she can write to me—what is the solution to the problem of those three schools in my constituency?
  In Essex local education authority area, 13,805 key stage 1 pupils and 28,850 key stage 2 pupils—40 per cent. of the total—are in classes of more than 30.
  Although one or two sedentary interventions began to exercise me a little, I said at the outset that I did not doubt Ministers' sincerity—and they are courteous in dealing with correspondence—but it is galling that whereas, under the previous Government, I was able to bring representatives—the head or deputy head—from every school in my constituency to meet the Secretary of State, I am now told that I cannot have any sort of meeting with any Minister because they are too busy. That is deeply disappointing, especially as the Government tell us time after time that they are listening to the people. They are jolly well not listening to those whom I represent in Southend, West.
  Mr. Byers: My hon. Friend the Under-Secretary and I have had a brief conversation to determine whether we can recall any correspondence from the hon. Gentleman requesting a meeting and we are unable to do so. My hon. Friend and I have a good record on meeting hon. Members from all parties when meetings are requested. If the hon. Gentleman would like to write to us—I do not remember receiving any correspondence from him, but I shall check—I am sure that we will treat his request as sympathetically as possible.
  Mr. Amess: I take the Minister's words in good faith, but three days ago—this is a little embarrassing—my secretary received a call from the diary secretary to one of the Ministers to say that a meeting was not possible. As the Minister expressed his view at the Dispatch Box I felt it necessary to respond, but I take what he said in good faith and I should be grateful if he will meet some of the headmasters in my constituency.
  I end by reiterating my main point about all the nonsense that has been said about saving money on the assisted places scheme. Labour Members know only too well that the Government may want to reduce class sizes—which I think will be impossible, given that our playgrounds are already overcrowded, not to mention the issue of choice—but from where will the money come? The Chancellor keeps telling us that he is relying on the previous Conservative Government's spending plans; then he says that there is to be a three-year strategy that will be more draconian. I want to know where the money will come from. Frankly, many people in my constituency feel that, under this Labour Government, they will not be able to afford children.
  9.12 pm
  Mr. Gordon Marsden: My hon. Friend the Member for Waveney (Mr. Blizzard), who unfortunately is no longer in the Chamber, put his finger on the issue when he distinguished between opposition and disingenuous opposition. Tonight, we have heard a great deal of the latter from the Opposition Benches.

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  The hon. Member for Bath (Mr. Foster) referred to the year zero mentality of Conservative Members. I thought that they were more like a collection of Rip Van Winkles who have slept through the last 20 years and now suddenly discovered all these new ideas. I had hoped that, when the hon. Member for Havant (Mr. Willetts) spoke, we would hear some opposition to that argument, but I could not find much of that in his speech. He said that the Conservative party understood that parents wanted their children to be educated in smaller classes, but there was precious little evidence of that while the Tories were in government. As my hon. Friends have pointed out, those of us who served on the Standing Committee saw much evidence of confusion and outright schizophrenia. I thought that schizophrenia had been confined to the previous members of the Conservative Front Bench, but it has clearly been inherited by the present incumbents.
  I understand that, in some quarters, the hon. Member for Havant bears the epithet "two brains". I had always assumed that that referred to his outstanding intellectual capacities, but clearly one brain is there to operate pre-1997 and the other post-1997. By that process, the two brains, rather like something in an H. G. Wells story, are able to proceed on their way without any conflict, but, unlike in science fiction, this problem has not just dropped from the planet Zog. As has been said, the build-up of class sizes has been strong and remorseless. In 1988, 804,000 children in the five to seven age range were being educated in classes of more than 30; by 1997, the figure had risen to 1,344,000. It is instructive to ask ourselves why. What series of factors over that period produced such a rise?
  In 1994 and 1996, Professor Neville Bennett of the school of education at the university of Exeter prepared an interesting report on class sizes in primary schools. It was a large survey and took into account the perceptions of head teachers, chairs of governors, teachers and parents. It is interesting to recall what some respondents to that survey said about the then Government and their policy on class sizes.
  One head teacher said:
  "The Government"—
  the previous Government—
  "has a policy (unstated) to increase class size. LMS determined budgets for schools, this was rate-capped and therefore budget was reduced. The last pay increase had to come from the budget. The only way to pay for this was by reducing staff."
  Another head spoke of
  "teachers in primary schools disadvantaged by a historical funding system which mitigates against smaller classes and non contact time—both sorely needed but not possible under present funding".
  Another reason for the increase in class sizes was the previous Government's severe attitude to local authorities that were trying to raise their game and raise educational standards. My hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman), who is in her place, can give eloquent testimony of the problems that Lancashire county council experienced in that connection.
  The previous Government hampered local authorities; moreover, they gave no thought to expenditure to improve the infrastructure that might support initiatives to reduce class sizes. They gave no thought to the number of
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  classrooms that rapidly became unusable, to the number of classrooms that were prefabricated or to the continuously lengthening list of necessary repairs.
  Perhaps the most significant reason for the increase in class sizes is the fact that the previous Government gave no thought to it because, as hon. Members have pointed out, too many of their own children were not educated in that system. As a result, they had no first-hand experience of the problems that were building in the primary school sector.
  Thankfully, the Government have begun—speedily, as Labour Members have said—to remedy the problem. From September, £22 million will be made available to 65 local education authorities. They include my new unitary education authority in Blackpool where, from September, 1,000 pupils will be kept out of classes of more than 30 as a result of the taking of money from the assisted places scheme.
  No sensible hon. Member would argue that it is easy to institute a policy of lower class sizes. There is a complex structure of schools. In my constituency there are 1950s or 1960s schools, where it would be relatively easy to implement the pledge, and schools where space will be a problem. That is precisely why the Government have not gone for a knee-jerk process of implementation, but are ensuring that the policy is implemented in a way that will not restrict parental choice. Tonight, the Minister gave a detailed and thoughtful list of the criteria that will be used. The wide range of schools also explains why the Government have given £40 million extra to build 600 additional classrooms in 1998–99, and why LEAs have been given searching and penetrating targets to institute their own strategy this autumn.
  In implementing our strategy, we must take every care not to restrict parental preference. The Government have made a strong and competent start and they deserve more than the Conservatives' knee-jerk reactions and schizophrenia. No Labour Member would argue—as some Conservatives have attempted to portray us as doing—that reducing class sizes is the be-all and end-all of education policy. A measured examination of what the Government have done in early-years education shows that that policy is only part of a raft of measures. My education authority has benefited from the new class sizes initiative, but not only that. We have benefited from an above average rise in education standard spending assessment; £73,000 for reducing class sizes; £24,000 for the national learning grid; £19,000 for literacy; and a total of £1·5 million of extra allocations for 1998–99.
  Those funds underline the holistic approach that the Government have taken to early-years education policy, and the pledge on class sizes is an important element in achieving those policy objectives. The Conservative motion therefore deserves to be rejected—and rejected decisively.
  9.19 pm
  Mr. John Hayes: As I said in an intervention earlier in the debate, I should like to nail as an untruth, or at least as a misapprehension, any statement that Opposition Members have not before spoken sensibly or in a balanced manner on education issues. Many of us, like Labour Members, have a long history of being involved in education—as teachers, governors and members of local education authorities—

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  and, of course, we acknowledge that class size is a factor and an issue in judging the quality of teaching and learning. The crude caricature of Opposition Members drawn in this debate by Labour Members does them far less justice than it does us.
  Three calumnies were preached—I use the word advisedly—by Labour Members in the run-up to the general election. The first was that class sizes were at an unprecedented level when the previous Government left office. That is certainly not true. Class sizes were not at an unprecedented high. Figures clearly show that secondary school class sizes, for example, were higher in 1978–79 than they were in 1996–97. The numbers were about the same at primary school level.
  The truth is that—largely because of demographic and birth rate factors, not because of Government policy—class sizes dipped in the 1980s. I should not claim Conservative credit for that dip, any more than Labour Members should claim that the Conservatives deliberately increased class sizes through the 1990s as a matter of public policy. Such a claim simply does not bear scrutiny. The full history of class sizes—not over 15 or 20 years, but over 50 years—suggests that not public policy but demography, population growth and the birth rate have been the major determinants of class sizes, both in the primary sector and the secondary sector. However, no Labour Member has mentioned that fact in this debate.
  The second calumny was that class sizes were the single most important factor in teaching and learning—in a child's educational progress. That is not borne out by the facts or by a wealth of research. Even those who take the most pro-Government perspective in educational research would argue that class size is only one of the key factors that affect a child's educational progress and the nature of teaching and learning. The truth is that the relationship between class size and educational success has as much to do with teaching and learning methodology as with anything else.
  The key factor of methodology has been mentioned in this debate by the hon. Member for Bath (Mr. Foster), who spoke about experience in Switzerland, and by me in my intervention in his speech when I spoke about the far eastern experience. There are a range of views on the importance of class sizes, just as there are a range of teaching methods. There are adherents to and protagonists of each of the different perspectives.
  The third calumny preached by Labour before the general election was that a Labour Government would quickly—immediately—do something about class sizes. Let us be absolutely clear about that pledge. Labour Members have told us today that it was always clear that it would take five years to reduce class sizes, but I remember that during campaigning before the general election Labour party campaigners told electors—Labour party candidates who are now hon. Members may have said the same—"Your child will be better off, because your child will be in a smaller class."
  Today, we have heard that many of those who currently have children in primary school will not benefit because—in the Minister's own words—the pledge will not come to its full fruition until 2001. We are talking largely about the next generation of children benefiting. That is hardly an early pledge. It is at best an early pledge delayed; at worst, it is a medium or long-term pledge in
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  respect of many children's life experience and educational progress. I fear that parents will judge that harshly against the propaganda that preceded it.
  Mr. Byers: The hon. Gentleman represents a seat in Lincolnshire, I think. This September, 900 five, six and seven-year-olds in Lincolnshire who will be in classes of 30 or fewer would have been in larger classes had the previous Government remained in office.
  Mr. Hayes: The Minister will acknowledge that I did qualify my remarks. Although I said that not all children would benefit, I then hesitated and said that, to be fair, some would. However, many of the people who voted Labour on the understanding that their children would be better off will not benefit. Many parts of the country will not see an improvement because, as the Minister acknowledged openly and fairly, the pledge will not be implemented in toto until 2001. That does not accord with the impression given during, or the marketing used by the Labour party before, the election. That is why people are coming to the hard, and arguably fair, judgment that Labour has not lived up to the expectations it created.
  I was about to talk about omissions from the pledge. One was the trade-off between class size and choice. We know that many large classes are the result of children being admitted to a school as a result of an appeal. It usually happens at the most popular schools, for obvious reasons. Burgeoning classes stem from the extension of choice—parents want to get their children into a particular school because of its reputation and record.
  Inevitably, there is a trade-off between class size and choice. One has to make a political and educational judgment: is it more important dogmatically to put every child in a class of fewer than 30, or to place more emphasis on choice?
  Mr. Brady: Would my hon. Friend care to reflect on the contradiction in the fact that the Government appear to have understood the importance of choice by accepting our policy of league tables for schools, but that, by capping numbers in classes of five, six and seven-year-olds, they are limiting choice? That limitation will not only affect parents; it will stop the good schools from dragging up the standards of the bad schools.
  Mr. Hayes: It is even worse than that. My hon. Friend points out a contradiction, but there is an implicit reduction in local discretion. Local education authorities have to prioritise and, with governors and parents, they may decide to place more emphasis on factors other than class size. The Government's bland, blanket policy prevents them from so doing.
  I had a state education and I have never had any parental connection with private education, contrary to the nonsense we heard from Labour Members. They talk as though the only factor that parents take into account when they choose to send their children to a private school is small class sizes. If that were the only basis on which private schools marketed themselves, they would do considerably less well. People are concerned about the quality of teaching. about leadership and about a school's ethos. Parental support is also a critical factor in a child's educational progress. Constantly focusing on class size dilutes the argument about those other vital factors and may even detract from their importance as issues to be considered in respect of the quality of teaching and learning.

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  The figures speak for themselves. Class sizes have risen. I cited figures from the Library that are available to everyone and show that class sizes in the secondary and primary sector have risen under this Government. We may argue about why that has happened. It may be said that the Government cannot proceed with their pledge on class sizes quickly enough as there are other priorities, or that this matter is not so important to them; in any event, average class sizes have increased, but to dwell on averages is in itself deceptive. If we look at LEA-by-LEA comparisons, Labour LEAs are worse. Class sizes in Labour LEAs are typically greater. That raises questions about the historical record of those LEAs in prioritising class size. As hon. Members will know, there is nothing to stop an LEA directing money towards that goal.
  Mr. Gordon Marsden: I accept that there will be variations, but will the hon. Gentleman accept—this is borne out by the allocations for this autumn—that many of the Labour LEAs to which he refers have those figures precisely because they are in areas of deprivation and need?
  Mr. Hayes: LEAs in areas of deprivation and need could have chosen to place greater priority on class size and to transfer money to subsidise, if you like—in the way that many LEAs subsidised nursery education as that was discretionary expenditure head—smaller class sizes. Many LEAs have chosen not to do so, but the hon. Gentleman makes a valid point in that LEAs are particularly poorly off because, as he will know, the largest classes tend to be in the most popular schools, and the most popular schools are frequently not in Labour LEAs, for obvious reasons.
  Mr. John Randall: I wonder whether my hon. Friend would be interested to know that the average class size in Islington is smaller than in the Oratory school.
  Mr. Hayes: I do not want to draw unnecessary attention to the fact that the Prime Minister is a highly privileged man who chooses to send his child to a highly privileged school, rather than the local comprehensive. I do not want to repeat that and would not do so, so I shall move swiftly on, but I also find it slightly distasteful that we have a Prime Minister with no background in local government or of using the state sector; he went to a private school with all that entails.
  The hon. Member for New college, Oxford and Harvard—the hon. Member for Blackpool, South (Mr. Marsden)—speaks as though he is one of the people's champions. I note that his interests are mediaeval history, theatre and other, equally arcane, matters—not football and real ale—so when he speaks as the people's champion we have to treat that claim with a certain latitude.
  The other omission from the Labour party's account before the election was the issue of the difference between schools within LEAs. Labour LEAs' failure to deal with surplus places means that a number of very small schools—some people would argue unviable schools—with relatively small classes, which are not necessarily the best or the most popular schools, are distorting the average. I should be interested to hear the Minister say in
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  her summing-up how we reconcile this class size policy with the issue of surplus places, and how surplus places are to be dealt with in this context.
  Valerie Davey: I give just the example of Gloucestershire, where schools such as the hon. Gentleman has described existed and the former Secretary of State for Education and Employment refused to take action.
  Mr. Hayes: I am afraid that I cannot give that intervention the credit or indeed attention that it deserves because my hon. Friend the Member for Cheadle (Mr. Day) was speaking in my ear and, as I am very deaf, I did not hear it all. However, in the spirit of the Minister, when he was dealing with my hon. Friend the Member for Southend, West (Mr. Amess), if the hon. Lady writes to me, I shall deal with her intervention fully.
  Class size is a factor in children's educational progress, but it is not the most important factor. The debate continues. The jury is still out on how important class size is. The important thing about this debate is that the Labour party, now the Government, raised expectations about immediate action on class sizes which it has failed to deliver—indeed, it has been thwarted. The British people are extremely angry that Labour has disregarded those expectations in its priorities.
  9.34 pm
  Mrs. Louise Ellman: Tonight's debate has been characterised by Tory hypocrisy. That has been clearly demonstrated by the assertion that we are choosing between smaller class sizes and good teaching. This Government offer both. When I was the leader of a local authority while a Tory Government were in power, we battled against cuts in revenue and capital, we battled to stop class sizes rising, we battled against cuts in resources and we battled to keep open opportunities for pupils in access to the arts, basic standards in education and discretionary grants in further education.
  We are offering smaller class sizes where it matters most, in infant education, and expanded opportunities for all. That is the beginning of a new era. I congratulate the Government on the splendid start that they have made. I condemn the hypocrisy of the Conservatives. I hope that they learn over the next few years, as the nation gets the benefit of expanded education opportunities for all.
  9.35 pm
  Mrs. Theresa May: The Government
  "has made two pledges on class sizes and parental choice. It is in danger of failing to deliver either."
  Those are not my words or the words of my hon. Friends, who have made such excellent contributions to the debate. They are not even the words of Conservative councillors. They are the words of Gavin Moore, the Labour chairman of education in the London borough of Lewisham, speaking last week at the conference of the Council of Local Education Authorities, which was reported on Saturday in The Times in the following way.
  "Parental freedom to choose a child's school must be constrained if class sizes are to be reduced, Labour councillors said yesterday.
  The election pledge made by Labour last year to reduce primary class sizes to under 30 pupils…will be impossible to achieve if parents have the right to decide which school their child attends, the councillors claimed."

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  The Minister dismisses the words of those local education authorities. They are the words of people who will be responsible for delivering the Minister's pledge at local level. As my hon. Friend the Member for Southend, West (Mr. Amess) made clear, there is real local concern about the practical implications of putting the pledge into practice.
  It is not surprising that the Minister for School Standards dismisses local education authorities. As my hon. Friend the Member for Guildford (Mr. St. Aubyn) pointed out, the Government are taking away local decision-making powers and centralising control in the hands of the Secretary of State.
  The Minister dismissed the concerns of his Labour colleagues in local government, saying that the issues were administrative and managerial, but they are not. The concerns of councillors are about whether children can attend the schools that they and their parents want them to go to, but the issue is about more than that; it is about the quality of education that children receive in our schools.
  My hon. Friend the Member for Havant (Mr. Willetts) referred to the only analysis that has been carried out on class sizes—the Coopers and Lybrand report commissioned by the Local Government Association. Coopers and Lybrand talked to LEAs, head teachers and governors about their concerns. On the opinions of head teachers and governors, the report says:
  "Whilst there was widespread support for the policy of reducing class sizes in principle, we found that many heads were not convinced that a slight reduction in class sizes in their own schools would recompense for the upheaval and loss of flexibility that could result."
  The report goes on to talk about where the policy might have a negative impact:
  "At Key Stage 2 (or other Key Stages) if the development causes resources to shift towards Key Stage 1 at the expense of other Key Stages
  at Key Stage 1 and 2 if the policy causes a change to mixed age teaching…
  at Key Stage 1 if non teaching classroom assistants are withdrawn…
  at schools in areas of social deprivation if the policy causes a shift of resources towards schools in more prosperous areas."
  I recognise that the Minister may dismiss the Coopers and Lybrand report because it was commissioned by local government, and he has no interest in and no time for local government. Perhaps he will take some interest in the findings of research undertaken by the National Foundation for Educational Research in England and Wales, which surveyed head teachers' concerns about the practical implications of the class size pledge. The survey said:
  "While supportive, in principle, of class size reduction, headteachers were concerned that fixed limits for key stage 1 classes…could produce three unwelcome and, they felt, adverse outcomes: the creation of more mixed age (vertically grouped) classes, even larger key stage 2 classes, and a reduced capacity to employ classroom assistants."
  In other words, the pledge will hit the quality of education that children receive in the classroom.
  The point about the impact on key stage 2 classes was made very clear to the Under-Secretary of State for Education and Employment, the hon. Member for Birmingham, Yardley (Ms Morris), when she appeared in front of a number of teachers in Derby, as reported in
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  Friday's Derby Evening Telegraph. When repeatedly challenged on the subject of overcrowding in junior schools, she replied:
  "Our current priority is to fund key stage one and we don't have any plans to deal with key stage two at the moment."
  In other words, children over the age of seven will suffer as a result of the Government's pledge on five, six and seven-year-olds.
  All that the Minister for School Standards did in the debate was constantly to assert that parental preference would not be affected. Yet, when we got to the subject of what decisions the Secretary of State will take, we were told that he must consider only whether local education authority plans have "due regard" to parental preference—not whether it is affected. That is not a pledge to parents who are worried that their choice will be restricted as a result of the Government putting their pledge into practice.
  Earlier, the Minister for School Standards refused to give the following pledge. In responding to the debate, will the Under-Secretary pledge that no parent will have a child—be they five, six or seven years old—turned away from the school of their choice due to the class size pledge? Will she also pledge that no parental appeal will be turned down on the basis of class size? We await her response to both those specific questions.
  It is clear from the debate that the Labour Government's pledge was ill thought out; it was not properly planned. It sounded good, and fitted on the pledge card, but Labour did not know how it would be put into practice. It is clear from the Minister's refusal to answer all the specific questions put to him that he still does not know how the Government will put the pledge into practice.
  The hon. Members for Blackpool, South (Mr. Marsden) and for Warrington, North (Helen Jones) referred to attacks of amnesia. The brief comments of the hon. Member for Liverpool, Riverside (Mrs. Ellman) implied the same. As my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) pointed out, Labour Members are the ones who have had an attack of amnesia.
  The hon. Member for Waveney (Mr. Blizzard) made a valiant attempt to protect his Front-Bench team—I sincerely hope that the duty Whip took due notice of his contribution—on the timetable of the pledge, by saying that there was absolutely no prospect ever that it would be met in the Government's early days. [Interruption.] I say to the hon. Member for Waveney, and to the Secretary of State, who just seems to have confirmed that from a sedentary position, that if that were so, why did Labour Members tell the electorate that the pledge was an early one? That meant to the electorate that it would be met quickly. Now we hear that an early pledge is simply one about which they thought before any others. That was not what they said during the election campaign. They told members of the public, parents and teachers that there was an early pledge to cut class sizes for five, six and seven-year-olds. The public believed the Labour party and thought that the pledge would be implemented quickly.
  The Secretary of State for Education and Employment (Mr. David Blunkett): Perhaps the hon. Lady will tell us whether the Conservative party is saying, as a consequence of its belief that the pledge was to be

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  implemented by September 1998, that it expected the assisted places scheme simply to be stopped and no further children to be allowed to continue through it?
  Mrs. May: Perhaps the Secretary of State would like to give a pledge now about whether the Government will implement their pledge within the life of this Parliament. Will the right hon. Gentleman give that pledge now?
  Mr. Blunkett: Absolutely.
  Mrs. May: The right hon. Gentleman says, "Absolutely" from a sedentary position. So we know that. Thank you very much.
  When the Labour party unveiled its pledge on class sizes, when it distributed its pledge cards and when those who are not Labour Members campaigned on the doorstep, they did not provide any small print. They did not add any caveats to what they were saying. I see that the Minister for School Standards has to get out his pledge card to check whether there is any small print on it, just to remind himself of what it says. I note that the Under-Secretary of State for Education and Employment, who will reply to the debate, has had to borrow the pledge card of the Minister for Schools Standards. I think that the hon. Gentleman said earlier that any self-respecting Minister made sure that he or she had a copy of it.
  When the pledge card was produced, when Labour candidates went on the doorsteps during the election campaign, when shadow Labour Ministers in the previous Parliament were interviewed during the election campaign and prior to it, and when the now Prime Minister unveiled all the pledge posters and pledge coffee mugs, there was not any small print. There were no caveats. They did not say to parents that they would achieve the pledge only by taking away parental choice. They did not say to parents that it depended on where people lived as to how early—
  Caroline Flint: Will the hon. Lady give way?
  Mrs. May: No. I must make progress.
  Parents were not told that it depended on where people lived as to how early the pledge would be delivered. The Government did not say to parents that they would deliver the pledge only by increasing mixed-age teaching. They did not say that they would do it by taking resources out of key stage 2 so that those children would suffer from a lack of resources. They did not say that they would do it by reducing the number of classroom assistants. They did not say that they would achieve their pledge only by refusing appeals. However, those are the implications of putting the pledge into practice.
  That is the reality and that is what will happen to parents and children throughout the country. They will find that choice is being taken away from them. They will find that other classes will suffer. Head teachers will say, as they say to me and to my hon. Friend the Member for Southend, West, that they have real concerns about the impact of putting the Government's pledge into practice in the classrooms. The reality is that the Government have failed to deliver on an early pledge, and they have failed to deliver the truth to the electorate.
  9.47 pm
  The Parliamentary Under-Secretary of State for Education and Employment (Ms Estelle Morris): I have spent three hours listening to the debate; I am a very disappointed person having listened to what Opposition Members have said. I am still not clear about what they really think about class size. I was in a Standing Committee earlier this year and I heard the right hon. Member for Charnwood (Mr. Dorrell) say that
  "there is some evidence that class size has a strong influence on educational attainment".—[Official Report, Standing Committee A, 20 January 1998; c. 31.]
  I thought that that was a conversion; I thought that Opposition Members had seen the light. I thought that today, we would see some sort of revivalist rally—some sort of coming-out celebration—where one Opposition Member after another would say, "Yes, we were wrong. We have seen the light and we have been converted." However, they did not say that. I do not believe that any of them, with the exception of the right hon. Member for Charnwood, has changed his or her mind about whether class size matters. It is interesting that the right hon. Gentleman has gone off to think for the Conservative party; I can only hope that he will have more influence on the hon. Member for Havant (Mr. Willetts) who, having taken over as shadow Secretary of State, has spoken in stark contradiction to what the right hon. Gentleman said in Committee.
  Conservative Members may show empathy and say that they want to reduce class sizes, but, at every turn, and again tonight, they have spoken and voted against the means of doing so. Last July, they voted against securing the money and, last year, they opposed the Bill that would have made the reduction possible. Now that we are implementing our pledge, they are warning of imaginary obstacles.
  To be fair—we always want to be fair—I must give Conservative Members some credit. There is a yawning chasm between even what they have said tonight and what they did when they had the chance to act on the issue. We have heard three hours of pious words, but they do not make up for 18 years of hopeless inaction. We have heard siren voices galore, but why were those same voices not raised when the Conservative Government were in office? Did we hear any Conservative Member protest when, year after year, class sizes rose? Did we hear a murmur from any of them when, just before the general election, the number of infant children in classes of more than 30 hit the 500,000 mark? More than 4,000 of those infants were in classes not of more than 30, but of more than 40. Given the Conservative party's record, can anyone take seriously what it says today about class size?
  As if the Conservative party's preaching about class size was not audacious enough, we have had to put up with a lecture by the shadow Secretary of State on the fulfilment of election pledges. That is the big conversion of the night—a member of the previous Government worrying about whether Governments keep their election pledges. However, not one Conservative Member has said, "Sorry we got it wrong; sorry we were so mistaken about the importance of class size." Not one of them has said sorry to the hundreds of thousands of kids whom they let down, or sorry to the parents and teachers who wanted and deserved better.
  As my hon. Friend the Member for Blackpool, South (Mr. Marsden) said, the Conservatives act as if the past 18 years did not happen. They may wish that that

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  were so—indeed, I wish that it were so—but parents, teachers and the Government cannot act as if it were; we have to pick up the pieces and face up to the consequences of the 18 years of Conservative Government. The fact that the Conservative Government cut budgets year after year and forced up class sizes had a direct effect on educational standards. We inherited a situation in which more than four out of 10 11-year-olds had not effectively mastered literacy and numeracy. One reason—it is not the only one—why that is the case is that class sizes were too large in those children's early years. That is the Conservative party's record on class sizes—we are putting it right, as we promised we would, and we are doing so ahead of time.
  From this September, 100,000 five, six and seven-year-olds in 65 local authorities across the country—both Conservative and Labour controlled—will be kept out of classes of more than 30. Moreover, 1,500 extra teachers will be, and have been, recruited to teach those children, and £40 million will be spent to build new classrooms. By 2001, the pledge that we made to the electorate before the general election will be honoured in full and ahead of time.
  Equally important, reductions in class size are only part of the wider strategy to raise standards—the hon. Members for Guildford (Mr. St. Aubyn), for South Holland and The Deepings (Mr. Hayes) and for Southend, West (Mr. Amess) were right about that, if about nothing else. The 100,000 children who go into smaller classes in September and the children who join them in smaller classes in the next few years will also learn in school buildings that, in some cases, have had repairs for which they have waited for years. They will read better and they will master numbers better because they will be taught by teachers who have been retrained in best practice, and because money has been put in the classroom for the most modern resources. They will use new technology because we shall have ensured that schools are equipped and teachers trained. They will learn both in and outside school because by 2002, one in every two secondary schools and one in every four primary schools will have the opportunity of a homework centre.
  We need no lectures from any Conservative Member about class size not being the only thing that matters. We know that it is not. All those initiatives and many more that have been announced are properly funded and, together with class size, will make a real difference to the life chances of children.
  The hon. Member for Maidenhead (Mrs. May) went into semantics about when is an early pledge not an early pledge but, whether it is one year or three, it is a damn sight quicker than 18 years with no action. The hon. Lady wittered away about parental choice. I think that choice is important, but, under the previous Government, the number of appeals by parents who did not get their first choice of school shot up year after year, and they took no action.
  Mrs. May: If the Minister is saying that parental choice is so important to the Government, will she now give the pledge asked of her and of the Minister for School Standards, that no parent will find that their preference for a school is refused because of Labour's class size pledge?
  Ms Morris: When my hon. Friend the Minister for School Standards opened the debate, he made it clear that
  118
  local authorities would not be able to meet the class size pledge by reducing parental choice. We have taken action to ensure parental choice, which is far more than the Conservatives ever did in 18 years in government.
  While Conservative Members work out what they think about class size, we have been getting things done. We secured the money with one of the first Bills to receive Royal Assent—the Education (Schools) Bill—and it has already been passed to schools in the first full academic year on which we had an influence. More places in popular schools that have high standards—that is what parents want and, with this Government, that is what they will get.
  The Conservatives have shown tonight that they are still in that state of confusion. They have still not understood the urgency of cutting class sizes. This September—only a few months away—100,000 children will benefit because we are keeping our promise. By 2001, classes of more than 30 for infant schoolchildren will, for the first time in the history of this country, be a thing of the past. That is good news for parents and for teachers, but most of all, it is good news for the children who need that best start if they are to reach their potential and have a real chance in life.
  What we have heard tonight is no more than cynical scaremongering by Conservative Members, but their words cannot take away what many parents already know—that Labour is delivering. We have shown that already and we will continue to show it in the next three years. The Opposition motion is nothing more than a cynical attempt to detract from a Government who are delivering on their pledge. It is not worthy of the support of the House and I urge hon. Members to reject it.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 134, Noes 297.

  Division No. 317]

  [9.58 pm

  AYES

  Ainsworth, Peter (E Surrey)

  Duncan, Alan

  Amess, David

  Duncan Smith, Iain

  Ancram, Rt Hon Michael

  Emery, Rt Hon Sir Peter

  Atkinson, David (Bour'mth E)

  Evans, Nigel

  Baldry, Tony

  Faber, David

  Bercow, John

  Fabricant, Michael

  Beresford, Sir Paul

  Fallon, Michael

  Blunt, Crispin

  Flight, Howard

  Body, Sir Richard

  Forth, Rt Hon Eric

  Boswell, Tim

  Fowler, Rt Hon Sir Norman

  Bottomley, Peter (Worthing W)

  Fraser, Christopher

  Brady, Graham

  Gale, Roger

  Brazier, Julian

  Garnier, Edward

  Browning, Mrs Angela

  Gibb, Nick

  Bruce, Ian (S Dorset)

  Gill, Christopher

  Burns, Simon

  Gorman, Mrs Teresa

  Cash, William

  Gray, James

  Chapman, Sir Sydney (Chipping Barnet)

  Green, Damian

  Greenway, John

  Chope, Christopher

  Grieve, Dominic

  Clappison, James

  Gummer, Rt Hon John

  Clark, Rt Hon Alan (Kensington)

  Hamilton, Rt Hon Sir Archie

  Cran, James

  Hammond, Philip

  Curry, Rt Hon David

  Hawkins, Nick

  Dafis, Cynog

  Hayes, John

  Davies, Quentin (Grantham)

  Heald, Oliver

  Davis, Rt Hon David (Haltemprice)

  Heathcoat-Amory, Rt Hon David

  Day, Stephen

  Hogg, Rt Hon Douglas

  Dorrell, Rt Hon Stephen

  Horam, John

  119

  Howard, Rt Hon Michael

  Robertson, Laurence (Tewk'b'ry)

  Howarth, Gerald (Aldershot)

  Roe, Mrs Marion (Broxbourne)

  Hunter, Andrew

  Rowe, Andrew (Faversham)

  Jack, Rt Hon Michael

  Ruffley, David

  Jackson, Robert (Wantage)

  St Aubyn, Nick

  Jenkin, Bernard

  Sayeed, Jonathan

  Johnson Smith, Rt Hon Sir Geoffrey

  Shepherd, Richard

  Simpson, Keith (Mid-Norfolk)

  Key, Robert

  Soames, Nicholas

  Kirkbride, Miss Julie

  Spelman, Mrs Caroline

  Laing, Mrs Eleanor

  Spicer, Sir Michael

  Lait, Mrs Jacqui

  Spring, Richard

  Lansley, Andrew

  Stanley, Rt Hon Sir John

  Leigh, Edward

  Streeter, Gary

  Letwin, Oliver

  Swayne, Desmond

  Lewis, Dr Julian (New Forest E)

  Syms, Robert

  Lidington, David

  Tapsell, Sir Peter

  Lloyd, Rt Hon Sir Peter (Fareham)

  Taylor, Ian (Esher & Walton)

  Llwyd, Elfyn

  Townend, John

  Loughton, Tim

  Tredinnick, David

  Luff, Peter

  Trend, Michael

  McIntosh, Miss Anne

  Tyrie, Andrew

  MacKay, Andrew

  Viggers, Peter

  Maclean, Rt Hon David

  Walter, Robert

  McLoughlin, Patrick

  Wardle, Charles

  Madel, Sir David

  Waterson, Nigel

  Malins, Humfrey

  Wells, Bowen

  Maples, John

  Whittingdale, John

  Maude, Rt Hon Francis

  Widdecombe, Rt Hon Miss Ann

  Mawhinney, Rt Hon Sir Brian

  Wilkinson, John

  May, Mrs Theresa

  Willetts, David

  Moss, Malcolm

  Wilshire, David

  Nicholls, Patrick

  Winterton, Mrs Ann (Congleton)

  Page, Richard

  Winterton, Nicholas (Macclesfield)

  Paice, James

  Woodward, Shaun

  Paterson, Owen

  Yeo, Tim

  Pickles, Eric

  Young, Rt Hon Sir George

  Prior, David

  Randall, John

  Tellers for the Ayes:

  Redwood, Rt Hon John

  Mr. John M. Taylor and

  Robathan, Andrew

  Mr. Tim Collins.

  NOES

  Adams, Mrs Irene (Paisley N)

  Burgon, Colin

  Ainger, Nick

  Byers, Stephen

  Ainsworth, Robert (Cov'try NE)

  Caborn, Richard

  Alexander, Douglas

  Campbell, Alan (Tynemouth)

  Anderson, Donald (Swansea E)

  Campbell, Mrs Anne (C'bridge)

  Anderson, Janet (Rossendale)

  Campbell, Menzies (NE Fife)

  Armstrong, Ms Hilary

  Campbell, Ronnie (Blyth V)

  Ashton, Joe

  Cann, Jamie

  Atkins, Charlotte

  Casale, Roger

  Austin, John

  Chapman, Ben (Wirral S)

  Ballard, Jackie

  Chaytor, David

  Banks, Tony

  Chidgey, David

  Battle, John

  Chisholm, Malcolm

  Bayley, Hugh

  Clapham, Michael

  Beard, Nigel

  Clark, Rt Hon Dr David (S Shields)

  Beckett, Rt Hon Mrs Margaret

  Clark, Paul (Gillingham)

  Begg, Miss Anne

  Clarke, Charles (Norwich S)

  Bennett, Andrew F

  Clarke, Tony (Northampton S)

  Benton, Joe

  Clelland, David

  Bermingham, Gerald

  Clwyd, Ann

  Berry, Roger

  Coffey, Ms Ann

  Blears, Ms Hazel

  Cohen, Harry

  Blizzard, Bob

  Coleman, Iain

  Blunkett, Rt Hon David

  Connarty, Michael

  Boateng, Paul

  Cook, Frank (Stockton N)

  Borrow, David

  Corston, Ms Jean

  Bradley, Keith (Withington)

  Cousins, Jim

  Bradley, Peter (The Wrekin)

  Crausby, David

  Brinton, Mrs Helen

  Cummings, John

  Brown, Rt Hon Nick (Newcastle E)

  Cunliffe, Lawrence

  Brown, Russell (Dumfries)

  Cunningham, Rt Hon Dr John (Copeland)

  Buck, Ms Karen

  Burden, Richard

  Cunningham, Jim (Cov'try S)

  120

  Dalyell, Tam

  Jones, Mrs Fiona (Newark)

  Darvill, Keith

  Jones, Helen (Warrington N)

  Davey, Valerie (Bristol W)

  Jones, Ms Jenny (Wolverh'ton SW)

  Davidson, Ian

  Davies, Rt Hon Denzil (Llanelli)

  Jones, Jon Owen (Cardiff C)

  Davis, Terry (B'ham Hodge H)

  Jones, Dr Lynne (Selly Oak)

  Dean, Mrs Janet

  Jones, Martyn (Clwyd S)

  Denham, John

  Keeble, Ms Sally

  Dobbin, Jim

  Keen, Alan (Feltham & Heston)

  Donohoe, Brian H

  Keen, Ann (Brentford & Isleworth)

  Doran, Frank

  Kennedy, Jane (Wavertree)

  Dowd, Jim

  Khabra, Piara S

  Drew, David

  Kidney, David

  Dunwoody, Mrs Gwyneth

  Kilfoyle, Peter

  Eagle, Angela (Wallasey)

  King, Andy (Rugby & Kenilworth)

  Eagle, Maria (L'pool Garston)

  Kingham, Ms Tess

  Edwards, Huw

  Kirkwood, Archy

  Ellman, Mrs Louise

  Kumar, Dr Ashok

  Ennis, Jeff

  Ladyman, Dr Stephen

  Etherington, Bill

  Lawrence, Ms Jackie

  Fatchett, Derek

  Leslie, Christopher

  Fearn, Ronnie

  Lewis, Terry (Worsley)

  Flint, Caroline

  Liddell, Mrs Helen

  Flynn, Paul

  Linton, Martin

  Foster, Rt Hon Derek

  Livingstone, Ken

  Foster, Don (Bath)

  Lloyd, Tony (Manchester C)

  Foster, Michael Jabez (Hastings)

  Lock, David

  Foster, Michael J (Worcester)

  Love, Andrew

  Foulkes, George

  McAllion, John

  Gapes, Mike

  McAvoy, Thomas

  Gardiner, Barry

  McCabe, Steve

  George, Bruce (Walsall S)

  McCafferty, Ms Chris

  Gerrard, Neil

  McCartney, Ian (Makerfield)

  Gibson, Dr Ian

  McDonnell, John

  Gilroy, Mrs Linda

  McGuire, Mrs Anne

  Godman, Dr Norman A

  McKenna, Mrs Rosemary

  Goggins, Paul

  McNulty, Tony

  Golding, Mrs Llin

  MacShane, Denis

  Gordon, Mrs Eileen

  Mactaggart, Fiona

  Grant, Bernie

  McWilliam, John

  Griffiths, Jane (Reading E)

  Mahon, Mrs Alice

  Griffiths, Nigel (Edinburgh S)

  Mandelson, Peter

  Griffiths, Win (Bridgend)

  Marsden, Gordon (Blackpool S)

  Grocott, Bruce

  Marsden, Paul (Shrewsbury)

  Grogan, John

  Marshall, David (Shettleston)

  Gunnell, John

  Marshall, Jim (Leicester S)

  Hain, Peter

  Marshall-Andrews, Robert

  Hall, Mike (Weaver Vale)

  Martlew, Eric

  Hamilton, Fabian (Leeds NE)

  Maxton, John

  Hancock, Mike

  Meale, Alan

  Hanson, David

  Michael, Alun

  Heal, Mrs Sylvia

  Michie, Mrs Ray (Argyll & Bute)

  Heath, David (Somerton & Frome)

  Milburn, Alan

  Henderson, Ivan (Harwich)

  Miller, Andrew

  Hepburn, Stephen

  Mitchell, Austin

  Heppell, John

  Moffatt, Laura

  Hewitt, Ms Patricia

  Morgan, Ms Julie (Cardiff N)

  Hill, Keith

  Morgan, Rhodri (Cardiff W)

  Hinchliffe, David

  Morley, Elliot

  Hoey, Kate

  Morris, Ms Estelle (B'ham Yardley)

  Home Robertson, John

  Mudie, George

  Hood, Jimmy

  Mullin, Chris

  Hoon, Geoffrey

  Murphy, Jim (Eastwood)

  Howarth, Alan (Newport E)

  O'Brien, Bill (Normanton)

  Howarth, George (Knowsley N)

  O'Brien, Mike (N Warks)

  Howells, Dr Kim

  Olner, Bill

  Hoyle, Lindsay

  O'Neill, Martin

  Hughes, Kevin (Doncaster N)

  Öpik, Lembit

  Humble, Mrs Joan

  Osborne, Ms Sandra

  Hutton, John

  Palmer, Dr Nick

  Iddon, Dr Brian

  Pearson, Ian

  Illsley, Eric

  Pendry, Tom

  Jackson, Ms Glenda (Hampstead)

  Pickthall, Colin

  Jackson, Helen (Hillsborough)

  Pike, Peter L

  Jamieson, David

  Plaskitt, James

  Jenkins, Brian

  Pond, Chris

  121

  Pope, Greg

  Stevenson, George

  Pound, Stephen

  Stewart, Ian (Eccles)

  Powell, Sir Raymond

  Stoate, Dr Howard

  Prentice, Ms Bridget (Lewisham E)

  Stott, Roger

  Prentice, Gordon (Pendle)

  Strang, Rt Hon Dr Gavin

  Prosser, Gwyn

  Straw, Rt Hon Jack

  Purchase, Ken

  Stringer, Graham

  Quinn, Lawrie

  Stuart, Ms Gisela

  Radice, Giles

  Sutcliffe, Gerry

  Rammell, Bill

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Rapson, Syd

  Reed, Andrew (Loughborough)

  Taylor, Ms Dari (Stockton S)

  Reid, Dr John (Hamilton N)

  Temple-Morris, Peter

  Rendel, David

  Thomas, Gareth R (Harrow W)

  Robertson, Rt Hon George (Hamilton S)

  Timms, Stephen

  Touhig, Don

  Roche, Mrs Barbara

  Trickett, Jon

  Rooker, Jeff

  Truswell, Paul

  Ross, Ernie (Dundee W)

  Turner, Dr Desmond (Kemptown)

  Rowlands, Ted

  Turner, Dr George (NW Norfolk)

  Roy, Frank

  Twigg, Derek (Halton)

  Russell, Bob (Colchester)

  Tyler, Paul

  Russell, Ms Christine (Chester)

  Vaz, Keith

  Ryan, Ms Joan

  Vis, Dr Rudi

  Salter, Martin

  Wallace, James

  Savidge, Malcolm

  Walley, Ms Joan

  Sedgemore, Brian

  Wareing, Robert N

  Shaw, Jonathan

  Watts, David

  Sheerman, Barry

  White, Brian

  Sheldon, Rt Hon Robert

  Whitehead, Dr Alan

  Simpson, Alan (Nottingham S)

  Wicks, Malcolm

  Singh, Marsha

  Williams, Alan W (E Carmarthen)

  Skinner, Dennis

  Willis, Phil

  Smith, Rt Hon Andrew (Oxford E)

  Wilson, Brian

  Smith, Angela (Basildon)

  Winnick, David

  Smith, Rt Hon Chris (Islington S)

  Wood, Mike

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Woolas, Phil

  Wright, Anthony D (Gt Yarmouth)

  Smith, Llew (Blaenau Gwent)

  Wright, Dr Tony (Cannock)

  Soley, Clive

  Wyatt, Derek

  Southworth, Ms Helen

  Spellar, John

  Tellers for the Noes:

  Squire, Ms Rachel

  Mr. John McFall and

  Steinberg, Gerry

  Mr. Clive Betts.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
  MADAM SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  122
  That this House congratulates the Government on the excellent progress it has already made towards honouring its pledge that no child of 5, 6 or 7 will be in a class of over 30 by the end of this Parliament, which will mean that 100,000 fewer infants will be in large classes from this September and the pledge will be met ahead of schedule by September 2001; and notes the Opposition's continuing hostility to class size reduction, having presided over year-on-year increases since 1988.

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

  DELEGATED LEGISLATION
    ANIMALS
    That the draft Welfare of Livestock (Amendment) Regulations 1998, which were laid before this House on 21st May, be approved.
    NORTHERN IRELAND
    That the draft Producer Responsibility Obligations (Northern Ireland) Order 1998, which was laid before this House on 1st June, be approved.
    VALUE ADDED TAX
    That the Value Added Tax (Reduced Rate) Order 1998 (S.I., 1998, No. 1375), dated 3rd June 1998, which was laid before this House on 3rd June, be approved.
    SOCIAL SECURITY
    That the draft Child Benefit and Social Security (Fixing and Adjustment of Rates) (Amendment) Regulations 1998, which were laid before this House on 8th June, be approved.
    PUBLIC HEALTH
    That the draft Vaccine Damage Payments Act 1979 Statutory Sum Order 1998, which was laid before this House on 8th June, be approved.

    CIVIL AVIATION
    That the draft Air Carrier Liability Order 1998, which was laid before this House on 23rd June, be approved.—[Janet Anderson.]
    Question agreed to.

  Wembley Stadium
  Motion made, and Question proposed, That this House do now adjourn.—[Janet Anderson.]
  10.14 pm
  Mr. Gerry Sutcliffe: By this time tomorrow evening, we shall know the fate of the England football team, which will be playing Argentina. I am sure that all hon. Members wish the team good luck. We have all been captivated by the excitement of the world cup and the skills on display; similarly, we all recognise its beneficial impact on the economy of the host country. That is why we all look forward to England winning the bid to host the world cup in 2006.
  Tonight's debate is about the future of Wembley stadium, the spiritual home of football. Those of us who have played there or been supporters there would be happy to see it redeveloped, but the reason for this debate is that a number of colleagues and I are concerned that the redevelopment is not taking place as smoothly as it might. We are worried about the speed at which the stadium is to be redeveloped.
  In April 1995, a competition was held to evaluate proposals for a national stadium, which was to accommodate football, athletics and rugby. Over a six-month period, five bids, including one from Bradford, were considered. The feeling at the time was that the process was a bit of a sham, because everyone knew that Wembley needed redeveloping. Many of us argued that there should be two national stadiums, one in the north and the other in the south at Wembley, to complement redevelopments at Hampden park, Murrayfield and Cardiff.
  History shows that Wembley was selected and that the other bids, although credible, all failed. The feedback, limited though it was, implied that the Bradford bid was too commercial—but Bradford's case was very strong. Bradford can be accessed by 10 million people in an hour and by 20 million in two hours. Two international airports are within an hour's drive, and the Euro-ports on the Humber and the west coast ports are all within two hours' travelling time. I hope that the door will not be closed on a stadium of the north—I hope that it will be actively considered.
  We all want Wembley to be redeveloped and wish the English National Stadium Trust well in its endeavours. However, owing to a combination of events, I understand that progress is slow and unconvincing. Of the £140 million available, £103 million will have to go Wembley plc for the sale of the leasehold. Wembley plc is making a great deal of money out of Wembley stadium; many of the supporters who go there are from the north. The sale needs to be completed quickly and contracts need to be exchanged.
  The Sports Council, which is also a partner, intends to hold a golden share to prevent the stadium from being sold on for future housing development, and so on. The Football Association is embroiled in complex issues such as covenants for games at Wembley for the next 20 years, and raising £200 million to spend on the stadium. The trust will hold the freehold, and the lease will be handed to the FA at £1, for 125 years. As planning permission is required, a start must be made on all the grand plans within the next 12 months to meet the deadlines.
  124
  Brent council has worked well with the trust, requiring social amenities under a section 106 planning agreement, at a cost of more than £45 million; but the trust is not a commercial operation and money needs to be found to ensure progress soon. There is a lot of good will among the parties involved, but it needs to be turned into meaningful action. I hope that the Minister will be able to provide both leadership and answers to the outstanding questions.
  One such question is: will buying the freehold from the current owners leave the trust with enough funds to complete the redevelopment? Another is: will the issues surrounding the section 106 agreement be resolved? Will the funding from other sources be available? Has the contract between the Sports Council and the trust been signed? And what is to stop Wembley plc entering a deal with Arsenal football club? I hope for answers to all those questions; I also hope that the viability of a stadium in the north will be considered.
  There will be a development in Bradford and, if the £140 million had been available at the time, I am sure that our stadium would have been in place. We are seeing developments in Manchester and Sheffield and investment in many of the football and rugby grounds in the north, but we can develop and sustain two national stadiums. I hope that we have the opportunity to host the world cup in 2006 in stadiums that are equivalent to, if not better than, those in France. I am sure that my hon. Friends will talk about the impact on their communities and the need for Wembley to be redeveloped as quickly as possible.
  10.19 pm
  Mr. Barry Gardiner: I congratulate my hon. Friend the Member for Bradford, South (Mr. Sutcliffe) on securing the debate, which is one for which I, too, have been petitioning the Speaker's Office for many months. I am extremely grateful to my hon. Friend for allowing me some minutes from his own allocation to speak as one of the local Members of Parliament. I hope to be able to repay his generosity in kind in future.
  The basic business structure of the national stadium is becoming clear: the FA will raise £200 million and the Sports Council will put in £120 million; the English National Stadium Trust will hold the freehold of the stadium and its narrow curtilage; but Devco, the development company currently owned by the trust, will be transferred to the FA. Devco will have a board ultimately comprised of 12 people: seven will be FA appointments by right, and five will be transferred across out of the trustees of the ENST, who are 10 in number. It is Devco which will ultimately be responsible for the emergence of the new stadium and for its continued operation, because it is Devco which will have the 125-year lease on the site. That is why the composition of the 12-man board is so critical.
  Under the guidance of Ken Bates, the board will no doubt have a strong chair, if not one who will always score the highest marks for tact and charm—at Chelsea, Ken Bates has certainly proved that he can get things done. However, if Wembley is to be a national stadium and not just the FA's stadium, it is vital that the seven FA representatives on Devco's board are balanced by the five transferring trustees from the ENST. Yet, of the 10 trustees of the ENST, five were nominated by the FA

  125
  in the first place. I believe that a monumental fix is about to take place, where 11 of the 12 members of the board of Devco are either directly or indirectly nominated by the FA. I look to the Minister to ensure that that does not happen.
  I have here a copy of a letter from the FA to the English Sports Council, which sets out what the FA calls
  "the position following recent meetings with The Sports Council and The English National Stadium Trust".
  The letter states:
  "In particular:

  1. The English Sports Council has grant-aided to The English National Stadium Trust £120 million.

  2. The English National Stadium Trust will buy the business of Wembley Stadium Ltd. for an amount not to exceed £103 million subject to due diligence. Completion will be no later than June 1999. This is not conditional on either planning or funding being in place… Grant aid shall be used to meet the professional fees and architect fees in the design phase of the project. Neither The Football Association nor the development company shall be responsible for any costs in relation to any infrastructure improvements and/or section 106 agreements."

  What concerns me is the way in which the FA appears to believe that it is possible to create an 80,000-seater national stadium without worrying about things like public transport infrastructure, new roads, or other environmental improvements, which will be vital to that stadium's success.
  Of Wembley's visitors, 55 per cent. arrive via Wembley Park underground station. It is a dilapidated, urine-stained, outdated station, which has no proper crowd-management facilities to meet the requirements of a world cup bid. In response to a written question tabled last week, my right hon. Friend the Minister of Transport today wrote to me as follows:
  "Following the Deputy Prime Minister's announcement of a Public/Private Partnership for London Underground and an additional £365 million of funding for London Transport over the next two years, LT and the Government have been considering together what additional investment projects should go ahead in the next two years. London Underground has proposals for a comprehensive redevelopment of Wembley Park Station, including improved platforms, Canopies, Ticket hall, Staircase and walkway. Subject to that review, and securing substantial contributions from outside parties, London Underground has indicated that construction of the Wembley Park Station redevelopment could start in 1999/2000."
  The Minister referred to substantial contributions from outside parties. These are, of course, usually achieved through the very section 106 agreements that the FA letter scorns.
  Major questions of public confidence must be answered. First, will any conditions be placed on the Sports Council grant to protect the £120 million of lottery money? Secondly, what controls will there be over the future use and operation of the stadium? Thirdly, who will approve the contract between the Sports Council and the FA, and can the Minister assure us that that will be done at the highest ministerial level?
  If the stadium is to be a national stadium, it is right that the nation should be proud of it and have a stake in it. At the moment, Wembley is set in the midst of a car park, surrounded by derelict and semi-derelict warehouses and flanked by a rundown industrial estate. I urge the Government to announce that they will invest in the regeneration of the surrounding area. If they do not, the new Wembley stadium may become a jewel set in
  126
  the midst of dereliction. I urge the Minister to see the wider vision for the future of Wembley and the people around it, whom I represent.
  10.25 pm
  Mr. Gareth R. Thomas: I congratulate my hon. Friend the Member for Bradford, South (Mr. Sutcliffe) on securing this Adjournment debate. I want to make two brief comments.
  First, I share my hon. Friend's view about the importance of the speedy redevelopment of Wembley as the national stadium. Wembley has an enormous impact on the economy of the surrounding area and supports many service jobs in my constituency and that of my hon. Friend the Member for Brent, North (Mr. Gardiner). Harrow town centre is extremely close to Wembley stadium—which many of my constituents enjoy and where many of them work—and depends in part on the resources brought to the area by those visiting the stadium. I seek the same assurances as my hon. Friend the Member for Bradford, South that the development of Wembley will be completed speedily and effectively.
  Secondly, a modernised national stadium will clearly be crucial to the success not only of our 2006 world cup bid, but of our London Olympic bid for 2012. While Wembley is the centrepiece of our national game—it is the home of football—I hope that my hon. Friend the Minister can offer reassurance that its redevelopment will ensure that it is modernised and capable of being the centrepiece also for an Olympic bid.
  10.27 pm
  The Minister for Sport (Mr. Tony Banks): I, too, congratulate my hon. Friend the Member for Bradford, South (Mr. Sutcliffe) on securing this debate, and I welcome the contributions of my hon. Friends the Members for Brent, North (Mr. Gardiner) and for Harrow, West (Mr. Thomas). I share their aspirations and, perhaps, some of their concerns.
  I simply do not have the answers to some of my hon. Friends' questions, and I shall not flannel my way around them. I shall examine them and give considered responses, because they are serious questions and merit good and proper answers. The construction of a national stadium is crucial. This might be the last comment that I ever make at the Dispatch Box, but there are times when one has to admire the way that the French secured their national stadium. They went straight out and did it, as they did with their fast rail link for the channel tunnel. They do not muck about and go around with begging bowls asking people whether they would throw in a few coins. I rather like that approach.
  Mr. Derek Wyatt: Much as I admire the French, there is a 10-year debt on the stadium in Paris, which we would not want to carry.
  Mr. Banks: There is always a down side, which is why we shall not approach matters as the French have done. However, there are times when I admire the French approach.
  The construction of Wembley is crucial to all the matters that have been raised. Wembley was selected as the preferred bid for the national stadium following a two-stage selection process. At stage one, three bids were

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  rejected. The Sheffield bid proposed two stadiums on one site and did not comply, while Birmingham's bid involved a site in the green belt which did not have planning consent. My hon. Friend the Member for Bradford, South referred to the Bradford bid. These are old issues, but it is worth putting the facts on the record. I know that the English Sports Council was impressed with Bradford's proposals. The concept had strong local support and there was genuine enthusiasm for the new ideas. However, the Bradford bid was eventually rejected on the ground of transportation. It would have required substantial investment to provide the necessary public transport and road access.
  At stage two, Wembley was preferred to the competing bid from Manchester. It had significant access advantages, given the existing transport infrastructure. However, both sites were successful in attracting funding. Investment was promised to Wembley as the site for the new national stadium and to Manchester for the 2002 Commonwealth games.
  It would be unreasonable to expect that there would not be difficulties with Wembley. We knew that there would be difficulties, and there are difficulties, in trying to plan a project of this size. There are difficult negotiations still to overcome. However, the English Sports Council's objectives remain clear—to build a world-class stadium within an appropriate setting; to provide 80,000 seats with appropriate public access; to secure benefits for the development of sport from the project; to provide a stadium for the three sports of football, rugby league and athletics; to ensure that the stadium can be developed with a maximum grant from the lottery of £120 million; to ensure that the project is completed by 2002; and, finally, to ensure that the project meets the English Sports Council lottery sports fund eligibility criteria, including viability and quality.
  To ensure the last of those objectives, the English Sports Council is, naturally, keeping a close watch on the costs of the project. I am sure that hon. Members appreciate that, for a variety of commercial confidentiality reasons, I am unable to provide a detailed breakdown of the total costs, now estimated at about £320 million. However, as it currently stands, the rough breakdown is £103 million for the purchase of the site and £217 million for demolition, construction, planning and design. Some £120 million will come from the lottery, with the rest being made up of debt financing via the FA. That is one of the problems; it is a national stadium, but the FA—I am not here as an apologist for it—is being required to find £200 million. Consequently, it will not be just Ken Bates who will give me grievous bodily harm of the ear; it will be the FA generally. As it will have to borrow that £200 million against the income that the trust will receive through England games, it will want a large say in what happens. We can hardly blame it for demanding that.
  Mr. Alan Meale: Perhaps my hon. Friend, like me, is worried about the nominations from the FA, which are very unrepresentative of football. All the nominations bar one come from the premier league teams. The one that did not was made only because it involved the chairman of the football league, who happened to represent a town that very nearly got into the premier
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  league. If it is to be a truly national stadium, it is worrying that only a minority section of football will command its management.
  Mr. Banks: My hon. Friend makes a good point. I know that when Hansard is read by the FA, the trust and the others involved, those matters will be considered. I am not trying to tell my hon. Friend that I have detailed control over these events on a day-to-day basis. As I have said in the House, that is what the arm's-length principle is all about; we let other people get on with it. However, my hon. Friend has raised a good point, which the FA must take seriously.
  I want to pick up on some other points. Devco must be representative of all the interests that will be involved in the redevelopment of Wembley. As I said, this is a national stadium, so we must consider Wembley in its wider context. It is not only about building a new national stadium, but about infrastructure investment. It is about the regeneration of the entire area. I feel ashamed going to Wembley and saying, "This is our national stadium at the moment." It might be a venerable institution, but it is long past its sell-by date. That is why we want to proceed with the demolition of the old Wembley after the cup final next year, and with the construction of the new Wembley by 2002. Some of those issues have yet to be resolved, because we need to consider the regeneration of the entire area.
  Obviously, those matters are well beyond the remit of a humble Sports Minister standing at the Dispatch Box. I imagine the Chancellor of the Exchequer—probably at this moment—being given a briefing on what I am saying about the likely cost implications for the Exchequer. Obviously, the Deputy Prime Minister will be involved because of the involvement of English Partnerships and the single regeneration budget, and the necessary development of the transport infrastructure. All those Departments and all those Ministers are involved. However, if—as I keep saying—it is to be a national stadium, we must get ourselves together to ensure that it works. We do not want a half-hearted effort that does not stand the test of time and does not give us the things that we want—the centrepiece of our bid for 2006 and, perhaps, the centrepiece for a future Olympic bid, if the British Olympic Association is prepared to submit it.
  Does one regard the FA, putting in that £200 million as a developer for the purposes of section 106, as one would any other developer that exists to make a profit? I may be wrong, but I make a distinction between the FA as the major putter-up of the funds and borrowing £200 million, and someone who wants to develop for private company purposes and make a profit from that development. I believe that such developers must be expected to put a considerable amount back into the community for the profits that they take out of it. I do not quite see the FA in the same role as a large property developer in London.
  Mr. John McDonnell: As the Minister is aware, in a former life I was involved in the establishment of the English National Stadium Trust. The question that is posed to him directly is: who protects the public interest in all this? In reality, this is the largest development that the Sports Council has ever been involved in, and, to a certain extent, I consider it not out of its depth, but certainly inadequate in the negotiations

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  with a body such as the FA, because when one negotiates with the FA, one lies down with a tiger. The onus is on the Minister to protect the public interest. Although I accept his relatively hands-off approach, a more day-to-day overview is required to ensure that the public interest and the London interest are protected, especially with regard to the environment.
  Mr. Banks: I agree with my hon. Friend. I can assure him that if I had not previously been convinced of that point, the serried ranks behind me would quickly have concentrated my mind on it. Of course the public interest must be protected. After all, £120 million not of Government money, but of public money, will be involved.
  One needs to safeguard public money, but there is a—perhaps marginal—qualitative difference between lottery money and straightforward Exchequer grant money; in the latter case, there is an obvious, direct and deliberate connected ministerial responsibility. I have to follow—we all do, as this is lottery money—the arm's-length principle, but, if anything went wrong, Ministers would be held to account, you can bet your life on it, Mr. Deputy Speaker. That being so, I do not want to get the sharp end of the stick poked in my eye at some future date; I want to ensure that things go smoothly.
  I say to my hon. Friend the Member for Hayes and Harlington (Mr. McDonnell) that Sir Rodney Walker's involvement in the negotiations until now has convinced me that, whatever else one says, he is not the type of person one can easily walk over, either. Some pretty tough cookies are involved in the negotiations. I understand that absolute priority is given to preserving public funding while ensuring that this development goes ahead.
  It is important that we ensure that there is proper regeneration of the entire area around Wembley stadium. I understand, of course, that Brent council is committed to making the new stadium a success, and is developing positive working relationships with all parties involved in bringing about a transformation of the stadium and areas around it.
  Making Brent a priority area for the Greater London authority seems to be a development which we can look forward to. I return to the comment of my hon. Friend the Member for Brent, North about London—as Wembley is the national stadium, it is, naturally, located in London. I say "naturally" because London is where people want to make such big investments. If such people come to the United Kingdom, they want to come to London. Speaking as a London Member rather than as a Minister, I think that that is right.
  The recent White Paper contained proposals for new regional development agencies which, working in partnership with central and local government, businesses and other key regional interests, will bring greater coherence and a sharper regional focus to the public resources available to promote development and regeneration. Our plans for London differ from the national picture—reflecting the influence, importance and uniqueness of our capital city—and impact on the proposals for Wembley. As endorsed by Londoners, there will be a directly elected mayor and a separately elected assembly, and any decisions on priorities for funding will eventually be for the mayor and the assembly to take.
  I know that hon. Members are concerned about progress with Brent on the planning brief, and I am aware that there are difficult issues, which need careful
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  consideration. That is why we have asked the Government office for London to chair a working group, to establish the principles of the planning application connected with the Wembley site. It will aim to facilitate agreement between the English National Stadium Trust development company and Brent. One of the specific issues on which it will focus is the best way of achieving an integrated public transport system.
  I know that accessibility by public transport will be central to the new stadium's success. The public transport factor has been reflected in the focus of the Government office for London. We are also in regular discussion with transport operators, with a view to improving the three main stations serving the stadium and bus penetration into the Wembley complex.
  My hon. Friend the Member for Brent, North asked some specific questions about timetabling. I understand that, on 6 to 7 July, the English Sports Council will consider the grant application for the next phase—by which time all key agreements and project structures will be in place, and the feasibility studies on planning, funding and development issues will be concluded. I am therefore expecting that to happen in the next week.
  In July 1998, contracts will be exchanged with Wembley for site acquisition. Also in July, design team appointments will be confirmed. In November to December, planning applications will be submitted. In April to May 1999, planning consents and the section 106 planning obligations agreement will be completed. In September 1999, secured partnership funding will be completed. Also in September, site work will start. The site work will be completed by the spring of 2002.
  That is the timetable, although I expect that there will probably be some slippages in it. Such projects tend to happen that way. I expect also that there will be some movements on the budgeted figures. However. I come back to the original point: Wembley will be the national stadium. Therefore, there must be greater national involvement, particularly in determining the planning infrastructure context for Wembley.
  It is important that we make a success of the project. I do not want it to turn into the equivalent of Blue Streak. Was it Blue Streak?
  Mr. Wyatt: The opera house.
  Mr. Banks: No, I think that the opera house is going quite well. I do not want it to turn into one of those great English disasters. It has to work. As hon. Members have said, a new Wembley is crucial to the United Kingdom securing the great international sporting events that the Government have pledged themselves to go for. It is necessary to support the British Olympic Association in a potential Olympic bid, and to secure the world cup in 2006.
  Going back to the original point made by my hon. Friend the Member for Bradford, South, we are all hoping that tomorrow we shall see England secure a great victory over Argentina. I predict that the score will be 2–1, with Michael Owen scoring both our goals. Then we can move on to greater sporting success, with a new Wembley.
  Question put and agreed to.
  Adjourned accordingly at sixteen minutes to Eleven o'clock.