Commons Sitting of 3 March 1998

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

PRIVATE BUSINESS
LLOYDS TSB BILL [Lords]
Order for Second Reading read.
To be read a Second time on Tuesday 10 March.

Oral Answers to Questions
  ENVIRONMENT, TRANSPORT AND THE REGIONS
  The Secretary of State was asked—

  Regional Regeneration
  Mr. Ian Bruce: If he will make a statement on the closure of the South Dorset economic partnership and the implications of this for the Government's regional regeneration policies. [30620]
  The Minister for the Regions, Regeneration and Planning (Mr. Richard Caborn): The South Dorset economic partnership is a local delivery organisation. How it operates and decisions about its future are matters for the local partners.
  Mr. Bruce: I am sad that the Minister has not thought to acquaint himself with exactly what is happening at the delivery points of Government policy. The Government have expressed their intention to regenerate jobs, particularly where defence jobs are being lost. Surely the South Dorset economic partnership demonstrates that Government policy is not working and that, because the regional development agencies are not providing funds, and the local authorities are not being given sufficient resources to assist, the excellent delivery of the South Dorset economic partnership is failing. Will the Minister please take some action and find out what is happening on the ground floor? By the time that the regional development agency is up and running, there will be no means left to deliver his policies.
  Mr. Caborn: We are keeping close contact with Dorset, where I understand that the three local authorities have withdrawn funding from the scheme. They plan to create a new organisation with a wider remit.

  Local Government Finance
  Mr. Gray: What representations he has received on the 1998–99 local government financial settlement. [30622]
  The Minister for Local Government and Housing (Ms Hilary Armstrong): The Department received 406 written representations within the deadline for responses. I and other Ministers at the Department also met the Local Government Association and the Association of London Government, delegations from 95 local authorities, and one special interest group during the consultation period.
  Mr. Gray: Is the Minister aware that, after the correction of an arithmetical error in the announcement of the revenue support grant for Wiltshire, this year's settlement represents a real cut of 7.2 per cent. which has meant for Chippenham an increase of £75.49 in band D council tax? Are the Government to blame for that increase, or is it the fault of the county council, in which case, will the Minister join me in calling on the four Labour councillors who keep the incompetent Liberal authority in place to withdraw their support?
  Ms Armstrong: The hon. Gentleman clearly still has the blame mentality. He will know that the previous Government wanted to shift the balance between central and local funding. We have continued that, but it is up to local government to make decisions about the balance between central funding and local taxation.
  Mr. Bill O'Brien: Has my hon. Friend received representations from Wakefield—my local authority—about the way in which the formula has reacted against it? Has she also received representations from the West Yorkshire police, who are now saying that there is a deficit in their income from the formula that has been set by council tax funding? As band D properties in West Yorkshire have received a 75p reduction in council tax, there will be a knock-on effect in all other bands and therefore a substantial reduction in revenue for the West Yorkshire police. Will she address that point and investigate the problems?
  Ms Armstrong: I am always interested in hearing from colleagues about how the settlement is working in their area. My hon. Friend will know that consultation on this year's settlement has finished, and the House has made a decision. The authorities that he mentioned will have an opportunity to make representations on how we decide on the standard spending assessments for next year. We intend to achieve a more just settlement.
  Sir Norman Fowler: May I ask about the position in London? Will the Minister acknowledge that, even after all the changes to distribution that the Government have made, Wandsworth's band D charge next year will be £319 and Westminster's will be £325, while Camden's will be £879 and Greenwich's will be £883? Why, even under this Government's system, do Labour councils come out so expensive?
  Ms Armstrong: I am sure that the House will note the difference between that contribution and what the right hon. Gentleman said during the debate on the settlement. We have begun the fairness exercise, but we have not yet completed it.
  Mr. Skinner: To ensure fairness, will my hon. Friend take particular note of the fact that, during the 18 years when the Tories were in power, many Tory Members from Derbyshire used to tell Ministers in the House to cut the grant for Derbyshire? They did that for 12 consecutive years. The net result is that we now need a little extra help to achieve fairness. I am being consistent. I called for extra money when the Tories were in power. I do the same now. Will my hon. Friend ensure that help is received?
  Ms Armstrong: My hon. Friend reminds us of the comments of the Conservatives during debates on settlements. We have not yet received representations from Derbyshire. When we do, we shall consider them fairly.

  Water Treatment Works
  Mr. Sanders: If he will introduce measures to allow independent public monitoring organisations to gain automatic entry to water treatment works. [30623]
  The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott)rose—
  The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Angela Eagle): I see no reason to provide for additional organisations to monitor water treatment works. Standards of water treatment are extremely high. Water companies must, by law, check that drinking water meets 55 separate standards. It is the job of the drinking water inspectorate to check that companies carry out their quality checks properly.
  Mr. Sanders: I thank the Minister for that reply, but it does not answer the question. Private companies are able to stop public bodies, such as the drinking water inspectorate and the Environment Agency, from gaining access to water works. There were problems with the cryptosporidium bug in my constituency in 1995 and more recently in London. Will the Minister look closely at the rights and duties of the public bodies that exist to protect the public's drinking water so as to enable them to inspect water works without prior appointment?
  Angela Eagle: We are looking carefully at the fallout from the outbreak of cryptosporidium and the health problems caused in Torbay in 1995, particularly in the light of the subsequent attempt to prosecute the water authority, which failed because the court did not allow as evidence the report of the outbreak control team. We hope to be able to make a statement about that shortly.

  Local Government (Best Value)
  Jane Griffiths: When he expects to publish his consultation document on best value in local government; and if he will make a statement. [30624]
  Mr. Prescott: At last; I was so keen to get in.
  Today, my hon. Friend the Minister for Local Government and Housing launched the consultation paper on best value in local services. It takes forward our commitment to introduce a comprehensive regime, which will empower local people and ensure continuous improvement in the performance of local services. The proposals were discussed with local government at the central-local partnership meeting, which I chaired this morning, along with nine members of the Cabinet and Ministers.
  Jane Griffiths: I thank my right hon. Friend for his answer and welcome the publication of the consultation document. Will he confirm that the purpose of best value is that councils should provide services at the level that residents have the right to expect, and at a price that residents can afford? Does he agree that Reading's Labour council, with its partnership-focused approach, is very well placed to meet the challenge posed by best value?
  Mr. Prescott: I very much agree with my hon. Friend. Our approach is about better value and fairer employment.
  Mrs. Ballard: The majority of councils are run by the Labour party. The Government, in their White Paper, are rightly wary of councils with large single-party majorities. Does the Secretary of State agree that the best way in which to achieve best value and truly accountable local government is by a fair system of local elections?
  Mr. Prescott: Although I am not surprised that the hon. Lady equates everything with a fairer voting system, I think that our proposals for best value are the best way of dealing with the issue.
  Mr. Tipping: Will the Deputy Prime Minister ensure that all councils benefit from the experience of best value councils and that good practice is promoted by the Audit Commission and other bodies? Will he particularly consider Newark and Sherwood district council's excellent record of energy efficiency and conservation?
  Mr. Prescott: Yes, the Audit Commission has looked at the matters and reported very favourably on local authorities. I endorse a great deal of what it says. We have made it clear in our approach to best value that we want better value and fairer employment. The pilot schemes, of which there are about 40, are under way. The reports from them will make a major contribution to improving standards of service and gaining better value in our local authorities.
  Sir Norman Fowler: Will the Secretary of State acknowledge that competitive tendering achieved hundreds of millions of pounds of savings to the benefit of the council tax payer? Is not the danger with the new system that has been set out today that it is too bureaucratic, will allow reluctant councils to continue to resist change, and will therefore work directly against the interests of the council tax payer?
  Mr. Prescott: It has been acknowledged by all parties that have studied the matter that competitive tendering cost the taxpayer considerably more, as the system was reduced to least cost, least value. The cost to the taxpayer,

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  either through family income supplements or as a result of the resources that were needed, was considerable. Even the private sector, in partnership with local authorities and trade unions, came to the conclusion that the previous system was over-bureaucratic and, in some cases, denied equality of employment in the contracts. That was the result of compulsory competitive tendering. We are seeking to change it.

  Regional Development Agencies
  Mrs. Spelman: What representations he has received from local authorities over the accountability of regional development agencies. [30625]
  Mr. Caborn: We received a number of representations from local government about the accountability of regional development agencies. RDAs will be non-departmental public bodies; as such, they will be accountable to Ministers. They will also be required to consult the designated regional chamber, and account for their activities to the chamber.
  Mrs. Spelman: Will the Minister assure the House that the new regional development agencies will not remove powers from local government, especially the planning powers envisaged in clauses that were withdrawn in consideration in Committee of the Regional Development Agencies Bill?
  Mr. Caborn: The hon. Lady knows that, in Committee, we said that we should look at certain clauses and come back to the House on Report.
  Mr. Blizzard: Will not people judge the accountability of a regional development agency by how successful it is in tackling a region's problems? For example, in Lowestoft in my constituency, where unemployment is 9.2 per cent., against a regional average of 3.6 per cent., people are looking forward to the RDA tackling the disparity, which was left unattended for 18 years by the Conservative party. Will my hon. Friend confirm that addressing such disparities will be one of the priorities of RDAs?
  Mr. Caborn: My hon. Friend is right. Apart from the Opposition, everybody accepts that there is a need to address the serious structural weaknesses in our eight English regions. To that extent, all the major stakeholders involved in the RDAs will address the issues and will try to bring more employment back to those regions than ever before.
  Mr. Yeo: As the Minister will appoint every single member of the RDA boards and will also choose the organisations that are to be designated as the regional chamber, is there not clearly a serious lack of accountability in the structure proposed? Against that background, is it not absolutely extraordinary that every one of the Opposition amendments, which would have required the Minister to consult local authorities about the activities of RDAs, were voted down by the Government?
  Mr. Caborn: The Opposition should be the last people to start lecturing the Government about quangos and accountability. We well know that the Conservatives took
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  more powers from local authorities than any other Government in history. We want no lectures from the Opposition on this issue.
  Madam Speaker: Mr. Boswell.
  Mr. Boswell: Number seven, Madam Speaker.
  Mr. Prescott: I think that it is number eight. At least I am right on this one.

  Air Quality
  Mr. Boswell: What plans he has to introduce measures to improve air quality. [30628]
  Mr. Prescott: The Government are taking action to improve air quality through the implementation of the national air quality strategy. On 12 February, we announced our plans to take forward an immediate review of the strategy, during which we shall look at all options for delivering improved air quality more quickly.
  Mr. Boswell: While that is welcome, will the Deputy Prime Minister take a particularly close look at the Environmental Agency's recent proposals in connection with sulphur dioxide emissions from power stations, which do not seem to be well founded in the facts and go well beyond our current international obligations? Incidentally, the proposals would have the serious effect of virtually wiping out the economics and the potential of the British coal mining industry overnight.
  Mr. Prescott: The hon. Gentleman will be aware that this strategy was begun by the previous Administration and that that is one of the gases under consideration in the review. We shall take into account the points that he has made.
  Dr. Lynne Jones: I understand that the planting of trees can have beneficial effects on air quality. However, will my right hon. Friend assure the House that he will not encourage the planting of leylandii trees and hedges in residential areas? On the contrary, will he consider introducing measures to curb the activities of those who insist on growing those hedges to monstrous proportions, thus inflicting considerable misery on their neighbours?
  Madam Speaker: The hon. Lady's question is vaguely related.
  Mr. Prescott: It will be vaguely replied to, Madam Speaker.
  I can confirm that we are considering some form of Government intervention in relation to those hedges if necessary.

  House Building (Rendering)
  Mr. Collins: What representations he has received about legislation governing the use of rendering in newly built housing; and if he will make a statement. [30629]
  The Minister for London and Construction (Mr. Nick Raynsford): Apart from the hon. Gentleman's letter of 24 February to my right hon. Friend the Deputy Prime Minister on this subject, the Government have received no representations regarding legislation concerning the use of rendering to newly built houses.
  Mr. Collins: The Minister will know from my letter that I have laid before the Department the concerns of my constituents living in the Helme View estate, built by Barratt Homes, in Kendal. Will he consider legislation to require the minimum specified standards of rendering set out by the manufacturers of those materials, to be used by private sector builders? Will he also consider replacing the National House-Building Council with something that is rather less of a toothless watchdog?
  Mr. Raynsford: I am grateful to the hon. Gentleman for providing me with some detailed background information about the case of Helme View. On the strength of his representations, I have seen that there is some evidence that the rendering may have been put on in a way that did not comply with the specification contained in the British Board of Agrément recommendations. If that is the case, there would certainly be grounds for the home owners concerned to seek redress through the NHBC, which has provided the insurance back warranty on the scheme. We have had general discussions with the NHBC about the performance of its obligations, and I have twice met its chief executive. I am expecting a report on the progress that it is making in the review of its service to ensure that it provides effective warranties to the public.

  Local Government Finance
  Dr. Cable: What plans he has to reduce local authorities' reliance on central Government funding. [30630]
  Ms Armstrong: We shall shortly be consulting on possible changes to the system of local government finance.
  Dr. Cable: Does the Minister recall that the Government have signed the European charter of local self-government? Is she willing to tell the vast majority of councils—of all parties—which are well run, what time scale the Government now envisage to allow councils to raise their own revenue to meet local needs free of central Government capping and other centralised controls?
  Ms Armstrong: We have said that we shall consult shortly. The consultation document will be going out in the next two to three weeks. Councils will then be able to respond. We shall be able to deal with the points that the hon. Gentleman has raised in that process. We then hope to bring a White Paper to the House. He will then see precisely how the Government intend to proceed.
  Dr. Ladyman: When the Minister is looking into how to reduce local government reliance on central Government funding, will she also look into those ways in which local government is bailing out central Government? I am thinking of the burden of housing benefit payments on district councils. When the
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  Conservative party passed the responsibility for such payments to local government, it promised that not a penny of that expenditure would fall on the council tax payer. In my district of Thanet, £3 million out of £15 million goes on covering the cost of housing benefit payments. Will my hon. Friend take that into consideration when considering how local government finance is to be reorganised?
  Ms Armstrong: That is part of the present review of housing finance. I met the Local Government Association to discuss issues associated with that last week. It is one of the areas that we are reviewing and I look forward to reporting back on the results at some stage in the future.

  Local Government
  Mr. Bob Russell: If he will reduce central Government intervention in local government. [30631]
  Ms Armstrong: We are committed to making local decision making less constrained by central Government and more accountable to local people. However, there will remain a need for reserve powers for Government to act if and when councils fall seriously short of what people are entitled to expect.
  Mr. Russell: While I acknowledge the Minister's response, does she agree that, after 18 years of relentless attacks on local government by the former Government, Britain now has the most centralised local government system anywhere in the democratic world—even more centralised than the system that Stalin achieved in the former Soviet Union? Is it not time that the Government started to roll back central Government control and get rid of the quangos? In short, is it not time that central Government got off local government's back?
  Ms Armstrong: I certainly accept and agree that we have ended up with the most centralised system in Europe. Indeed, the number of Acts that the previous Government passed to try to neuter and devalue local government was almost more than the number of Conservative representatives on the Opposition Benches at the moment. We are determined to change the situation, but we want to do so in partnership with local government. That means that we are working with local government to plan the way forward and to do that in partnership. We shall not take decisions on our own without recognising the valuable contribution that local government has to make to the way forward.
  Mr. Rammell: All of us would want to see an end to crude and universal capping as soon as possible, but does the Minister agree that political consistency is necessary on those issues? While in the House the Liberals argue for extra powers, extra expenditure and extra taxation at a local level by local councils, in my constituency and, I imagine, in others they criticise the fact that council taxes are increasing to fund reasonable increases in expenditure. Do we not need some consistency on those matters and does not that problem undermine the credibility that the Liberals might otherwise have on such issues?
  Ms Armstrong: I think that both Opposition parties have some difficulties in consistency in their local government policy. Of course we need consistency, but, more than anything else, if we are to get a proper democratic balance in this country, we need a rejuvenated local government. We need that rejuvenation and diversity properly to express the will of local people and to ensure that they really are in the driving seat and we get a democracy worthy of its name.
  Mr. Pickles: One of the principal worries of local councils about Government intervention concerns the planning powers of the regional development agencies. There is confusion on that. The Select Committee on the Environment, Transport and the Regions was told that there were no plans to take away powers from local authorities. The Regional Development Agencies Bill originally proposed to give the agencies such planning powers, but those proposals were then withdrawn. I accept that there may have been drafting problems, but my question is wholly reasonable—what powers does the Minister believe that the RDAs should have on planning?
  Ms Armstrong: I am staggered by the hon. Gentleman. Year after year, he supported measures that gave central Government greater powers of intervention in local government. He knows that the issue will be dealt with properly on the Floor of the House on Report.

  Parish Councils
  Mr. Burns: If he will extend the powers of the local government ombudsman to cover parish councils.[30632]
  Mr. Raynsford: We have no plans to extend the powers of the local government ombudsman to cover parish councils. Individual electors can raise complaints directly at meetings of the parish council.
  Mr. Burns: Why not?
  Mr. Raynsford: Quite simply because, even though there are some 17,000 parish councillors and some 8,000 parish councils in England, the Department has received fewer than 10 representations suggesting such an extension.

  Local Government Reform
  Mr. McNulty: What progress he is making in his consultation on the reform of local government. [30633]
  Ms Armstrong: On 9 February, my right hon. Friend the Deputy Prime Minister launched a wide-ranging consultation paper, "Local Democracy and Community Leadership", on modernising local government. A second paper, "Local Services Under Best Value", was published today. Further papers on the new ethical framework and on aspects of local government finance will be published shortly. Following consultation, the Government will set out their firm proposals in a White Paper this summer.
  Mr. McNulty: I thank my hon. Friend for that answer. Does she agree that the apparent conversion of the right hon. Member for Richmond, Yorks (Mr. Hague) to the value of local government is far too little, far too late? No one will be convinced by Mickey Mouse conversions by the Opposition on that, the countryside or any other issue.
  Ms Armstrong: We are determined to rejuvenate local government. The Conservative Government left local government demoralised and in a mess. They believed that they knew best about everything, but they had their answer on 1 May and they will receive similar answers in the future.
  Mr. St. Aubyn: Does the Minister accept that there was no countryside rally or countryside march against the last Government? The reason why more than 100,000 people rallied in Hyde park last year and more than 250,000 people marched through London at the weekend is the Government's meddling attitude to rural affairs.
  Ms Armstrong: The hon. Gentleman needs to learn a little history. People in the countryside are not obsessed by one issue; they want a Government who listen to them on the whole range of issues. That is precisely why I am consulting them on the future of housing opportunities in the countryside, and why we are ensuring that brown-field sites in the countryside are properly used for social housing. Moreover, we are considering transport opportunities to ensure that there is decent public transport in areas where few people have had access to it. People in the countryside are anxious—and angry—about those issues because, for the past 18 years, they have been absolutely neglected.
  Mr. Soley: Has my hon. Friend seen Hammersmith and Fulham council's proposals for improving the representation of councillors and reinforcing their role, while subjecting them to closer scrutiny? In anticipation of the Local Government (Experimental Arrangements) Bill, may I ask whether that is not the way in which the Conservative party, and all parties, should encourage local authorities to develop the local democracy that will strengthen the bond between elected councillors and the electorate? Is not that where the real argument lies?
  Ms Armstrong: Of course it is where the real argument lies. We want to ensure that local councils take responsibility for thinking about how they can be as responsive and as open as possible to local people. Those ideas are expressed in the Local Government (Experimental Arrangements) Bill, which has recently been considered in the House of Lords. That private Member's Bill arose from a House of Lords Select Committee; it had all-party support in the House of Lords, as well as the strong support of local government. I hope that the House of Commons will treat it seriously.
  Sir Norman Fowler: It needs debate.
  Ms Armstrong: It certainly needs debate and, if Opposition Members are co-operative, it will get debate. We are determined to ensure that it is debated properly. If Opposition Members agree with that, they

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  will ensure that the Bill gets into Committee, so that we can give local government the chance to develop its own way of working.

  Dorchester Relief Road
  Mr. Ian Bruce: When he will make a decision on the financing of the Dorchester relief road in Weymouth; and if he will make a statement. [30649]
  The Minister of Transport (Dr. Gavin Strang): The Government's priorities for investment in local road schemes, including the Dorchester relief road, will be decided in the context of the new appraisal framework that we are developing in the trunk roads review.
  Mr. Bruce: I thank the right hon. Gentleman for his non-answer. I approached the Government about the scheme, which was waiting for them on 1 May. They decided that they wanted an integrated transport solution to be proposed by Dorset county council. The council rewrote its bid and submitted it to the Government on a tight deadline, spending probably tens of thousands of pounds, but the Minister's Department did not even send it to the Treasury task force for private finance initiative bids, further delaying the scheme. What is the reason for that prevarication; for the extra money being spent by local government; and for the lack of a decision from the Government?
  Dr. Strang: Surely the hon. Gentleman is aware that the Government are implementing the manifesto commitment to conduct a fundamental review of our roads programme; to decide what role roads play in an integrated transport policy; and to determine what criteria should be taken into account in choosing which roads to give priority to. In the business plan for its proposed PFI scheme, Dorset county council envisages signing the contract in 1999–2000.

  Driving Test Centre, Chelmsford
  Mr. Burns: If he will make a statement on the progress being made in moving the driving test centre in Beeches road, Chelmsford, to another site in the Chelmsford area. [30650]
  The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Glenda Jackson): A planning application for the Chelmer business park, which includes plans for a purpose-built driving test centre, is due to be considered by Chelmsford borough council planning committee on 6 April. Assuming that the application is successful, building work should start this summer and driver testing operations could move there from Beeches road by the end of the year.
  Mr. Burns: Many of my constituents in the Waterhouse Farm area of Chelmsford will be extremely heartened and gladdened to hear what the Minister says, and I am grateful to her. Will she keep a watching brief to ensure that there is no slippage? As she will be aware, the problem has been rolling along for at least eight years and has been the subject of an adverse report by the Parliamentary Commissioner for
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  Administration. There was a problem earlier this year when the ownership of the land on which the centre is to be built changed hands. My constituents would appreciate it if the Minister could ensure that the deadline that she has given today is honoured.
  Ms Jackson: I can well understand the hon. Gentleman's constituents' concern. The issue has indeed dragged on since 1989. I am pleased to note that, since the Labour Government came to power on 1 May, there seems to have been a move in the right direction. We want the centre to be retained at Chelmsford, but the decision rests with the local authority, and we are hopeful that planning permission will be granted.

  Road Traffic Reduction
  Mr. Dobbin: What guidance has been issued to local authorities under the Road Traffic Reduction Act 1997. [30652]
  Mr. Prescott: Guidance to local authorities on meeting their obligations under the Road Traffic Reduction Act 1997 was issued in draft on 15 January in order to allow local authorities and other interested parties to comment on its contents.
  Mr. Dobbin: Is my right hon. Friend aware of the growing concern about ill health caused by pollution from road traffic? Does he agree that the Road Traffic Reduction Act 1997 will provide an important framework for local authorities to tackle the problem of traffic congestion? I welcome the guidance that has been issued under the Act and I congratulate the Government on their support for the Road Traffic Reduction (United Kingdom Targets) Bill.
  Mr. Prescott: My hon. Friend has established a reputation for campaigning hard on this matter. Air pollution from traffic is a serious problem and we hope to tackle it through our national air quality strategy and the integrated transport White Paper that we will publish shortly. The Road Traffic Reduction Act 1997 provides an important framework for local authorities to take action, and the Government are committed to tackling the harmful effects of the growth in road traffic. It is estimated that up to 24,000 people die prematurely each year because of exposure to such air pollution.
  Mr. Brake: Will the Secretary of State add up the reductions contained in all the local authority plans so that we can assess the contribution that local authorities will make to reducing road traffic? Will he also introduce a national target for the Government so that local authorities do not have to take sole responsibility for reducing traffic?
  Mr. Prescott: Those matters are very much in our mind and are being considered for the White Paper, which will be published in May.
  Mr. Ottaway: Does the Secretary of State agree that, whatever their good intentions, local authorities can do little in practice to reduce traffic levels, and that the way forward is to encourage people on to public transport? With that in mind, will he give a warm welcome to Virgin's announcement today of a

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  £1.8 million order for rolling stock for the west coast main line, which demonstrates the long-term benefits of rail privatisation?
  Mr. Prescott: I welcome the hon. Gentleman's conversion to the need to give public transport priority over private transport. Whether the privatised rail system will contribute to that, we wait to see, although the signs are not good. I would point out to the hon. Gentleman that, in the past 20 years, the costs of car transport have increased by 8 per cent. while the costs of public transport have increased by 30 per cent., and that that happened because the previous Government pursued a different policy.

  New Roads
  Mr. Mullin: How many miles of new road he has (a) approved and (b) declined to approve since he took office; and if he will make a statement. [30653]
  Dr. Strang: Last July, I approved three schemes, which included 36 miles of road on new alignments. At the same time, I declined to approve 22 schemes, which would have included 85 miles of road on new alignments.
  Mr. Mullin: I welcome that reply. Is the Department still under the control of the road lobby or has word reached the civil servants that the days of bigger and better roads are over and that the future lies with better public transport? I know that Ministers have grasped that point, but is my right hon. Friend satisfied that word has reached all concerned?
  Dr. Strang: I assure my hon. Friend that, under this Government, the days of predict and provide are over. We recognise that we cannot build our way out of our transport problems and that is why we will publish a White Paper on an integrated transport policy in a few months' time.
  Mr. Chope: Is not the Government's record, albeit short, deplorable? In 18 years, the Conservatives built or upgraded 1,300 miles of motorway and trunk road. That investment is a vital ingredient in the nation's prosperity and in regional competitiveness. Does the Minister agree that further extra taxes on motorists in the Budget before the publication of the White Paper would be unacceptable?
  Dr. Strang: The hon. Gentleman is surely aware that the Government no longer regard building a new road as the first option for tackling a transport problem. We have to consider a range of options, although we will, of course, always have to build some new roads. One of the biggest problems that we inherited was the previous Government's complete failure adequately to maintain the existing roads network. That is why we have provided for such a large increase in expenditure on maintenance of our trunk roads and motorways in the next financial year.

  Roads (Noise Pollution)
  Mr. Randall: If he will make a statement on his Department's plans to limit noise pollution on major trunk roads.[30654]
  Dr. Strang: Noise pollution is being addressed in the review of the role of trunk roads in England and is being considered with other matters in the preparation of the White Paper on integrated transport.
  Mr. Randall: I thank the Minister for his reply. What assurances can he give my constituents, particularly those living in Ickenham close to the A40, about measures to alleviate the misery of noise pollution there?
  Dr. Strang: The hon. Gentleman is right to focus attention on that. I know how important the issue is for many of his constituents. Under the policy of previous Governments, there has been no specific provision for tackling the problem once a road has been constructed. We are considering the matter, and we will announce our decision when we publish our White Paper on integrated transport.
  Fiona Mactaggart: I am glad that the matter will be covered in the White Paper. Is there any prospect that the paper will include proposals to protect people who live near existing roads, such as the A40 and M4, that have had increasing traffic in recent years and become very noisy for people nearby? If there were to be some alleviation, it would be for the first time for many years, which would be welcome to those of us who have campaigned on the matter for a long time.
  Dr. Strang: My hon. Friend is right to point up the problem. As she knows, there is an excellent chapter on the subject in the report on transport of the royal commission on environmental protection. It is an issue of growing importance for many people and we intend to address it.

  A5
  Mr. Paterson: What plans he has to dual the A5 north of Shrewsbury. [30655]
  Dr. Strang: We are considering that proposal as part of our review of the roads programme.
  Mr. Paterson: Twenty-five people have been killed between Shrewsbury and Ruabon over the past five years. The project has the full support of all the neighbouring local authorities and the Government office of the west midlands. It is the last link in the trans-European network route between Felixstowe and Holyhead that has not been dualled. When will the Minister be able to give a clear idea of when a final decision will be made?
  Dr. Strang: We will take decisions on such roads in the context of our roads review. The hon. Gentleman is right, and makes a strong case for the road. New roads can save lives, and safety is a factor in this case.

  Traffic-Calming Measures
  Mr. Bob Russell: What action the Government are proposing to take to encourage councils to introduce further traffic-calming measures; and if he will make more financial resources available. [30656]
  Dr. Strang: I recently announced the Government's intention to remove the requirement for local highway authorities to obtain the Secretary of State's consent to making 20 mph speed limits. That should encourage the creation of more 20 mph zones, particularly where children and vulnerable road users are most at risk. The Department will continue to provide local authorities with guidance on traffic-calming measures. We are currently considering what resources can be made available for 1999–2000.
  Mr. Russell: I am grateful both to this Government for what they are doing on road safety—and, in fairness, to the previous Government, who pioneered traffic calming. I regard road safety as a non-party issue. However, more money is needed because road safety is in the national interest. I draw the Minister's attention to the high street scheme in my constituency, which has been funded by Government, past and present; the county council, past and present; and the borough council. It has led to a reduction of almost 50 per cent. in the number of accidents. Given that the Department's figures show that a fatal accident costs £1 million, a serious injury accident £110,000 and a slight injury accident about £10,000, the introduction of that traffic-calming system across the country would save hundreds of lives, prevent thousands of injuries and save the country money. Can we have more resources for more traffic-calming schemes?
  Dr. Strang: Yes, the hon. Gentleman is right to commend so strongly the Colchester transport package, which this Government, like the previous Government, support. It contains a number of positive elements such as the provision of bus priority measures at key points and the development of cycle networks. As he rightly said, it has a strong emphasis on safety, traffic-calming measures and 20 mph zones. It is because of the merits of those schemes that I recently announced that local highway authorities will no longer have to approach the Government to create new 20 mph zones.
  Ms Southworth: Will my right hon. Friend work with local authorities and public and private sector partnerships that are working to create sustainable town centres that are safe, environmentally friendly and accessible to everyone in the local community? In particular, will he give consideration to the unfair competition from out-of-town shopping centres that provide free car parking?
  Dr. Strang: Yes, I agree with my hon. Friend. Most hon. Members would accept that when the former Secretary of State for the Environment, the right hon. Member for Suffolk, Coastal (Mr. Gummer), announced that he was changing the planning legislation in relation to the development of out-of-town centres, it was a case
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  of shutting the stable door after the horse had bolted. Far too many out-of-town centres have developed. We must now cope with that situation. Clearly, the encouragement of greater use of public transport and the promotion of an integrated transport policy are made so much harder by the development of out-of-town schemes.
  Mr. Dafis: Do not reductions in the roads budget—which are reasonable enough for the purpose of discouraging unsustainable traffic growth—sometimes lead to cuts in the resources available for traffic-calming measures? That is an ironic outcome. What can the Government do to ensure that, while the roads budget may be reduced for good reasons, that other aspect of investment in roads is encouraged and enhanced?
  Dr. Strang: I would be keen to examine any examples of that. We are, as the hon. Gentleman knows, very much in the business of encouraging more investment in traffic-calming measures and more emphasis on safety. However, he is right to point out that we cannot continue a policy of building more and more roads. It is important that transport packages are designed to put the emphasis on safety.

  Road Fatalities (Drugs)
  Mr. Flynn: What is his estimate of the numbers of road fatalities that result from the use of medicinal drugs. [30657]
  Ms Glenda Jackson: No such estimate is available. A survey that my Department is conducting found medicinal drugs present in 6 per cent. of road user fatalities—only 4 per cent. in the case of drivers—but their presence does not necessarily mean that they were a factor in causing the fatality.
  Mr. Flynn: The Government are to be congratulated on being the first Government to take practical steps to deal with the dangers of drug driving. As my hon. Friend knows, the trial can identify only a small number of problems involving medicinal drugs. As she is aware, 100 million prescriptions are issued every year for medicines which, if taken according to instructions, will leave drivers' reactions as impaired as if they had drunk an equivalent quantity of alcohol. Will my hon. Friend give more attention to the matter, as medicinal drugs are the major drugs that cause accidents?
  Ms Jackson: I believe that my hon. Friend is confusing the incidence of drugs in road fatalities and the cause of such accidents. In our survey to date, 16 per cent. of the fatalities—drivers, passengers, pedestrians and cyclists—had evidence of an illicit drug in their bodies. The incidence for drivers was 18 per cent. Six per cent. had evidence of medicinal drugs. For drivers, the incidence was 4 per cent. Compared to a survey 10 years ago, that represents a fourfold increase in the incidence of illicit drugs, but very little change in the incidence of prescription drugs. However, road fatalities and serious

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  casualties overall have fallen by more than a third during those 10 years, so it is extremely difficult to judge the road safety implications of drug use.
  Rev. Martin Smyth: I welcome the Minister's statement. Does she share the concern of diabetic people who feel that they are discriminated against by the new regulations coming out of Europe?
  Ms Jackson: I should be extremely sorry if there were a sense of discrimination with regard to insulin-treated diabetics. Since 1991, they have been prohibited from holding licences to drive large goods vehicles and buses, and, as a consequence of the United Kingdom's implementation of the second EC driving licence directive, the prohibition extends to licences to drive lorries between 3.5 and 7.5 tonnes and minibuses with nine to 16 seats. Licences to drive cars, restricted to a maximum of three years at a time, continue to be granted to insulin-treated diabetics, subject to satisfactory health checks at each renewal. The road safety dangers associated with drivers treated with insulin have been recognised for many years—it can lead to hypoglycaemia, which in turn can result in loss of consciousness, in some cases without warning.

  Fuel Duties
  Mr. Gray: What assessment his Department has made of the impact of increasing fuel duties by 6 per cent. a year in real terms on road traffic levels. [30658]
  Ms Glenda Jackson: The Department's national road traffic forecasts assume that fuel duties will increase by 6 per cent. per annum until 2002. Those forecasts predict that the level of road traffic will increase by 11 per cent. between 1996 and 2002.
  Mr. Gray: Is the Minister aware of the disproportionately harsh effect that an increase in road fuel duties will have on rural motorists, many of whom rely exclusively on private motor cars to get about? Will she consult her right hon. Friend the Chancellor of the Exchequer to find ways of deterring the city driver—and particularly the company car driver—while safeguarding the interests of the rural motorist?
  Ms Jackson: That question comes ill from a party which inflicted enormous damage on rural transport through its policies of rail privatisation and bus deregulation. In the past two decades, rail fares have risen by 75 per cent. and bus fares have risen by 60 per cent. above inflation, yet overall car costs are 6.5 per cent. below inflation. Central to this Government's policies for rural communities is the restoration of real integrated public transport in order to begin to make some sort of inroad into the isolation in many rural communities that is a direct result of the policies of the former Conservative Administration.
  Mr. Baker: Given that the real cost of motoring has decreased by 6.5 per cent. since 1974, and that rail fares have increased by 75 per cent. or 78 per cent., are the Government prepared to consider in their transport White Paper not simply increasing costs for motorists but using funds to decrease costs for rail and bus users?
  Ms Jackson: We are reviewing every possible lever of government to ensure that, when we produce our integrated transport policy, it will be clear to the whole country that we are taking a long-term view. This is our window of opportunity to create an integrated transport policy based on an integrated public transport system and to reduce the huge costs that this country has suffered through 18 years of neglect by the previous Administration.
  Sir Norman Fowler: But my hon. Friend the Member for North Wiltshire (Mr. Gray) was asking about the position of motorists. Will the Minister acknowledge that the car is an absolute necessity for millions of people in rural areas and elsewhere? Will she acknowledge also that hundreds of thousands of people work in the motor industry in areas such as mine in the west midlands—which used to be a rather important consideration as regards industrial policy? Will the Minister recognise that there is no justification for introducing swingeing increases in motor taxation that will simply penalise many millions of ordinary people?
  Ms Jackson: I repeat that the greatest damage was inflicted on the rural communities by the previous Government's policies of rail privatisation and bus deregulation. I repeat that the issue of rural communities is central to this Government's policies. The rural communities' need for a properly integrated transport policy, which is essential for regeneration in those areas that the former Conservative Government neglected for 20 years, will be central to the Government's policies.

  Workplace Parking
  Mr. Swayne: What assessment has been made of the cost of enforcing proposals to limit the availability of workplace parking. [30659]
  Ms Glenda Jackson: The Government are currently looking at the potential costs and benefits of a levy on non-residential parking places. Administration and enforcement arrangements are of course an important element in that.
  Mr. Swayne: I find that most regrettable. Does the hon. Lady agree that, given the Government's aspirations to reducing congestion, this is a daft idea that will increase congestion by 20 per cent. and load new costs on to small businesses, many of which will be rural?
  Ms Jackson: No—and anything that causes the hon. Gentleman regret is music to my ears.

  Rail Passenger Satisfaction Surveys
  Mr. Cranston: If he will make a statement on the publication of rail passenger satisfaction surveys. [30660]
  Mr. Prescott: The Government welcome the customer satisfaction surveys, which the franchising director has required to be published. They show that a significant proportion of privatised train companies are offering a worse service and an overall reduction in the standard and quality of service. That is unacceptable.
  Last November, I gave the franchising director new objectives, requiring him to change his priorities. He must now put the interests of passengers first. Concerns continue to be expressed about safety and the excessive profits that are being made by individual directors as a
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  result of the privatisation of the railways. Furthermore, the franchising director and the regulator think that their powers are inadequate. Our White Paper will address that.
  Mr. Cranston: Can my right hon. Friend confirm that under the previous Government there was no obligation on many train operating companies to publish these surveys and, where they were obliged to do so under some of the contracts, they had a free choice as to what they could publish? Does he agree that such information is vital? I welcome what he has done in the past month or so to ensure that survey results are published.
  Mr. Prescott: That is correct. I increased the franchising director's powers to achieve those objectives. Indeed, I made it clear to him that his primary objective is not to secure maximised profit and privatisation but to put customer satisfaction first.

Points of Order
3.30 pm
Mr. Simon Burns: On a point of order, Madam Speaker. Obviously, you are not responsible for the contents of Ministers' written answers, but, on behalf of hon. Members, I ask whether there is anything that you can do to protect hon. Members who table questions for written answer, only to have them blocked.
As you are aware, last Wednesday I tabled a question to the Department of Social Security, asking for the raw numbers on the lone parent scheme. It now turns out that those numbers are somewhat embarrassing to the Government. On Friday, to forestall my question, the Department of Social Security got the hon. Member for Gravesham (Mr. Pond) to place a planted question asking for the proportions, not the numbers, on the lone parent scheme.
Yesterday, shortly after 3.30 pm, the hon. Member for Gravesham received his answer, saying that the Secretary of State for Social Security had published a press release, which appeared on the tapes. In my answer, I was referred to that given to the hon. Member for Gravesham, but mine was not the same question as his, so I never got an answer on the raw figures. To my mind, the Government are abusing their position by failing to answer questions that are embarrassing.
Is there anything that you can do to try to stop that practice?
Madam Speaker: I can make no comment on the hon. Gentleman's first point, which is far too general and is unacceptable to me. I quite understand his frustration. He was good enough to give me the information—which is rather convoluted—that he expressed at the Dispatch Box. He is quite right that the contents of answers are not a matter for me. It is for Ministers to take responsibility for the replies that they give. The hon. Gentleman is an experienced Member of the House, and I am sure that he can find further parliamentary means of following up the matter. If hon. Members are dissatisfied with replies that they receive, they might in the first instance consult the Table Office, which is extremely helpful in these matters. I would prefer the hon. Gentleman to do just that.
Mr. Eric Forth: Further to that point of order, Madam Speaker.
Madam Speaker: No. There is no further point of order; I have made a ruling. I have seen the answer to the question asked by the hon. Member for West Chelmsford (Mr. Burns), and all the answers that he has received.
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If he consults the Table Office, he can table a question that will get the answer that he wants. That is the point that I am making. What is the further point of order?
Mr. Forth: You mentioned the Table Office, and that is helpful, but are you aware that in its efforts to be helpful, it has on occasion said to me, and, I am sure, to others, "This matter has been blocked by the Department"? It would appear that a trend is emerging, whereby Government Departments are able to place an arbitrary block on questions tabled by hon. Members, which, apparently, the Table Office has to respect. I should have thought that the Table Office was responsible to you and the House, not Government Departments. Therefore, are you satisfied that the House can be treated in that way by Government Departments?
Madam Speaker: I am satisfied because, as Speaker under the previous Government, I am well aware of the number of questions that were blocked then. I must be frank and tell the House that. In this case, a question could be tabled to elicit the information that the hon. Member for West Chelmsford requires.
Mr. Tam Dalyell: This point of order has the attraction of being not at all generalised but very particular.
On the radio this morning, the Foreign Secretary said that it was his understanding—he was doubtless speaking for the Government—that the agreement reached by the United Nations went along with previous agreements, in that it allowed military action to take place under existing United Nations charter resolutions on Iraq.
Mr. Dale Campbell-Savours: Thank God for that.
Mr. Dalyell: My hon. Friend says thank God for that; some of us take a different view.
Later on the same programme, the Chinese ambassador, representing some of the permanent members of the Security Council, made it abundantly and unambiguously clear that their interpretation was diametrically opposite—that there could be no military action until the powers had gone back to the Security Council. They cannot both be right. My point of order is simply to ask you, Madam Speaker, whether you have had a request from the Foreign Office or the Law Officers to explain precisely what the legal position is in this crucial matter.
Madam Speaker: No. I have not been informed that a Minister will make a statement to the House. Foreign Affairs questions come before us next week, when the hon. Gentleman may seek to catch my eye on those matters.

Religious Discrimination and Remedies
3.36 pm
Mr. John Austin: I beg to move,
That leave be given to bring in a Bill to render unlawful religious discrimination in employment and in the provision of certain types of goods, facilities and services and to make provision for appropriate enforcement; to create new offences relating to incitement to religious hatred; and for related purposes.
In a submission to the United Nations in 1995, the previous Government stated succinctly and boldly their vision of an inclusive society. The submission said:
"It is a fundamental objective of the United Kingdom Government to enable members of ethnic minorities to participate freely and fully in the economic, social and public life of the nation, with all the benefits and responsibilities which that entails, while still being able to maintain their own culture, traditions, language and values. Government action is directed towards addressing problems of discrimination and disadvantage which prevent members of ethnic minorities from fulfilling their potential as full members of British society."
The twin aims of public policy are social inclusion and participation by all in a shared civic culture, combined with cultural pluralism. The achievement of that requires issues of discrimination and disadvantage to be addressed. Racial abuse and racial harassment are a fact of life for many of our citizens. Racial harassment occurs when someone abuses or assaults someone else because of his or her colour, race, nationality, or ethnic or national origin. Incitement to racial hatred is a criminal offence, but what if the harassment, abuse or incitement is based not on one's colour, race, nationality, or ethnic or national origin, but on one's religion?
The National Secular Society and others have expressed concern that the Bill may limit freedom of speech and expression. I do not intend to make it more difficult for the religious beliefs and practices of any group to be open to critical scrutiny or rational discussion. The Bill does not intend to extend the blasphemy laws; nor would it suppress the legitimate reporting of atrocities or gross violations of human rights carried out in the name of religion. Freedom of speech and of expression, and freedom of the press and other media, are the sinews of our democracy, but they are not an absolute right without limits.
Some have argued that the existing laws are adequate to deal with the problem, but evidence published by the Runnymede Trust in its report, "Islamophobia—a challenge for us all" clearly shows that the law is inadequate to secure the objective of an inclusive and pluralist society, as set out in the previous Government's submission to the United Nations.
The Commission for Racial Equality has recommended changes in the law in respect of discrimination on grounds of religion and incitement to religious hatred. The previous Home Secretary, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), said in response to the Commission for Racial Equality:
"I have yet to be convinced that legislation could be justified. So far, there is little hard evidence of discrimination against individuals on religious rather than racial grounds, but I can assure you that the Home Office remains ready to look at any other evidence."
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I hope that the new Home Secretary will examine that evidence, which is clearly stated in the Runnymede Trust's report on Islamophobia.
Since that time, various faith communities have become more concerned, particularly about the extent and nature of discrimination in this country against Muslims and the lack of legal remedies that would allow those problems to be tackled. The Runnymede report refers to the prejudice and discrimination that Muslims experience in their everyday lives and describes Islamophobia as
"an ugly word for an ugly reality"
and as a growing phenomenon.
Hatred of Islam has existed in western cultures for several centuries, but it has become more explicit, extreme and dangerous. It is an ingredient of all sections of our media, which means that many Muslims are frequently excluded from the economic, social and public life of the nation.
The Runnymede report goes further than the Bill and makes wide-ranging recommendations. The Bill addresses only the issues of discrimination in employment and the provision of goods and services, and incitement to hatred. Estimates of the Muslim population in Britain vary, but the community is reliably thought to number between 1.2 million and 1.4 million. Whatever the correct figure, for the sake of members of that community and society as a whole, we cannot afford to allow Muslims to feel isolated and excluded from society.
The argument for legislation outlawing religious discrimination is broadly the same as that for legislation outlawing racial discrimination. First, a religious discrimination law would be a powerful symbol of public policy and would convey the important message that religious identities are valued and respected throughout society.
Secondly, there must be consistency. The Fair Employment (Northern Ireland) Acts have created an anomaly: religious discrimination in employment is unlawful in one part of the United Kingdom, but not in Great Britain. A further anomaly has been thrown up by the House of Lords decision that Sikhs constitute a racial group and are entitled to protection under the Race Relations Act 1976. Similarly, Jews can rely on that Act, because, like Sikhs, they can be defined by their ethnic as well as their religious identity. No such protection is afforded to other religious groups, such as Hindus or Muslims.
Yet another anomaly has been thrown up by the Crime and Disorder Bill, which addresses racially aggravated behaviour. In a civilised society, criminal law must be operated even-handedly. An attack carried out on a Sikh or a Jew because of his religion could be classified as racially aggravated assault, but an attack on a Hindu or a Muslim could not. In employment, except in Northern Ireland, an employer is free to discriminate against an employee on the ground of religion, which is often used as a cover for racial discrimination.
The Government have always maintained that equality of opportunity in employment is economically desirable: discrimination is an inefficient business practice which results in talent being wasted, to the detriment of the public at large. Discrimination also creates alienation and frustration among those who feel that the law does not provide them with redress. My Bill would contribute in no small measure to the elimination of such alienation and frustration.

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The adherents of some faiths could make a discrimination claim under the Race Relations Act 1976 on the basis of their membership of an ethnic group. Hindus might do so as Indians, or Muslims as Arabs or Pakistanis, under the indirect discrimination clauses of that Act, but a white or Afro-Caribbean British citizen who had converted to Hinduism or Islam could not. Nor could groups such as Rastafarians, who are a minority within their own racial or national group. The 1976 Act deals with indirect religious discrimination, but financial compensation is not available unless the discrimination can be shown to be intentional. I accept that defining religion is difficult, but difficulties are no argument for not acting in the interests of harmony in our society.
The Bill does not deal with the issue of blasphemy. I would prefer the current law to be rescinded rather than extended, but there is a difference between the offences of blasphemy and incitement. Blasphemy outrages people's sensibilities, whereas incitement endangers their material and physical well-being. Currently, incitement to racial hatred is an offence under the Public Order Act 1986; inciting others to hate Muslims, however, is not a crime—the 1986 Act does not deal with the stirring up of religious hatred.
It has been suggested that the Bill limits freedom of speech, but the current law acknowledges that it is legitimate, in a democratic society, to interfere with freedom of expression if the publication of threatening, abusive or insulting material may not only offend people's sensitivities, but have a direct and harmful effect on their lives. An extension of the law to cover religious groups, as well as racial or ethnic groups, would give Muslims treatment equal to that of Jews and Sikhs, and would reassure them that their interests were respected sufficiently to warrant their protection from religious hatred.
The international covenant on civil and political rights declares that
"any advocacy of national, racial or religious hatred that constitutes incitement to discrimination, hostility or violence shall be prohibited."
We are not legally bound to introduce legislation to implement the provision, but I think that it is essential if we are serious about human rights, and about building a society in which all our citizens can participate freely and fully in the economic, social and public life of the nation—with all the benefits and responsibilities that that entails—while maintaining their own culture, traditions, language and values.
Question put and agreed to.
Bill ordered to be brought in by Mr. John Austin, Mr. David Atkinson, Mr. Simon Hughes, Fiona Mactaggart, Mr. Terry Rooney and Mr. Marsha Singh.

RELIGIOUS DISCRIMINATION AND REMEDIES
Mr. John Austin accordingly presented a Bill to render unlawful religious discrimination in employment and in the provision of certain types of goods, facilities and services and to make provision for appropriate enforcement; to create new offences relating to incitement to religious hatred; and for related purposes: And the same was read the First time; and ordered to be read a Second time on Friday 3 July, and to be printed [Bill 133].
Opposition Day
[8TH ALLOTTED DAY]

ISAs, TESSAs and PEPs
Madam Speaker: I have selected the amendment in the name of the Prime Minister.
3.46 pm
Mr. Peter Lilley: I beg to move,
That this House welcomes the success of TESSAs and PEPs in extending popular saving and deplores the Government's proposal to abolish them and replace them with Individual Savings Accounts (ISAs); condemns the retrospective taxation of the most prudent savers who have accumulated more than £50,000; believes that ISAs will involve high administrative costs, especially because of the unnecessary and unfair lifetime limit on tax-free saving; and urges the Government to bring forward new proposals that would not involve retrospective taxation, would build on PEPs and TESSAs, would reduce the costs of administering the schemes and would not involve a lifetime limit on the amount that may be invested.
This is the first opportunity that we have had to debate an issue that is of great and growing concern to our constituents since the Paymaster General shook millions of people by announcing that he planned to abolish personal equity plans and tax-exempt special savings accounts. People were shaken because they could not have guessed from what Labour had said before the election just what would hit them.
Last spring, the Labour party told us—and told the British people—that it had changed. This was new Labour: the people's party. Middle Britain was safe with new Labour, and so were its savings. It was the Prime Minister—"Trust Me Tony" himself—who said:
"We want to extend the scope of PEPs and TESSAs, so the idea that the Labour party is going to take action against those is completely absurd."
Labour's manifesto reaffirmed that, stating:
"We will … extend the principle of Tessas and Peps to promote long-term saving."
And it was the current Chief Secretary to the Treasury who was reported by the Investors' Chronicle as saying:
"The party has pledged that anyone who invests in a PEP or TESSA before the general election … would not be penalised under a Labour Government."
The article went on to say that the Chief Secretary had reiterated Labour's promise that it would not retrospectively abolish tax incentives on PEPs or TESSAs.
"It doesn't matter what the issue is with tax,"
he said.
"People are entitled to certainty."
If that did not reflect the Chief Secretary's remarks accurately, he could have written to deny it. Actually, he did write a letter to the Investors' Chronicle, in which he said:
"You correctly quote me as saying, 'We support Peps and Tessas but we want to build on that.'
However the assertion in the article that 'Labour is examining proposals to abolish PEPs and TESSAs' is not true."

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That was the height of deception. The Chief Secretary chose to deny the one assertion in the article that has since proved to be true, that Labour would abolish PEPs; but he chose not to qualify his clear assurances—which have since proved bogus—that Labour would do nothing retrospectively, that there would be no penalty for those with existing PEPs or TESSAs and that there would be no uncertainty in the tax regime.
It is the betrayal of those pledges which has caused so much fury among our constituents. That betrayal is why this debate is being held today, and why we have dragged back the Paymaster General from Guernsey. People had been reassured by Labour's pledges; now they are angry, and rightly so. We will hound the Government until they honour their pledges to savers.
People with longer memories might have known how little Labour cares for their savings. They will remember the deadly combination of socialism and inflation, which destroyed Britain's savings habit in the 1970s.
Conservative Members are proud to have rebuilt savings in the 1980s and early 1990s. We did it, first, by building up pension funds, to the point at which the United Kingdom has more money invested in pension funds than does all the rest of the European Community put together. We introduced PEPs and TESSAs, and now 3 million people have PEPs and 4.5 million people have TESSAs. Those schemes have massively extended popular saving.
We realise, of course, that more people need to save, and that many of those who already have savings need to save more. The Government would therefore have enjoyed our support if they had built on the success of our schemes. However, far from building on those schemes—building them up—the Government's proposals will mean cutting them back. Individual savings accounts will take away relief from those who have saved most prudently, giving less help, for less time, for less saving.
The only silver lining in the Government's proposals is that they have decided to open up the proposals for consultation. Ministers may rather regret that decision, because the reaction of savers, savings providers and expert advisers has been universally critical. It is not only that the plans were announced by Geoffrey Robinson; they were designed by Heath Robinson.
People's criticisms go to the heart of the Government's proposals. The best advice that Ministers could take would therefore be to listen to the thousands of small savers who are telling them, "Go back to the drawing board, and build on PEPs. In fact, do exactly what the Prime Minister and the Chief Secretary promised they would do. They should simply honour their pledges."
The public have been most infuriated by the retrospective impact of the Government's plans. My postbag is full of letters from aggrieved savers, who thought that they were safe and trusted Labour. I do not know whether the Paymaster General reads such letters, but he certainly does not reply to them. Perhaps we should forward them to him in Guernsey. Nevertheless, he will have to listen to one or two of them today.
A typical example is a letter from a pensioner in Abergavenny, who writes:
"This punitive tax proposal, in my view, breaks a contract which we established with a previous Government and it is neither just nor defensible."
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A gentleman from Chester sent me a copy of his letter to the Prime Minister. He wrote:
"We have worked hard, saved and planned for our retirement on the assumption that whatever steps we have taken would be honoured by whichever party was in power at the time. We have paid our taxes and behaved as responsible citizens and now your Government—the one we were asked to trust remember—has broken the contract between the state and those people who have more than £50,000 in PEPs."
The Government said that education was to be their passion. Some teachers in Birmingham disagree. They write:
"We are retired teachers who thoroughly enjoyed our chosen profession and who, during the later years of employment, made a conscious decision to save as much as we could from our salaries through PEPs and TESSAs towards our old age. Unlike the Paymaster General, we do not have a large offshore trust, a mansion in Surrey, a residence in Godalming or a villa in Tuscany.
We are just very ordinary members of the public who welcomed the opportunity by the Conservative Government to invest for our futures. Through careful planning and by putting prudence before pleasure we have been able to save in excess of the £50,000 limit now being proposed by Mr. Robinson."
I could go on. We have all received heaps of such letters.
Even if the Government will not listen, they must realise that to withdraw tax relief from savings that people made in good faith is not only wrong, but undermines the credibility of any future system. People will fear that if ISAs are successful, that regime too, could be changed. The Government must honour their contract with people who have saved in good faith.
Even if the £50,000 lifetime limit is not applied retrospectively, it remains the biggest problem in the ISA plan. There is no need for a lifetime limit, given that the annual limit on the amount that people can invest has been reduced, but if the Paymaster General insists on a lifetime limit, £50,000 is simply too low. The Paymaster General may consider it more than enough for humble folk not used to his style of life, but it is not a huge sum.
Another saver from Peterborough wrote:
"I may have to spend the final years of my life in a nursing home where fees are approximately £20,000 per annum, so £50,000 will last just two and a half years."
The Paymaster General himself admitted in reply to my right hon. Friend the shadow Chief Secretary that £50,000 invested in equities yields an annum income of less than £1,500 after tax. The Lord Chancellor would not get many rolls of wallpaper for that.
We do not know how many hundreds of thousands of savers have already accumulated more than £50,000. The Government did not even bother to find out before launching the new scheme, but it is not just those who have already reached the limit who will be hit. We should be encouraging those with £30,000 or £40,000 to continue building up their savings, yet the Government's plans mean that after a few more years, they, too, will lose the incentive to save. Will the Government publish an estimate not just of how many people have already reached the £50,000 limit, but of how many will reach it over the next few years?
It is not just the public who oppose the scheme. The experts are virtually unanimous in giving it the thumbs down. That is not my assessment. A survey of finance directors carried out by the company of one of Labour's most prominent business supporters, Alec Reed, found that more than 70 per cent. were opposed to ISAs.

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The scheme is half-baked, ill thought out, unnecessarily complex and unlikely to achieve its stated objectives—in short, very new Labour.
Criticisms come from people who are well disposed to the Government. Richard Branson condemned it as "retrospective". The Financial Times said that it was
"unfair … unattractive … and bureaucracy gone mad".
The Sunday Times said:
"ISAs will be the most complex instant access accounts ever."
The Consumers Association said:
"We are struggling to see the point of ISAs. We see no real advantages but a lot of problems."
The only possible justification for persisting with the reform would be if it generated more saving. The National Institute of Economic and Social Research is unequivocal about that, saying:
"The Government's proposed replacement of PEPs and TESSAs by Individual Savings Accounts would reduce the pool of savings available to finance investment in Britain."
and speculates
"that this could result in a reduction in the overall level of national wealth by as much as 4 per cent. of GDP".
ISAs could hope to attract extra savings, particularly from the less well-off, only if they offered either lower costs or better incentives, but far from reducing costs, the new rules will add to them. According to the management consultants OSI, setting up new systems to replace PEPs and TESSAs will cost nearly £1 billion. That is equivalent to an extra £30 a year for every ISA for the next five years. Running costs would also be higher than for PEPs and TESSAs because the lifetime limit is very costly to monitor, the profusion of annual limits adds to the costs and the absurd raffle will also cost money to run.
At the same time as driving up costs, the Government are reducing the tax relief in ISAs, particularly for small savers on the basic rate, whom they are supposed to attract. For such savers, relief from capital gains tax is likely to be of no importance, because they are unlikely to have capital gains greater than the £6,500 annual CGT exemption that they get outside an ISA. The tax relief that really matters to them is that on dividends.
Under the Conservatives' tax regime, for every £80 of net dividends, the fund manager could reclaim an additional £20 of tax credits. That was more than enough to cover the typical management charge. Under the ISA tax regime, the same dividends will give a credit of only £8.90. That is insufficient to cover the current costs of PEPs, let alone the higher costs of ISAs. Moreover, that tax credit will disappear after five years. I am glad to see that the Paymaster General is briefing the Chief Secretary, who was clearly unaware of the point. We know that he has been cut out of the circulation on welfare to work. He has clearly also been cut of the circulation of information on the debate that he is about to speak in.
The absurdity is that, whereas the majority of those with PEPs were basic rate taxpayers, ISAs will be attractive only to higher rate taxpayers. Does the hon. Member for Bolsover (Mr. Skinner) realise that the scheme that his Government are proposing will shut out
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from equity investment anyone on the basic rate of tax or paying no tax and that the scheme will be worth while only for those paying 40 per cent. tax?
Mr. Dennis Skinner rose—
Mr. Lilley: I am glad to have the hon. Gentleman's support.
Mr. Skinner: I shall tell the right hon. Gentleman, a previous Tory Minister, what I think. The issue is marginal in the extreme. However, I remember that every pensioner in Britain-10 million of them, including some who were able to find money to put in PEPs or TESSAs—lost £20 a week because of the Tory Government's decision to change the method of calculation for the old-age pension, linking it to prices instead of wages. The result was that every one of them constantly told me about the rotten, lousy Tory Government. What the right hon. Gentleman is saying today is just a bout of hypocrisy. Why does he not get back to his chateau in France?
Mr. Lilley: As I said, I am grateful for the hon. Gentleman's support. He says that a limit of £50,000 on tax relief is trivial. It is to him. He entered the House in 1970. I have had distinguished accountants calculate the cost of purchasing the pension that he is entitled to from the House of Commons. It would cost £356,000. He is worth even more than the pension scheme of the Paymaster General, and considerably more than the Chief Secretary, who is languishing at a mere £140,000, excluding his ministerial pension.
Mr. Skinner: I never realised that it was that much. If someone has been advising me wrongly, I shall go to my hon. Friend the Economic Secretary to the Treasury, who is dealing with the mis-selling of pensions, to ensure that it is put right. I come here every day to earn my money, unlike many Tories, who, not content with their £40,000 salary as a Member of Parliament, are lining their pockets with moonlighting jobs, directorships and consultancies, picking up as much as £200,000 or £300,000 a year. Why does the right hon. Gentleman not direct his attacks on them?
Mr. Lilley: The hon. Gentleman is worth every penny, and we wish him a very happy retirement.
Mr. Barry Gardiner: Will the right hon. Gentleman give way?
Mr. Lilley: I am going to make some progress. I have not made an estimate of the hon. Gentleman's pension, so he will have to apply for one.
Mr. Gardiner rose—
Mr. Lilley: I am not giving way.
I was pointing out that there will not be any incentive in five years' time, when it is planned that the tax credits in the scheme will disappear entirely. Can the Chief Secretary or the Paymaster General put their hands on their hearts and advise any basic rate taxpayer to invest in shares via an ISA? They will not. The Paymaster General is right not to, because he is sitting next to the

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Economic Secretary, who is in charge of pensions mis-selling. The Paymaster General knows that, if anybody gave such advice professionally, they would be guilty of mis-selling.
Where are the 6 million extra savers whom the Prime Minister tells us will be attracted to the scheme? The Prime Minister says that he sees them queueing up in Tesco, buying their corporate bonds with their Brooke Bond and getting their share tips with their PG Tips. The truth is that they are a phantom army. They do not exist; they had to be invented to pretend that tax relief was going to be spread more widely. In fact, tax relief under the scheme is being withdrawn wholesale. The effect of the scheme will be simply to raise extra tax revenue from savers. The Government's plans amount to a savings tax, to add to their pensions tax.
Do the Government accept that, as a very minimum, they must come up with a radically redrawn plan? Will they ensure that their final version fully respects those who have saved in good faith? There must be no retrospective taxation. There must be no lifetime limit—or at least a limit much higher than £50,000. The system must be simpler and have lower costs. Can the Minister give a guarantee today that those elements will be included in the final scheme?
If there is one characteristic that is starting to define this Government, it is that they practise the opposite of what they preach. When they say one thing, one can be sure that they will do another. They said that they wanted investment for the long term, so they introduced a £5 billion-a-year tax on pension funds—the country's main source of long-term investment. They said that they were pro-business, so they have imposed a £22 billion extra tax burden on the corporate sector in this Parliament. They said that they would stamp out abuse of offshore trusts, so they put in charge of the policy a Minister who has millions salted away in an offshore tax haven. When Labour spokesmen said before the election that they would not harm PEPs and TESSAs, the alarm bells should have started sounding for small savers. Under this Government, black is white, higher tax is a boost to investment, and the abolition of PEPs and TESSAs is to be sold as an opportunity for more people to save.
Whoever had announced this misbegotten plan, it would have provoked anger, but for it to come from the Paymaster General added insult to injury. The Chancellor has extraordinary insensitivity and arrogance. It was a cheek to put the Economic Secretary, Robert Maxwell's public relations spokesmistress, in charge of pensions mis-selling. It was brazen to put the Financial Secretary, who was taken to court for failing to pay her poll tax, in charge of tax collection. But it was an insult to put the tax-dodger general, with £12 million in an offshore tax haven, in charge of taking away tax relief from middle Britain. Power has simply gone to the Government's head.
I assure the House that we will not abandon this issue until the Government recognise that their scheme is mean, costly, complex, retrospective and a breach of trust. We will defend the savers of middle Britain.
4.9 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:
"welcomes the Government's commitment, set out in the pre-Budget report, to consult on tax proposals, including the proposed ISA; believes that the ISA will extend the opportunity to save and invest and that the Government's proposals will ensure a stable and fair savings environment; commends the Government for its commitment to long-term economic stability and low inflation which is good for savers; and rejects any return to the boom and bust policies of the past which were so damaging to those on low incomes, savers and investors.".
I wondered why so many Tories were here this afternoon; I suspect that it has not much to do with small savers, or any other sort of saver. In looking at the record of the previous Tory Government, we remember what they did to all those on low incomes and those who endeavoured to save, despite the difficulties visited upon them.
The Government have been consulting over the past few months on the new individual savings account. In the pre-Budget report, my right hon. Friend the Chancellor made it clear that it is this Government's intention—unlike what happened in the past—to consult, particularly where there are tax measures with long-term consequences. It is important to get the proposals right so that they endure in the long term. For that reason, we are happy to consult as many people as possible. The consultation period ended in January, and the Government will shortly set out our conclusions as part of the Budget process.
When the right hon. Member for Hitchin and Harpenden (Mr. Lilley), the shadow Chancellor, said that this was the first opportunity the Opposition had to debate this matter, he was not quite right. It was up to the Opposition to use any of their Supply days to discuss this matter far earlier than just two weeks before the Budget.
I am sure that the House will understand that it is necessary for me to confine my remarks to some fairly general principles, rather than pre-empting anything that may be part of the Budget process. If anyone has come to the House today expecting specific announcements—or if anyone is following our proceedings elsewhere—I advise them to switch off or to leave now, because I intend to make a short series of remarks, setting out the principles that underpin the Government's approach to the savings process.
The Tory party's claim to be the friend of small savers and those on low incomes simply does not add up. The shadow Chancellor referred to pensions and the mis-selling of pensions. The House and the country will recall that more than 600,000 people have cause to regret the day the previous Government took office, as many believe that their pensions were mis-sold. People remember the previous Government's advertisements—paid for by the public—showing a man in a straitjacket breaking free from his occupational pension into which he and his employers paid, as if the very act of going private and getting a personal pension was enriching, both in the spiritual and material sense.
We remember that many were mis-sold pensions and may have lost thousands of pounds. Yet there was not a word of apology from the Tory party. The Tories were responsible for one of the biggest financial scandals this country has ever seen. They are in no position to lecture anyone on the plight of those who have suffered.

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During the 1980s—to which the shadow Chancellor referred—inflation at one point hit 18 per cent. The Tory party ran economic affairs in such a way that many people who tried to save and to make provision for themselves found that what they had saved had been eaten up by inflation. The Tories are in no position whatever to talk about probity, or to lecture this or any other Government on helping those on low incomes.
Mr. John Townend: Does the Chief Secretary agree that the Government's proposal to limit to £50,000 what an ordinary saver can shelter from tax, while Ministers are sheltering millions in the Channel Islands, is the height of hypocrisy?
Mr. Darling: The Government's proposals are designed to ensure that more people have the opportunity to save than in the past. I remind the hon. Gentleman that, before the election, the right hon. Member for Hitchin and Harpenden proposed a reform to the pensions system that would have cost this country £7 billion a year at its peak—money that would have had to be provided by increased tax on the very people for whom the right hon. Gentleman says he wants to speak.
The Government have two key objectives, which are both set out in the consultation document. First, we want to develop and extend the savings culture, because that is good for individuals and for the country. More than half the population have less than £200 each in savings, which is less than half the average weekly wage, and just over a quarter have no savings at all. Indeed, 60 per cent. of those who save have less than £500 in savings.
It must be in the interests of the country and of everyone that we extend the savings principle to encourage people to save as much as they can. If we are to do so, three things are necessary. First, we have to get the right economic framework—macro-economic stability. Secondly, we must have a regulatory system that commands the confidence of individuals and industry alike—something which the Conservative party does not begin to understand. Thirdly, we must have specific measures, such as those canvassed in the consultation document, to encourage individuals to save.
The second objective is to ensure that where we are giving tax relief, it is fairly distributed. The problem is that we are spending about £1.5 billion in tax relief on PEPs and TESSAs. On present trends, by 2007 that amount would rise to more than £2 billion, which is the equivalent of 1p on the basic rate of income tax. We must ensure that that tax relief does what it is supposed to do, which is to encourage people who do not save to save in the future. There is no point in continuing to give tax relief to people who can already afford to have significant sums locked up for long periods.
Several hon. Members rose—
Mr. Darling: I shall give way soon to all hon. Members who are showing an interest. It is important to ensure that tax relief is focused in such a way as to help people who do not save to become savers and, once they
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become savers, to encourage them to continue saving. That is in their interests and those of everyone else in the country.
Several hon. Members rose—
Mr. Darling: First, I will give way to the hon. Member for Twickenham (Dr. Cable), but I will give way to all the other hon. Gentlemen who are trying to intervene.
Dr. Vincent Cable: Will the Chief Secretary confirm whether more, less or the same amount of tax relief will be available under the projected new scheme as could be available under the existing scheme?
Mr. Darling: I repeat what my right hon. Friend the Prime Minister has said. We believe that broadly the same amount of money forgone in tax relief under the present system will be forgone in tax relief under the new system. Encouraging people to save—people who do not save at the moment—is a useful application of the tax system.
Mr. Dafydd Wigley: While I accept the objective of trying to broaden the scope of the schemes and to get more people in, does the Chief Secretary accept that some people decided not to go for a personal pension but to invest in PEPs and TESSAs because of the old tax regime, and it is too late for many of them to revert and get a personal pension plan? Will that not put some people in an invidious position?
Mr. Darling: I am aware that many people have taken advantage of PEPs and TESSAs with a view to providing for their pensions and elsewhere. That is one of the measures of which we are well aware, and we want to encourage people to save to complement their pensions, although I regard the future individual savings accounts and the present PEPs and TESSAs as complementary to anything an individual might be doing as regards his or her pension. We ought to encourage people to make long-term arrangements for their pension, because that is the best form of security for the future.
Several hon. Members rose—
Mr. Darling: I will give way to one more Conservative Member—the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), as he has been standing the longest.
Mr. Nick Gibb: Given that most lower and basic rate taxpayers are unlikely to generate gains that would exceed their capital gains tax exemption every year, and given that management charges for individual savings accounts are likely to exceed the 10 per cent. tax credit paid into ISAs, what are the advantages for those taxpayers in holding their equities through an ISA?
Mr. Darling: The hon. Gentleman raises a number of matters. On management charges, he is right to highlight that, under the present PEP systems, there have been cases of people's management charges being rather more than the tax relief they were getting. The hon. Gentleman cannot be held to blame, because he was not here at the time, but the previous Government did nothing about that.

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That is one of the reasons why we want a robust regulatory system that will ensure that people are charged fairly.
Under the existing system, many basic or lower-rate taxpayers do not have gains that exceed their personal allowance, whereas, under the new system, holders of the individual savings account will enjoy tax relief—not only the tax credit for five years of lop, but a general tax exemption.
Mr. Gibb indicated dissent.
Mr. Darling: The hon. Gentleman shakes his head, but many providers and many objective observers have welcomed our proposals. [HON. MEMBERS: "Name them."] Conservative Members shout, "Name them." Let me quote from a representation that we received:
"There is much that we welcome within the ISA … We agree with features such as flexibility, no minimum level of saving, reducing the restrictions on the equity element and no 'lock in' … they are all welcome and we consider that there has been much careful thought given to the design of the ISA".
Conservative Members sneer, but, less than a year ago, they sat on the same Benches as the person who gave the proposals such a warm welcome—the former Economic Secretary to the Treasury, Angela Knight.
Virgin has welcomed the individual savings account, and the Halifax building society said that it saw a bright future for it. ProShare, an organisation dedicated to share-based investment, said that the Government had achieved the right balance in their aim to reach investors on low income, many of whom do not currently save, as well as others on higher income. Many people have examined the consultation document and praised the Government's objective of extending the base of savers to include those people about whom the previous Government did not care one jot—the Conservatives have never bothered about people on low incomes or people of modest means.
On those key objectives, it is worth reminding the House that one of the most fundamental prerequisites of generating a savings culture is to ensure long-term economic stability and low inflation. If there is high inflation or instability, any benefits that a saver may accrue will disappear.
The House should note two interesting phenomena that occurred when the shadow Chancellor was a Treasury Minister. First, during the Lawson boom in the mid-1980s, not only were people encouraged to spend as much as they had, then to borrow and to spend again, but the amount of money that people saved was reduced—there was a negative savings ratio. Secondly, because of the Conservative Government's failure to keep control of what was happening during the late 1980s, the inflation rate rose from nearly 5 per cent. to almost 10 per cent. between 1988 and 1990—in the space of two years. Interest rates also rose dramatically, which affected mortgages and the very people whom the Conservatives pretend to support.
Unless people can plan against a stable economic background, they will not be encouraged to save. If there is instability, any benefits from saving will be eaten up. We believe that economic stability is of fundamental
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importance if we are to encourage people to save—they must know the background against which they will plan and save over the ensuing few years.
Mr. Julian Brazier: Does the right hon. Gentleman accept that, although administrative charges are important to all investors, they are particularly crucial to small investors, whom Labour has chosen to target? In devising a scheme that, by its nature, is much more expensive than existing schemes to administer, the Government have undermined their objective.
Mr. Darling: I dealt with that point when I said that one of the problems with PEPs, particularly in the early days, was the high administrative charges. The transparency that we believe to be necessary did not exist then, so many individual savers did not know how much they were paying in administrative charges. The hon. Gentleman's point would have had far more force if he had raised it during the many years when, as a Conservative Back Bencher, he supported the Conservative Government.
Fiona Mactaggart: Does my right hon. Friend agree that, whatever the charges, people will know, in a stable situation, what they are buying into, unlike in the boom and bust years of the past? Every saver will benefit from the opportunity, sneered at by the shadow Chancellor, to enter the draw and get £1,000.
Mr. Darling: My hon. Friend is right. People well remember what happened in the late 1980s: the Conservative Government managed to create an unsustainable boom which culminated in one of the deepest recessions this country has ever known. The people who lost their jobs and their homes will remember that very well.
The shadow Chancellor was a Treasury Minister throughout that period. I commend to him another excellent document, "Fiscal policy: lessons from the last economic cycle", published at the time of the pre-Budget report, which draws on the lessons to be learnt from what the Conservatives did in the late 1980s when, through their economic incompetence, they completely misread the economic signals and took all the wrong decisions, with the result that millions of people suffered a great deal.
The first precondition to encouraging people to save is to ensure that we have economic stability, and the Government are absolutely committed to that. The second necessary condition is to ensure that we have a regulatory regime that enjoys the confidence of savers and investors alike, and we have delivered that already.
Mr. Tim Loughton: I agree that good regulation is essential, so why do regulation and compliance occupy only one line on page 17 of the Green Paper?
Mr. Darling: In the consultation document, we make it clear that it is necessary to have an appropriate and robust regulatory regime. [Interruption.] If Opposition Members care to look, they will find many references to what we propose to do to ensure that the regime will maintain the interests of those investing in individual savings accounts and elsewhere.

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The Conservative party showed scant interest in reforming and improving the regulatory system over the past 18 years, despite all the problems with pensions mis-selling, in the City and elsewhere. We, by contrast, have made clear our determination to reform the system, not only making it more robust and putting an end to the nonsense of self-regulation, which was too often more a matter of self-interest than of the public interest, but—and this is an important point—ensuring that it is at an appropriate level for the savings or investments that it is supposed to be looking after.
Mr. John Bercow: Will the Chief Secretary give way?
Mr. Darling: No.
We are very conscious of the fact that, in the past, the regulatory system became so expensive that the relationship between cost and benefit was completely lost. We are determined never again to return to the situation in which so much rampant mis-selling of pensions could take place.
My hon. Friend the Economic Secretary has shown what a difference a change of Government can make. Since she took up her post and the Government made it clear to the pensions industry that we would not tolerate a situation in which absolutely nothing was being done to remedy the plight of those who had been mis-sold pensions, there has been a dramatic improvement in the clear-up rate, so many people now have the reassurance that they would never have had under the Tory Government.
The third element needed to ensure that people save is to have the appropriate incentives in place. We have taken a number of steps, on which we have held consultations, that I believe will help people on low incomes. Conservative Members, when they were not shouting and bawling, tried to persuade us that they were interested in the plight of those on low incomes.
All the evidence is that one of the biggest obstacles to people on low incomes saving, especially under the current regime, is the necessity to lock up money for a considerable period. People on low incomes, who may have unexpected and unwelcome demands on their savings, have not been prepared to take that risk.
We want the system to be more accessible, with no "lock-in" period or minimum investment, partly because we want to encourage many people to save who would not dream of doing so under the current system. We want a flexible system which people feel they can use as confidently as they do banks and building societies. We also want to extend the variety of outlets from which the individual savings account can be bought, including supermarkets, friendly societies, national savings, banks and building societies. That will make it easier for people to access the individual savings account and will provide flexibility and a wide choice of tax-free products that are not available under the present system.
I thought that Conservative Members might have shown a little more practical interest in the measures that can be taken to encourage saving. However, their conduct this afternoon suggests that they are still not bothered about people on low incomes, any more than they were when they were in government.
Mr. Bercow: Given that the Chief Secretary is in listening mode, will he give a specific response to the
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criticisms made in the green budget published by the Institute for Fiscal Studies, which stated that the proposal for a cumulative contribution limit of £50,000 will impose substantial compliance costs, is unlikely to raise much revenue, and sits uneasily with a commitment to increase self-reliance in welfare provision?
Mr. Darling: The £50,000 limit was not meant to raise revenue. The hon. Gentleman is right, and we have made it clear that one of our objectives—and one of the reasons for a £50,000 limit—is to ensure that the amount of tax forgone is manageable. The amount of tax forgone would have to be examined, whichever Government were in power. Had the Conservatives won the election in May, they would have had to consider how tax relief was being focused. Our intention is that broadly the same amount currently spent, in terms of tax forgone, will be applied to the new scheme, but we are rebalancing it, to ensure that people who do not save now are encouraged to save in the future. That is a useful and worthwhile objective.
Mr. Kenneth Clarke: The Chief Secretary has evaded the question by speculating on what the previous Government might have done, but we were committed to PEPs and TESSAs. How does he reconcile what he has just said with the quotations put to him in which, on behalf of the Labour party, he pledged that it was not considering the abolition of PEPs and TESSAs? He also told savers that there was no threat to the continuation of the tax relief that the previous Government gave them.
Mr. Darling: I said on several occasions that we were committed to building on the principle established by PEPs and TESSAs. The individual savings account will do that. If the right hon. and learned Gentleman reads the consultation document—I know that he has a reputation for not always reading everything that is put in front of him—he will see that TESSAs will run their course. He is right to say that we will never know what the previous Government would have done had they been re-elected, but perhaps he will one day shed some light on the subject. I repeat the point, which he, as a former Chancellor, will acknowledge: every Chancellor has to keep the level of tax reliefs granted under review from one year to the next. It would be madness not to do so.
We want to ensure that the substantial amounts given in tax relief are directed to helping those people who do not currently save, but whom we want to save in the future. Helping more and more people to save is an objective of this Government, just as it was of the previous Government.
The House will understand that there is a limit to what any Treasury Minister can say only two weeks before the Budget, but I repeat the fundamental and important objectives set out in the consultation document. First, we want to extend the savings culture so that more and more people save and make provision for themselves. To achieve that, we need economic stability, the right regulatory framework, and specific measures to help people to save. That is the direction of the Government's thinking, and it has been broadly welcomed.
The second objective is to ensure that the scheme is affordable and sustainable, to give people the certainty referred to earlier. The proposals, on which we have consulted, are a useful contribution to encouraging people

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to save. It is in the interests of everyone in this country, and of the country as a whole, that as many people save as possible. I am sure that my right hon. Friend the Chancellor of the Exchequer will have more to say about that in the not-too-distant future.
Mr. Lilley: On a point of order, Mr. Deputy Speaker. It has been suggested to me that my description of the Paymaster General as the tax-dodger general may be out of order, in which case I withdraw it unreservedly.
Mr. Deputy Speaker (Sir Alan Haselhurst): The House will be grateful for that.
4.34 pm
Mr. John MacGregor: I declare an interest as a director of the London and Manchester Group, which specialises in encouraging people on low incomes to save. I make that declaration not only because it is necessary because of the Register of Members' Interests but because I believe that, on top of my lifelong interest in the issue, it has given me further insight into the problems that we are discussing. I therefore speak with considerable practical experience. I want to make a constructive contribution, but, given what the Chief Secretary said at the start of his speech, I must respond in a partisan way first.
It was outrageous for the Chief Secretary to suggest that pension mis-selling concerned only the Conservatives. We know that some took place, but many thousands, if not millions, more people benefited from personal pensions than suffered. It was a major contribution. He also ignored the fact that the major pensions scandal of the period was the work of a former Labour Member, for whom other Labour Members worked. It was outrageous that the Chief Secretary made such attacks.
The Chief Secretary accused us of having had a short period of high inflation. He forgets that under the previous Labour Government—I remember it well, because I served on every Finance Bill Committee—the average level of inflation was 15 per cent. We never in all our 18 years in government breached that average. For him to talk as though we were the party that did not understand the importance of a positive return on savings is nonsense. There was a negative return on savings throughout the time of the previous Labour Government, which was the biggest disincentive to save of all time.
For the Chief Secretary to suggest that we show no interest in low-income groups was a travesty of the speech of my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), which was a devastating critique. We have not heard an answer to any of his criticisms. I want to turn to that now. The House agrees about the importance of savings, especially long-term savings. The key question is how to go about it. That is why it was disappointing that the Chief Secretary did not answer any of the points that were made, although I understand why.
I have four main points. The first concerns the £50,000 limit on existing PEPs and TESSAs. My right hon. Friend the Member for Hitchin and Harpenden made many criticisms on that, all of which I agree with, and some of which I want to reinforce. I agree that it is
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insulting that the Minister who introduced this ceiling has done well in many ways through tax avoidance, and so on. That is so well documented that I shall not repeat it.
I shall comment on the key points, starting with the retrospective nature of the proposals. The right hon. Member for Caernarfon (Mr. Wigley) put it well in his question. People who entered into PEPs—this is not so much true of TESSAs—thought that the tax regime would last. They were reassured by the Chief Secretary before the general election that it would. They invested year after year, often, as the right hon. Member for Caernarfon said, not only for short to mid-term savings but to pay for mortgages. More important, many people chose them as their form of pension, rather than taking personal pensions if they did not have occupational schemes, or as a supplement to their pensions. They now find a change in tax legislation which, in many cases, will severely reduce the benefit that they were getting from those savings. For someone who started saving in 1987, £50,000 is not a huge sum today, given the improvements in the stock markets. The first point is that the Government's proposal is retrospective legislation.
The second point is the volatility of the issue. We do not know what the position will be next year in relation to PEPs. The stock market may not continue as it is at present. Some people will find themselves unexpectedly above or below that £50,000 line, and they will do so thereafter.
Thirdly, as my right hon. Friend the Member for Hitchin and Harpenden made clear, £50,000 is not a substantial sum in terms of the income produced, particularly after retirement. It will produce nothing like what most personal pensions and certainly occupational pensions will produce. To cut the sum off at £50,000 when so many people are relying on it is the exact reverse of what the Government said that they were about—encouraging people to save for their retirement.
That leads me to my final point on the £50,000 limit. I plead with the right hon. Gentleman to think seriously about this. How will people enter into future savings schemes with tax incentives, if they see that there has been such a dramatic change in these? The right hon. Gentleman said that some parts of the ISAs are meant to be short term, but if these are fundamentally meant to be long-term saving schemes, and if the Government, who said before the election that they would not make such a move, now do so, who will believe that they or a future Government will not change again?
That is one of my most fundamental worries, linked to the retrospective aspect. I entirely agree that tax incentives are an important way of encouraging long-term savings. If we reduce the credibility of tax incentives by making this move, we will have undermined the specific long-term objective that we are all seeking to achieve. I plead with the Chief Secretary to think seriously about the limit.
The simple answer is to say that all schemes up to now should remain within the tax net in which everyone expected them to remain. As we know, TESSAs will drop out, by their very nature. Everyone knew that they entered that scheme for a five-year period. No one can complain about TESSAs dropping out, because when people entered the contract, they knew the terms.
However, PEPs are different. The Government ought to have said that, as from a given date, there will be no further opportunities to engage in TESSAs and PEPs,

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but that all those who already have them should be allowed to continue with them and to come out of them when they wish to do so. That is the simple answer, which deals with all the arguments that I have advanced, but, above all, with the point that it is essential to maintain belief and credibility among the population at large that tax incentives given for long-term savings are maintained.
My second general point is that the Government are in a muddle about the relationship between ISAs and the stakeholder pension. I believe that it is important to encourage many more people, especially at a younger age, to save for their retirement. I think that that is also the Government's objective.
The House is aware of the issues—the fact that the state pension will no longer provide enough. All public opinion surveys show that the public have at last got that message, although they have not sufficiently grasped the importance of their doing something about it. We know about the problem of retirement in nursing homes. We know that people live longer. All those factors mean that we must build on the already considerable success that we have achieved, especially in relation to the rest of the European Union and most other countries, to encourage occupational and personal pensions.
We all agree that that should be the main objective. I am in total sympathy with the Government about the need to find a way of enabling those who do not have personal or occupational pensions to have them. I therefore look forward to the stakeholder pension document. I put a much higher priority on that than on the ISAs, but the Government have presented a proposal first for ISAs, which are apparently designed for the same low-income groups as the stakeholder pensions will be. I cannot see the attraction of an ISA to those lower-income groups.
Let me elaborate. I have read all the responses to the consultation document, and many of them argue that we should have a compulsory third pension—we already have a compulsory second pension. If that is the direction in which we move, and I am reluctantly beginning to come to the view that that must be done, low-income groups will not have any extra income to put into an ISA, on top of the compulsory second or third pension, however one wishes to describe it. They will move into the pension area, which some of them will find difficult enough, and they will have very little to contribute to ISAs.
Secondly, ISAs will provide only limited benefits to lower-income groups. They would do worse on equities than they would under the existing PEP regime. Supposing people put up to £1,000, as they will be allowed to do in the existing ISA, into a deposit scheme, I calculate that the benefit to an individual from going into an ISA through cash will be under £5 a year. That is not a big attraction for going into an ISA: £5 a year for five years and that is it—no more after that.
Mr. Oliver Heald: Does my right hon. Friend agree that it would be wrong for someone in that income group to put the money in an ISA? It would be far better to put it in a pension,
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so that the money is there for the future. The Government's proposal creates a temptation that is all wrong in public policy terms.
Mr. MacGregor: I entirely agree with my hon. Friend. If the second—or third—pension is compulsory, that is what people will have to do anyway. We are setting up elaborate machinery, designed apparently for the low-income groups, which will be of little interest to them. Given the likely charges and costs, which I shall deal with later, that would probably be the wrong thing for them to do as a means of efficient saving. I would not quite call it a fraud, but it is a pretty poor prospectus—a con—for the low-income groups. The proposals for ISAs and stakeholder pensions should have been considered together. If they had been, the Government might have come to a different view.
I am all in favour of savings regimes with tax incentives for the middle and upper-income groups, for whom PEPs have largely been of benefit up to now. It is not just low-income groups who need to save for their retirement. We all know that one of the most devastatingly difficult problems to deal with is the case of people in middle-income groups who have to sell their family home to provide for nursing homes. Part of the objective is to encourage them, through PEPs and other regimes, to accumulate some liquid savings to deal with that situation when it arises, as it will for many in any age when people live so much longer.
I am strongly in favour of PEPs—indeed, as Chief Secretary, I took them through the House in the Finance Bill—but I am certainly not going out to sell the advantages of a PEP or of an ISA on the basis that it will be of great benefit to low-income groups, because that is not the case. The Government have got into a muddle.
One of the problems that have arisen from encouraging savings through occupational or other pensions is that those are available only to people with earned income. That is a strong criticism of the existing system, given that life styles are different, and people go in and out of work more frequently. The way to tackle that is for those who are not currently earning but who have some disposable income to be encouraged to put it into pension schemes with the same tax reliefs, rather than into ISAs.
Through their approach, the Government have clobbered the PEP saver. They have already clobbered pension savers through their measure on advance corporation tax in the last Budget. They are not putting in place a regime that is attractive enough to the people whom they intend to help. I hope that the forthcoming Budget does not contain any other measures to hit contributions or savings going into pension schemes. If further tax reliefs were taken away from contributions, that would be further evidence that the Government were not serious about what they claim to be their objectives, because their actions go in the opposite direction.
The last two points that I shall make are somewhat related. The first is the need to encourage the market and people out there to take up ISAs, if those are to be introduced. The second is the regulatory regime. When we were considering introducing PEPs—as I said, I took

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the legislation through the House—I said regularly that we had to give incentives to the marketplace, which is the financial services industry, to encourage it to sell PEPs. I was bothered then that the scheme that we were introducing, which had a limit of £2,400, would not prove sufficiently attractive to the financial services industry to enable it to recoup the costs of selling the scheme. However, I was happy to see the scheme start, because at least there was a regime and a tax incentive on the statute book on which we could build.
That is precisely what occurred. The take-up was low in the early years. As the conditions were relieved—we allowed some investment in shares in foreign companies, and the £2,400 limit was raised effectively to £9,000—there was massive take-up both by the industry and by individual savers. The Government should give the financial services industry—I shall turn to Tesco, Marks and Spencer and so on later—some incentive so that it can make the scheme work. The more the Government criticise the financial services industry without appreciating that point, the less successful the scheme will be. I urge the Government to acknowledge the importance of that argument with regard to PEPs.
The Government are doing something quite different with ISAs. According to the conditions outlined in the consultation document, they are producing a scheme that the industry will find difficult to market at low cost. First, the product is anything but simple, so advice must be provided. Secondly, the Government are insisting that a single manager should handle all the different elements of the scheme every year. It will be extremely difficult for individual providers to monitor those elements, and there will an associated cost. Thirdly, we have the limits. The industry will not take up ISAs easily—the vast range of respondents who criticise the scheme in the consultation document make that point based on their experience.
That leads me to ask whether we can simplify the product and sell it differently. I am in favour of Virgin, Marks and Spencer and others trying to simplify the product and using their marketing skills to reach a wider clientele. However, the product will not be easy to sell. It is suggested that people from low-income groups will be able to take up ISAs at the cash till, having asked the cashier what it means and what they should do with it. That is not on. It will not happen like that—if it does, there will be massive mis-selling on a huge scale for which the Government will have to take the blame. The product as it stands will not be easy to sell, so there will be an associated cost.
That brings me to my point about the regulatory regime. I am trying to be as objective as I can, because there has been too much criticism of pension mis-selling by Labour Members who do not understand the basics. If we introduce complicated schemes such as this, we must ensure that those who take them up receive proper advice—and there is a cost attached to providing that advice. There is a cost attached to administering the scheme and a big cost attached to tracking the £50,000 limit to which I have referred already.
There is a direct contradiction between the Government's comments about the regulatory regime, and their lambasting of the industry for high costs and charges, and the purportedly low-cost scheme that they have introduced. I am in favour of the Government's
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attempts to reduce costs and charges—that is a highly desirable aim. However, if the Government go down that route, they must recognise that the regulatory regime will have to change. We cannot maintain the current prescriptive and difficult regulatory regime.
In the event of any so-called "misselling", this or a future Government must not be able to blame those who sold the product. We must recognise that those who buy financial products assume a certain amount of the risk—it is caveat emptor to a certain extent. If we invest in equities in an ISA, and another unit trust performs better, we cannot blame the provider of the poor-performing trust. That would be ludicrous. There is a vast difference in the performance of unit trusts in any one year, so there must be a certain amount of understanding and give and take. The only way forward is to have the simplest possible regulatory regime with a kite mark—it could be a benchmark, but I prefer a kite mark—set by the Government. Providers could then follow that kite mark without needing to worry about redress—which could be enormously expensive—if it is thought subsequently that their original selling was wrong.
I plead with the Government to appreciate that they must understand what happens in the marketplace—not in the tax avoidance industry, but at the bottom end where the low-income groups are involved—regarding selling and the regulatory regime. I know from my experience in the London and Manchester Group that encouraging people on modest incomes to save can be a labour-intensive exercise, and therefore a costly business. However, that is how we shall achieve our objectives. The scheme and the regulatory regime must be made much simpler.
I do not seek to make a partisan point: I genuinely believe that the Government have got it wrong. I believe that the scheme is wrong and that the £50,000 limit is dangerous and unfair on those who have invested to date. It is a breach of the retrospective principle. The Government must take into account the relationship between ISAs and the stakeholder pension, and recognise that ISAs will not be particularly attractive to those in the low-income group—although I favour some form of saving of that sort.
I fully understand why the Chief Secretary could not reveal today the Government's response to the consultation document. However, I hope that the Chancellor will introduce a totally different scheme in two weeks that responds to all the objections that my right hon. Friend the Member for Hitchin and Harpenden raised.
4.56 pm
Mr. Ivor Caplin: I begin by responding to the comments of the right hon. Member for South Norfolk (Mr. MacGregor). He said that PEPs had no advantages for the low-income group; I shall outline the advantages of ISAs in my speech today. Before I do that, I must express my admiration at the desperate attempt by the right hon. Member for Hitchin and Harpenden (Mr. Lilley), the shadow Chancellor, to save his job. However, I think that he failed and I am sure that he will not hold that position much longer. He made a vindictive and petty speech, in which he failed to address seriously the issues of the day.
It is interesting to witness the politics of envy: Conservative Members are envious of anyone who is successful in this country. That is quite astonishing.

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I am waiting for a response from the Opposition, but there is none, as usual. The right hon. Gentleman launched a completely unnecessary attack on Ministers in a very important debate about the future of savings in this country. I welcome the fact that the right hon. Gentleman has apologised for one remark, but I think that he should reconsider many of his comments in light of today's debate.
Of all hon. Members, I am qualified to speak in this debate because—as I am sure Opposition Members know—until 1 May, I was employed by Legal and General, which is a major pension and savings provider. In 1986, when the then Chancellor, Nigel Lawson, introduced PEPs, I was in the marketing department of Legal and General. We faced the quandary of deciding what the PEPs products meant.
We looked carefully at Nigel Lawson's Budget speech in 1986. He said, for example, that
"it is the long-term ambition of this Government to make the British people a nation of share owners … in which more and more men and women have a direct personal stake in British business and industry."
This is not about privatisation; it is about personal equity plans. The then Chancellor continued:
"I propose … a radical new scheme to encourage direct investment in United Kingdom equities … it is specially designed to encourage smaller savers, and particularly those who may never previously have invested in equities in their lives."
His final comment on the PEPs scheme in March 1986 was:
"I am confident … it will bring about a dramatic extension of share ownership in Britain."—[Official Report, 18 March 1986; Vol. 94, c. 177–78.]
Those words, 11 years later, are wrong. What we in the marketing department discovered in 1986 was that it was not possible to put those words into action, because PEPs were not about greater share ownership. They were about allowing the better-off in society the opportunity to save in a tax-free vehicle. There would be nothing wrong with that if the Government in 1986 had been honest, but they were not because PEPs were not an attempt to bring about greater share ownership. [Interruption.] My hon. Friend the Member for Workington (Mr. Campbell-Savours) has just asked me whether the year was 1986. It was.
I will take the House through the PEPs issue in its entirety. Fewer than one in 100 of the poorest households in the United Kingdom have any form of tax-free share investments, whereas more than a quarter of the wealthiest do. That shows clearly that, as the right hon. Member for South Norfolk said, there is no advantage in PEPs for low-income groups. He is right. It is his Front Benchers who are getting it wrong by trying to defend PEPs and TESSAs. I looked at the pledges that the Conservative party made in its manifesto to rectify the point that the right hon. Gentleman made. Nothing in it corrects the anomaly that there is no advantage in PEPs for low-income groups.
Mr. Loughton: Is the hon. Gentleman aware that the latest Association of Private Client and Investment Managers and Stockbrokers figures show that earners down even as far as the fourth decile use PEPs extensively; that more than half the people who invest in PEPs are basic rate tax payers; and that 20 per cent. do not pay any tax? Does he agree?
Mr. Caplin: The hon. Gentleman might like to get a copy of the Institute for Financial Studies briefing paper
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on this, which is widely available, including in the Library. It says that 49.65 per cent. of households in the United Kingdom have no investments; that 40.27 per cent. have some investments but no PEP; that 4.62 per cent. have no investments other than a PEP; and that 5.46 per cent. have a PEP and some other investments. That does not seem to bear out the hon. Gentleman's point. Only 4.62 per cent. of households in the United Kingdom have no investments other than a PEP.
Mr. MacGregor: I should clarify what I said, and what I meant. One has to define low-income groups. If by that one means the groups to whom the company with which I am involved, London and Manchester, often appeals, and the groups to whom the £1,000 cash limit is meant to appeal, I agree with the hon. Gentleman that the low-income group is unlikely to be attracted by PEPs. There is a substantial range of income groups who did not previously invest in equities, but who have been encouraged by the PEP regime and the other ways in which we have encouraged savings.
Mr. Caplin: I do not think that I have denied that the previous Government attempted to encourage savings, and that PEPs and TESSAs are worthwhile causes, but have they encouraged many to save? They have not. I have just amplified the point that fewer than 5 per cent. of households in the United Kingdom have no investments other than a PEP. In that respect, no Government with any reasonable ambition for wider savings could sit on their hands and do nothing. That would be a travesty, but that was the proposal in the Conservative party's manifesto in 1997. Perhaps the Conservatives, like the rest of the country, knew that they would lose the election. I do not know.
The Institute for Fiscal Studies document says clearly that, on average, as the right hon. Gentleman will know, PEP holders are older and richer than non-PEP holders. In other words, the industry and the then Government aimed PEPs at people in the 50-plus age group.
Nigel Lawson said in 1986 that PEPs were about widening share ownership in the United Kingdom. The Conservatives must answer the question whether PEPs have achieved that. PEPs have not achieved their goal. Indeed, the financial research survey shows that the same type of people invest in PEPs as hold stakes in normal unit trusts. Unit trusts do not have tax incentives whereas PEPs do, yet the same type of people are investing in both. Unit trusts and PEPs are concentrated among those who are over 55.
Mr. Loughton: The hon. Gentleman's figures seem to be completely out of tally with those of the industry. Is he aware that the Association of Unit Trusts and Investment Funds has carried out a survey that suggests that 78 per cent. of unit trust holders who also have a PEP would not invest in those unit trusts if they were not "PEPable"?
Mr. Caplin: I will not bandy figures with the hon. Gentleman. I do not know where he got that survey from.
Mr. Dale Campbell-Savours: That is the same point that my hon. Friend is making.
Mr. Loughton indicated assent.
Mr. Caplin: Perhaps the hon. Gentleman is agreeing that only 5 per cent. of households in the United Kingdom have only PEPs.
Mr. Campbell-Savours: The overlap.
Mr. Caplin: I think that the hon. Gentleman was talking about 22 per cent. of those who have unit trusts and PEPs.

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I will try to make some progress, as I think that Opposition Members are getting a bit bored. [Interruption.] You are obviously not bored, as you keep intervening.
Mr. Deputy Speaker: Order. The hon. Gentleman must remember that he is addressing the Chair.
Mr. Caplin: Thank you, Mr. Deputy Speaker. I had not forgotten.
I shall make some points about the financial research survey carried out by NOP. I am sure that the shadow Chancellor has seen it, as he is well versed in these issues. The survey shows that 57 per cent. of adults in this country have less than £500 in any savings scheme, including PEPs, and that 85 per cent. of people in socio-economic classes D and E have less than £500 in savings or investments, so PEPs and TESSAs have not worked. They have not got the masses to save.
The question put to me by the right hon. Member for South Norfolk was whether, going up the salary scale, greater use had been made of PEPs? I am afraid that the answer is no. Those with incomes between £25,000 and £35,000 have less than £2,000 in savings or investments. The previous Government failed in their savings policy for PEPs and TESSAs.
Mr. Michael Fallon: If the hon. Gentleman's figures are true—for the sake of the argument, let us assume that they are—would he advise the same proportion of the population on low incomes to contribute to an ISA before they contribute to a stakeholder pension?
Mr. Caplin: I am grateful to the hon. Gentleman for his intervention, but I am not—and nor is he—qualified to give advice on financial products. That would be against the current regulatory regime. When one comes from the industry, one is aware of the traps when colleagues ask questions about financial services. I am surprised at the hon. Gentleman for suggesting that I should advise him on financial matters in the House of Commons. We cannot do that.
The shadow Chancellor made some disgraceful comments about the consultation process on future savings on which the Government have embarked. Opposition Members seem to have a problem with the word "consultation". For 18 years, it meant not consultation, but "This is what we shall do; we want you to sign up to it". When we say "consultation" and invite comments from the industry and all interested parties, including political parties, we mean it. In the past few weeks, I have been out and about speaking to colleagues in my old industry. People in the industry are debating vigorously the future of savings, but no one believes that the status quo, as proposed by the Conservatives in their 1997 manifesto, is a starter. People welcome the opportunity to contribute to the debate about the future of savings.
I have already owned up to having been in the industry when pensions were mis-sold in the late 1980s. I finished my career working as head of quality in Legal and General's compliance department, which was growing more quickly than the marketing department. That may
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have been a sign of the failure of the regulatory regime that the Tories gave us in the Financial Services Act 1986. It is now widely accepted that it has failed badly.
It would have been nice for the House to hear the person who was responsible for the mis-selling of pensions, the right hon. Member for Hitchin and Harpenden, apologise to the House today for the fact that hundreds of thousands of people were mis-sold pensions. He had the opportunity to do so today and in the Budget debate in July, but he has failed to apologise time and again. He must be judged in those terms.
The right hon. Member for South Norfolk said that the ISA is a product. In pure marketing terms, it is not a product, but a concept. It can become a product only once we have devised how it will be sold. I have attempted not to be partisan about that.
I have outlined in detail why PEPs and TESSAs have failed to extend savings. It is right that any Government should consult widely in an attempt to do that, which is what this Government have done. Ultimately, we shall have an effective and sensible product which will make savings available to the many. That must be the aim of every right hon. and hon. Member, because PEPs and TESSAs have clearly failed to do that in the past.
5.12 pm
Dr. Vincent Cable: May I couch my remarks primarily in terms of the Government's declared objective, which is to spread the savings culture and encourage low-income savers? That objective should be judged as laudable and sensible. I regret that the Conservative amendment makes not even a passing reference to that problem, although the right hon. Member for South Norfolk (Mr. MacGregor) made some pertinent remarks about it.
The hon. Member for Hove (Mr. Caplin) summarised very well the problem of low-income savings. The figures are reasonably well known: roughly a third of households have no financial assets and many of them are in debt. The reasons are profound and not easy to overcome. Many people simply do not have the money to save. The whole institutional structure discourages them from saving because there are relatively large returns for people with large bank deposits and smaller returns for those with small bank deposits. Those on low incomes sensibly and rationally discount saving and, unless spectacularly high returns are offered, keep such savings as they have in cash. The test of ISAs is whether they can overcome that.
Despite the Government's objectives, many of the proposals are disappointing. The right hon. Member for South Norfolk gave a good arithmetical example to illustrate the reasons for that. The logic of his arithmetic was that, under the Chancellor's newly proposed 10 per cent. income tax band, a £1,000 deposit with a 5 per cent. yield would give the saver an extra £5. If the saver falls below the 10 per cent. band, he would get nothing. The Government intend to compensate for that by some kind of bonus, but when one studies the details of the bonus, the word that comes to mind is "pathetic". They propose that 50 out of the prospective 6 million new savers be allowed to take part in a prize draw to claim £1,000. That is the kind of sum that one would get in a respectable summer village fete. It is not a large inducement to save, especially for low-income savers.
May I suggest, in a constructive spirit, how the Government might deal with that problem? One route is to adopt the Government's philosophy of rewarding

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reasonably good balances. Why not take up the proposal of the Liverpool Victoria Provident Society, for example, which suggests that small savers could be rewarded with a generous entitlement to premium bonds or a large portfolio of free lottery tickets? That is an attractive proposal.
I am surprised that no one so far has mentioned the fact that the benefit system severely damages the incentive for those on low incomes to save. Many low-income families are caught in a savings trap, just as they are caught in a poverty trap when they try to work. This weekend, I dealt with a lady who is having serious problems with the Department of Social Security. The DSS was in arrears of payment and, now that it has eventually paid the several hundred pounds owing into the lady's bank account, it is trying to claw back entitlement to supplementary income support because she has a few hundred pounds' savings in her bank account. Such practice is common under the benefit system. I hope that the Government will rule that all benefits paid to low-income savers can be credited as a savings disregard. I also hope that they will make some positive suggestions, in the Budget if not today, about how the savings disregard could operate more flexibly to help low-income savers.
My main criticism is that, although the Government's intentions for low-income savers seem admirable and should be supported, the incentives are weak. Most hon. Members have received a lot of representations about the £50,000 limit. Many people in Twickenham have written to me about it. I am not referring to some abstract philosophical problem with retrospective taxation—the Conservatives have missed the point in that respect, because it is not a basic point of principle. All Governments have chiselled away retrospectively at mortgage income tax relief, for example. That is common practice. The real problem is practical: the marketing of new savings instruments is undermined once it becomes clear that the Government tamper with hindsight in returns from successful products. That is what is happening with PEPs and TESSAs.
There is also a serious administrative problem. Under the PEP scheme, many people have 10 different accounts. Will there be a centralised register so that those can all be monitored? Potentially, there could be an administrative nightmare in capturing the extent to which people exceed their lifetime ceiling. The Inland Revenue has laid off 6,000 people and is already under pressure. It simply does not have the capacity to handle such administrative problems.
It would appear from leaks in the financial press that the Government have already thought about that problem. I therefore suggest that the £50,000 cumulative limit on TESSAs and PEPs be waived. If it were waived, a lifetime ceiling would be illogical, because the Government could impose the necessary restrictions on tax relief through the annual limit. Clearing up the system in such a way would deal with many of the objections of Opposition Members.
My final point relates to the reform's implications for public expenditure. The Chief Secretary gave a clear and helpful response to my earlier intervention, but my hon. Friends and I have been trying to get to the bottom of the matter for months and have received different answers from different Ministers. On 10 December 1997, the Prime Minister said at Question Time that there would be more relief than is currently available, but on 17 December, the Chancellor told the Treasury Select
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Committee that he was working within a ceiling of £1.5 billion, which is quite different and implies that significant savings will result from the reform.
The correspondence that we have had with Treasury officials to clarify the matter essentially confirms what the Chief Secretary said: the existing level of tax relief will apply for the first two or three years, but there will be a flatter profile after that, which is a technical way of saying that savings will result from the scheme. That is not simply a debating point: if savings are made, those resources should go into improving the scheme.
Two major improvements—to the £50,000 retrospective limit and to bounties or incentives for low-income savers—could be made to the scheme. If the Government can reassure us on those points, we shall support the ISA scheme in principle.
5.20 pm
Ms Sally Keeble: I am grateful for the chance to speak in the debate because financial services are of great importance to my constituents. I was particularly interested when the right hon. Member for Hitchin and Harpenden (Mr. Lilley) said that Conservative policy was, somehow, in the best interests of middle Britain. I represent a constituency in middle Britain, which I took from the Conservative party. The financial reality faced by my constituents bears little resemblance to that which the right hon. Gentleman described. An estimated 9,000 people in Northampton need help with debt problems. Many of my constituents have no savings, but are sold more credit than they can manage. They are living at the limit of their income and have nothing to fall back on, even if they run into small family problems. Therein lie most of their problems.
I shall consider the individual savings accounts proposal from the viewpoint of my constituents in middle Britain with incomes of about £16,000 and mortgages of about £40,000. Most of those who have provided for continuing care have done so with insurance policies. I understand the problems that the right hon. Member for South Norfolk (Mr. MacGregor) mentioned, but he described them from the provider's viewpoint. That does not gainsay the need for a vehicle to ensure that the consumer has access to good financial services and good returns on savings.
The fact that 40 per cent. of the population have no savings has been referred to often. That figure is bad enough, but the position is worse. The Consumers Association recommends that people should have three to six months' savings to fall back on. For my constituents, that means £4,000 to £8,000, yet fewer than half of all savers have savings approaching that sum. Not only are people not saving; even those with savings do not have enough to protect themselves against the proverbial rainy day.
My hon. Friend the Member for Hove (Mr. Caplin) quoted figures showing that people with children, whether couples or single people, have the lowest savings. I strongly believe that the complex problems surrounding savings and debt, as much as those surrounding benefits and work, must be solved if we are to tackle child poverty. It is not good enough to accept the fact that families with children are the most vulnerable to financial ups and downs.
As my hon. Friend the Member for Hove said, TESSAs and PEPs have failed to deal with the problem. Although they attracted huge investment from private individuals,

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those people were not necessarily new savers and certainly were not on lower incomes. That failure is especially true of PEPs: one in four of the top 10 per cent. of earners have a PEP, but fewer than one in 100 of the bottom 10 per cent. have one.
The involvement of the wider public in share ownership has increased, but has recently tailed off among the young and those on lower incomes, partly because of marketing changes and the ending of the previous Government's privatisation advertising campaigns. The real problem with TESSAs and PEPs is that, although tax breaks undoubtedly encouraged investment, tax benefits mostly went to those who were already in higher income groups, which is why the proposed saving scheme with tax advantages for low-income earners is so welcome. Individual savings accounts will benefit the many, not the few.
It is especially important that ISAs will provide access to different types of investment. Conservative Members described that as a complication; I think that it is an advantage. People on lower incomes have tended to use only certain financial services, such as bank, building society and credit union savings accounts, which carry fewer risks, but offer lower rewards. If we are serious about fuller participation in the economy, people on lower incomes must have access to the sophisticated financial products that are on the market.
The industry may find the ISA formula complex, but it is relatively simple for the consumer to understand. Another important feature is easier access; I welcome the Government's intention to make schemes available through supermarkets. I have struggled through shopping centres with small children in tow, so I know the value of one-stop shopping. Other retailers may not like the idea, but consumers, especially women with young children, increasingly hope and expect to do the bulk of their shopping, pay their bills and bank in one shop.
The quality of ISAs will depend, in part, on the quality of the supermarket from which they are available. That is no different from supermarket banking or products such as Virgin PEPs.
Mr. Loughton: How will the hon. Lady get best advice among the frozen peas and discounted yoghurt at the checkout at Tesco or Sainsburys?
Ms Keeble: I shall return to that serious point. As I said in relation to Virgin PEPs, the quality of financial services depends, to an extent, on branding. The quality of financial advice is a serious issue—it does not have to be a problem—which the Government must address in response to the consultation.
The issue of the quality of financial advice is not exclusive to PEPs and TESSAs. A number of high street banks are shutting local branches, and financial products are marketed aggressively on the radio and can be bought over the telephone. There is a wider issue: personal banking service providers must give good advice to people who are looking into financial services while buying peas and yoghurts in a supermarket. Although ISAs may be complex for the industry to manage, they will be accessible to the consumer, which is a particular advantage for those who would otherwise be locked out
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of the increasingly sophisticated financial services market. Moreover, as I have said, banks are closing branches, and supermarkets are likely to become increasingly the most convenient—and sometimes the only—point of access.
The possibility of individual savings accounts being offered through credit unions is an important development which is often overlooked. Credit unions have been the poor relation of financial services in Britain, but the advent of the first national credit union—organised by the bakers' union, backed by Unity Trust bank—has changed that, allowing people to deduct amounts from their payroll.
I hope that when the Government produce their final proposals for individual savings accounts, they will address two issues. I have referred to the provision of financial advice for those who buy such accounts at supermarkets. The other issue is the amount of savings that people are to be allowed to hold before being disqualified from receiving various kinds of benefit, especially if they have chosen life insurance as one of their options for individual savings accounts.
I hope that the Government will consider those two issues, for a reason in addition to those given by Opposition Members. I think that they will particularly affect women who, although they want to save, may either find it difficult to gain access to good financial services and advice or feel concerned about the impact of their savings on benefit entitlement. The figures show that those with the least savings are, overwhelmingly, single parents, only about 20 per cent. of whom have any savings at all.
Much has been made of the £50,000 limit. We used to hear a good deal about the impact on PEP mortgages, but, according to information provided in Hansard, if both partners in a couple exercise their full rights they can support a combined PEP mortgage of some £250,000. Whatever the financial problems of people in middle Britain, they certainly do not focus on mortgages of a quarter of a million pounds. That error of judgment may have contributed to the Conservative party's losing its hold on middle Britain.
I believe that the plans for the individual savings account are both bold and ambitious. I believe that they provide people who have so far been excluded with access to a range of modern financial services. They combine imaginative and innovative features that will attract people who have not saved money before, and, in doing so, they will help to end some of the misery of those who find that lack of money turns a family problem into a financial crisis. I think that these will be savings accounts for the many, not the few, and that they will give more people just the kind of financial independence and choice that this Labour Government are all about.
5.32 pm
Mr. Peter Viggers: The hon. Member for Northampton, North (Ms Keeble) made a thoughtful speech. In her summing up, she referred to the need for advice to be available within the general context of savings schemes. It is interesting that she raised the question without having an answer to it, simply pointing out that it needed to be addressed by Government. I certainly agree with that. Another point that the hon. Lady made in summing up related to the effect of the level of savings on benefits, which I intend to discuss in my own short speech.

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The subject of pensions and savings may seem dry to those who are young and a long way from retirement age, but I have long been interested in it. I may be the only Member of Parliament to have recently taken the trustees' examination of the Pensions Management Institute; I am also the independent chairman of a pension fund. Given that Lord Nolan puts his nose into most matters nowadays, I suppose I should add that I am not a beneficiary.
This is an issue of raw politics. It goes to the centre of the contrast between the Labour Government and the Conservative party. The Conservative party lives in the tradition of kin Macleod, who said that it was the duty of Government to provide a framework within which each individual could save, and make himself a modest fortune in his own lifetime. In contrast, the Labour party promised in its manifesto to extend the principle of PEPs and TESSAs, which have done so much to enable many people to build up modest fortunes and look forward to retirement with confidence. There is no doubt that that undertaking to extend the principle of PEPs and TESSAs reassured savers as the election approached, and no doubt that it won votes for the Labour party. I submit that it was a misleading statement, a fraud on the saver and the electorate and a false prospectus.
A striking feature of the Labour Government's current formulation of savings policy is its lack of cohesion. As the Association of British Insurers has pointed out, the consultation paper on ISAs seems to have been written by a different hand from the consultation paper on stakeholder pensions. That is extraordinary. One would have thought that the Government's approach to savings would be within the general framework of their approach to pensions.
There are four main ways in which individuals can prepare for retirement. First, they can save for their pensions through an employment scheme, if they are fortunate enough to be in one. Secondly, they can save through a special additional scheme—the state earnings-related pension scheme, or an alternative private scheme. Thirdly, there is the basic retirement pension. Fourthly, there are personal savings.
I have attended seminars, and have studied the subject of low-cost pensions, which the Government's consultation paper is intended, in due course, to address. The expression "low-cost pensions" has become associated with stakeholder pensions. One certainty, however, is that there is no such thing as a low-cost pension. Any pension that is funded will need to be funded by an amount 15 to 18 times the amount of any required pension. People will need to save substantially if they are to save for their own pensions.
Some people will have had the benefit of saving through occupational pension schemes. Others will have relied on PEPs and TESSAs. I heard the Chief Secretary say that he had always regarded PEPs and TESSAs as complementary to pensions. Of course the Chief Secretary is economically literate. He may well regard PEPs and TESSAs as complementary to pensions, but some people do not, including a clergyman's widow who wrote to me from my constituency. She has been relying on her PEP and TESSA contributions as a significant part—perhaps a major part—of her retirement income. It is not good enough for the Government to change the rules on PEPs and TESSAs, and, effectively, to impose retrospective legislation to change the benefits that people will receive
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from them, when some have been looking forward to PEPs and TESSAs as the main plank of their retirement arrangements.
Attention has been drawn to the cost of the advice that people will need to take before changing their retirement plans. Legal and General carried out a survey, asking people how much they would think it reasonable to pay for advice on insurance and retirement provision. Most regarded £60—younger people said £50—as a reasonable amount to pay for advice on retirement provision. As the hon. Member for Northampton, North said, however, advice is needed, and the Government have now demanded that it be of high quality. The normal rate charged by a pensions or insurance adviser is about £150 an hour. No one can believe that it is possible for a pensions adviser to give realistic and sensible advice in 20 minutes. He cannot do so in less than two hours, given the time that it takes to appraise the position. That will cost £300 plus VAT—in other words, £335—which, incidentally, amounts to two thirds of 1 per cent. of a £50,000 fund. Those who wished to rely on PEPs, TESSAs and ISAs under a Labour Government have been badly let down.
Another issue that has not yet been raised in this debate is the implication of the savings trap, which the hon. Member for Northampton, North mentioned. The hon. Member for Bolsover (Mr. Skinner) clearly had absolutely no idea of the yield on pension funds, or, more important, of the capital sum required to provide a pension. The savings trap will have dramatic effects on savings for pensions. If savings are limited to £50,000, as they may be under ISAs, and if that sum is the sole pension provision, it will yield only £256 per month—£3,072 annually—in annuity for a 65-year-old married man, allowing for the normal 3 per cent. inflation expectation.
If someone with no other pension or savings receives a state pension of £5,083 annually, income support at the level of £330 annually, housing benefit at £2,080 annually and council tax benefit of £312 annually, his or her net annual income will be £7,805. However, if that individual has saved £50,000 in an ISA, the additional amount that he or she will receive will be only an extra £400 annually. Therefore, £50,000 which has been saved over the years will yield only four-fifths of 1 per cent.—representing a serious savings trap with which the Government must deal.
A 45-year-old man who expects to retire at 65 and has no other savings or pension would have absolutely no incentive to save for retirement unless his pension will amount to £4,132 annually, allowing for 3 per cent. inflation. Therefore, if he cannot save £65,000, he would be better off simply blowing his money and not bothering to save.
The message is quite clear: individuals who wish to prepare for their own retirement should start early and keep saving. Although individuals might well support a cap on the annual commitment to their pension or savings fund, it is not acceptable for them to have on overall cap of £50,000, as that would render such savings completely pointless. If such a scheme were to be their only method of savings, regrettably, there would be no point in their saving £50,000.
Are the Government small-minded and ignorant about those matters? No; the situation is worse than that. The Government, having won the general election by

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reassuring holders of PEPs and TESSAs, are now ditching those individuals. The losers will be many: those who believed the Labour Government when they said that they would extend the benefits of PEPs and TESSAs. The only beneficiary of the change, should it happen, will be the Treasury, which will save £800 million annually in tax relief on PEPs and £450 million annually in tax relief on TESSAs.
5.42 pm
Mr. Ross Cranston: The debate had a very unfortunate start. Nevertheless, both Labour and Opposition Members have made some valuable points. The right hon. Member for South Norfolk (Mr. MacGregor) made some valuable points on the interaction of pensions and savings vehicles, such as individual savings accounts and personal equity plans. The hon. Member for Gosport (Mr. Viggers) made some useful points on pension yields, although those who can afford to invest will rarely rely on only one vehicle.
It is useful to start such debates with some history. The right hon. Member for Hitchin and Harpenden (Mr. Lilley) began his speech with some remarks about the previous Government's policy to promote savings. Lord Lawson—in his book, "The View from No. 11"—was much more frank about the matter, making it quite clear that policy was not thought up by the Conservative party, and that he got the idea from a law passed in France in 1978. The comments of the right hon. Member for Hitchin and Harpenden were therefore partly a mis-selling of Tory innovation.
The right hon. Member for Hitchin and Harpenden mentioned promoting savings. However, as my hon. Friend the Member for Hove (Mr. Caplin) rightly said, PEPs were originally designed to widen share ownership. In his book, Lord Lawson says:
"I was always very cautious about describing PEPs as savings incentives."
He went on to admit that PEPs were intended more to widen share ownership. However, as my hon. Friend the Member for Hove said, that intention was not fully realised, as those who already had shares moved into PEPs because they were a tax-efficient means of investing.
Conservative Members have suggested that the PEPs and TESSAs savings regimes are long established and almost sacrosanct. They also mentioned retrospectivity, which I shall deal with later in my speech. Conservative Members should remember that they changed the mortgage interest relief at source regime, which affected the tax advantages gained by putting one's investment—if one considers it as such—into housing. If the introduction of ISAs represents retrospective legislation, changing the MIRAS regime certainly represented retrospective legislation.
PEPs did not take off in the early years—until 1991, fewer than 50,000 had been sold. They have been bought in large quantities in only the past five or six years—so that now, according to one estimate, there are up to 2.5 million PEPs. TESSAs were introduced only in 1991, although TESSA ownership has grown more smoothly than PEP ownership. Nevertheless, only about 4.5 million people currently have TESSA savings. We are therefore
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debating not schemes that have been approved over generations but recent institutional developments. Hon. Members should therefore be much more careful when mentioning retrospectivity.
Labour Members have made some important points about the extent of TESSA and PEP ownership among the public, and Conservative Members have said much about how middle Britain will be hit—although the statistics do not begin to support their comments. My hon. Friend the Member for Hove cited the 1995 British household panel survey which showed that almost 50 per cent. of households had absolutely no investments—no shares, no bank accounts, no building society accounts and no friendly society holdings—and that only 10 per cent. had PEPs. Therefore, only a very small segment of society has such investments.
The 1996 family expenditure survey showed that just over 10 per cent. of families held TESSAs. If we go further and examine the type of people who comprise that 10 per cent. of the population, a point made by Labour Members is confirmed: wealthier and older segments of the population hold such institutional savings accounts and investments. The right hon. Member for Hitchin and Harpenden talked about small savers—but they are small savers with very large incomes.
I am not as cynical as Gillian O'Connor was last week in the Financial Times, when she rather acerbically said that the PEPs regime had been a licence for the middle class to print money. Nevertheless, the report by Andrew Dilnot and his colleagues at the Institute of Fiscal Studies demonstrates the limited ownership of those investment vehicles.
My hon. Friend the Member for Hove cited the figures, so I shall not repeat them, but it is clear, from the percentage of households with at least one PEP, that ownership is concentrated among the richest 10 per cent. A quarter of that cohort own PEPs. We should also bear in mind distribution by age. Ownership is highest among households aged between 50 and 59.
The report reveals that TESSAs are similarly concentrated among older and richer households. Again, the highest ownership rate is among those aged between 50 and 59 and more than 70 per cent. of TESSAs are owned by households in the top 50 per cent. in terms of income.
To anyone other than the Opposition, that would raise an interesting and important issue of public policy—how to involve other segments of the population in saving. The ISA proposals are designed to address that.
Opposition Members have not addressed other disadvantages with the existing regime of PEPs and TESSAs, such as the inflexibility of the TESSA regime. The report by the Institute of Fiscal Studies demonstrates that, because of their inflexibility TESSAs are not held by the sections of the population that one would normally expect to invest in them. People in their 50s, and particularly those in their 40s, need ready access to money to meet particular contingencies and the TESSA regime is far too inflexible.
There are also disadvantages in the PEPs regime. The hon. Member for Gosport touched on the fact that PEPs do not roll over to surviving partners in the event of the death of the investor. There are also marketing problems. My right hon. Friend the Chief Secretary

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mentioned that the management charges in respect of many PEPs were quite significant and in some cases outweighed the tax relief.
There are further problems. Some companies in the PEP market had to cease taking new business until they had sorted out their problems. A couple of months ago, Kevin Goldstein-Jackson wrote in his column in the Financial Times:
"In July 1995, I pointed out that many people had been persuaded to invest in Peps in order to 'save' tax—but the only tax they saved was that on dividend income. This was because many of them had invested sums which, had they been used to buy shares directly, would not have been subject to capital gains tax since they were within the exemption limit."
In other words, there was a mis-selling of PEPs. So there are problems in the existing system and, more important, there are grave disadvantages in terms of the coverage of current investment vehicles.
I now come to the ISA proposals which aim to increase the coverage in the general population. We want to encourage saving. Half the population hardly save at all. In 1995–96, the family expenditure survey revealed that more than a third of households had no financial assets—no bank accounts and no shares.
Mr. Loughton: The hon. Gentleman has said that for the third time.
Mr. Cranston: The hon. Gentleman does not want to hear the facts. He has never been concerned with empirical evidence, only rhetoric.
The ISA proposals are designed to get new savers involved. My right hon. Friend the Chief Secretary drew attention to the tax expenditure aspects of the current regime. In 1997–98, the figure was £1.25 billion and it would rise to £1.7 billion by 2001 under the current regime. Given the enormous tax expenditure, the idea is to distribute more widely the advantages that currently benefit a limited section of the population.
Of course, there have been criticisms from some parts of the industry. The shadow Chancellor quoted some industry reaction, but, as Gillian O'Connor said last week in the Financial Times,
"the industry's laments … suggest that they had been a nice little earner."
I would not be so cynical, but certainly some parts of the industry have been making a nice little profit from PEPs and TESSAs, and there is nothing wrong with that.
The right hon. Member for Hitchin and Harpenden quoted various criticisms. However, he omitted to mention the support for the proposals from various parts of the industry. Roger Cornick, head of marketing at Perpetual, a big provider in the PEPs market, is quoted as being
"confident that the company will still get a big slice of the ISA cake".
Mr. Loughton: And the share price fell by 10 per cent.
Mr. Cranston: If the hon. Gentleman examined the figures in the Financial Times more carefully, he would see that it rose again subsequently.
The industry will have to be much more flexible and innovative. At present, some parts of the fund management industry concentrate on equities. Under the
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ISA proposals, they will have to be more expansive in terms of the products that will fall under the tax shelter. Of course, there will be new institutions involved. My hon. Friend the Member for Northampton, North mentioned the supermarkets, some of which have made very positive comments about the possibility of promoting ISAs.
Lord Lawson explained in his book the great difficulty in the initial years with unit trust companies which were most reluctant and dragged their feet. It was only subsequently that they started to promote PEPs vigorously. ISAs will have to be sold in new ways as well as through the traditional channels. Supermarket checkouts are one possibility. Tesco described ISAs as "a smashing idea". Mr. Newton Scott, chairman of Tesco Personal Life was most complimentary. He was not especially happy with the idea of a prize draw fund, but said that, in his view, to get people on lower incomes involved it might be better to offer groceries and loyalty points, and such points have arisen in the consultation period.
Mr. Caplin: I have no interest in the matter, but is my hon. Friend also aware that Marks and Spencer has also welcomed the proposals for ISAs to attract the widest possible range of savers?
Mr. Cranston: Yes. Marks and Spencer has also been very forward looking, also in respect of the euro, unlike the Opposition.
My hon. Friend the Member for Northampton, North mentioned another advantage of ISAs, which is that a wider range of products could be developed. She mentioned deposits with credit unions, national savings products and shares in industrial and provident societies. They should all get a boost from incorporation in ISAs.
There will also be flexibility for investors, who will be able to withdraw their money when particular demands arise. As I said earlier, there is evidence that one off-putting feature of TESSAs is that because of their inflexibility those who might otherwise invest do not do so.
Conservative Members have talked about retrospectivity. They misunderstand the nature of retrospective legislation. It makes unlawful something that was lawful at the time or, in the tax context, renders a past transaction subject to tax that was not applicable at the time. At the most, one could say here that expectations have been disappointed. But I do not think that anyone who deals in the area of taxation can have any such expectations. I gave the example of MIRAS earlier. One has to expect different Chancellors to change taxation regimes. No one can proceed on the basis that regimes will remain unchanged for ever. No one could have had a legitimate expectation that the existing tax regime would remain unchanged.
Mr. Viggers: I take the hon. Gentleman's point. What is his comment on the Labour party's manifesto promise about the future of PEPs and TESSAs?
Mr. Cranston: Our manifesto made it clear that we intended to provide savings vehicles for a wider section of the population. That is what we are doing with our ISA proposals.

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It has been argued that increased flexibility will result in higher costs for providers than at present—up to 30 per cent. higher, according to one estimate. That demonstrates a misunderstanding of the nature of our financial services industry. Over the past 15 or 20 years, we have had increased competition and innovation. With new providers and managers coming in, I am sure that any increases in costs will be much lower than the figures that are being bandied around.
ISAs will also make the tax system more neutral, reducing the extent to which it distorts investment choices. I would have made further points about the £50,000 limit if I had had more time. Only between 10 and 15 per cent. of PEP holders would be affected by the £50,000 limit. We are talking about a relatively small number of people. My right hon. Friend the Chief Secretary took up the point about marketing. Given the past problems of pension mis-selling, we have to be cautious about the marketing of the products.
The charging regime must be more transparent than at present. That is one of the disadvantages of the PEP system. One has to go to Chase De Vere's guide to find out how much investing in a PEP will cost. There have to be controls on the operations and the administration of funds.
I congratulate the Government on the ISA proposals. I look forward to the results of the consultation exercise.
6.4 pm
Mr. Quentin Davies: I sincerely congratulate my right hon. Friend the shadow Chancellor on two things: his powerful and compelling speech; and—the Labour party should be grateful to him for this—his altruism in proposing the debate. A more cynical politician might have avoided talking in public about Labour's plans for ISAs and exposing all their shortcomings, perversities and absurdities to Ministers. Instead, he might have let Ministers get on with implementing their plans. When the shambles ensued, as it certainly will—when there was a collapse of tax-incentivised savings vehicles, when the individual aspirations of so many had been shattered, when the proposals had produced a great deal of justifiable resentment—the Conservatives could have made some political capital. My right hon. Friend has decided to take the high road and have a debate before legislation is introduced. We are trying to save the Government from the fate to which they are heading—taking the country with them—by having genuine parliamentary consultation. The debate has already illustrated extraordinary perversities and absurdities in the Government's proposals.
We do not have any quarrel with the objectives that the Government say that they are trying to pursue: to produce a fair scheme; to produce a system that increases savings, because one of our national handicaps is having the lowest savings ratio in the European Union; and to do something for the lower paid, helping wealth creation in the less financially privileged section of the population. We agree
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with all that, so we should be having a dispassionate and technical debate, deciding how best to relate objectives to means.
Mr. Caplin: Will the hon. Gentleman give way?
Mr. Davies: I am sorry, but the hon. Member for Dudley, North (Mr. Cranston) took such an awfully long time with his speech that I cannot accept any interventions. I apologise for that, because I normally enjoy the cut and thrust of debate on such occasions.
I shall deal briefly with those three objectives—fairness, aggregate savings behaviour and the position of the lower paid. The proposals cannot be fair. How can they be fair for someone who has decided to build up a PEP to repay his mortgage of more than £50,000, which is less than the average price of a house? He will suddenly find that his calculations have been thrown out, producing a gap that he had not anticipated. Given the promises that the Labour party made before the election, such a person would have had every reason to suppose that his PEP would continue under the same tax regime until his mortgage needed to be repaid. He and his family will be very badly let down. If the proposals go through, there will be a lot of miserable families. Some people will probably lose their home.
Mr. Steve Webb: Will the hon. Gentleman give way?
Mr. Davies: I am sorry, but, for the same reason that I gave to the hon. Member for Hove (Mr. Caplin), I have to refuse.
It is not fair to bamboozle the public in such a way. We heard the Prime Minister, then the Leader of the Labour party, the Social Security Secretary and Treasury Ministers making it absolutely clear to the public that the PEP and TESSA regime was not threatened. The quotations are very well known. We now know that it has been fundamentally threatened.
Given that the tax-incentivised savings vehicle was limited on entry—one was able to have only £6,000-worth of general PEP investments, £3,000-worth of a specialised PEP a year and TESSAs were limited on entry—it is not fair to say to people that, retrospectively, the vehicle will be limited on exit as well. It is not fair to say to people that, if the result of saving has been positive and they have managed to accumulate a reasonable pot of money, tax privileges will be retrospectively withdrawn or limited to some figure about which they did not know in advance. That is clearly the very reverse of fair.
I shall deal with what I think that the Paymaster General will say about fairness. He will say, "Oh, but we are withdrawing tax privileges from the rich who have accumulated £50,000, and the poor, who have not got anywhere near that sum, will continue to enjoy them." If that is being done in the name of traditional socialist egalitarianism, it is thoroughly perverse. It is one of the most foolish perversities in a whole string of such perversities in this debate. If one wants to go in for socialist egalitarianism and clobber the rich, one should put up marginal tax rates—although that would be very bad and destructive for everyone, including those who are less well off, since it would threaten their jobs and the country's prosperity.

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Most extraordinarily, however, the Labour Government are proposing to say to the rich that, if they spend their higher income, the tax regime will not be changed and they can go on enjoying exactly the same standard of living, but if they save their higher income, they will be worse off. The Government will clobber such people and ensure that they suffer if they save. The change will impact only on people who save on higher incomes or who are better off—not on those who spend that higher income. That cannot make the beginnings of sense and certainly cannot be justified on the grounds either of economic rationality or of fairness.
What about the impact on savings as a whole? How can such a proposal possibly increase aggregate saving? Let us just think about that for one second; it is clear that Treasury Ministers have not begun to think seriously about it. After all, on their own admission, they are proposing to reduce tax credits for such saving. On universal admission, due to the greater administrative complexity of ISAs, which will force managers to keep an account for every contribution in every year, administrative costs will greatly increase.
If the returns are reduced and the costs are increased, there will be a double negative impact on the net return to savers. Clearly, therefore, the attractions of the scheme as compared with its predecessors will significantly reduce. If human beings are rational, there will be less saving, not more. That is the only possible conclusion; it follows as surely as night follows day.
The negative impact on savings behaviour will be compounded by the fact that those who have already saved £50,000 in their PEPs will have no tax-driven incentive to save any more than they otherwise would. So, the section of the population which has the highest propensity to save—those on the highest incomes—will save less. One does not know by how much, but it will undoubtedly be less. If the aggregate return of saving for such people is reduced, the aggregate savings flow will fall. The proposal's effect on aggregate savings will undoubtedly be negative.
Let us look at those who are low paid—people whose interests the Government claim to have at heart. Will the proposal help them? Such people cannot get many of the benefits of ISAs. Nor could they in predecessor regimes; nothing has changed. In practice, such people will not benefit from capital gains tax relief because they are unlikely to have capital gains exceeding the £6,000 annual personal allowance—or whatever it is now. I think that it is £6,500.
Equally, low-paid people will not get higher tax relief because, by definition, they do not pay higher tax. All that they will get is relief on the basic rate of tax. We have demonstrated in this debate that, from any view, management charges will exceed that benefit, which itself is being reduced due to the reduction in tax relief on ISAs over the next five years.
For those on smaller incomes, the financial benefit of taking part in the new savings vehicle will be less than it was when they contributed to PEPs. The opposite effect of the one for which the Government hope will come
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about. There will be less saving, not more, by the less well off. The Conservatives are genuinely concerned about that, regardless of whether the Labour party is.
Ms Keeble: Will the hon. Gentleman give way?
Mr. Davies: I cannot take an intervention due to lack of time. I hope that the hon. Lady will forgive me. She and her hon. Friend the Member for Dudley, North had plenty of time to make their points.
There is another sinister discriminatory aspect of the proposal, which I fear will impact particularly seriously on those who are on lower incomes. As we know, the proposal is that anybody can save up to a maximum of £1,000 a year in cash, £1,000 in insurance products and £3,000 a year in equities. That is a very artificial portfolio balance, which may be totally inappropriate in certain circumstances.
For example, when the equity market is particularly high, it might be thoroughly irresponsible to put such a high proportion of savings in equities. Indeed, no independent financial adviser worth his salt would dream of advising his client to do so. For the wealthier savers who have an ISA—if any do—as part of a wider portfolio, such constraints are not very great. The balance of portfolio which they desire to achieve can be achieved elsewhere, outside the ISA regime.
People who will not have savings outside an ISA because they hardly have any savings at all—the people about whom the Government claim to be concerned, and whom the ISA regime purports to encourage to save—will not have the ability to obtain a portfolio balance outside the ISA regime. The portfolio balance forced on them inside the ISA regime may be extremely damaging. Poor people might be bamboozled into going for the product, and find that the apparent tax advantages are more than outweighed by management fees. On top of that, they might find that they are forced by regulation to put a disproportionate part of their savings into equities, which might prove to be a disaster at a certain stage in the market. They might find themselves exposed to losing a large part of their savings. That must be an exceedingly bad deal for the low paid.
Ms Keeble: Will the hon. Gentleman give way?
Mr. Davies: I am about to bring my remarks to an end. I am sure that the hon. Lady's colleagues will have an opportunity to make whatever points they can—if they can—in answer to my criticism of the Government's proposal.
I shall put one final point to Labour Members. The tragedy for the low paid is that it is not worth their while saving at all. They will merely find that they have deprived themselves of future income. In the event of loss of employment or some disaster, or when they reach retirement age, they will have deprived themselves of access to means-tested welfare benefits. Therefore, the return from their savings will be negative. They might find that they have sacrificed consumption by putting money away, and then do not qualify on retirement for income support, housing benefit, council tax relief and all the things enjoyed by the family next door, which has never bothered to save.

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It is the cheating of the poor by this particularly pernicious system that the Government should be addressing if they seriously want to do something for the lower paid, and if they seriously want to change the culture of this country in favour of greater saving. That requires either a much more radical and fundamental welfare reform programme than I believe the Government have the courage to begin to contemplate, or some form of socialist compulsion. We shall see, as the months go by, which of those courses the Government take.
6.18 pm
Mr. Barry Gardiner: Why do the Government give tax relief? It is to achieve a particular policy objective. In plain language, when the Government give people a handout, they do so to encourage them to do something. The point of the handout, and that is exactly what it is in the case of PEPs and TESSAs, is to encourage people to save.
"Although the scheme will be open to everyone, it is specially designed to encourage smaller savers, and particularly those who may never previously have invested in equities in their lives."—[Official Report, 18 March 1986; Vol. 112, c. 178.]
Mr. Bercow: Speed it up a bit.
Mr. Gardiner: I am taking my speech at the rate at which I think it is possible for the hon. Gentleman to comprehend it.
"I now want to extend savings incentives to the mass of ordinary tax-paying savers—and potential savers".—[Official Report, 20 March 1990; Vol. 169, c. 1024.]
That was said in the Budget statement on 20 March 1990 about the introduction of TESSAs.
How effective has that handout been? We have heard that 50 per cent. of adults—broadly the poorest 50 per cent.—have virtually no savings at all. They do not invest in PEPs and TESSAs, but they do pay for them. It is the tax taken from that poorest 50 per cent. of our community that still goes to contribute to the tax relief from which the richer 50 per cent. presently benefit. It is because of that that this handout must be justified to those who pay for it without benefiting from it.
We have been told today that £50,000 is not a huge sum. We have been told also—by the hon. Member for Gosport (Mr. Viggers)—that unless a person was able to save at least £65,000, there would be no point in saving at all. They might as well blow it, because the yield would be so small. I wonder whether the hon. Gentleman considers whether his words gave great comfort to those who have not yet accumulated £50,000 in their PEPs. There is little comfort here for the struggling pensioner who was mentioned, who put his faith in the then Government's PEPs scheme if, unless he accumulates £65,000, there is no point in accumulating anything at all.
The shadow Chancellor, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), stated that after the replacement of PEPs with ISAs, people would "lose the incentive to save." How does that statement stand up? Either there is a benefit from saving or there is not. If there is, and no one in the Chamber today has suggested otherwise, it seems clear that by the time one has accumulated £50,000 of tax-free savings, one has worked
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out the value of that activity; one does not require an additional handout to convince one further. Money spent in this way is doubtless much appreciated by the recipient, but it is unjustifiable to the neighbour, who pays for it without benefiting from it.
The shadow Chancellor, in a carefully crafted speech, enticed my hon. Friend the Member for Bolsover (Mr. Skinner) to bite and then closed the trap on him. The right hon. Gentleman said that a fund of £356,000 would be required to produce my hon. Friend's pension—about £20,000 per annum. He refused to take an intervention from me at that time, when I would have informed, or reminded, him that the new stock exchange regulations to force companies to disclose the pension arrangements for their directors have revealed—I see some Opposition Members blanching—many more interesting cases than that of my hon. Friend.
Let us take the example revealed in the annual report of the Bass brewing and leisure group, which states that one director—Sir Ian Prosser—has a pension which, at 30 September 1997, is valued at £304,300. That is not the fund—it is the pension which he will take each and every year in retirement. Even the shadow Chancellor might accept that in the light of such a pension, my hon. Friend the Member for Bolsover may be entitled to his paltry £20,000.
Unlike the shadow Chancellor, I do not want to get into the politics of envy. The director of Bass may well deserve his £304,000 a year pension. However, the remarks of the right hon. Gentleman were significant in that they were a reversal of what the Conservatives have traditionally echoed in this Chamber over past years. The politics of envy have never been quite so clearly stated as they were by the right hon. Gentleman this afternoon.
The hon. Member for Grantham and Stamford (Mr. Davies) talked of penalising people who have saved because they will not get tax relief on their savings in excess of £50,000. However, no penalising is going on. It is a change in the tax regime so that taxpayers' money is spent where it is most effective and most needed—in persuading the 50 per cent. of the population who presently are unconvinced of the benefits of saving.
Mr. Caplin rose—
Hon. Members: Oh!
Mr. Caplin: At least I am taking an interest in the subject—unlike Opposition Members, particularly some who have just walked into the Chamber. Has my hon. Friend had time to consider the figures I mentioned in respect of the lack of people who have PEPs? I referred to a figure of less than 5 per cent. Will he address that point?
Mr. Gardiner: My hon. Friend is entirely right. The figures that he gave were most revealing in that only 4.7 per cent. of people have a PEP and no other form of saving. He also laid before the House his qualifications, as someone previously employed in an insurance company. Although it is many years ago, my qualification as an associate of the Chartered Insurance Institute gives me some reason to stand in this Chamber this afternoon.
When the hon. Member for Grantham and Stamford talked about penalising, the critical fact that he failed to mention was that the legislation is not retrospective.

901
Nothing that was lawful would be unlawful and nothing that was unlawful would be lawful as a result of the proposed measures.
The right hon. Member for South Norfolk (Mr. MacGregor) talked about the way in which people who have not got great incomes but are of modest means, go about saving. They do so piecemeal and in dribs and drabs. Indeed, the whole foundation of the old Prudential insurance company was based on that policy—the fact that it was difficult to get people to save. We know the old image of "the man from the Pru", who knocked on the door to pick up the weekly premium—the odd five shillings—from the householder. I would be reticent to refer to my right hon. Friend the Chief Secretary as the modern day "man from the Pm", but in setting up ISAs we are seeking a contemporary equivalent of just that.
The ISA would enable people to bring together a range of savings—stocks, shares, cash, national savings, life insurance—and to do so in dribs and drabs, in small weekly amounts. That is the way in which people are able to save—over a period of years—and how they have learnt to save in the past.
At the same time, the great majority of TESSA and PEP investments could be carried forward into the tax-favoured environment of the ISA. For most people, the ISA will be the natural home where their savings and investments of the past few years can lodge to their benefit for the future. It is simply not the case that the Government are trying to penalise people who have saved hard and planned for their retirement. There has been no more telling remark this afternoon than that of my hon. Friend the Member for Dudley, North (Mr. Cranston), who said that if there were ever a case of people's planning for their futures being thrown up in the air by the Government, it was when the previous Government changed the MIRAS tax relief system to their financial detriment.
In conclusion, in the past eight and more years since TESSAs and PEPs were introduced, the schemes have significantly failed to find acceptance throughout society. The people who have benefited from them are those whom one would expect to benefit—people who have traditionally saved and planned pensions and who take advantage of whatever scheme is available. I do not believe that any hon. Member thinks that the schemes have succeeded in the original intention as stated in the extracts from Hansard that I quoted—the intention in those Budget statements that the benefits of tax-free savings would be extended down to the most disadvantaged in our community.
6.35 pm
Mr. Michael Fallon: All I can say about the speech of the hon. Member for Brent, North (Mr. Gardiner) is that the hon. Gentleman is clearly one of the few hon. Members who speak faster than they think. We now have a Paymaster General whose tax is sheltered and whose reply to the debate has had to be sheltered by the sort of filibuster that we just heard.
The Government's proposals are dishonest, ill thought out, technically defective and hypocritical. I shall begin with the dishonesty. This scheme is mis-selling in every sense. The individual savings account is designed not to encourage new saving, but to cut the cost to the Treasury of existing saving. Before the election, the Government
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claimed that they wanted to extend the scope of PEPs and TESSAs. Even the consultative document that they published concealed their true purpose. That was forced out first in the debate in another place two weeks ago, when the Government spokesman, Lord McIntosh, came clean about PEPs and TESSAs, saying:
"We must consider the ultimate effect to the revenue of a system which relies only on annual limits … I want to make clear that capping is an essential part of any tax-free savings package."—[Official Report, House of Lords, 11 February 1998; Vol. 585, c. 1220–21.]
That statement flatly contradicts the Prime Minister's assurance before the election and that given by the Chief Secretary after the election, that existing savers would not be affected. I hope that Ministers will now apologise for deliberately misleading the public. Of course, they will not do so—expecting contrition from this Government is like expecting openness from the Paymaster General.
The whole ISA scheme is ill thought out. As my right hon. Friend the Member for South Norfolk (Mr. MacGregor) and my hon. Friends the Members for Gosport (Mr. Viggers) and for Grantham and Stamford (Mr. Davies) said, there is nothing long term about encouraging instant access accounts at supermarket checkouts. There is nothing sound about offering a monthly flutter as a way of building lifetime savings. The Government now admit that the £50,000 limit would yield only £1,420 a year. That will not pay for long-term care or support PEP-based mortgages and it will certainly not help to provide the sort of pension that, as my hon. Friend the Member for Gosport so neatly illustrated and my right hon. Friend the Chief Secretary—[HON. MEMBERS: "Who?"] I mean the former Chief Secretary, who pointed out that the scheme is wholly inconsistent with the stakeholder pension that the Government are simultaneously proposing.
The scheme is flawed in conception and deeply flawed in detail. I cannot recall a Treasury proposal that has had such universally bad press—[Interruption.] Let me quote it. The Consumers Association has described the scheme as
"fundamentally flawed, and … a considerable risk to consumers."
The Association of Investment Trust Companies said that the ISA proposals
"will do very little to encourage those on modest incomes to save."
The Independent Financial Advisers Association said that the scheme was
"little more than a tax efficient Christmas club."
The Association of British Insurers believed that it was "potentially anti-competitive". It said:
"Complexity, and hence cost, is a major worry."
The National Association of Pension Funds said that the proposals were
"tackling the problem from the wrong end."
Even the Treasury's spokesman in the other place attacked the scheme. The hapless Lord McIntosh criticised the consultation paper for not proposing a proper regulatory framework. He said that such a framework
"receives almost no mention in the document … That is certainly a defect."—[Official Report, House of Lords, 11 February 1998; Vol. 585, c. 1223.]
All the practitioners regard ISAs as unworkable. As the Association of Private Client Investment Managers and Stockbrokers—led by the former Conservative Economic

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Secretary to the Treasury, whom the Chief Secretary prayed in aid—highlighted, the proposals will be an administrative nightmare. The association said:
"For the system to work, ISA providers will have to provide the following information at the end of each tax year during which they have provided an ISA:—
ISA assets transferred in or out.
ISAs which have been closed.
ISAs which have been made void.
Investor details.
Where an ISA has been transferred, the provider to whom it was transferred.
Where a transfer has been received, the provider to whom it was received.
Where an ISA has been closed, the date of closure.
Net investment made during the tax year … We cannot emphasise too strongly the difficulty and so the associated cost of administering"
this system. In case the Chief Secretary is still tempted to claim that Angela Knight is in favour of the scheme, I should point out that she proposes—her views are set out in black and white—that
"the tax regime for all the existing PEPs and TESSAs should be honoured".
ISAs are unfair, technically defective, administratively complex and will be very expensive for the providers to operate. We are entitled to ask, therefore, who dreamt up this scheme, which brings us to the architect of ISAs, the Paymaster—or taxmaster—General. He launched the scheme in his usual, careless, blustering style. In the foreword to the consultative document, he opined:
"Everyone should have the opportunity to save in a tax-favoured environment".
He wrote that in happier times, of course, before the storm broke over his head. Perhaps he wrote it in one of his two large country mansions—perhaps those words were inscribed in his Park lane penthouse, in his apartments in Cannes, or even in his unselfconsciously named "Villa Muchio". His words would show nerve enough, but he then had the gall to attack those who currently hold PEPs as
"well-off people who have done extremely well out of the accounts".
Not as extremely well as he has done with his £12 million offshore—all of it sheltered from tax.
The plan is this: those who have scrimped and saved their PEPs over 10 years will now be penalised. The tax man will rob them retrospectively of anything over £50,000. The Paymaster General, however, will still pay nothing on his £12 million—no income tax, no capital gains tax, no inheritance tax. That is true hypocrisy.
As we have learnt, when the hon. Gentleman is caught out, he blusters. One ISA conference was told that the £50,000 limit would stay, whereas the next was told that it could be changed. Finally, he blamed his officials. In meetings with representatives of the savings and investment industries, he revealed that
"he was not fully briefed on the widespread appeal of Peps among all taxpayers.
He allegedly said that he was given out-of-date information and was wrongly advised that Peps were still the domain of higher-rate taxpayers."
904
This is a true Labour saga: a broken promise that was dishonestly concealed; an ill-thought-out scheme that is technically defective; a measure ridiculed by the industry that is supposed to provide it. For the 3 million people who hold PEPs, for the 4.5 million people who hold TESSAs, this is a serious breach of faith that will undermine confidence in Government savings.
The Government have one way out, which is an unusual one for the Paymaster General—he can come clean. He can admit that he has bungled. He can admit that he tried to deceive existing savers. He can take away his ludicrous scheme and rethink it in the fortnight that remains before the Budget.
6.45 pm
The Paymaster General (Mr. Geoffrey Robinson): We welcome this opportunity to discuss the ISA proposals, which have been put out to consultation. Indeed, consultation ended on 31 January—clearly, the Opposition have only just caught up with that fact, but we welcome them none the less to the debate. We wish that they had had something more substantive to say, on which we could further consult, but the pettiness and irrelevance of what they said were no better exemplified than in the speech of the hon. Member for Sevenoaks (Mr. Fallon).
It is left to us to consider the representations that we have received—they have been many, varied and all of considerable interest, as we intended when we put out the scheme to consultation. The former Conservative Government refused to consult—they did not adhere to that process—which is why they got things very wrong.
No hon. Member can expect me or my right hon. Friend the Chief Secretary to the Treasury to pre-empt what the Chancellor will say in the Budget. I welcome the hon. Member for Sevenoaks to his position as shadow spokesman—I think that this is the first time that he has spoken from the Front Bench, at least since I have been in government—but I was surprised that he did not quote in full the words of Angela Knight, who is not unknown to Conservative Front Benchers. I should put the record straight, as he seems incapable of reading what she said. She stated:
"There is much that we welcome within the ISA and APCIMS"—
which, as the hon. Gentleman read out, stands for the Association of Private Client Investment Managers and Stockbrokers—
"endorse the policy of attracting more people to save. We also agree with features such as the flexibility, no minimum level of saving, reducing restrictions on the equity element and no lock-in'".
Those are precisely the points that the hon. Member for Sevenoaks and others, including the hon. Member for Grantham and Stamford (Mr. Davies), tried to refute. Angela Knight continued by saying that those aspects
"are all welcome and we consider that there has been much careful thought given to the design of the ISA."
She speaks with much experience and authority in these matters, to which she clearly gave much thought.
That does not mean that we shall not also listen carefully to other representations that we received, although those we heard today from the Opposition will not rank highly in our consideration. The Virgin organisation, for example—which has driven down costs on various sorts of savings and investments—said:

905
"Undoubtedly ISAs are good news. They will bring more savers into the market."
Fidelity, one of the biggest product providers in the financial services industry, said:
"We welcome the new scheme … this was the big breakthrough in investment."
The Halifax said:
"Halifax sees a bright future for the ISA."
The Prudential said:
"We welcome the Government's aim of promoting saving, in particular for people with modest incomes … we welcome making ISAs as accessible as possible."
Those quotations are worth reading because they show clearly that, while we were open to consultation, we thought carefully about the document that we issued as the basis for that consultation.
Mr. Fallon: Will the Paymaster General give way?
Mr. Robinson: I shall give way in a moment, although I did not interrupt the hon. Gentleman in his speech. In all that he said, he made no attempt to discuss any of the points raised in the debate. I do not say that he acted discourteously, as he had other, less relevant, things to say.
The shadow Chancellor told us that he, personally, by some Herculean endeavour, had rebuilt savings in the 1980s. What happened in the 1980s is a sorry story. When he was in the Treasury in various guises, from 1986 to 1990—a full five-year period—we had a negative savings ratio in the household sector. The figure was -0.3 per cent. in 1986; -1.9 per cent. in 1987; -2.8 per cent. in 1988; -2.7 per cent. in 1989; and -0.4 per cent. in 1990.
Mr. Fallon rose—
Mr. Andrew Tyrie rose—
Mr. Robinson: I shall give way, but not to the hon. Member for Chichester (Mr. Tyrie) who was not here during the debate. Johnnies-come-lately do not get in; he should know that by now.
Mr. Fallon: Of all the organisations that the Paymaster General cited as giving some support to the Government's proposal, can he name one that says that the £50,000 limit should stay?
Mr. Robinson: We have held consultations with all of them. I do not know why the hon. Gentleman is smirking, as if he had said something terribly clever. If the previous Government had gone out to consultation, as we have, they would not have got into the frightful muddle that I shall talk about in a moment when the right hon. Member for South Norfolk (Mr. MacGregor) first launched PEPs.
Mr. Loughton: Will the Paymaster General give way?
Mr. Robinson: I will, because I know that the hon. Gentleman was here throughout the debate and did not get the chance to make his own speech.
Mr. Loughton: I am very grateful to the Paymaster General, but when he is quoting from authorities in the City, he should give the whole quotation. Richard Branson, to give the whole sentence, said:
906
"The £50,000 limit also sends the wrong signal to potential savers—it says that rules can be changed retrospectively."
Fidelity said of the £5,000 annual limit that it
"represents a 53% reduction in the total tax-privileged investment … it removes an incentive for"—
Mr. Deputy Speaker (Mr. Michael Lord): Order. That is far too long for an intervention.
Mr. Robinson: I had hoped that the hon. Gentleman, who is not usually short of words, would have something to say for himself, rather than reading. It was clearly a waste of time for me to give way.
I was dealing with the shadow Chancellor, who was so proud of his record in the 1980s; in fact, it was a terrible record on savings, as he well knows. It is worth recalling that stability is the key to economic growth and to savings. When he was in the Treasury, interest rates were at 10 per cent. and inflation at 5 per cent. in 1988. Interest rates peaked at 15 per cent. and inflation at nearly 10 per cent. in 1990. That did not promote growth or stability or encourage savings. That is why we had negative savings rates in the last five years of the 1980s. That is not a record to be proud of.
The right hon. Member for South Norfolk, a former Chief Secretary, made a good contribution to the debate, but he did not tell us that the pension fund of which he is a director was fined £545,000 for mis-selling. He courteously informed me that he would have to leave before the end of the debate, but I wish that he was here to hear this, because he might have been able to tell us something about why, in that context, he recommended a light regulatory touch for the new system. We shall ensure that no such problems happen again, and we are consulting to that effect.
The right hon. Member for South Norfolk mentioned the problems that the Conservative Government had with the introduction of PEPs, and the number of goes that they needed to clear it up. They had a go when they introduced them in 1987; a go in 1988; and another go in 1989. They had to keep trying to simplify the rules and get rid of the anomalies, for the simple reason that they did not consult beforehand.
The right hon. Gentleman also mentioned kitemarking or benchmarking products, with a view to bringing down the costs of administration. That is a matter to which both Government and Opposition Members have alluded in a serious vein, and we are consulting on it. We are attracted by the concept, but we tend to favour benchmarking rather than kitemarking, as the latter might imply that the Government were totally committed to a given product. The hon. Member for Gosport (Mr. Viggers) spoke about that. It is a matter of interest, and my right hon. Friend the Chancellor will consider it in the Budget process.
My hon. Friend the Member for Hove (Mr. Caplin) spoke with the background of much personal and professional experience. He pointed out exactly what had gone wrong in the mis-selling of pensions, and he is keen that we should not follow in the misbegotten, badly thought out footsteps of our predecessors.
The hon. Member for Twickenham (Dr. Cable) made a serious contribution and we hope that, when my right hon. Friend the Chancellor has decided on his proposals, we shall be able to secure his support in the Lobby on the new savings proposals. He was especially concerned, as

907
were the hon. Member for Grantham and Stamford and some of my right hon. and hon. Friends, about the savings disregard and the problems of those on benefit.
The problems go much wider than that, and it is ironic in the extreme that they should be raised by Conservative Members, who have a record second to none in living memory on means-tested benefits that cut right against the principle of people being able to work and save; working and saving is clearly the logical order of events.
I agree with my hon. Friend the Member for Northampton, North (Ms Keeble) that there are considerable advantages in the idea of a one-stop account. I hope that those will be contained in the decisions that my right hon. Friend the Chancellor will make. Opposition Members attempted some ill-founded irony about how retailers could deal with those accounts, but the fact is that many retailers have already moved into financial products and are doing well and giving advice. The exact arrangements are a matter for them, but when companies such as Tesco, Safeway, Marks and Spencer and others—
Mr. Gerald Howarth: Will the Paymaster General give way?
Mr. Robinson: No. The hon. Gentleman was not here during the debate and I have no intention of giving way to him, as I have very little time left and I want to make some more points.
Mr. Howarth: On a point of order, Mr. Deputy Speaker. The Paymaster General said that I was not here during the debate. I was here for the opening speeches, after which I attended a Defence Export Services Organisation symposium with the Minister for Defence Procurement. I will not be told that I have not participated in this debate.
Mr. Deputy Speaker: Order. That is not a point of order for the Chair. It is for the Minister himself to decide whether to give way.
Mr. Robinson: I am sure that the hon. Gentleman was spending his time very well with my noble Friend, but he was not here, so it is better for me to reply to those who spoke in the debate and attended it throughout.
The hon. Member for Gosport made several points, as did my hon. Friend the Member for Dudley, North (Mr. Cranston), who speaks with great erudition on these matters. He is one of the biggest contributors to Committees on finance-related Bills. I hope that he will participate in more this year. His remark about Lord Lawson's purpose in introducing PEPs was one of the most perceptive of the debate. My hon. Friend is a keen observer of such matters and realises the motivation behind the introduction of PEPs. Lord Lawson introduced them not as an incentive to save or to increase aggregate savings, as has been claimed, but as a way to spread share ownership. That is a welcome objective, but it has nothing to do with savings.
The main issue is stability. We have acted on tax credits and on advance corporation tax. We have introduced a deficit reduction plan and a code of fiscal stability. We
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have reintroduced the golden rule. Which of those measures, if any, do the Opposition support, or would they repeal them? They should come clean. Would they repeal the provisions of the Bank of England Bill? Would they return to the imputation system of corporation tax? Would they reintroduce advance corporation tax or tax credits? All those measures are intended to have long-term effects, and they will generate savings.
Question put, That the original words stand part of the Question:—
The House divided: Ayes 142, Noes 329.*
*[This Division was incorrectly recorded. See Col. 962]

Division No. 187]

[7 pm

AYES

Ainsworth, Peter (E Surrey)

Grieve, Dominic

Amess, David

Hague, Rt Hon William

Ancram, Rt Hon Michael

Hamilton, Rt Hon Sir Archie

Arbuthnot, James

Hammond, Philip

Atkinson, David (Bour'mth E)

Hawkins, Nick

Atkinson, Peter (Hexham)

Hayes, John

Baldry, Tony

Heald, Oliver

Bercow, John

Heathcoat—Amory, Rt Hon David

Beresford, Sir Paul

Horam, John

Blunt, Crispin

Howard, Rt Hon Michael

Boswell, Tim

Howarth, Gerald (Aldershot)

Bottomley, Peter (Worthing W)

Hunter, Andrew

Bottomley, Rt Hon Mrs Virginia

Jack, Rt Hon Michael

Brady, Graham

Jenkin, Bernard

Brazier, Julian

Johnson Smith, Rt Hon Sir Geoffrey

Browning, Mrs Angela

Bruce, Ian (S Dorset)

Jones, Ieuan Wyn (Ynys Môn)

Burns, Simon

Key, Robert

Cash, William

King, Rt Hon Tom (Bridgwater)

Chapman, Sir Sydney (Chipping Barnet)

Kirkbride, Miss Julie

Laing, Mrs Eleanor

Chope, Christopher

Lait, Mrs Jacqui

Clappison, James

Lansley, Andrew

Clark, Rt Hon Alan (Kensington)

Leigh, Edward

Clarke, Rt Hon Kenneth (Rushcliffe)

Letwin, Oliver

Lewis, Dr Julian (New Forest E)

Clifton—Brown, Geoffrey

Lidington, David

Collins, Tim

Lilley, Rt Hon Peter

Colvin, Michael

Lloyd, Rt Hon Sir Peter (Fareham)

Cormack, Sir Patrick

Llwyd, Elfyn

Cran, James

Loughton, Tim

Curry, Rt Hon David

Luff, Peter

Dafis, Cynog

Lyell, Rt Hon Sir Nicholas

Davies, Quentin (Grantham)

MacKay, Andrew

Davis, Rt Hon David (Haltemprice)

Maclean, Rt Hon David

Day, Stephen

McLoughlin, Patrick

Duncan, Alan

Madel, Sir David

Duncan Smith, Iain

Maginnis, Ken

Emery, Rt Hon Sir Peter

Major, Rt Hon John

Evans, Nigel

Malins, Humfrey

Faber, David

Maples, John

Fallon, Michael

Mates, Michael

Forsythe, Clifford

Mawhinney, Rt Hon Sir Brian

Forth, Rt Hon Eric

May, Mrs Theresa

Fowler, Rt Hon Sir Norman

Moss, Malcolm

Fox, Dr Liam

Nicholls, Patrick

Fraser, Christopher

Norman, Archie

Gale, Roger

Ottaway, Richard

Garnier, Edward

Page, Richard

Gibb, Nick

Paice, James

Gill, Christopher

Paterson, Owen

Gillan, Mrs Cheryl

Pickles, Eric

Goodlad, Rt Hon Sir Alastair

Randall, John

Gorman, Mrs Teresa

Redwood, Rt Hon John

Gray, James

Robertson, Laurence (Tewk'b'ry)

Green, Damian

Ruffley, David

Greenway, John

St Aubyn, Nick

909

Sayeed, Jonathan

Trend, Michael

Shephard, Rt Hon Mrs Gillian

Tyrie, Andrew

Shepherd, Richard

Viggers, Peter

Simpson, Keith (Mid—Norfolk)

Walker, Cecil

Smyth, Rev Martin (Belfast S)

Wardle, Charles

Soames, Nicholas

Waterson, Nigel

Spelman, Mrs Caroline

Whitney, Sir Raymond

Spicer, Sir Michael

Wigley, Rt Hon Dafydd

Spring, Richard

Wilkinson, John

Stanley, Rt Hon Sir John

Wilshire, David

Steen, Anthony

Winterton, Mrs Ann (Congleton)

Swayne, Desmond

Winterton, Nicholas (Macclesfield)

Syms, Robert

Yeo, Tim

Tapsell, Sir Peter

Young, Rt Hon Sir George

Taylor, Ian (Esher & Walton)

Tellers for the Ayes:

Townend, John

Mr. John Whittingdale and

Tredinnick, David

Mr. John M. Taylor.

NOES

Abbott, Ms Diane

Clelland, David

Ainger, Nick

Coaker, Vernon

Ainsworth, Robert (Cov'try NE)

Coffey, Ms Ann

Allan, Richard

Cohen, Harry

Anderson, Donald (Swansea E)

Colman, Tony

Anderson, Janet (Rossendale)

Connarty, Michael

Ashton, Joe

Cook, Frank (Stockton N)

Atkins, Charlotte

Cooper, Yvette

Austin, John

Corbett, Robin

Baker, Norman

Cotter, Brian

Ballard, Mrs Jackie

Cousins, Jim

Banks, Tony

Cranston, Ross

Barron, Kevin

Crausby, David

Battle, John

Cryer, Mrs Ann (Keighley)

Bayley, Hugh

Cryer, John (Hornchurch)

Beard, Nigel

Cunliffe, Lawrence

Beckett, Rt Hon Mrs Margaret

Cunningham, Rt Hon Dr John (Copeland)

Begg, Miss Anne

Bennett, Andrew F

Cunningham, Jim (Cov'try S)

Benton, Joe

Dalyell, Tarn

Bermingham, Gerald

Darling, Rt Hon Alistair

Betts, Clive

Darvill, Keith

Blackman, Liz

Davey, Valerie (Bristol W)

Blears, Ms Hazel

Davidson, Ian

Blizzard, Bob

Davies, Rt Hon Denzil (Llanelli)

Boateng, Paul

Davies, Geraint (Croydon C)

Bradley, Keith (Withington)

Davies, Rt Hon Ron (Caerphilly)

Bradley, Peter (The Wrekin)

Davis, Terry (B'ham Hodge H)

Brake, Tom

Dawson, Hilton

Brand, Dr Peter

Dean, Mrs Janet

Breed, Colin

Denham, John

Buck, Ms Karen

Dismore, Andrew

Burden, Richard

Dobbin, Jim

Burgon, Colin

Donohoe, Brian H

Burnett, John

Doran, Frank

Burstow, Paul

Dowd, Jim

Byers, Stephen

Drew, David

Cable, Dr Vincent

Drown, Ms Julia

Caborn, Richard

Dunwoody, Mrs Gwyneth

Campbell, Alan (Tynemouth)

Edwards, Huw

Campbell, Mrs Anne (C'bridge)

Ellman, Mrs Louise

Campbell, Menzies (NE Fife)

Ennis, Jeff

Campbell, Ronnie (Blyth V)

Etherington, Bill

Campbell-Savours, Dale

Fearn, Ronnie

Cann, Jamie

Field, Rt Hon Frank

Caplin, Ivor

Fisher, Mark

Chapman, Ben (Wirral S)

Fitzpatrick, Jim

Chidgey, David

Fitzsimons, Lorna

Chisholm, Malcolm

Flint, Caroline

Clapham, Michael

Follett, Barbara

Clark, Rt Hon Dr David (S Shields)

Foster, Rt Hon Derek

Clark, Dr Lynda (Edinburgh Pentlands)

Foster, Don (Bath)

Foster, Michael Jabez (Hastings)

Clark, Paul (Gillingham)

Foster, Michael J (Worcester)

Clarke, Eric (Midlothian)

Fyfe, Maria

Clarke, Tony (Northampton S)

Galloway, George

910

Gapes, Mike

McAvoy, Thomas

Gardiner, Barry

McCabe, Steve

George, Andrew (St Ives)

McCartney, Ian (Makerfield)

George, Bruce (Walsall S)

McDonagh, Siobhain

Gerrard, Neil

McDonnell, John

Gibson, Dr Ian

McGuire, Mrs Anne

Gilroy, Mrs Linda

McIsaac, Shona

Godman, Norman A

McKenna, Mrs Rosemary

Golding, Mrs Llin

Mackinlay, Andrew

Gordon, Mrs Eileen

McLeish, Henry

Gorrie, Donald

McNamara, Kevin

Griffiths, Jane (Reading E)

McNulty, Tony

Griffiths, Nigel (Edinburgh S)

Mactaggart, Fiona

Griffiths, Win (Bridgend)

McWilliam, John

Grocott, Bruce

Mahon, Mrs Alice

Grogan, John

Marek, Dr John

Gunnell, John

Marsden, Gordon (Blackpool S)

Hain, Peter

Marshall, David (Shettleston)

Hall, Mike (Weaver Vale)

Marshall, Jim (Leicester S)

Hall, Patrick (Bedford)

Martlew, Eric

Hamilton, Fabian (Leeds NE)

Maxton, John

Hanson, David

Meale, Alan

Harris, Dr Evan

Michael, Alun

Heal, Mrs Sylvia

Michie, Bill (Shefld Heeley)

Healey, John

Michie, Mrs Ray (Argyll & Bute)

Heath, David (Somerton & Frome)

Milburn, Alan

Henderson, Ivan (Harwich)

Miller, Andrew

Heppell, John

Mitchell, Austin

Hesford, Stephen

Moffatt, Laura

Hinchliffe, David

Moore, Michael

Hodge, Ms Margaret

Moran, Ms Margaret

Hoey, Kate

Morgan, Ms Julie (Cardiff N)

Home Robertson, John

Morley, Elliot

Hoon, Geoffrey

Morris, Ms Estelle (B'ham Yardley)

Hope, Phil

Mudie, George

Hopkins, Kelvin

Mullin, Chris

Howarth, George (Knowsley N)

Murphy, Denis (Wansbeck)

Hughes, Ms Beverley (Stretford)

Murphy, Jim (Eastwood)

Hughes, Kevin (Doncaster N)

Oaten, Mark

Hurst, Alan

O'Brien, Bill (Normanton)

Hutton, John

O'Hara, Eddie

Iddon, Dr Brian

Olner, Bill

Illsley, Eric

Öpik, Lembit

Ingram, Adam

Organ, Mrs Diana

Jackson, Ms Glenda (Hampstead)

Palmer, Dr Nick

Jackson, Helen (Hillsborough)

Pearson, Ian

Jamieson, David

Pendry, Tom

Jenkins, Brian

Perham, Ms Linda

Johnson, Alan (Hull W & Hessle)

Pickthall, Colin

Johnson, Miss Melanie (Welwyn Hatfield)

Pike, Peter L

Plaskitt, James

Jones, Helen (Warrington N)

Pope, Greg

Jones, Ms Jenny (Wolverh'ton SW)

Powell, Sir Raymond

Prentice, Ms Bridget (Lewisham E)

Jones, Jon Owen (Cardiff C)

Prentice, Gordon (Pendle)

Jones, Dr Lynne (Selly Oak)

Primarolo, Dawn

Jones, Nigel (Cheltenham)

Prosser, Gwyn

Jowell, Ms Tessa

Purchase, Ken

Keeble, Ms Sally

Quinn, Lawrie

Keen, Alan (Feltham & Heston)

Rammell, Bill

Keen, Ann (Brentford & Isleworth)

Raynsford, Nick

Keetch, Paul

Reid, Dr John (Hamilton N)

Kelly, Ms Ruth

Rendel, David

Kemp, Fraser

Robertson, Rt Hon George (Hamilton S)

Kennedy, Charles (Ross Skye)

Kidney, David

Robinson, Geoffrey (Cov'try NW)

Lawrence, Ms Jackie

Roche, Mrs Barbara

Lepper, David

Rogers, Allan

Levitt, Tom

Rooker, Jeff

Lewis, Ivan (Bury S)

Rooney, Terry

Liddell, Mrs Helen

Ross, Ernie (Dundee W)

Linton, Martin

Roy, Frank

Livingstone, Ken

Ruane, Chris

Lock, David

Russell, Bob (Colchester)

Love, Andrew

Ryan, Ms Joan

McAllion, John

Salter, Martin

911

Sanders, Adrian

Trickett, Jon

Sarwar, Mohammad

Truswell, Paul

Sawford, Phil

Turner, Dennis (Wolverh'ton SE)

Sedgemore, Brian

Turner, Dr Desmond (Kemptown)

Sheerman, Barry

Turner, Dr George (NW Norfolk)

Sheldon, Rt Hon Robert

Twigg, Derek (Halton)

Shipley, Ms Debra

Tyler, Paul

Simpson, Alan (Nottingham S)

Vis, Dr Rudi

Singh, Marsha

Wallace, James

Skinner, Dennis

Walley, Ms Joan

Smith, Angela (Basildon)

Ward, Ms Claire

Smith, John (Glamorgan)

Wareing, Robert N

Smith, Llew (Blaenau Gwent)

Watts, David

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

Webb, Steve

Snape, Peter

Whitehead, Dr Alan

Soley, Clive

Wicks, Malcolm

Spellar, John

Williams, Rt Hon Alan (Swansea W)

Squire, Ms Rachel

Stevenson, George

Williams, Alan W (E Carmarthen)

Stewart, Ian (Eccles)

Williams, Mrs Betty (Conwy)

Stinchcombe, Paul

Willis, Phil

Stott, Roger

Winnick, David

Strang, Rt Hon Dr Gavin

Winterton, Ms Rosie (Doncaster C)

Straw, Rt Hon Jack

Wise, Audrey

Stringer, Graham

Wood, Mike

Sutcliffe, Gerry

Worthington, Tony

Taylor, Rt Hon Mrs Ann (Dewsbury)

Wray, James

Wright, Anthony D (Gt Yarmouth)

Taylor, David (NW Leics)

Wright, Dr Tony (Cannock)

Thomas, Gareth (Clwyd W)

Wyatt, Derek

Thomas, Gareth R (Harrow W)

Tellers for the Noes:

Tipping, Paddy

Mr. Graham Allen and

Touhig, Don

Mr. John McFall.

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 welcomes the Government's commitment, set out in the pre-Budget report, to consult on tax proposals, including the proposed ISA; believes that the ISA will extend the opportunity to save and invest and that the Government's proposals will ensure a stable and fair savings environment; commends the Government for its commitment to long-term economic stability and low inflation which is good for savers; and rejects any return to the boom and bust policies of the past which were so damaging to those on low incomes, savers and investors.

Listening to the Countryside
Mr. Deputy Speaker (Mr. Michael Lord): We now come to the debate on listening to the countryside. I have to inform the House that Madam Speaker has selected the amendment in the name of the Prime Minister.
7.14 pm
Mr. Michael Jack: I beg to move,
That this House recognises the concern of those marching in London on 1st March that the voice of the countryside should be listened to by all politicians but regrets the attempts by non-attending Agriculture Ministers to undermine the credentials of the march with claims of it being hijacked by political and overseas interests; calls upon Her Majesty's Government, in acknowledging that a viable agricultural industry lies at the heart of a successful rural economy, to recognise properly the fears and concerns of farmers over dramatically falling farm incomes, rising levels of food imports, the continued imposition of the beef ban, the introduction of the Minimum Wage, the Working Time Directive and Agenda 2000, by now making a clear statement of how it proposes to address these concerns; deplores the threat to life in rural Britain resulting from a revenue support grant settlement which has removed resources from rural local authorities; and calls upon the Government not only to strengthen the protection for the countryside while encouraging the renewal of towns and cities, but also to respect the patterns and fabric of rural life by removing the threat to land owners of a statutory right of access.
I move this motion as the spokesman of the true party of the countryside in the House. [Interruption.] The guffaws of Labour Members are typical of people who have not done their homework.
Mr. Hilton Dawson: Can the right hon. Gentleman, my parliamentary neighbour, explain why his party is regarded as the true party of the countryside when, in all their 18 years in government, they did nothing to resolve the problem of the moss roads, which so afflict both my rural constituents and his?
Mr. Jack: When the hon. Gentleman and I join forces perhaps something will be done on that. I am grateful to him because he usually leads with his chin. I will take advantage of that by noting that Professor John Curtice of Strathclyde university, using data from the 1991 census to classify seats as rural on the basis of the number of people directly involved with agricultural production, classifies 54 of the 100 most rural seats as Conservative and 21 as Liberal; in third place comes the Labour party with 15, there are nine for the nationalists and one other. That conclusively shows that when it comes to the real rural voice of the United Kingdom, it is the Conservatives who speak for rural Britain.
The first thing that our motion does is to recognise the significance of Sunday's march. The first thing that the Government's amendment does is to ignore the march and its clear message. Its message was that every hon. Member should listen to the voice of the countryside. Our motion recognises the importance of that listening exercise; the Government's amendment does not.
Let us spend a moment considering the amendment. It is a slap in the face for the voice of the countryside, which was heard in London. More than 280,000 people came to a dignified, positive demonstration to speak on behalf of the countryside. I and many of my right hon. and hon. Friends were proud to walk with our constituents and help their voice to be heard. There is nothing about

913
listening in the Government amendment. Most of it condemns the previous Administration. Has it not dawned on Labour Members that, in 18 years, in spite of some things that we may have done that upset some people some of the time, we never provoked a reaction that filled London's streets like the country people did on Sunday? Let that be a lesson to the Labour party.
We recognised the need to do more for the people of the countryside. That is why, in 1995, we published a countryside White Paper, the first such document since 1945. We published a follow-up in 1996 to say what we had done. It included initiatives on matters such as rural transport and housing. The Government amendment says that they have policies for the reform of the common agricultural policy. I did not know that the Government were the Commission in disguise; perhaps we have discovered something new. The Community is responsible for that policy.
If the Government have ideas for successful sustainable agriculture, why did the Select Committee on Agriculture, which consists of seven Labour Members, three Conservatives and one Liberal, say in its recent report on Agenda 2000 that the Government should produce
"a comprehensive and clear vision of the future for UK agriculture"?
Only today, the same Select Committee, dominated by Labour Members, pointed out that it was the same lack of strategy and forward planning which had contributed to the problems of the beef industry. It states:
"We concede that valuable time and money that could have been spent on restructuring the industry has been wasted for lack of a clear Government long-term strategy which would have assisted farmers to recognise the need for change."
On two counts, the Select Committee condemns the Government's approach to the future of agriculture.
Several hon. Members rose—
Mr. Jack: It is hardly surprising to discover the Government's priorities. The Prime Minister dropped agriculture as a priority for one of the presidency priorities, about which he boasted so much.
Mr. Paddy Tipping: The right hon. Gentleman spoke about the BSE crisis. Will he acknowledge that this Government are to spend £70 million on introducing a cattle traceability scheme? What did his Government do? Nothing.
Mr. Jack: With respect to the hon. Member for Sherwood (Mr. Tipping), when we were in government we promised that, on its introduction, such a scheme would be free to farmers in terms of its establishment costs. His right hon. Friend decided only later to join that party.
The motion refers to the minimum wage. I shall return to that, as it poses a serious threat to agricultural employment for temporary and casual people.
Mr. Gordon Prentice: Is it not the case that the Agricultural Wages Board, which survived despite the attempted abolition in 1994, gives a minimum wage of £4.12 and an average—
Mr. Ian Bruce: No, it does not.
Mr. Prentice: The hon. Gentleman contradicts me from a sedentary position. I have the figures. The minimum rate
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is £4.12, and the actual rate is £4.69 per hour. How can the right hon. Gentleman speak of minimum wages devastating the agricultural industry, when the wages board is protecting minimum wages in that industry?
Mr. Jack: I shall deal with that when I come to the fruit industry later in my speech.
It would be interesting to hear from the Minister of Agriculture, Fisheries and Food whether he can give the House an assurance, when he talks about rural prosperity, that he has made a Budget submission to the Chancellor, asking him to ensure that no one in the countryside will be worse off as a result of the up-coming Budget. I expect that he will be unable to do that.
The march on Sunday was described in a recent magazine article in these words:
"But the march is also about ordinary people coming from communities across Britain coming together to show their concern about the future and help to raise awareness throughout the country of the vital role that farming and the wider rural community plays."
It is a great pity that the right hon. Member for Copeland (Dr. Cunningham), his Minister of State, the hon. Member for Birmingham, Perry Barr (Mr. Rooker) and others on the Front Bench spent so much time rubbishing the march as having been hijacked by politicos and the American gun lobby—points that the organisers of the march forcefully rebutted. The right hon. Gentleman may not have realised that the words that I quoted, which welcomed the march, were those of the Prime Minister. It will not have done the right hon. Gentleman's career any good to have departed from the Prime Minister's line on the march.
The only Minister who seemed to get it right was the Minister for the Environment, who was brave enough to turn up and be counted. We can draw our own conclusions. We see a Government divided on the question of the countryside, as witnessed by their attitude to the march.
The march illustrated how out of touch with the countryside the Government have become in nine short months. In a panic response to the force of argument deployed by Conservative Members and others speaking for the countryside, the Deputy Prime Minister tried to convince us that, all of a sudden, his free-for-all on the green belt had come to and end. My hon. Friend the Member for South Suffolk (Mr. Yeo) soon rumbled that, by pointing out that in that announcement there was no evidence that any of the controversial housing developments in the green belt had been stopped.
Mr. Ronnie Campbell: I thank the right hon. Gentleman for giving way. I cast my mind back to the hundreds of thousands of miners and their families who came down in the Tory Government years when we fought for our communities and to save our pits. The Tory Government did not take a blind bit of notice, and the former President of the Board of Trade, who led the great march on Sunday, put one finger up to us. Where was the Tories' support when we were trying to save our communities in those days?
Mr. Jack: I am flattered that the hon. Gentleman still calls me the Minister.
Mr. Campbell: Shadow Minister.
Mr. Jack: I remind the hon. Gentleman that the Government are in charge and will be replying to the debate tonight.

915
A farming concession followed on the Deputy Prime Minister's announcement.
Mr. Campbell: On a point of order, Mr. Deputy Speaker. I asked the right hon. Gentleman a question and I have not got the answer yet. I and the mining communities are entitled to an answer. When they came down—
Mr. Deputy Speaker: Order. [Interruption.] Order. The House must calm down a little. It is for hon. Members on the Front Bench to answer questions as they see fit.
Mr. Jack: If this was a debate about mining, perhaps we could debate the hon. Gentleman's point, but it is a debate about the countryside. [Interruption.] It is typical of Labour Members, who want to raise everything other than the countryside. They are deeply embarrassed about their miserable record, as I am teasing out in front of the House.
Mr. Campbell: Hypocrite!
Mr. Deputy Speaker: Order. The hon. Gentleman should not use words like that, and I must ask him to withdraw that word. [Interruption.] The hon. Gentleman is an experienced—
Mr. Campbell: I will not withdraw the word hypocrites, Mr. Deputy Speaker, because that is what the Tories are.
Hon. Members: Withdraw.
Mr. Deputy Speaker: I remind the hon. Gentleman, as an experienced Member of the House, that the debate is about the countryside. I understand his feelings, but he must withdraw the word hypocrite. I ask him to do that.
Mr. Campbell: I am sorry, Mr. Deputy Speaker, I will not withdraw it. They are nothing but hypocrites. I remember the miners fighting for their communities in the countryside, and they got nothing.
Mr. Deputy Speaker: I have given the hon. Gentleman every chance to withdraw the word hypocrite.
Mr. Campbell: I will not withdraw.
Mr. Deputy Speaker: In that case, I must ask the hon. Gentleman to leave the House for the remainder of the sitting.
Mr. Jack: Before that interruption, I was pointing out to the Minister of Agriculture that he was second in line with a concession to the voice of the countryside. It is remarkable that the right hon. Gentleman has told us on umpteen occasions in the past few months that there was no new money for agriculture. He said that the cupboards were bare. We pointed out that money was there. Suddenly, in the week running up to the march, we find new money coming out to deal with the higher charges for the Meat Hygiene Service and the cattle passport
916
scheme. Is it not remarkable how, under a whiff of grapeshot coming in the direction of MAFF, the Minister panics and finds £70 million?
The Minister tried to put about the myth that the Government were giving money to farmers. They were not. All that he had decided to do was not to charge them for those schemes. It is about time that he acknowledged that fact, which we have pointed out.
Not to be outdone in the rush to concessions, the Minister for the Environment produced his much-delayed consultation document on the so-called right to roam. The document is a mailed fist in a velvet glove. Paragraph 5 of the introduction tells us:
"If we could be certain of achieving our objectives entirely by voluntary means, there would be no need to legislate at all".
So much for the spin that it would be voluntary—there is an implicit threat of legislation. Who is the judge and jury? None other than the Minister.
Mr. Barry Sheerman rose—
Mr. Jack: I think that we have had enough interruptions from Labour Members for the time being. The House wants to hear our message on behalf of the countryside, because last Sunday Labour Members were too frightened to turn up and march with country people and, more important, to listen to what they had to say.
The Government have pledged to protect village schools. However, when we examine the fine print, we find that the closure decisions will be called in for further consideration. There is no guarantee whatsoever that no rural schools will close in future. The question regarding the Department for Education and Employment's proposal to stop parish councils nominating governors of rural schools remains unanswered. I must conclude that this rag, tag and bobtail collection of piecemeal policy concessions does not add up to a comprehensive policy for the countryside. People were crying out on Sunday to hear that policy from the Government, but they were met with silence.
I suppose that is not surprising when we consider the true priorities of the Minister of Agriculture. Rather than concentrating on the countryside, the wallpaper fetish from which this Government are suffering has really taken hold in the Ministry of Agriculture. The Guardian revealed this week that the Minister has spent £2.3 million on his office move. Did that move have anything to do with the priorities and problems of farming? No, it took place because the Minister needed new accommodation to
"send a strong signal that the department should have a new aim, focus and objectives."
What are the Government's new aims, focus and objectives? If their main aim is not looking after farmers in their present plight, I do not know what their priority is. We also discover that the Minister spent £10,409 on an antique reproduction desk—he cannot recognise the real thing when he sees it, so he must buy a reproduction. I suppose that that is typically new Labour.
The Minister of Agriculture, Fisheries and Food (Dr. John Cunningham): Before the right hon. Gentleman digs himself into a bigger hole of myth and inaccuracy, I shall tell him one or two truths. The Guardian revealed nothing: all that information was published in the MAFF bulletin in January this year. That is my first point.

917
Secondly, the accurate figures for the cost of transferring the headquarters of MAFF, not just my office, to Nobel house—and I remind the House that the previous Government took the lease on that property; it was already a MAFF building—were provided in answer to a parliamentary question from the hon. Member for Totnes (Mr. Steen) last month. Incidentally, that information was also given to the Agriculture Select Committee. If the right hon. Gentleman checked the facts in Hansard, rather than the inaccuracies in The Guardian, he might be worth listening to.
Mr. Jack: That reveals that nobody reads the MAFF bulletin. I would be wary if I were in the Minister's boots. My hon. Friend the Member for Mid-Worcestershire (Mr. Luff), the Chairman of the Agriculture Select Committee, told The Guardian:
"We were told £930,000, you have got figures saying £2.3 million. We are very concerned and we will be investigating."
My hon. Friend would not have said that if he was not sure of his facts.
Mr. Peter Luff: This is a matter of considerable importance to the House. The Guardian obtained those figures under the access to information code. MAFF did not deny those figures until the Minister came to the Dispatch Box tonight. My right hon. Friend may wish to know that the Select Committee is writing to MAFF seeking clarification of how the discrepancy between the figures is accounted for.
Mr. Jack: That answer will be very interesting. I had thought that the Minister had installed a naff kitchen, but it turns out to be a Neff kitchen.
That is typical of what has been happening in MAFF. Irrespective of the Minister's denials, the authoritative article in The Guardian shows where the Ministry's priorities lie—and they are not with farming issues and the countryside. The Select Committee summed up the situation currently facing farming in its report on Agenda 2000, which states:
"UK farmers are experiencing a uniquely difficult time, with structural problems compounded by the strength of sterling. It is unusual for all sectors of fanning to be confronting sharply reduced incomes simultaneously. So it is understandable if many farmers are concerned about radical change."
It is sad that the Minister has not responded humanely to what the farmers have said. Those who attended the annual general meeting of the National Farmers Union heard one of the most chilling addresses ever made to a farming audience. The Minister talked about partnership at the start of his speech and then lectured farmers saying, "You will do this and that". In no sense did he appear to share the current burden in agriculture.
Two columns of figures published by MAFF highlight the seriousness of the income situation facing farming. It has been said that times improved for agriculture in 1992–93. Compared with an average net farm income at 100 per farm between 1989–90 and 1991–92, the index shows that net farm income for the dairy sector stood at 116 in 1992–93. However, the provisional figure in that sector for 1997–98 is 60—which is a 50 per cent. fall. Net farm income for cattle and sheep in less favoured areas was 129, but it is projected to be 80—a fall of 38 per cent. There will be a fall of 75 per cent. in projected net income for cattle and sheep in the lowlands. There is a
918
level picture for cereals. General cropping will be down 12 per cent., pigs and poultry will be down 40 per cent., and mixed farming will be down 48 per cent.
Those chilling statistics reveal that if farm incomes had accumulated over a series of good years—as was said in a recent Adjournment debate—any accumulated surpluses will be used up by the end of this year.
Mr. Mike Hall: Will the right hon. Gentleman give way?
Mr. Jack: Agriculture will truly face a frightening financial crisis to which the Minister has provided no solutions so far.
Mr. Hall: Will the right hon. Gentleman give way?
Mr. Jack: I pointed out to the Minister some time ago that there were opportunities for the Government.
Mr. Hall rose—
Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The right hon. Gentleman is not giving way.
Mr. Jack: I pointed out some time ago that there were things that the Government could do. The Opposition highlighted the fact that hill farmers needed help. The Minister provided a sort of increase in funds, but he botched that as well. As a result of his announcement in December, hill farmers will receive not £65 million but £57 million. The sum total of the Minister's assistance for agriculture to date is plus £21 million.
The Minister has often challenged us to say where the money would come from to deal with the question of agrimonetary compensation, for example. I remind the Minister that the Treasury has confirmed that there was a surplus in the European Agricultural Guidance and Guarantee Fund in 1996. That resulted in Britain's achieving a higher Fontainebleau rebate which assisted the Government in terms of the Chancellor's Budget statement. I hope that the Minister will confirm that that same fund is under-spent for the calendar year 1997. In which case, will he be prepared to go to the Chancellor, in light of the figures that I have put before the House, and ask for at least some compensation for our farmers? That could be done within the bounds of public expenditure. After all, we did not ask the Government to adopt our plans, but they have adopted them. I have pointed out from where money could come to assist our hard-pressed farmers.
Dr. John Cunningham: How much?
Mr. Jack: The Minister is aware of the figures. If he has done his homework, he will be able to put before the House the detail that it requires and, once and for all, answer the questions that I have asked. Underspends on United Kingdom Community-funded agricultural schemes could enable him to recycle to the areas that are hardest pressed.
Dr. Cunningham: How much?
Mr. Jack: The Minister asks me questions. He is supposed to give answers. I have done my homework. I know that the EAGGF fund is underspent.
Dr. Cunningham: Since, as always, the right hon. Gentleman never fails to demand more public

919
expenditure, more taxpayers' money, let me remind him and the House that £86 of every £100 of agrimonetary compensation comes from Her Majesty's Treasury. How much more public expenditure is he demanding?
Mr. Jack: If that is an example of the Minister's preparation, he has not listened to what I have said. I said that I wanted him to use the underspend, which would enhance our rebate, to give money back to farmers, within public expenditure guidelines. That is not more public expenditure. The guideline for agriculture is 41.8 becu. The spend is 40.374 becu. He should have known those facts. If I can get them, why could not he?
On a serious point—[Laughter.] The guffaws of laughter to questions that affect the very fabric of rural life in this country clearly show that the Minister's priorities really are his wallpaper and his plants, and not the needs of the countryside in the United Kingdom.
I should like the Minister, if he will be kind enough, to tell the House what will happen at the end of this year when the freeze on the livestock and arable area payments ends. Those payments are worth some £400 million to United Kingdom agriculture and farming. Farmers would like to know what the situation is.
The Minister has shown scant regard for the effect of his policies on rural communities. I quote from a survey undertaken in west Wales by the NFU, as reported in the Farmers Guardian of 20 February. The area is represented by Labour Members of Parliament, who claim to speak for the countryside. The report says:
"Trade down 50 per cent, staff being laid off, debts still unsettled 12 months on, veterinary practitioners surviving largely on cat and dog treatments and even a vicar praying hard that the depression within the farming industry would not turn into a wave of suicides."
Those are the real issues that face farming and countryside communities. The Minister must address those fears and concerns when he replies.
Mr. Lembit Öpik: I thank the right hon. Gentleman for giving way at last.
Is the right hon. Gentleman saying in all honesty that his former Administration take absolutely no responsibility for the crisis in the countryside in mid-Wales?
Mr. Jack: I said earlier that we take some responsibility for the need to improve. That is why we produced two White Papers on the countryside.
I have put before the House the Labour Government's record of neglect on the countryside. I gave information on incomes in farming, and its knock-on effects on the rural community. When one considers all the other things that are going on as far as the countryside is concerned, it is hardly surprising that the countryside feels under siege: no early lifting of the beef ban in sight; the ending of the Rural Development Commission; the beef on the bone ban; the efforts to ban green-top milk; an assault on country sports; the reference to the Monopolies and Mergers Commission of the milk industry; the Krebes report, leaving large parts of the countryside vulnerable to tuberculosis from badgers; and a raft of Labour private Members' Bills on pigs and poultry, which would leave our industry seriously disadvantaged compared with our European competitors.
920
It is no wonder that country people cry out to be listened to, but not, it seems, by the Government. The listening will be done by Opposition Members. I beg to support our motion.
7.44 pm
The Minister of Agriculture, Fisheries and Food (Dr. John Cunningham): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
"condemns the previous administration for its persistent neglect of the countryside over the past eighteen years which resulted in rural unemployment and deprivation and the collapse of the rural transport system; and congratulates the Government on its emphatic commitment to comprehensive countryside policies, to reform of the Common Agricultural Policy, to successful, sustainable United Kingdom agriculture, and on its vision for a countryside that is strong, fair and modern, with a programme for social justice, inclusiveness, welfare reform, improving services, the national minimum wage, education and skills which will ensure prosperity for all in rural areas as well as in the towns.".
It is an easy task to deal with the rag bag of a motion that stands in the name of the Leader of the Opposition, particularly since it is as incoherent as it is inaccurate. After the long, boring and convoluted speech of the right hon. Member for Fylde (Mr. Jack), the task should not take too long. The Opposition motion refers to the need to recognise concerns over farm incomes, yet it opposes the minimum wage. In fact, farm incomes fell consistently throughout the period in which the Conservative Government were in office. The Opposition motion refers to concerns about the Agenda 2000 proposals, which the National Farmers Union, the Country Landowners Association and the Government support. The motion talks of rising levels of food imports. It is pretty easy to dismiss that, too, because they were lower in 1997 than in 1996. It talks of the need to strengthen protection for the countryside and the fabric of rural life, which Tory policies disastrously undermined over 18 years and left in tatters.
On access to the countryside, the Government have listened and responded to the dialogue and a request for a voluntary approach. The Opposition motion contains no new proposals for a better future for agriculture or for rural communities. It is devoid of coherence and content. As The Scotsman asked on 7 April last year, speaking of the Tories,
"Do their plans for the future of farming really matter when we know perfectly well what they have done in the past 18 years or even the past year?"
That simple quote says it all about the failure of the Tories' stewardship of the countryside.
Mr. Geoffrey Clifton-Brown: The motion asks the Government to consider properly the fears and concerns of farmers over falling incomes. If the Minister doubts those fears and concerns, he has only to look at the tragic case, detailed on "Panorama" last night, of a farmer who committed suicide. Will the Minister now tell the House that there will be a proper green pound compensation scheme for our farmers, which every other Government in Europe have given to theirs? Our farmers have to compete with those farmers in the same marketplace.
Dr. Cunningham: The latter part of the hon. Gentleman's statement is not only inaccurate but untrue.

921
In case he has not noticed or does not understand, virtually all the agrimonetary compensation available to beef and livestock farmers has already been given to them.
The Opposition's motion represents another attempt by the Conservatives to deny their past: their record of taking rural communities for granted for almost two decades; their disastrous record of betrayal of millions of people in the countryside, which culminated in swings to new Labour in rural areas every bit as powerful as they were in the urban areas. That is why Labour has so many Members of Parliament representing rural communities, and they are doing it well.
The right hon. Member for Fylde struggled to find a Scottish academic who had produced a paper saying that the Tories represent rural areas. They do not represent a single seat in Scotland, so that is stretching credibility just a little bit. Nor do they represent any constituency, urban or rural, in Wales.
Since last May, the Labour party has had more Members in rural constituencies than the Tories and the Liberal party put together.
Mr. Paul Tyler: May I draw to the Minister's attention the fact that, like Scotland and Wales, Cornwall is now a Tory-free zone?
Mr. Charles Kennedy: And the list goes on.
Mr. Tyler: We shall do the infilling later.
I invite the Minister to ignore Conservative Members' absurd amnesia and deal with the concerns of those who really represent rural areas—the farming unions and all those concerned with the future of the countryside. The Agriculture Committee's report, which was published today and which Labour Members support, makes it clear that long-term problems face the farming community. Will the Minister ignore the ridiculous speech that we have just heard?
Dr. Cunningham: I shall do my best to satisfy the hon. Gentleman, although I am sure that I shall not succeed totally. I warmly welcome the Agriculture Committee's report, which is an important and constructive contribution to the debate about the problems in the beef industry. I congratulate the hon. Member for Mid-Worcestershire (Mr. Luff) and his colleagues on the Committee—of all parties—on their serious piece of work.
As I was saying, last May people in rural areas put their trust in Labour—for the first time, in many cases. They did so because they felt betrayed by successive Tory Governments, and we all know why: bus deregulation has meant no public transport for many communities. The closure of rural schools—450 closed in just over a decade—has torn the heart out of rural communities. Health care is inadequate and inaccessible: many of my constituents in rural west Cumbria cannot gain access to a national health service dentist as a result of Conservative policies. Low pay is a chronic problem in rural communities. Even recognising that, the Conservatives tried to abolish the agricultural wages board—in the teeth of the opposition of farmers, incidentally. They left us and the farmers with the tragic consequences of BSE and the beef crisis.
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The list of Tory failures is almost endless. Rural parishes were destroyed: 75 per cent. were left with no daily bus service; 82 per cent. were left with no food-only shop; 70 per cent. were left with no general store; 43 per cent. were left with no post office—and the Conservatives tried to privatise that, too. In addition, 93 per cent. were left with no public nursery provision; and 91 per cent. were left with no access to day care, banks or building societies. That is the Tory party's record. What a legacy, yet they have the gall—the brass neck—to table such a motion.
Mr. John Hayes rose—
Mr. Chris Ruane rose—
Dr. Cunningham: I give way to my hon. Friend.
Mr. Ruane: Would my right hon. Friend consider adding to that list Alar in the apple industry, anthrax in the pig industry, botulism in the food processing industry, salmonella in the chicken industry, listeria in the dairy industry, E. coli in the meat industry and BSE in the beef industry?
Dr. Cunningham: As I said, the list is almost endless.
As the Agriculture Committee points out in its good and constructive report, the previous Government bequeathed an "unenviable inheritance" to this Government on BSE. In short, the previous Government presided over the worst crisis in British agriculture this century, destroying beef farming and loading colossal costs on to taxpayers, culminating in the tragedy of new variant CJD. It is an appalling record.
The election of a Labour Government last May signalled a clear break with the past right across Britain. That is as true in rural areas as it is in towns and cities. The Labour party is effectively—indeed, formidably—represented in rural areas and I am proud to have represented a rural constituency in west Cumbria for almost 28 years.
Mr. Nigel Evans: I do not know whether the right hon. Gentleman is proud to be the Minister of Agriculture, Fisheries and Food. Mrs. Wright, whose family farm is in Salmesbury in my constituency, telephoned me today and wanted to know the answer to two questions. First, what is the Minister's response to last night's "Panorama" programme? Secondly, does the Minister fully appreciate the number of hours that farmers put in every day, seven days a week, to make a small return? The Minister heard what my right hon. Friend the Member for Fylde (Mr. Jack) said about the returns that farmers get. Will he answer both those questions, please?
Dr. Cunningham: My response to the "Panorama" programme is that I was in it and gave my response at the time. On the second question, the hon. Gentleman can tell his constituent that I am well aware of how hard-working and industrious farmers are.
Mr. Evans: My constituent does not think so.
Dr. Cunningham: The hon. Gentleman had better tell his constituent that I have represented people like her for

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much longer than he has. I represent many, many farmers in west Cumbria. Nothing changed under Tory policies for hill farmers with incomes in the lowest decile of farm incomes.
Mr. Evans: Will the Minister visit my constituency?
Dr. Cunningham: No, I shall not promise to visit the hon. Gentleman's constituency.
Rural people voted for our policies, which are putting more money into health care in rural areas and, for the first time, making allowances for the extra costs of emergency ambulance care in rural areas. They voted for our new deal, which the Conservative party opposes. That is bringing quality jobs and training to young people. Pilot schemes of that £3.5 billion initiative in counties such as Cumbria and Cornwall are already showing the potential for benefiting rural as well as urban areas. Those same people voted for a Government who would understand the need throughout the country for regional development agencies that could understand different regions' unique needs.
The difficulties in British farming and the concerns for the future felt by people in rural areas are the result not of 10 brief months of the new Labour Government but of 18 years of failure by the Tory party in office.
Action for Communities in Rural England said of the Conservative record:
"Our main perception is one of neglect."
The NFU and the Country Landowners Association also complained about Conservative neglect of their interests. The Conservative party's attempts to proclaim itself as the party of the countryside just do not wash. It should credit the public with a longer memory of its record in government, although we all understand why it wishes to forget that record.
Mr. Ian Bruce: Will the Minister give way?
Dr. Cunningham: No, not for the moment.
Farm incomes have been in long-term decline for more than two decades, apart from the brief period between 1992 and 1996. The situation then changed temporarily only because sterling's weakness gave British farmers bigger rises in income than those in any other European country. Naturally, European farmers then complained that the playing field had been tilted too far in Britain's favour.
We have already promised more essential help for farmers who need it most—certainly more than the Tory Government were prepared to plan for or provide. The package of measures that I announced in December, which was targeted at livestock farmers who have particular disadvantages, was worth an extra £85 million. The measures that I announced last week were worth £70 million to the same sector. A further £9 million, which is not new money but money that has been recycled from a scheme under which some farmers were paid too much and others too little, will go principally to suckler cow farms.
We are working consistently to lift the beef ban. Indeed, the scheme is being considered today and tomorrow in the Standing Veterinary Committee in
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Brussels. We are working constructively with our European partners, the member states and the institutions of the European Union, within which Britain is no longer reviled and mistrusted as it was when the Conservative party was in power.
Mr. Tim Collins rose—
Dr. Cunningham: I give way to my constituency neighbour.
Mr. Collins: The right hon. Gentleman has mentioned the income of hill farmers several times. Many hill farmers in his constituency and in mine are on incomes of much less than £10,000 a year. How can he justify spending more than £10,000 on a desk?
Dr. Cunningham: I am sorry that I took the hon. Gentleman seriously. I did not spend £10,000 on a desk, let alone more than £10,000. The hon. Gentleman should look at the figures. I shall not be sidetracked, but if the hon. Gentleman wants to read something accurate in The Guardian, he should read today's editorial, and not refer repeatedly to yesterday's misleading and inaccurate article. I regret inviting that particular journalist into the Ministry and taking him through—[Interruption.] I want to be open about what is going on.
Mr. Jack: What about the £2.3 million?
Dr. Cunningham: There is no such expenditure figure. We are reorganising the Ministry, because the previous Government left it in a shambles. Many buildings used by the Ministry are decrepit, dilapidated and under-utilised. [Interruption.] As my hon. Friend the Minister of State says from a sedentary position, others are unsafe.
Today, I decided to bring our civil servants into the centre of London from places such as Tolworth, where the previous Administration left them, and to dispose of surplus sites and assets. The taxpayer will see a substantial profit from that exercise.
Mr. Charles Kennedy: I am anxious to hear more about the possible internal reorganisation of MAFF, the Department of the Environment, Transport and the Regions and other Departments, because that is slightly more significant in the long term than the cost of office furniture. The rueful smile crossing the right hon. Gentleman's face has perhaps given me the answer before he has said anything. Can he put further flesh on the bones of weekend press reports, and tell us the time scale for reaching any decisions?
Dr. Cunningham: I cannot provide more flesh off the bone, let alone on the bone.
The Prime Minister asked me to do several things at the Ministry of Agriculture, Fisheries and Food, one of which was to set up the Food Standards Agency. We are making good progress, and the White Paper has been exceptionally well received. We are reorganising, redirecting and slimming down the Ministry—many civil servants will leave as a result—and giving it a new open culture, but the Prime Minister will make the final decisions.

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The right hon. Member for Huntingdon (Mr. Major) is smiling benignly at me. He rarely does so, but he is welcome to continue, for a while at least. The right hon. Gentleman knows that decisions about changes to Ministries and the machinery of government in Whitehall are for Prime Ministers, not individual Ministers. I have noted what the Select Committee on Agriculture and the Country Landowners Association have said on the subject, but no decisions have been taken. I will not be tempted any further on that issue.
Mr. Christopher Gill: Will the right hon. Gentleman give way?
Dr. Cunningham: No, I want to deal with the nonsense that we heard from the right hon. Member for Fylde.
The prudent control of public expenditure is a Government commitment. Every time the right hon. Gentleman comes to the Dispatch Box, he demands more support and public expenditure, but never puts a figure on it or says where the money should come from. He is almost always misleading, as he was today. The right hon. Gentleman knows this well, but the record should be set straight: the Conservative Government never once in 18 years recycled money from European budgetary contributions back into Ministries—MAFF or any Ministry. His argument is a complete fraud.
The Conservative party never once paid agrimonetary compensation when in office, probably because the previous Prime Minister, as a former Chancellor of the Exchequer, knew that £86 out of every £100 would have to come from the Exchequer.
Mr. John Bercow: Will the right hon. Gentleman give way?
Dr. Cunningham: No, not on that point.
Let us hear no more of those fraudulent arguments. The right hon. Member for Fylde knows, as we do, that easy, no-cost money from Brussels is not available to the Government or to farmers.
Mr. Jack: My figures are based on Treasury figures. Is the right hon. Gentleman saying that the Economic Secretary's answer about the £400 million that the Chancellor gave away in his July Budget is wrong, and that underspend on the EAGGF did not help to provide that £400 million?
Dr. Cunningham: Not at all; I am saying something completely different. If the right hon. Gentleman does not understand, he clearly has a problem with understanding what goes on in the Treasury and in Brussels.
The Government have provided an extra £447 million for shire counties to raise school standards and to repair school buildings which were neglected under the previous Administration; £900 million of capital receipts is being released for new homes in urban and rural areas; and an extra £1.5 billion has been made available for the national health service in all areas of the country. Work opportunities for young people are being created through the biggest welfare-to-work programme in history, and pathfinder schemes are already operating in rural areas in Cornwall and Cumbria; £300 million has been provided for child care, and pilot programmes have been set up in
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rural as well as urban areas. Rural transport needs are being examined by my right hon. Friend the Deputy Prime Minister and his ministerial team—I am delighted to welcome my hon. Friend the Member for Hampstead and Highgate (Ms Jackson) to the Front Bench this evening—as part of the Government's integrated transport strategy. A rate relief scheme will give sole post offices and general stores in small rural villages 50 per cent. off their rates bills.
We have released a consultation paper on access that balances the needs of landowners—[Interruption.]
Mr. Deputy Speaker: Order. The House must come to order. There is far too much noise in the Chamber.
Dr. Cunningham: I think, Mr. Deputy Speaker, that some Conservative Members have spent too much time recently in the vicinity of hunting horns.
Last week's announcement about the green belt will help to protect the countryside, as will the extension of the green belt that has been agreed since the Government were elected. We have found extra resources for hill and livestock farmers as well as the additional £70 million in costs which we removed last week. [Interruption.]
Mr. Deputy Speaker: Order. The hon. Member for South Dorset (Mr. Bruce) must be quiet. I demand silence.
Dr. Cunningham: Farmers will begin to receive those payments next week.
Yesterday, I visited the A1nwick district in the constituency of the right hon. Member for Berwick-upon-Tweed (Mr. Beith).
Mr. James Gray: Did the right hon. Gentleman have lunch with the Duke of Northumberland?
Dr. Cunningham: I met the Duke, and he was a welcoming and generous host.
I was greeted warmly by the leader of the council—who, incidentally, was not a Labour party councillor—and was astonished when he announced to the gathering of farmers, farmers' wives and other people from rural communities that, in the history of the district council and in the past 18 years, in one of the most rural parts of one of the most rural counties in England, no Conservative agriculture Minister had shown his face.
That is indicative of the Conservative party's betrayal of rural areas. It is a record which we and the country roundly condemn. It is a record which we shall erase, while demonstrating that we are genuinely committed to all the people of this country.
8.10 pm
Mr. Charles Kennedy: At the end of his speech, the Minister made a point in passing. The Government—and the Liberal Democrats, for that matter—rightly point to the 18 years that preceded the events of last May, and it is fanciful nonsense to suppose that the British public are so thick that they imagine that all the problems of the countryside began on the stroke of midnight on 2 May. The truth is, however, that ever since the days of "dig for victory" during the second world war, thanks to social, economic and

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technological changes, the country has seen almost the reverse of the industrial revolution. That is behind many of the problems of the countryside as much as specific policy controversies, or the shortcomings of Administrations of one hue or another.
One hundred years ago, people were moving from the country into the city—into conurbations—in search of work. Now, owing to technology, greater social mobility and increased disposable income, more and more people are moving to the country, taking with them pressures that are attitudinal as well as infrastructural. I feel that, given the seriousness of the subject, it is worthy of a slightly greater sense of perspective in regard to time than has been allowed for by the Conservative party.
The right hon. Member for Fylde (Mr. Jack) produced a selective series of statistics showing how well his party was doing, on the basis of a sample of 100 rural seats. It would be interesting to be given the same statistics on the basis of a sample of 200 seats. We would then find that Labour and the Liberal Democrats handsomely outnumber the Conservatives in terms of rural representatives. I empathise with the right hon. Gentleman, however. For four years, I was something called the president of my party, and I always took the view that the difference between the leader and the president was this: when the party won a by-election on a sensational swing, my right hon. Friend the Member for Yeovil (Mr. Ashdown) would be seen on "Newsnight" saying what a great breakthrough it had been, but when a by-election was lost—and the candidate's deposit with it—the president would be seen on "Newsnight" telling Jeremy Paxman that, in fact, the lost deposit was a very encouraging base on which to build for the future. I felt that there was a hint of that in the opening analysis of the right hon. Member for Fylde.
Mr. Ian Bruce: I was elected by only 77 votes; the Liberals were pushed into third place by the Labour party. I congratulate the Minister, who, in 10 months, has converted my local farmers from being very anti-me and the Conservative Government to being totally against him. Surely the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) does not support that lot, who have made such a disastrous job of the past 10 months.
Mr. Kennedy: My colleagues and I are immensely encouraged by that tale. If the farmers began by hating the hon. Gentleman and now hate the Government as well, that must mean that we are set for another appearance on "Newsnight" by my right hon. Friend the Member for Yeovil. What a great day for us that will be.
It is interesting that the Conservatives entitled the debate "Listening to the Countryside". Listening is a faculty that we did not associate with them during their period in office. As my hon. Friend the Member for North Cornwall (Mr. Tyler) pointed out, if we were concerned about the Conservatives' faculties in general, we would be concerned not just about their capacity to hear, but about their capacity to remember even recent history in this context.
I do not think that the amazing scenes in London on Sunday—in which a number of us were very pleased to participate—should be interpreted by the Conservatives as
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an overwhelming endorsement of all that they stand for. I think that they should be interpreted as a rainbow coalition of contradictory viewpoints sending a common signal. There was a general concern for the countryside as a whole. The march was disparaged in some ministerial quarters, although not in others. I have to say that, for once, I agreed with the Minister for the Environment. I felt that he was entirely right, as Minister for the Environment, to turn up and to make it clear that he disagreed with one of the central tenets of the march. I consider that not an inconsistent position, but a perfectly sensible one. [Interruption.] I am interested by the running commentary that I am hearing from Conservative Members.
The march achieved one thing apart from the tremendous image that it presented. It led to a raft of policy statements during the week. If the threat, or the approach, of the march could achieve that, let us hope that its aftermath will achieve even more.
I note that the Under-Secretary of State for Wales, the hon. Member for Bridgend (Mr. Griffiths)—the Welsh agriculture Minister—looked as rueful as the Minister himself over departmental reorganisations. I do not refer only to the original reorganisations applying to the Minister's Department—the Food Standards Agency and all the rest. I am thinking of changes elsewhere in Government that are being implemented under—I fear—the none-too-sensitive hand of the Deputy Prime Minister, affecting both the structure and the funding of the Rural Development Commission and its absorption into the regional development agencies.
I should have thought that, if the Government are having something of a turf war in Whitehall on what kind of rural-agricultural agency may yet emerge, they would take a fresh look at their own legislation. They might ask themselves whether it would make more sense, if such an agency is established, not to subsume the RDC in the original RDAs—where many of us feel that the voice of rural Britain will not be heard sufficiently—but to merge it with the Countryside Commission and make it answerable to a rural and agricultural Ministry. I think that that would be a much more sensitive approach than the approach that we might see if the agency ends up in the Deputy Prime Minister's super-glorified Department.
Dr. John Cunningham: The budget of the Rural Development Commission will be ring-fenced within RDAs, and at least one member of the agency will be given specific responsibility for rural areas and rural enterprise. As for the wider argument, the important thing is to get the decisions right if there is to be any reorganisation in Whitehall. Turf wars usually result in people not getting things right. In politics, it is important not to engage in a turf war in the first place.
Mr. Kennedy: I do not think that that last comment was directed at me. I hope that those at whom it was directed will read it in Hansard, and will act accordingly. Liberal Democrats are always willing to act as a useful conduit for the Minister to engage in megaphone diplomacy with some of his ministerial colleagues.
Mr. David Curry: Is the hon. Gentleman aware—given the intervention by the Minister of Agriculture—that, in the Standing Committee debating the Regional Development Agencies Bill, the Government

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specifically rejected the idea of giving one person in the regional development agencies a mandate to deal specifically with rural issues? The Government are, therefore, doing exactly the opposite of what the Minister said in this debate that they wanted to do. Does the hon. Gentleman agree that the sensible thing would be if the entire membership of the agencies were mandated to keep an eye specifically on rural interests? Would he also be interested to know that the Government plan to incorporate the rump of the Rural Development Commission into the Countryside Commission—unless the Government's fundamental spending review cuts all the commission's remaining money, as is entirely possible?
Mr. Kennedy: I thank the right hon. Gentleman for that intervention. I think that it was T. S. Eliot who wrote:
"In a minute there is time for decisions and revisions,
Which a minute will reverse."
It may well prove to be the case that the confusion on the issue that we saw spilling out in column inches from different bits of the Government over the weekend has not yet been fully clarified.
Regardless of whether there is to be ring fencing of funding or only one person designated to deal with countryside matters, the fact is that one person would not be sufficient to deal with them. Although the RDC's impact on the rural areas that it covers—in the north of England and Cornwall, for example—is very important, the totality of its budget compared with those that will be available to RDAs will be sufficiently small—significant though those funds will be for the areas that they cover—that ring fencing will not act as a sufficient safeguard. I should prefer wider consideration to be given to the matter.
In a very good letter in today's The Daily Telegraph, Lord Barber of Tewkesbury said that—of all people—the late Nicholas Ridley, who may not have had the greatest credentials in countryside matters, had a blueprint ready to go as far back as 1987 to deal with those matters. It might be worth revisiting that blueprint to discover whether it is applicable to current circumstances.
Mr. Luff: May I be clear about the hon. Gentleman's comments? Is he suggesting that Liberal Democrat party policy is now to support the creation of a Department of rural affairs, along the lines suggested by the Agriculture Select Committee in its first report, which was endorsed in an early-day motion signed by 60 Labour Members?
Mr. Kennedy: No; we shall have to wait and examine the Government's proposals. I am trying to say that if the Government are examining the matter—as the Minister, in his interventions, has clearly confirmed that they are—they will have to consider the implications of other bits of legislation that are being passed in parallel with that Bill.
Ministers will have to consider two issues. First, if a post were created at Cabinet level, they would have to determine how to prevent it from being regarded as a rural ghetto for all rural issues, allowing other Ministers completely to switch their attention from the rural implications of their policies. If that were to happen, it would be a setback rather than a step forward. Secondly, Ministers will have to deal with the extremely
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vexed issue of planning, and decide who will responsible for it. The planning issue will have to be examined very carefully.
Many of the issues that have been raised in this debate, as detailed in the Conservatives' motion and in the Government's amendment, show that—as the Minister knows that we have argued—there is now an overwhelming case for a royal commission to examine countryside issues.
The flashpoint for recent concerns—leading to last summer's protest in Hyde park, and to this weekend's events—may have been the Wild Mammals (Hunting with Dogs) Bill, and perhaps the post-Dunblane gun legislation. Those were rightly regarded as free-vote issues in the House and divided all parties. If there is to be a royal commission, surely it is sensible that it should encompass not only the types of issue that I mentioned earlier, but those more recent issues, and determine—as it looks as though that private Member's Bill will die a death on Friday—whether we can find a way forward.
Mr. Gray: Is the hon. Gentleman interested to note that the hon. Member for Worcester (Mr. Foster) has not been in the Chamber for any part of this debate?
Mr. Kennedy: The hon. Gentleman makes his point. We may hear in Friday's debate why the hon. Member for Worcester (Mr. Foster) has not attended.
Liberal Democrat Members commend the idea of a royal commission to examine overall countryside concerns. A commission could also examine the other issues that have been raised in this debate, the first of which is the catastrophic situation vis-a-vis farm incomes.
A couple of weeks ago, hon. Members may have heard on "Farming Today" a representative of Barclays bank say that farmers are perhaps in for a better year. However, in the recent edition of Farmers Weekly, another representative of Barclays pointed out that, in the most extreme cases, farm incomes would fall from £47,500, in 1996, to only £2,485 this year. That exceeds the traditional picture of farming in which one or two good years help to compensate for one or two bad years. That peak and trough will be disastrous not only for farmers, but for the rural economy.
The position of farmers was well summed up by a very entertaining barrister who spoke, a couple of weeks ago, at the National Farmers Union's annual dinner in London. He said that he spoke to a wholesaler in Yorkshire, who said that farm incomes were now so bad that even the blighters who did not pay had stopped ordering. [Laughter.] That was a graphic illustration of just how bad things have become.
We must undoubtedly deal with the issue of farm incomes. Equally, there is no doubt that the continuing unjust ban on British beef is contributing significantly not only to depressed morale, but to depressed income and depressed opportunities to enhance income. In his reply, perhaps the Minister will reflect on reports in today's Evening Standard that the Department has issued further clarification to inspectors on policing the ban, and that meat inspectors are being encouraged to act as agents provocateurs in many respects. If that is not the case, we would like clarification of the matter—which has been well spelt out in the Evening Standard, with attendant supporting quotes.

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The Minister of Agriculture currently holds the presidency of the Council of Agriculture Ministers. The Government have also placed great emphasis on reforming the common agricultural policy. The emphasis on that reform has undoubtedly changed significantly since the beginning of year—reflecting, we believe, Germany's upcoming elections, in September, and the fact that Chancellor Kohl does not want to open up that Pandora's box in immense detail, especially after this weekend's election results, which he will have to consider.
One wonders, therefore, whether the Government are not putting the cart before the horse. Last night on "Panorama", the Minister was at pains to stress the need to get away from the subsidy regime and to restructure the policy. Reform is part of a bigger debate. However, surely it is better not to restructure on a United Kingdom-wide basis until we know what shape and form Agenda 2000 will take; it may cause even more dislocation.
Dr. Cunningham: The hon. Gentleman is making an important point. Surely we can all see that the policies that have been pursued for the past couple of decades have not well served farmers, let alone consumers or the environment. There is an overwhelming case for change; the question is how and to what time scale we shall manage that change. The hon. Gentleman was, of course, right to say that one of the first proposals that we shall see from the Fischler package of reform will be on restructuring the beef sector throughout Europe. He was right also to say that we must insist that the brunt of the burden of restructuring the beef sector does not continue to be borne by British beef farmers—as it has been for the past three or four years—but is shared equally across the European Union.
Mr. Kennedy: I thank the Minister for that response. I tell him constructively that, if that attitude were being expressed more strongly by him and the Ministry—
Dr. Cunningham: It is.
Mr. Kennedy: As the Minister well knows, politics—he has been in this business a long time; a lot, lot longer than I—is about perceptions as much as anything else. The current perception outside the House is that such restructuring is not the Government's priority. Farming sectors will be more reassured if he and his colleagues take more opportunities to emphasise that that is the Government's priority. Hon. Members who represent those sectors would be significantly assisted in our jobs, when dealing with local farmers, if they were to do so.
On the CAP reform, given the general consensus that there should be greater emphasis on environmentalism, if we allow the baby to be thrown out with the bath water, there will not be sufficient personnel on the land to carry out the husbandry that will be essential to the environmental protection enhancement that we all support. If we allow it to go wrong, it will also defeat Europe's stated objectives.
On the right to roam, I welcome the fact that, last week, the Government opted for local voluntary agreements, although there is a different legal and traditional
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framework in Scotland which works rather well, albeit in a rather piecemeal fashion. There is no reason why it should not be extended south of the border, although it might be helpful to remove the continuing uncertainty. As for the squeeze on local authority funding, the worry is not that the landlords will create problems, but that local authorities are likely to say, "Let us sit back and do nothing for 18 months or two years. We know that there will be legislation at a later date that will allow us to proceed from a statutory position rather than have to make the time and effort to deploy personnel to negotiate local voluntary agreements".
In respect of the local authorities, our principal disagreement with the Government remains, and it impacts on the countryside as much as on everything else. By accepting the rather arbitrary Conservative spending limitations which, in the unlikely event that the Tories had won the election, the previous Chancellor would have broken on day one—of that there can be no realistic doubt—
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Kennedy: No. I am concluding my remarks. The Government are making it almost impossible to meet the laudable objectives that would unite a considerable body of opinion in different parties in the House in respect of countryside concerns and the rural environment. Although the Government have taken some initial positive steps, they clearly have a long way to go, largely because they are hamstrung by an item of their own making—accepting their predecessors' artificial constraints and sticking to them unrealistically. Due to that and other disagreements of principle with the Government, we shall not support them tonight. Nor shall we be giving our endorsement—[Interruption.] It takes a particular acumen to know when both parties are wrong.
As I was saying, our disagreement with the Government is on principle, but we disagree with the Conservatives because we are not prepared to be unprincipled, as their amendment is tonight.
8.31 pm
Mr. Colin Pickthall: I represent a large rural constituency and I am also the patron of Country Guardian, of which the hon. Member for Ribble Valley (Mr. Evans) is president. It is an organisation which exists to prevent country-loving landowners from putting wind turbines all over choice upland areas.
It is interesting that the Conservatives—the "true party of the countryside"—have not been able to muster a dozen Back Benchers to attend their own debate. That shows how much interest they have in the countryside. Only eight Conservative Back Benchers are present in the Chamber.
A few weeks ago, my hon. Friend the Member for Forest of Dean (Mrs. Organ) initiated a debate on rural poverty that was well attended by Labour and Liberal Democrat Members. For the Conservatives, there was a brief appearance by the right hon. Member for Kensington and Chelsea (Mr. Clark), who made a short speech about his rural constituents and then left. The only Back-Bench Member present was the hon. Member for Totnes (Mr. Steen). The Conservative Whip wound up the debate as no Front-Bench representative was present. That was

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emblematic of the Conservatives' true concern for the countryside. They have no interest whatever in rural poverty, isolation in the countryside or the regeneration of the rural economy. They are interested only in the continuation of blood sports, which are opposed by 57 per cent. of rural dwellers, the preservation of privileged enclaves in the countryside and, most seriously, the creation of a false division between town and country.
Mr. Alan Clark: First, the hon. Gentleman is completely wrong to say that I attended the debate only briefly. I was present for virtually the entire debate. If the hon. Gentleman was there, he will have heard what I said. Secondly, I made none of the points that he identified with the Conservative party. I said exactly the reverse and many of his colleagues praised my speech. I do not know whether or not the hon. Gentleman was in the Chamber throughout, but if he reads Hansard he will see that I am correct.
Mr. Pickthall: I do not remember the right hon. Gentleman's speech being praised by my colleagues, but I remember him leaving shortly after making his speech.
The Tories and the Countryside Alliance seem to assume that the United Kingdom is made up of rolling countryside occupied by real British people—a squirearchy served by cheerfully toiling peasants, farmers and hunters—and opposed by huge urban conurbations such as Greater Manchester—full of alien masses that are eager to burst out and swamp merry England. They do not address the reality of much of Britain—the complex interpenetration of rural areas, market towns, large villages, suburbs and, of course, larger towns and cities. They consider urban dwellers visiting the countryside or seeking to live there to be alien interlopers, but feel that it is perfectly natural for rural dwellers to penetrate urban areas for work, services or leisure activities.
It is airily forgotten by many Conservatives that the industrial, commercial and tax base of our economy is largely urban and that if it were the collective will to end all agricultural subsidies, each taxpayer would save £4 a week and most farmers would be bankrupt. They forget that a child in a rural school costs the taxpayer in Lancashire, for example, four times as much as a child in an urban school and that does not include school transport. They forget that without urban links all rural rail services would cease and that local authority transport subsidies are almost all that keep rural services going.
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Pickthall: No. I am trying to be brief, as many of my hon. Friends are waiting to speak.
It is forgotten that the opponents of overdevelopment in the countryside—of whom I am emphatically one—are not just those who come from 10 generations of green wellies and Barbours. They are often urban escapees, whose first priority, having grabbed a chunk of rural Britain, is to pull up the drawbridge so that other townies cannot get anywhere near them.
The underlying presumption by my right hon. Friend the Secretary of State for the Environment, Transport and the Regions that the health and prosperity of the countryside is inextricably bound up with the health and prosperity of urban areas is exactly right. The right
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hon. Member for Skipton and Ripon (Mr. Curry) has expressed the same view on several occasions, and I agreed with him each time.
I recite all that, not to attack the countryside in which I live, but to assert the need for balance as opposed to the recent drive to create enmity and rivalry. Town and country should forge alliances against their common problems, as is the case in many shires, although some of those alliances have been badly damaged by the creation of unitary authorities.
The stirring up of hatred by the Countryside Alliance and the killing wing of the Conservative party is extremely dangerous and threatens every rational attempt to address the genuine needs of the countryside.
Mr. Gray: Will the hon. Gentleman give way?
Mr. Pickthall: No. The Conservative motion begins by recognising the concern of those marching on London, and that is fair enough. It then attacks falling farm incomes, rising food imports, the beef ban—which was achieved by the Conservatives—the minimum wage, the working time directive, Agenda 2000, the rate support grant settlement and the right of access to the countryside. It makes not one mention of hunting. Yet Robin Hanbury-Tenison, a well known hyphen and chief executive of the Countryside Alliance said in a press release yesterday:
"Yesterday's march demonstrated … the concerns of rural people. Fears for the future of hunting and field sports, and deep concern at the problems facing livestock farmers were undoubtedly the issues that brought the majority of the crowd to London."
He goes on:
"Yesterday's march could not have happened without hunting."
So why is there no mention of it in the Conservative motion? Could it be that it has finally sunk into the brain of the Leader of the Opposition that more than 70 per cent. of the population support the Bill proposed by my hon. Friend the Member for Worcester (Mr. Foster)? If they decided to march through London, they would take about a week to march past Nelson's column.
The central concern of the countryside is the difficulty faced by many farmers. After a number of good years, they are having a bad year, largely as a result of the level of the pound, but also because of the problems with beef. It is worth reiterating that no other sector of the economy has had so much subsidy or compensation in hard times. My hon. Friend the Member for Blyth Valley (Mr. Campbell) has had to leave the Chamber because of his feelings about mines. Many of us share those feelings.
We are constantly told that the Government are doing nothing for farmers. The Government were right to remove the cost burden of cattle identification and meat hygiene inspection, but they should expect no thanks for that—and they got none from the right hon. Member for Fylde (Mr. Jack). Rather, they should expect further demands.
I did not notice many banners on Sunday attacking supermarket buying policies, which can have as debilitating an effect on farming as BSE. Safeway in my constituency recently announced that it was ceasing to buy locally grown produce. Farmers have rightly complained that lower prices for their meat are not reflected in lower prices on supermarket shelves. I saw no banners saying, "Growers against the Government",

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although they are having a hard time, too. I represent many growers. There is more to agriculture than beef, although one would not think so listening to the Conservatives. As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) once memorably said, he is not just the Minister for meat.
The National Farmers Union bravely addressed the long-term structural problems of agriculture in its document, "Options for Change" a couple of years ago. The NFU and the Government agree on the need for common agricultural policy reform and the steady removal of subsidy and quotas. We should be working on that agenda, not one designed to provoke the majority in this country to say, "A plague on farmers and on the countryside."
The Government should look closely at the labelling of foodstuffs so that the consumer can choose British meat—and other products—with confidence. We should also examine the distribution of beef cattle compensation. It is logical that there should be much greater compensation for a pedigree beef animal than for a finished dairy cow.
My right hon. Friend the Deputy Prime Minister has effectively addressed my concerns about building development in the countryside and the need to protect the green belt in particular. However, I urge him not to have a blanket policy on urban brown-field sites. We must not forget that towns need open spaces, too. The ending of predict and provide and the policy to take more planning decisions regionally represent an important breakthrough, marking a major change from the previous Government's attitude to planning in the countryside, which all too often was just to let it rip.
Governments cannot achieve the same services, leisure facilities, transport systems and choice of occupation for people in rural areas as are available for those in urban areas, contrary to what the Country Landowners Association foolishly asserted in the handout that it sent us today. Similarly, it is not possible to achieve for people in urban areas the benefits of clean air, open landscapes and small, quiet communities enjoyed by most people in rural areas. Government, local and national, must ensure that each is available to the other as easily as possible without damaging either. Public transport systems through rural areas provide a crucial means of achieving that. Government policy is moving in the right direction on that.
It is disturbing that a vociferous minority, purporting to represent rural areas, is seeking to brand the towns as predatory and privileged and to keep townspeople out of large chunks of the countryside if possible. Most people in rural areas feel no antagonism towards the towns. If anything, they feel sympathy, sometimes even pity. Most of my rural constituents have not been impressed by the motives of many involved in Sunday's demonstration, sympathetic though they are to the concerns of farmers and some of the other groups represented on the march.
When the Countryside Alliance shouts, "Listen to us"—not, "Please listen to us"—they really mean, "Don't listen to anyone else." The Conservatives—devastated at the election result in rural and urban areas—are desperately seeking to claw back support in what they have always regarded as their heartlands. If they cannot do that, they have no hope of ever forming a Government
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again. In the process, they are trying to obliterate from the public memory 18 years in which they presided over the devastation of rural areas such as mine in matters ranging from housing, transport and schools to BSE. They should remember that the march on Sunday may not have been the tip of the iceberg, but the whole of it and that the ship of state, to stretch the image, spotted it a while ago and has sailed on by.
8.45 pm
Mrs. Caroline Spelman: I am glad to have the opportunity to contribute to the debate. I am concerned from the speech of the hon. Member for West Lancashire (Mr. Pickthall) that we are being treated to a selective interpretation of what happened on Sunday. The great thing about Sunday's march was that it brought together such a wide range of interests—a patchwork of people with different concerns for the countryside. We have to be careful about selective interpretation. The Conservative party was careful not to abuse the request from the Countryside Alliance to keep the march apolitical. We tried our best to respect that.
I owe it to those of my constituents who participated in the march to use this opportunity to articulate their concerns in Parliament. I feel strongly that the Government amendment seriously misses the mark. At no point during 18 years of Conservative agricultural policy did more than 250,000 people find it necessary to descend en masse on the capital to express their fears for the future.
One had only to ask those taking part to discover the causes that brought them to London. Like me, many of them had sat at the back of the hall during the Minister of Agriculture, Fisheries and Food's address to the National Farmers Union annual general meeting. They became increasingly disappointed, then annoyed, by what they had to listen to. He did not uphold new Labour's promises of partnership. I was appalled by the mismatch between his statement on page one that
"the Government seeks a partnership with everyone involved in agriculture"
and the use of the word "we" shortly afterwards referring only to the Government. In most of what followed, he consistently used the word "you" to refer to the industry in phrases such as, "the challenge to you" and "yours is the choice".
Partnership requires co-operation and communication between two or more parties.
Mrs. Anne McGuire: Will the hon. Lady explain what partnership the previous Administration were involved in when they closed their eyes in the hope that BSE would go away between 1988 and 1996? What communication was there between the then Minister of Agriculture, Fisheries and Food and the farmers?
Mrs. Spelman: Practical partnership when facing a food scare established by the scientific community means listening to the advice of the scientific community and following it. The previous Government undertook that.

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In contrast, when the present Government were presented with scientific options, they selected one without consultation.
Mrs. McGuire: Will the hon. Lady give way again?
Mrs. Spelman: Not again. I should like to proceed. I think that I have described the professional partnership between the Government and scientific bodies adequately.
The greatest offence in that speech was the Minister's separation of the industry from the Government, again using the word "you", saying:
"Farmers need to he good business people."
Apart from stating the blindingly obvious, he was rather patronisingly suggesting that they are not good business people. The successful rationalisation and modernisation—a response to world market forces in agriculture—that has been achieved in this country is a tribute to the good business management of the majority of farmers.
The Minister's speech was full of hand-washing phrases designed to exonerate the new Government from blame for the farming crisis. Hiding behind Conservative spending plans or suggesting that farmers should have set more money aside in good times is an inadequate response to the crisis facing the countryside.
The farmer who built the beacon in my constituency on Thursday is not untypical. He has had to sell his farmhouse. Formerly, he and his brother farmed together and hired labour. His brother had to find a job in landscape gardening; they no longer hire labour. That is a typical example of the real crisis faced today. That was why he was so keen to have the beacon built on his land: as a statement of his practical experience.
Mr. David Drew: Is the hon. Lady aware of the Conservatives on North Yorkshire county council who have made known their intention to sell their farm estate? As the farm estate is the way in which most people without means come on to the land, does she agree that those Conservative county councillors deserve condemnation?
Mrs. Spelman: I am wisely advised by my right hon. Friend the Member for Skipton and Ripon (Mr. Curry), who has a better understanding of that part of Britain, that the council has to make such a move because the local government financial settlement, under a Labour Government, put the council in the financial position of having to realise an asset.
Why would the NFU, an organisation which has been commended by Labour, go to the lengths of producing slogans such as "Keep Britain Farming" and putting them on trailers and standing them over motorways if there were not a real threat? An empty threat would simply bring that organisation's reputation into disrepute.
The Government cannot wash their hands of the impact of their economic policies since they came to power. Allowing the Bank of England to raise interest rates has resulted in five separate rises since 1 May. It is to the immense frustration of farmers that the political instrument that the Minister has at his disposal under the common agricultural policy to compensate for such currency fluctuations just lies motionless on his table. It may be possible in the short term to "tough out" such
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times of strong currency, but do the Government envisage the pound weakening in the short term? Is it not rather more likely that Britain's position outside European monetary union—[Interruption. I am not making a comment on that stance. We must think about the consequences of the policy. It will attract speculation on our currency, result in a strong pound and aggravate the difficulties faced by agriculture. The instrument that could do something about that lies unutilised on the Minister's table.
It is not possible for the Government to wash their hands of the deepening crisis and ignore the way in which their policies have aggravated the situation for the beef industry. The Government's decision to impose a ban on beef on the bone was riddled with inconsistency. We find that the guiding principle of the new Food Standards Agency will be to give consumers the right information and allow them the freedom to decide. Yet precisely the opposite is true of the ban on beef on the bone. That is why the decision has attracted ridicule in the wider population—urban and rural. The nannying stance of deciding for others in the case of minimal risk is what has so irritated consumers.
The march sought not only to call the Government to account for such decisions but to draw attention to what is ahead. At the NFU annual general meeting, we saw a little of the Minister gazing into the future. I am concerned by the inexperience and naivety of his perspective on the future of British agriculture. He said that he
"wants to see changes … so that British farmers can take full advantage of growing world markets".
Although we all aspire to a reduction in agricultural support and want a reduction in protectionism in agriculture, it is unrealistic to think that British agriculture can survive on its own with reduced support in a market where competing countries would not hesitate to capitalise on a disadvantaged competitor.
A reduction in agricultural subsidy is a sincerely held objective among Conservative Members and has been progressively achieved in GATT rounds, but any comparative advantage that Britain enjoys with its relatively large farming structures pales into insignificance alongside the economies of scale of the prairies of the mid west, the plantations of South America and the low-wage farming of the far east. The new Government's policy direction of unilateral disarmament, particularly in relation to sectors that are experiencing an abnormal crisis, is irresponsible.
The Minister has been challenged on numerous occasions in the Chamber over his commitment to the beef industry. It was pointed out to him that, in Agenda 2000, there is a Commission intention to reduce the size of the beef sector in Europe by 30 per cent. It was put to him that the current situation in British farming and the inadequate support given to the beef sector in order that it might stabilise its position could result in the entire 30 per cent. reduction occurring in this country. Yet we have been given no adequate answer.
Mr. Hayes: Does my hon. Friend appreciate that, when the Minister was asked in the Select Committee on Agriculture whether he had a vision, a view, a projection for the amount of production or the number of producers in the British beef industry, he was sadly lacking?

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That lack of strategic vision, of targets, was pointed out in the Select Committee's reports on beef and on Agenda 2000—by all Committee members, not just Opposition Members.
Mrs. Spelman: Consequently, the Select Committee, which has a majority of Labour Members, concludes its report on the beef industry by saying that the UK beef industry
"could become too enfeebled to restructure itself rationally".
That is the very point that I have been making. With inadequate help, Britain will unilaterally disarm an otherwise profitable, competent and professionally run sector, which is handicapped by the Government's handling of it.
Mr. Peter Bradley: Are the hon. Lady and her colleagues aware that farming, deep though its crisis is, involves and employs a relatively small proportion of people who live in the countryside? Whether or not farming was in crisis, 56 per cent. of people in rural parishes would still be left without a shop of any kind, 45 per cent. without a post office, 53 per cent. without a school, 84 per cent. without a general practitioner and 86 per cent. without a rural bus service. What has she to say to people in rural constituencies such as mine and hers whom she and her colleagues continue to ignore—even though they have called for this debate?
Mrs. Spelman: We do not ignore the ancillary industries serving agriculture. At my surgeries, I have repeatedly received delegations from farmers and from ancillary industries. The crisis in farming has knock-on consequences for a far wider group of people than the hon. Gentleman would imply. Only last week, I learnt that Massey Ferguson—a well-known tractor producer outside Coventry, offering jobs to a large number of the population of the surrounding conurbation—has been forced to adopt a three-day week. That is an example of the way in which the difficulties in the agricultural sector knock on to a wider range of industries.
The countryside is in crisis because the country is governed by an Administration who do not really understand its ways and presume, with the audacity of a new Government, to know better than country people how they should maintain our rural heritage. The Government are not prepared to fight for the needs of the countryside and, in a curious modern double-speak, claim a vision of the countryside which is strong, fair and modern while presiding over its demise. That is why people marched on Sunday—to demonstrate their solidarity with the many ancient rural traditions under threat.
The small concessions and selective back-tracking are no substitute for forward vision. Blaming a past Administration is a feeble attempt to duck responsibility. In opposition, we call the new Government to account. In so doing, we keep alive the hopes of the countryside protesters, who have no confidence that the Government will fight their corner.
8.59 pm
Mr. Paddy Tipping: I am pleased to speak in this important and topical debate. I spend a lot of time listening to the voices of the countryside, and it is
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important to recognise first that there are different voices in the countryside. Countryside people are not a homogenous mass, and anyone who has had a meal around a farm kitchen table will recognise that.
I regularly speak to and arrange events with a range of countryside organisations—the Country Landowners Association, the National Farmers Union, the Council for the Protection of Rural England, the Countryside Commission, the Rural Development Commission, the National Trust, parish councils, the Council for National Parks, the Youth Hostels Association and the Ramblers Association. Let me make it clear to the House that I am a vice-president of the Ramblers Association.
Last weekend, I was tree planting and looking at erosion where people had been walking. The weekend before that, I was with the National Trust, looking at its positive policies in the High Peak. Not long ago, I spent a day on a hill farm, talking about the real problems that farmers have. Only yesterday, I was talking with people about traffic-calming measures and the powers of parish councils in rural areas.
Given all that, to be accused of not listening to the voice of the countryside, or of not understanding the delicate balances that exist there, is, to put it mildly, rather irritating. It is important to recognise that Labour Members representing county seats make up more countryside Members of Parliament than the Tories and Liberal Democrats put together.
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Tipping: No, I will not give way. The hon. Gentleman will make his own speech, if he has the opportunity.
I am backed by a fine group of parish, county and district local councillors, who look after the needs of the rural community.
I watched the countryside march with great interest. What surprised me was that I was not certain under what banner those people were marching. I am extremely grateful to the chief executive of the Countryside Alliance for telling me what the march was about. In a press release on 2 March, he said that the march
"could not have happened without hunting. More than 70 percent of the coaches and trains bringing people to London were organised by the hunting community."
That is not top of the agenda in the countryside that I know and love. There are important issues, hard questions and difficult decisions about priorities that must be made in the countryside, and it will take time to put them right.
What is my countryside agenda, and that of the people in Nottinghamshire to whom I speak? First, let us be straight—farmers face real problems. British farmers are the most efficient in Europe, but they face problems. Farm incomes have fallen, and we must contrast what is happening now and in the past year with previous years. We must be open—there is no point in having discussions with farmers unless we are open and honest. We must say that there is no pot of gold in Brussels. The story spread by Opposition Members about £985 million being made available is nonsense. The British taxpayer would have to contribute to 70 per cent. of the cost. It is all about priorities, and farm interests have had priority with this new Government. Let us not dismiss the fact that £85 million was made available before Christmas for the

941
most disadvantaged farmers. Let us welcome the fact that £70 million will be made available for a cattle traceability scheme and let us remember that the Conservative party presided over the bovine spongiform encephalopathy crisis, but did not produce a computer scheme like that, which will help.
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Tipping: No, I will not.
New and extra money has been made available to farmers, on top of existing Tory spending plans. We must also remember that reform of the common agricultural policy is on the agenda. Enlargement will happen, and we shall have to move from a system in which we support production to one that is different. I hope that we shall work with our partners in Europe at the centre of Europe, using our voice wisely to bring in more money and investment, and to create jobs and investment in the rural economy. Also, I hope that we shall move towards a green premium, whereby we can lift the landscape and enhance the environment.
Farm incomes have fallen in recent years, and I am delighted that we have recognised that and are consulting and talking carefully to such bodies as the NFU about an early retirement scheme. Those are not easy issues and they will require a Government who look to the future, not the past, who believe that the countryside is for all our people and not merely for the landowners and who are prepared to take tough and hard decisions to drive reform through.
Progress is being made on lifting the environment. I was delighted that one of the first steps taken by the new Government was to put a moratorium on the sale of Forestry Commission land. Under the previous Government, a piece of land the size of the Isle of Wight was sold off, with no access to the public, whether the environment was rural or urban. I am also delighted that since the Government came to power, the Secretary of State for the Environment, Transport and the Regions has given no new consents for opencasting on green-field sites. That is widely recognised and welcomed throughout the countryside.
We have taken steps to ensure that we protect the green belt. I welcome the statement by the Secretary of State only last week, that 60 per cent. of new housing will be built on recycled sites, and his statement on sequential planning permissions—the end of predict and provide. Those are important steps forward. I look to the Budget for fiscal measures to reinforce that programme.
On a more critical note, there are real problems in the east midlands. Under the previous Government, 32 per cent. of houses were built on recycled sites. If I put that another way, under that Government, two out of every three houses were built in green-field areas. There are problems in my county of Nottinghamshire, where the previous Government endorsed a structure plan that provided 67,000 new houses. I must praise councils such as Gedling borough council, which is struggling to find a way through the Conservative Government's mess. I know that it welcomes the policy changes announced by the Secretary of State.
People in Nottinghamshire welcome the fact that this Government have put extra money into education. Nottinghamshire schools have an extra £12.2 million to
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spend next year as opposed to this. For the first time, there is new and extra money—2 per cent.—to develop new initiatives. The people welcome the new deal.
Mr. Hayes rose—
Mr. Tipping: I can tell the hon. Gentleman that last Friday the Newark Advertiser, a rural newspaper, welcomed the new deal, saying that it was by no means an inner-city policy. It welcomed the initiatives that we have taken.
One thing that filled me with enormous pleasure last week was the publication of our consultation paper, "Access to the open countryside in England and Wales". The principle of greater access is not negotiable. We want to ensure that access by the millennium—what a way to celebrate the millennium, with the right to walk over open countryside. We shall ensure that that promise is delivered. Landowners have been given a chance, and now it is up to them to respond. If they do not, legislation will follow.
I know that the countryside is not a museum—it has always changed, and it will always change. Our policy must be to ensure that that change is properly managed. I believe that we can achieve that. We shall consult and we shall listen. We are not ignorant of and arrogant about the countryside. Unlike the Conservative party, we are not full of pride and prejudice about it—we have sense, and we shall have sensitivity. We shall deliver. I am confident that, under the Labour Government, the countryside will be a place for all our people.
9.10 pm
Mr. Anthony Steen: I agree with much of what the hon. Member for Sherwood (Mr. Tipping) said, but I am not sure that I am a vice-president of the Ramblers Association.
Mr. Tipping: A very good and honoured supporter.
Mr. Steen: I know that I am something important in it. I am also involved with the Open Spaces Society and the Dartmoor Preservation Association. I cannot list as many great deeds as the hon. Gentleman did, but I have some interest in and experience of the countryside, and I want to share with the House what I believe to be some of the threats to the landscape and the continuation of the rural way of life.
All hon. Members will recognise that agriculture plays a central role in the rural economy. The rundown of a farm has a knock-on effect. For example, when I first went to South Hams in 1983, a father, his son and six workers used to repair tractors in the little village of East Allington. Now, only the father and son do that, as the demand is not the same. The rundown of agriculture also affects local builders, who do not have as much work, as well as mechanics, temporary milkers and the village shop. The importance of the crisis in agriculture is that it threatens not only the farmers but the whole rural way of life in Britain.
The decline in agricultural support will result in what has happened in third-world countries—the agricultural worker will move from rural to urban areas. Although the rural way of life currently provides an enormous amount of employment, if it is not supported, rural areas will

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become run down, and the workers will find jobs only in the towns and cities, which is the very thing that we do not want to happen in this country.
Mr. Dawson: I entirely accept the hon. Gentleman's point about the regrettable movement of young people from rural areas to the towns. Was not that exacerbated, however, by the policies of the previous Government, which led to the reduction in the availability of affordable accommodation? Young people who have grown up and now work in rural areas can no longer afford to live there. Should not we address that issue as a matter of some urgency?
Mr. Steen: The problem about making a speech in the House is that one can end up debating each point. I do not want to outstay my welcome, but I will answer that point. One can go on building affordable housing association or council accommodation in the countryside, but one has then to find jobs. Without a buoyant agricultural community to supply the jobs, it is no good building houses.
There is a great movement of people into my area from the north, on retirement, which pushes up the house prices. One cannot build a wall and stop them moving around. That is a problem of market forces.
I want to deal with the more serious problem of urbanisation and suburbanisation of the countryside. The drift from major cities to rural areas is well documented. The number of Members of Parliament representing Liverpool and Birmingham has seriously declined. In 1965, Liverpool had about nine Members, and it now has five, while in Birmingham the figure has decreased from about 11 to eight.
The drift is away from the inner cities and urban areas to the rural areas, because that is where people want to live. Should we deal with that by building new satellite towns around the principal conurbations, or should we infill the villages and hamlets? In my part of south Devon, we have done both, with the result that the countryside between the conurbations is getting narrower and narrower.
The Labour Government, not following the Conservative lead, have increased the number of houses that are to be built in Devon by 2011 from 90,000 to 95,000. The problem is where we are to build all those houses. The Liberal Democrat councils in South Hams and Torbay are simply lying down and accepting the Government's figure, but in my view they should fight the Government and say that they cannot accommodate 95,000 more houses. We shall end up with a continuous run of housing from Plymouth to Exeter. The whole of the A38 will be one urban sprawl, as I forecast in 1983. Unless we stop the growth, we shall get one large urban sprawl throughout the county. How are the Government to stop that happening?
A more significant problem is how the Government are to help to preserve the countryside; that is the subject of this debate. The major factor to be considered about the countryside is the landscape and the view. [Laughter.] One of the first steps that the Government could take is to introduce a new planning policy guidance whereby the view has to be taken into consideration. At present, people
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can build anything where they like, because the view is of no consequence. The Government may say that we could have done that, but I am saying that they can do it now.
Mr. Hayes: Labour Members may laugh, but my hon. Friend makes an important point. He is saying—I hope that he will accept my clarification—that aesthetic concerns are important both in planning terms and in terms of people's perception of the environment around them. That is a matter not only of what they do, but of what they are. The fear of radical change—of the transformation of customs; culture; and the traditions of whole communities—motivated Sunday's march more than any other factor. Of course it was about hunting, but, more than that, it was about the fear of such radical change.
Mr. Steen: I am very grateful to my hon. Friend for that helpful elucidation. In fact, I was saying that in current planning law one cannot consider the damaging effects of development on the view and the landscape. The planners say that the view is not a consideration when an application for development is approved. The Government could look at that.
Mr. Peter Bradley: Will the hon. Gentleman give way?
Mr. Steen: Yes, provided that it is not another clarification of what I am saying.
Mr. Bradley: Does the hon. Gentleman acknowledge that, just as there are additional planning protections for conservation areas in towns, there are numerous designations—not least areas of outstanding natural beauty—that afford such protection in the countryside? Is he really saying that if people in the countryside do not have jobs, they do not need homes, and if they do not have homes, they do not need buses, but a view would be helpful?
Mr. Steen: We need someone to explain the hon. Gentleman's point. The serious question is how we can build 4.5 million houses in Britain without damaging the countryside. One of the factors that should be taken into account when planning applications and structure plans are considered is the effect that those developments will have on the landscape and the view in the area. We do not want to see the British countryside rapidly changed and destroyed.
At present, we have a two-way movement of people. We have the rundown of British agriculture and the movement of rural workers to the towns, and we have a movement from the urban areas to the countryside by, usually, young married couples who want to have their children taught in rural areas and to experience the rural way of life. People are being levered from the towns to the countryside to find a better quality of life for themselves and their children, while country dwellers are forced—by the decline in agriculture—from the villages into towns to find work.
The Government must support the agricultural sector, and so slow down the migration from the country to the towns. They must also make the cities more attractive places in which to live, to stop the reverse process. I draw

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the House's attention to an excellent book that I wrote about 10 years ago, called "Plums", in which I suggested that publicly owned vacant land should be auctioned and that derelict land in the inner city should be used first before the rural landscape is changed.
The Government can take action on some of the issues that I have mentioned. The landscape must be protected by changes in planning law, and farming must be supported, as it is in other European countries, so that the rural economy is anchored and safe. Our principal cities must be given an injection of new life, because we have been talking about the inner cities for the 24 years that I have been in the House and they remain as bad as ever. Housing need on green-field sites must be approached with caution, with new settlements being considered preferable to creeping urbanisation of existing market towns and villages. I hope that I have been helpful to the House, which has listened carefully to what I have said.
9.22 pm
Mr. David Hanson: I am grateful for the opportunity to contribute to the debate, because I represent a large rural area in north Wales and have done so since 1992. It is an area with a large farming community, many small villages and many problems with transport, access to rural services and other matters. We also have a fox hunt—the Flint and Denbigh hunt—as well as a Labour majority of 13,000.
I am pleased to see so many of my hon. Friends who also represent rural areas present for the debate. Labour Members represent many of the rural areas of this country, and I must point out to Conservative Members that not a single tree, bush, fence, hedge or cow in Wales or Scotland is represented by a Conservative Member of Parliament.
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Hanson: No, time is pressing. It is a caricature of the debate to claim that there is a difference between town and country. My hon. Friend the Member for West Lancashire (Mr. Pickthall) put his finger on it when he said that we are interdependent. All of us have an interest in rural areas and all of us have an interest in the success and prosperity of those areas. All of us eat the food produced by rural areas and use the leisure facilities available in rural areas. All of us have a stake in the future of rural areas and many of us who live in cities and towns pay through our taxes for the success and development of rural areas. We all need such success. The caricature of town versus country exemplified by Sunday's march is unproductive and unhelpful.
I hope that Sunday's march helps us to focus not only on those who want preserve fox hunting, of whom I am not one, or members of the Conservative party, of whom I am not one, but on the real issues of rural Britain and the positive things that can be done. In the spirit of cross-party co-operation, I welcome some of what the previous Government did. I welcome their White Papers on rural England, the working countryside for Wales and rural Scotland. I just wish that they had done something about those issues, rather than simply producing White Papers.
I welcome the Liberal Democrat amendment, which recognises that things did not get bad in the countryside only after 1 May. I remind the House of bus deregulation
946
in 1985. In Wales, 33 million bus journeys a year have been lost in rural areas since 1985. In one small village in my constituency, Trelawnyd, people cannot get to the dentist, doctor or the shops because bus deregulation has robbed it of its lifeline. We have also seen the sale of housing association homes and the failure of the previous Government to promote low-cost home ownership. The previous Government allowed more green-belt building than this Government intend to. They reduced the number of properties available for rent and the number that councils could build for rent.
Crime is also a factor in rural areas, such as mine in north Wales, with the closure of local police stations. Crime rose by 80 per cent. under the Conservative Government, while police numbers fell in my area. My hon. Friend the Member for Sherwood (Mr. Tipping) mentioned the sell-off of Forestry Commission land. In Wales, under Conservative rule, 229 woodlands were sold—4,500 hectares of land. Only 18 have had access agreements put to them.
Those were the actions of the previous Government. There were proposals that we managed to stop, such as the abolition of the wages board, the sell-off of rural post offices and, through local councils, the closure of local schools. The previous Government's record was not addressed by Conservative Members, but the House should address it—and that is before we touch on BSE or the 17 per cent. drop in farm incomes in Wales between 1981 and 1991, or the loss of local businesses, pubs and shops. It is also before we touch on the fact that, after 18 years of Conservative rule, many rural areas such as mine cannot get NHS dentists. People have a 25-mile drive to the local major district general hospital. The Conservatives would do well to recognise and address that inheritance, as well as the issues that we are discussing today.
Mr. David Taylor: They should apologise.
Mr. Hanson: My hon. Friend mentions apologising. I think that the Conservatives owe my rural constituents an apology for the misery that they put them through. In the short time remaining, I should like some discussion of how to address those issues—not only fox hunting and the others mentioned by Conservative Members.
There are three broad objectives: economic renewal, protection and enhancement of the environment, and social renewal.
Mr. Gray: Will the hon. Gentleman give way?
Mr. Hanson: I have not got time.
I do not mind whether the issues are addressed by a rural Minister directly or by Ministers in each Department with a rural responsibility, but they need to be addressed. On economic renewal, we need to consider an overall economic strategy, both in Wales and in each region, to include rural areas.
I hope that we will examine information technology: bringing the city and information to rural areas through IT. I accept that the new deal will create many jobs for people such as my constituents in rural areas. I hope that we examine—I am sure the Government are doing

947
so—diversification to help with falling farm employment and incomes. I hope that the Government will look at helping small firms to establish themselves in rural areas.
Next year, there will be a minimum wage in rural areas, something which I am very proud of. That will help to support the economic regeneration of areas that are traditionally low paid, especially in parts of Wales. I welcome the rate relief that has been given to local shops and businesses in rural areas. This Government have done it. I hope that we will reform the common agricultural policy to shift the balance of wealth and power from the larger farmer, to ensure that the small farmers, who are in most need, have the income and support that they need. I welcome the Government's announcement of £12 million extra to be given to Wales and farming incomes this year, in connection with the charges for specified risk material and the cattle tracing scheme.
On the protection and enhancement of rural areas, I should like to know how many of the people who went on the march on Sunday have been responsible for removing hedgerows and destroying the rural areas that they purport to represent. Reform of the common agricultural policy is important in that respect. The Government will take steps to protect flora and fauna, strengthen areas of outstanding natural beauty and establish a green belt for the first time in Wales.
A further issue that we need to discuss is a third party right of appeal on planning applications, so that local community councils can tackle developers.
In the context of social renewal, we must examine transport issues. I am pleased to see that the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Hampstead and Highgate (Ms Jackson), is winding up the debate. Transport is crucial to rural areas.
I appreciate the Government's initiative on rural schools, so that such schools cannot be closed without ministerial approval.
Thanks to the Government's capital receipts programme and the input from local authorities into new social building and improvements in local villages, a village in my constituency has for the first time had central heating put into the small council accommodation in the area.
I welcome the extension of the social exclusion unit to include rural areas. I hope also that we can look imaginatively at the use of lottery money to improve village halls and be proactive about the investment in village halls. Perhaps we could examine the issue of matching funds to make it easier for local communities in rural areas to have access to lottery money.
The Opposition motion is too simplistic. It focuses on countryside issues, ignoring the failure of the Conservative Government over the past 18 years to tackle those issues. I know that my Government have a constructive approach to rural areas, and I will be pleased to support them in the Lobby tonight.
9.32 pm
Mr. Christopher Gill: In a wide-ranging debate, we have heard hon. Members on both sides claiming to support the countryside, but, when one listens to the speeches, it is apparent that the perception and understanding on the two sides are quite different.
948
That was demonstrated by the hon. Member for Sherwood (Mr. Tipping), who said that his approach was not the result of ignorance or arrogance. He went on to say that the right to roam on other people's land is not negotiable. That will strike many of those who have listened to the debate not as ignorant or arrogant, but as intolerant, as is the Labour party's commitment to abolish the right of other people to hunt on their own land. We have seen no great enlightenment among Labour Members, but rather a digging in and reinforcement of an intolerant attitude.
I appreciate that the job of agriculture Ministers is always difficult. I thought that the fisheries Minister was to wind up the debate, and I would have said that no job was more difficult than his. I do not want to open up the European debate, but it is clear that not least among the difficulties of agriculture Ministers is the fact that they have responsibility without necessarily having the authority to do what needs to be done. In his opening remarks, the Minister of Agriculture spent much time criticising the record of the previous Administration. Let me say to him and to others on the Front Bench: you will be judged by your record.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman should not be saying anything of the kind.
Mr. Gill: I beg the House's pardon. Right hon. and hon. Members opposite will be judged by their record.
Many of us regret the non-attendance of agriculture Ministers at the countryside march on Sunday. It was a missed opportunity to listen to what the countryside had to say—more to the point, Ministers would have been able to hear what country people had to say because it was a good-natured, peaceable demonstration. It was not a howling mob. Ministers could have conversed with the people on that march, and doubtless they would have learnt something.
Mr. Dawson: On a point of order, Mr. Deputy Speaker. Will the hon. Gentleman note that certain Labour Members attended the march on Sunday?
Mr. Deputy Speaker: That is simply not a point of order for the Chair.
Mr. Gill: It was a peaceable demonstration by responsible people whose livelihoods and way of life is under threat.
Mr. Gray: With reference to the spurious point of order from the hon. Member for Lancaster and Wyre (Mr. Dawson), is it not interesting to note that the only Minister to attend the march on Sunday is notable by his absence from this debate? He has not even turned up.
Mr. Gill: I think that the House will draw its own conclusions.
Ministers cannot dismiss the significance of Sunday's march, and they certainly cannot ignore the fact that 300,000 people sent but one message. That single message was, "Please listen to us".
In this debate, we have heard some predictable responses to the recognisable problems in the countryside. It was suggested that a royal commission should be

949
established, that there should be a Minister for rural affairs and that possibly the Ministry should be reorganised. Is the House really saying that it does not know what the problems are? Surely the problems of the countryside are all too plain. The electorate in this country expects its politicians, particularly the Government and Ministers, to provide answers to those questions.
That job cannot be sub-contracted to a review or a task force. In nine months, the Government have appointed no fewer than 140 such bodies. The urgency of the problems in the countryside does not permit the establishment of bodies to investigate such matters: we do not need a theoretical examination by intellectuals who cannot tell wheat from barley. We need to listen to people in the countryside who do the job—they are the experts.
The problems have been identified already. There is high dependency on agriculture in the countryside. The difficulties currently facing agriculture are exemplified by one of my constituents who produces 1,400 cattle per year at a cost of 112p per kilo and who is currently selling them at 97p per kilo. Another problem is the high dependency on the motor vehicle in the countryside. The House will be watching to see what the Chancellor does in his Budget, because we are aware of the devastating effect that an increase in vehicle excise and fuel duties would have on transport in rural areas.
The threat to community hospitals is implicit in the ending of the general practitioner fundholding system. [HON. MEMBERS: "Rubbish."] Oh yes. I invite Labour Members to come to my constituency where they will see how fundholding doctors, working closely in conjunction with a community hospital, have transformed that hospital, which now provides a much greater range and quality of services than ever before.
In the few seconds that remain, I must mention the totally inadequate SSAs for sparsely populated rural areas, where economies of scale do not apply. Those areas have high transport costs and, as the Minister said, low wages. This year, we shall face record increases in the council tax. Shropshire county council's precept will be 14 per cent. up on last year, before we even consider the district council precept. The Government must take responsibility. Many of the solutions to the problems identified tonight are in their own hands. A measure of the Government will be whether they address those very real and obvious problems.
9.39 pm
Mr. Tim Yeo: We have had an exceptionally interesting debate which has reflected the depth of concern about the countryside—a concern which is particularly shared by hon. Members on the Opposition Benches.
The debate has exposed the Government's continuing lack of understanding of rural issues. The Minister of Agriculture, Fisheries and Food showed no sign at any stage during his 26-minute speech that he had listened to a single concern of the 280,000 people who marched on Sunday. That is not, perhaps, surprising, as he did not have the courtesy to turn up and meet them. Let me point out to him that the mandatory rate relief for small shops, to which he referred, was introduced by the Conservative Government.
The truth is that, on the countryside, the Labour Government have moved from denial, through panic into confusion. A month ago, they denied that there was a
950
problem. A week ago, they panicked about the extent of public hostility. Today, they are in a state of total confusion about what to do and who should do it.
On Saturday, we saw the extraordinary spectacle—it would have been bizarre had it not been disgraceful—of an agriculture Minister publicly smearing the march, just when his colleague, the Minister for the Environment, was announcing that he would take part in it. Open warfare has broken out between the Department of the Environment, Transport and the Regions, and the Ministry of Agriculture, Fisheries and Food about who is in charge of countryside policy. Will it be the Minister of Agriculture, who preferred to remain in the comfort and security of his expensive new office rather than meet the 280,000 representatives of the countryside? Or will it be the Secretary of State for the Environment, Transport and the Regions, who, uncharacteristically, is hiding in the corner—the Minister who picked the pockets of local authorities in rural areas to reward his friends in the towns; who, in 10 short months, has destroyed the principle of the green belt, which has protected the environment around our cities for half a century?
The losers in the battle between the Departments will be those who live and work in the countryside. It is a battle which should never have started. The countryside needs not a new Minister or Department but a new policy.
Having heard the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy), who has not had the courtesy to return to the debate, I am of the view that not only the Government but the Liberal Democrats need a new policy. The hon. Gentleman expressed concern about the Rural Development Commission, but, only a week ago, in the Standing Committee, two of his colleagues voted to approve clause 39 of the Regional Development Agencies Bill, which gives the Government the power to abolish the Rural Development Commission. It was a familiar example of the Liberal Democrats pointing in both directions at the same time.
The hon. Member for West Lancashire (Mr. Pickthall) joined Labour's attempts to impugn the motives of Sunday's marchers, but, as my hon. Friend the Member for Meriden (Mrs. Spelman), rightly pointed out, at no time in the 18 years of the previous Government did 280,000 people protesting about Government policy on the countryside descend on the capital city.
The hon. Member for Sherwood (Mr. Tipping) was at least honest enough to admit that farmers face real problems, but he would have done himself more credit had he also recognised that those problems are among the reasons why the marchers came to London last Sunday.
The Government still have an opportunity this evening to regain a shred of credibility and to show that they want to make amends. I welcome the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Hampstead and Highgate (Ms Jackson) to the Front Bench. It is revealing that, for all the Government's claimed expertise in rural matters, and for all the countryside seats which they have now won, the person who is fielded to wind up a debate entitled "Listening to the Countryside" is a London Member and the Minister for Transport in London. I hope that in her winding-up speech, she will announce changes of policy in three key areas. None of those changes would cost a penny of public money, none would need legislation and each would herald the possibility of a more sympathetic attitude towards rural communities.

951
The first change concerns the way in which the cash is distributed to local authorities. This year, the Government carried out a funding fiddle. They took £94 million off the standard spending assessments for rural authorities and switched it into towns. None of the eight changes made by the Government to the standard spending assessment formula has helped shire England. The Government took £8 million from Oxfordshire, £8 million from Norfolk and £10 million from Hampshire.
This week, the Prime Minister wrote in Country Life of his concerns about rural crime. Those were fine words, but, as so often under new Labour, they were just words and they were not matched by deeds. In rural Lincolnshire, the standard spending assessment for the police authority has been cut in cash terms. The same applies to Wiltshire and many other counties. What a contrast with the police authorities in urban areas, which are getting an increase in their standard spending assessment. Yet again, that is the clearest possible proof that when it comes to allocating public money, the Government always favour urban Britain.
The second change of policy that is needed concerns planning. Last Monday, the Secretary of State for the Environment announced a partial climbdown. He appeared to overrule his junior Minister, the hon. Member for Greenwich and Woolwich (Mr. Raynsford), who had described any increase in the target for building more new homes on previously developed sites as a "recipe for disaster". We welcomed those greener noises from the Secretary of State, but we listened in vain for a hint that he would rethink his recent decisions to approve up to 10,000 homes on the green belt in Hertfordshire and 2,500 homes on the green belt in Newcastle, and approve industrial development of 150 acres of farmland in the west midlands. We listened in vain for a hint that he would not insist on inflicting an extra 13,000 new homes in the West Sussex countryside.
The Secretary of State talked of a sequential and phased approach to the development of all sites, but when will that approach be incorporated into planning policy guidance? In a written answer in yesterday's Hansard at column 429, the Minister for London and Construction explained that that idea is merely for consultation at this stage. Until planning policy guidance notes are altered, nothing has changed and the green fields are just as much at risk as they were before. The Minister's fine words are not matched by deeds.
What about the county structure plans? When will the new approach apply to them? Counties such as Hampshire were dragooned into accepting an extra 10,000 houses for their structure plan. Will Hampshire, Devonshire, Cheshire and Gloucestershire have a chance to think again before their structure plans are adopted? That problem was rightly highlighted by my hon. Friend the Member for Totnes (Mr. Steen).
The third policy that should be changed is the right to roam—another example of Government confusion. Months of delay occurred while Ministers argued about whether to implement their promises. Finally last week, a document was published, which was portrayed as evidence of the Government's conversion to the voluntary approach, which the Conservative party has always supported and which has opened up 250,000 acres of land
952
for access since 1990. However, during questions about the documents launched, the Minister for the Environment was reported as saying that he saw legislation as inevitable. As my hon. Friend the Member for Ludlow (Mr. Gill) pointed out, that threat should be withdrawn today.
I hope that all hon. Members will study the wording of the Government's amendment, which claims that the Government want
"prosperity for all in rural areas".
Yet the Government have just taken powers in the Regional Development Agencies Bill to wind up the Rural Development Commission. The amendment claims that the Government are concerned about rural transport, but their planned huge increase in petrol tax will clobber every rural motorist. The amendment also claims that the Government want "comprehensive countryside policies", yet they refuse to continue to publish an annual update of the countryside White Paper, the first ever comprehensive review of countryside policy.
Dr. John Cunningham: The Conservative Government did not do that.
Mr. Yeo: Yes we did, and the Minister should know it. If the right hon. Gentleman aspires to be the countryside Minister, he should do his homework.
The amendment claims that the Government believe in inclusiveness, but lovers of traditional country sports are not just being excluded; Labour Members are supporting a Bill that will criminalise them. The Government's actions contradict the fine words in their amendment. The debate gave the Government the chance to show that they understand why 280,000 people gave up their Sunday to march on London, and that they are willing to listen to the anxieties of the marchers and millions of other country dwellers. That chance was missed by the Minister, but I hope that it will be seized by the Under-Secretary.
If the Government agree to our motion, the marchers really will have something to cheer about. I commend the motion to the House.
9.51 pm
The Under-Secretary of State for the Environment, Transport and the Regions (Ms Glenda Jackson): In his opening remarks, the right hon. Member for Fylde (Mr. Jack) dubbed the debate one in which the true voice of the countryside would be heard. The Country Landowners Association may not agree. In January 1995, it stated:
"For too long there has been a lack of political focus on Britain's rural areas."
In January 1995, the National Farmers Union stated:
"Many parts of the countryside are seriously affected by unemployment, under-employment, a narrow range of job opportunities and low average wage levels."
In July 1994, the Rural Development Commission stated:
"Declining rural services threaten village life."
In November 1994, Countryside 2000, the country life magazine, stated:
"Protecting the countryside is something that we did well traditionally. Sadly the 1980s was a disastrous decade in this respect, thanks to the new spirit of laissez-faire that afflicted planning."

953
Speaking on the Conservative Government's rural record in January 1995, Action for Communities in Rural England stated:
"Our main perception is one of neglect."
On 10 October 1996, the National Farmers Union Council passed a vote of no confidence in the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg), declaring that it had
"no confidence in the Minister's representation of the interests of the UK and its agricultural industry in the EU."
The Opposition are noted for their lack of policies, direction and principles. Tonight's debate showed their sheer opportunism. The Conservative Government would not have wanted to abolish the agriculture wages councils if they had been genuinely concerned for the rural economy and the countryside. The Conservative Government deregulated bus services and privatised the railways, leaving 75 per cent. of parishes with no daily bus service, 79 per cent. with no community minibus or social car scheme, and 93 per cent. with no rail service at any time. They also closed 450 village schools, constantly threatened rural post offices with privatisation, built 60 per cent. of new houses on green-field sites, and closed village shops, hospitals and dental surgeries.
We are dealing with 18 years of Conservative neglect, but, during their lamentable contributions, Conservative Members did not have the courtesy to apologise to the people of this country for the damage that their Government caused. I have not even touched on the relaxation of regulations which led to the introduction of BSE not only into the British beef herd, but into the human food chain. The previous Government were responsible for that disgraceful occurrence, which has had an appalling effect on the countryside and its economy.
My right hon. Friend the Minister of Agriculture, my hon. Friends the Members for West Lancashire (Mr. Pickthall), for Sherwood (Mr. Tipping) and for Delyn (Mr. Hanson), and the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) dealt with the serious issues that face people in rural areas.
Several themes have recurred tonight. My hon. Friends the Members for West Lancashire and for Delyn pointed out that the Conservatives' policy was clearly "town versus country". That is not our policy. We are clear about the fact that town needs country and country needs town. [Interruption.]
Mr. Deputy Speaker: Order. Hon. Members should listen to the Minister, who is winding up an important debate.
Ms Jackson: Thank you, Mr. Deputy Speaker, but it is too late to ask Conservative Members to listen. If their own leader cannot point out to them that their arrogance and unwillingness to listen lost them the last election so resoundingly, there is nothing that anyone can do. Regrettably, their ignorance is bliss for no one in this country.
The peroration of the hon. Member for South Suffolk (Mr. Yeo) matched the opening speech of his right hon. Friend the Member for Fylde (Mr. Jack) in its lack of any understanding of the real difficulties that their Government created for those living in rural areas. The hon. Gentleman castigated the present Government for their local government finance settlement, particularly in
954
a rural context. For the first time in four years, increased funds have been provided for services delivered by a shire district. This Government have done that. We have treated all local authorities, whether rural or urban, fairly and consistently.
The pattern of gainers and losers in rural and urban areas is mixed. There are gainers and losers in both types of area. That confirms yet again that the present Government govern for all the people. We are not interested in creating artificial divisions between town and country.
Many grievous allegations were made about the Government's policy. I shall touch on only a few that we have heard, perhaps on both sides of the House but certainly from Opposition Members. A recurring Opposition allegation—
Mr. Owen Paterson: Will the Minister give way?
Ms Jackson: No.
A recurring Opposition allegation related to building on green-belt land.
Mr. Paterson rose—
Ms Jackson: I said no. That is another example of Opposition Members' inability to listen.
As my right hon. Friend the Secretary of State made clear in a statement to the House only a few days ago, we have abandoned the old predict and provide policy with regard to house building. We will work from the bottom up. We have asked for 60 per cent. of building to take place on brown-field sites. It was the Conservative party that built 60 per cent. of houses on green fields. In our 10 short months of government, we have added five times as much land to the green belt as has been lost.
Certain allegations were made about our ban on beef on the bone. Opposition Members described it as a panic measure. Let the record show, however, that independent scientists said that the material could be infected with BSE. The Conservative party banned all sales of infected material; we have done the same. It is vital to rebuild confidence in British beef at home and abroad.
More than once we were asked where was our right hon. Friend the Minister for the Environment. Let me allay the fears that may be pounding in the breasts of Opposition Members: my right hon. Friend is abroad on Government business.
Our manifesto pledged to recognise the special needs in rural areas, and our policies are being designed to take account of rural interests—it is quite wrong to suggest that we do not care or understand. The Government believe in opportunity, fairness and prosperity for all—applied equally to urban and to rural areas. We realise also that people who live and work in the countryside have distinctive needs. The rural dimension is an important consideration in many of the Government's policies.
Most important, we wish to foster a strong and vibrant rural economy. New jobs are being created in the countryside.
Mr. James Arbuthnot rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the original words stand part of the Question:—
The House divided: Ayes 131, Noes 321.

Division No. 188]

[9.59 pm

AYES

Ainsworth, Peter (E Survey)

Horam, John

Amess, David

Howard, Rt Hon Michael

Ancram, Rt Hon Michael

Howarth, Gerald (Aldershot)

Arbuthnot, James

Hunter, Andrew

Atkinson, David (Bour'mth E)

Jack, Rt Hon Michael

Atkinson, Peter (Hexham)

Jenkin, Bernard

Baldry, Tony

Johnson Smith, Rt Hon Sir Geoffrey

Bercow, John

Beresford, Sir Paul

Key, Robert

Blunt, Crispin

King, Rt Hon Tom (Bridgwater)

Boswell, Tim

Kirkbride, Miss Julie

Bottomley, Peter (Worthing W)

Laing, Mrs Eleanor

Bottomley, Rt Hon Mrs Virginia

Lait, Mrs Jacqui

Brady, Graham

Lansley, Andrew

Brazier, Julian

Leigh, Edward

Browning, Mrs Angela

Letwin, Oliver

Bruce, Ian (S Dorset)

Lewis, Dr Julian (New Forest E)

Burns, Simon

Lidington, David

Cash, William

Lilley, Rt Hon Peter

Chapman, Sir Sydney (Chipping Barnet)

Lloyd, Rt Hon Sir Peter (Fareham)

Luff, Peter

Chope, Christopher

Lyell, Rt Hon Sir Nicholas

Clappison, James

MacKay, Andrew

Clark, Rt Hon Alan (Kensington)

Maclean, Rt Hon David

Clarke, Rt Hon Kenneth (Rushcliffe)

McLoughlin, Patrick

Madel, Sir David

Clifton-Brown, Geoffrey

Major, Rt Hon John

Collins, Tim

Malins, Humfrey

Colvin, Michael

Maples, John

Cormack, Sir Patrick

Mates, Michael

Cran, James

Mawhinney, Rt Hon Sir Brian

Curry, Rt Hon David

May, Mrs Theresa

Davies, Quentin (Grantham)

Moss, Malcolm

Davis, Rt Hon David (Haltemprice)

Nicholls, Patrick

Day, Stephen

Norman, Archie

Duncan, Alan

Ottaway, Richard

Duncan Smith, Iain

Page, Richard

Emery, Rt Hon Sir Peter

Paice, James

Evans, Nigel

Paterson, Owen

Faber, David

Pickles, Eric

Fallon, Michael

Randall, John

Forth, Rt Hon Eric

Robertson, Laurence (Tewk'b'ry)

Fowler, Rt Hon Sir Norman

Ruffley, David

Fox, Dr Liam

St Aubyn, Nick

Fraser, Christopher

Sayeed, Jonathan

Gale, Roger

Shephard, Rt Hon Mrs Gillian

Garnier, Edward

Simpson, Keith (Mid-Norfolk)

Gibb, Nick

Soames, Nicholas

Gill, Christopher

Spelman, Mrs Caroline

Gillan, Mrs Cheryl

Spicer, Sir Michael

Gorman, Mrs Teresa

Spring, Richard

Gray, James

Stanley, Rt Hon Sir John

Green, Damian

Steen, Anthony

Greenway, John

Swayne, Desmond

Grieve, Dominic

Syms, Robert

Hague, Rt Hon William

Tapsell, Sir Peter

Hamilton, Rt Hon Sir Archie

Taylor, Ian (Esher & Walton)

Hammond, Philip

Townend, John

Hawkins, Nick

Tredinnick, David

Hayes, John

Trend, Michael

Heald, Oliver

Tyrie, Andrew

Heathcoat-Amory, Rt Hon David

Wardle, Charles

Heseltine, Rt Hon Michael

Waterson, Nigel

956

Whitney, Sir Raymond

Yeo, Tim

Widdecombe, Rt Hon Miss Ann

Young, Rt Hon Sir George

Wilkinson, John

Wilshire, David

Tellers for the Ayes:

Winterton, Mrs Ann (Congleton)

Mr. John M. Taylor and

Winterton, Nicholas (Macclesfield)

Mr. John Whittingdale.

NOES

Abbott, Ms Diane

Cryer, John (Hornchurch)

Ainger, Nick

Cunliffe, Lawrence

Ainsworth, Robert (Cov'try NE)

Cunningham, Rt Hon Dr John (Copeland)

Allan, Richard

Anderson, Donald (Swansea E)

Cunningham, Jim (Cov'try S)

Anderson, Janet (Rossendale)

Dafis, Cynog

Ashton, Joe

Dalyell, Tam

Atkins, Charlotte

Darting, Rt Hon Alistair

Austin, John

Darvill, Keith

Baker, Norman

Davey, Valerie (Bristol W)

Ballard, Mrs Jackie

Davidson, Ian

Banks, Tony

Davies, Rt Hon Denzil (Llanelli)

Barron, Kevin

Davies, Geraint (Croydon C)

Bayley, Hugh

Davies, Rt Hon Ron (Caerphilly)

Beard, Nigel

Davis, Terry (B'ham Hodge H)

Beckett, Rt Hon Mrs Margaret

Dawson, Hilton

Begg, Miss Anne

Dean, Mrs Janet

Benn, Rt Hon Tony

Denham, John

Bennett, Andrew F

Dismore, Andrew

Benton, Joe

Dobbin, Jim

Bermingham, Gerald

Donohoe, Brian H

Blackman, Liz

Doran, Frank

Blears, Ms Hazel

Dowd, Jim

Blizzard, Bob

Drew, David

Boateng, Paul

Drown, Ms Julia

Bradley, Keith (Withington)

Dunwoody, Mrs Gwyneth

Bradley, Peter (The Wrekin)

Edwards, Huw

Brake, Tom

Ellman, Mrs Louise

Brand, Dr Peter

Ennis, Jeff

Breed, Colin

Etherington, Bill

Brown, Rt Hon Nick (Newcastle E)

Fearn, Ronnie

Buck, Ms Karen

Field, Rt Hon Frank

Burden, Richard

Fisher, Mark

Burgon, Colin

Fitzpatrick, Jim

Burnett, John

Fitzsimons, Lorna

Burstow, Paul

Flint, Caroline

Cable, Dr Vincent

Follett, Barbara

Caborn, Richard

Foster, Don (Bath)

Campbell, Alan (Tynemouth)

Foster, Michael Jabez (Hastings)

Campbell, Mrs Anne (C'bridge)

Foster, Michael J (Worcester)

Campbell, Menzies (NE Fife)

Foulkes, George

Campbell—Savours, Dale

Fyfe, Maria

Cann, Jamie

Galloway, George

Caplin, Ivor

Gapes, Mike

Chapman, Ben (Wirral S)

Gardiner, Barry

Chidgey, David

George, Andrew (St Ives)

Chisholm, Malcolm

George, Bruce (Walsall S)

Clapham, Michael

Gerrard, Neil

Clark, Rt Hon Dr David (S Shields)

Gibson, Dr Ian

Clark, Dr Lynda (Edinburgh Pentlands)

Gilroy, Mrs Linda

Godman, Norman A

Clark, Paul (Gillingham)

Goggins, Paul

Clarke, Eric (Midlothian)

Golding, Mrs Llin

Clarke, Rt Hon Tom (Coatbridge)

Gordon, Mrs Eileen

Clarke, Tony (Northampton S)

Gorrie, Donald

Clelland, David

Griffiths, Jane (Reading E)

Coaker, Vernon

Griffiths, Nigel (Edinburgh S)

Coffey, Ms Ann

Griffiths, Win (Bridgend)

Cohen, Harry

Grogan, John

Colman, Tony

Gunnell, John

Cook, Frank (Stockton N)

Hain, Peter

Cooper, Yvette

Hall, Mike (Weaver Vale)

Corbett, Robin

Hall, Patrick (Bedford)

Cotter, Brian

Hamilton, Fabian (Leeds NE)

Cousins, Jim

Hanson, David

Cranston, Ross

Harris, Dr Evan

Crausby, David

Heal, Mrs Sylvia

Cryer, Mrs Ann (Keighley)

Healey, John

957

Heath, David (Somerton & Frome)

Maxton, John

Henderson, Doug (Newcastle N)

Meale, Alan

Henderson, Ivan (Harwich)

Michael, Alun

Heppell, John

Michie, Bill (Shefld Heeley)

Hesford, Stephen

Michie, Mrs Ray (Argyll & Bute)

Hinchliffe, David

Milburn, Alan

Hodge, Ms Margaret

Miller, Andrew

Hoey, Kate

Moffatt, Laura

Home Robertson, John

Moore, Michael

Hoon, Geoffrey

Moran, Ms Margaret

Hope, Phil

Morgan, Ms Julie (Cardiff N)

Hopkins, Kelvin

Morley, Elliot

Howarth, George (Knowsley N)

Mudie, George

Hughes, Ms Beverley (Stretford)

Mullin, Chris

Hughes, Kevin (Doncaster N)

Murphy, Denis (Wansbeck)

Hurst, Alan

Murphy, Jim (Eastwood)

Hutton, John

Oaten, Mark

Iddon, Dr Brian

O'Brien, Bill (Normanton)

Illsley, Eric

O'Hara, Eddie

Ingram, Adam

Olner, Bill

Jackson, Ms Glenda (Hampstead)

Öpik, Lembit

Jackson, Helen (Hillsborough)

Organ, Mrs Diana

Jenkins, Brian

Palmer, Dr Nick

Johnson, Alan (Hull W & Hessle)

Pearson, Ian

Johnson, Miss Melanie (Welwyn Hatfield)

Pendry, Tom

Perham, Ms Linda

Jones, Helen (Warrington N)

Pickthall, Colin

Jones, leuan Wyn (Ynys Môn)

Pike, Peter L

Jones, Ms Jenny (Wolverh'ton SW)

Plaskitt, James

Pope, Greg

Jones, Jon Owen (Cardiff C)

Pound, Stephen

Jones, Dr Lynne (Selly Oak)

Powell, Sir Raymond

Jones, Nigel (Cheltenham)

Prentice, Ms Bridget (Lewisham E)

Jowell, Ms Tessa

Prentice, Gordon (Pendle)

Keeble, Ms Sally

Prescott, Rt Hon John

Keen, Alan (Feltham & Heston)

Primarolo, Dawn

Keen, Ann (Brentford & Isleworth)

Prosser, Gwyn

Keetch, Paul

Purchase, Ken

Kelly, Ms Ruth

Quin, Ms Joyce

Kemp, Fraser

Quinn, Lawrie

Kennedy, Charles (Ross Skye)

Rammell, Bill

Kidney, David

Raynsford, Nick

Kilfoyle, Peter

Reid, Dr John (Hamilton N)

Lawrence, Ms Jackie

Rendel, David

Lepper, David

Robertson, Rt Hon George (Hamilton S)

Levitt, Tom

Lewis, Ivan (Bury S)

Roche, Mrs Barbara

Lewis, Terry (Worsley)

Rogers, Allan

Liddell, Mrs Helen

Rooker, Jeff

Linton, Martin

Rooney, Terry

Livingstone, Ken

Ross, Ernie (Dundee W)

Livsey, Richard

Roy, Frank

Lloyd, Tony (Manchester C)

Ruane, Chris

Llwyd, Elfyn

Russell, Bob (Colchester)

Lock, David

Salter, Martin

Love, Andrew

Sanders, Adrian

McAllion, John

Sawford, Phil

McAvoy, Thomas

Sedgemore, Brian

McCabe, Steve

Sheerman, Barry

McDonagh, Siobhain

Sheldon, Rt Hon Robert

McDonnell, John

Shipley, Ms Debra

McFall, John

Short, Rt Hon Clare

McGuire, Mrs Anne

Simpson, Alan (Nottingham S)

McIsaac, Shona

Singh, Marsha

McKenna, Mrs Rosemary

Skinner, Dennis

Mackinlay, Andrew

Smith, Angela (Basildon)

McLeish, Henry

Smith, John (Glamorgan)

McNamara, Kevin

Smith, Llew (Blaenau Gwent)

Mactaggart, Fiona

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

McWilliam, John

Snape, Peter

Mahon, Mrs Alice

Soley, Clive

Marek, Dr John

Spellar, John

Marsden, Gordon (Blackpool S)

Stevenson, George

Marshall, David (Shettleston)

Stewart, Ian (Eccles)

Marshall, Jim (Leicester S)

Stinchcombe, Paul

Martlew, Eric

Stott, Roger

958

Straw, Rt Hon Jack

Webb, Steve

Stringer, Graham

Whitehead, Dr Alan

Sutcliffe, Gerry

Wicks, Malcolm

Taylor, Rt Hon Mrs Ann (Dewsbury)

Wigley, Rt Hon Dafydd

Williams, Fit Hon Alan (Swansea W)

Taylor, David (NW Leics)

Thomas, Gareth (Clwyd W)

Williams, Alan W (E Carmarthen)

Thomas, Gareth R (Harrow W)

Williams, Mrs Betty (Conwy)

Tipping, Paddy

Willis, Phil

Touhig, Don

Winnick, David

Trickett, Jon

Winterton, Ms Rosie (Doncaster C)

Truswell, Paul

Wise, Audrey

Turner, Dennis (Wolverh'ton SE)

Wood, Mike

Turner, Dr George (NW Norfolk)

Worthington, Tony

Twigg, Derek (Halton)

Wray, James

Tyler, Paul

Wright, Anthony D (Gt Yarmouth)

Vis, Dr Rudi

Wright, Dr Tony (Cannock)

Wallace, James

Wyatt, Derek

Walley, Ms Joan

Ward, Ms Claire

Tellers for the Noes:

Wareing, Robert N

Mr. Clive Betts and

Watts, David

Mr. Graham Allen.

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
The House divided: Ayes 265, Noes 163.

Division No. 189]

[10.13 pm

AYES

Ainger, Nick

Clelland, David

Ainsworth, Robert (Cov'try NE)

Coaker, Vernon

Anderson, Donald (Swansea E)

Coffey, Ms Ann

Anderson, Janet (Rossendale)

Cohen, Harry

Atkins, Charlotte

Colman, Tony

Austin, John

Cooper, Yvette

Banks, Tony

Corbett, Robin

Barron, Kevin

Cousins, Jim

Bayley, Hugh

Cranston, Ross

Beard, Nigel

Crausby, David

Beckett, Rt Hon Mrs Margaret

Cryer, Mrs Ann (Keighley)

Begg, Miss Anne

Cryer, John (Hornchurch)

Benn, Rt Hon Tony

Cunliffe, Lawrence

Bennett, Andrew F

Cunningham, Rt Hon Dr John (Copeland)

Benton, Joe

Bermingham, Gerald

Cunningham, Jim (Cov'try S)

Blackman, Liz

Dalyell, Tam

Blears, Ms Hazel

Darting, Rt Hon Alistair

Blizzard, Bob

Darvill, Keith

Boateng, Paul

Davey, Valerie (Bristol W)

Bradley, Keith (Withington)

Davidson, Ian

Bradley, Peter (The Wrekin)

Davies, Geraint (Croydon C)

Brown, Rt Hon Nick (Newcastle E)

Davis, Terry (B'ham Hodge H)

Buck, Ms Karen

Dawson, Hilton

Burden, Richard

Dean, Mrs Janet

Burgon, Colin

Denham, John

Caborn, Richard

Dismore, Andrew

Campbell, Alan (Tynemouth)

Dobbin, Jim

Campbell, Mrs Anne (C'bridge)

Donohoe, Brian H

Campbell—Savours, Dale

Doran, Frank

Cann, Jamie

Dowd, Jim

Caplin, Ivor

Drew, David

Chapman, Ben (Wirral S)

Drown, Ms Julia

Chisholm, Malcolm

Ellman, Mrs Louise

Clapham, Michael

Ennis, Jeff

Clark, Rt Hon Dr David (S Shields)

Fitzpatrick, Jim

Clark, Dr Lynda (Edinburgh Pentlands)

Fitzsimons, Lorna

Flint, Caroline

Clark, Paul (Gillingham)

Follett, Barbara

Clarke, Eric (Midlothian)

Foster, Michael Jabez (Hastings)

Clarke, Rt Hon Tom (Coatbridge)

Foster, Michael J (Worcester)

Clarke, Tony (Northampton S)

Foulkes, George

959

Fyfe, Maria

McGuire, Mrs Anne

Galloway, George

McIsaac, Shona

Gapes, Mike

McKenna, Mrs Rosemary

Gardiner, Barry

Mackinlay, Andrew

George, Bruce (Walsall S)

McNamara, Kevin

Gerrard, Neil

Mactaggart, Fiona

Gibson, Dr Ian

McWilliam, John

Gilroy, Mrs Linda

Mahon, Mrs Alice

Godman, Norman A

Marek, Dr John

Goggins, Paul

Marsden, Gordon (Blackpool S)

Golding, Mrs Llin

Marshall, David (Shettleston)

Gordon, Mrs Eileen

Marshall, Jim (Leicester S)

Griffiths, Jane (Reading E)

Martlew, Eric

Griffiths, Nigel (Edinburgh S)

Maxton, John

Griffiths, Win (Bridgend)

Meale, Alan

Grogan, John

Michael, Alun

Gunnell, John

Michie, Bill (Shefld Heeley)

Hain, Peter

Milburn, Alan

Hall, Mike (Weaver Vale)

Miller, Andrew

Hall, Patrick (Bedford)

Moffatt, Laura

Hamilton, Fabian (Leeds NE)

Moran, Ms Margaret

Hanson, David

Morgan, Ms Julie (Cardiff N)

Heal, Mrs Sylvia

Morley, Elliot

Healey, John

Mudie, George

Henderson, Ivan (Harwich)

Mullin, Chris

Heppell, John

Murphy, Denis (Wansbeck)

Hesford, Stephen

Murphy, Jim (Eastwood)

Hodge, Ms Margaret

O'Brien, Bill (Normanton)

Home Robertson, John

O'Hara, Eddie

Hoon, Geoffrey

Olner, Bill

Hope, Phil

Organ, Mrs Diana

Hopkins, Kelvin

Palmer, Dr Nick

Howarth, George (Knowsley N)

Pearson, Ian

Hughes, Ms Beverley (Stretfond)

Pendry, Tom

Hughes, Kevin (Doncaster N)

Perham, Ms Linda

Hurst, Alan

Pickthall, Colin

Hutton, John

Pike, Peter L

Iddon, Dr Brian

Plaskitt, James

Illsley, Eric

Pope, Greg

Ingram, Adam

Powell, Sir Raymond

Jackson, Ms Glenda (Hampstead)

Prentice, Ms Bridget (Lewisham E)

Jackson, Helen (Hillsborough)

Prentice, Gordon (Pendle)

Jenkins, Brian

Prescott, Rt Hon John

Johnson, Alan (Hull W & Hessle)

Primarolo, Dawn

Johnson, Miss Melanie (Welwyn Hatfield)

Prosser, Gwyn

Purchase, Ken

Jones, Helen (Warrington N)

Quin, Ms Joyce

Jones, Ms Jenny (Wolverh'ton SW)

Quinn, Lawrie

Rammell, Bill

Jones, Jon Owen (Cardiff C)

Raynsford, Nick

Jones, Dr Lynne (Selly Oak)

Reid, Dr John (Hamilton N)

Jowell, Ms Tessa

Robertson, Rt Hon George (Hamilton S)

Keeble, Ms Sally

Keen, Alan (Feltham & Heston)

Roche, Mrs Barbara

Keen, Ann (Brentford & Isleworth)

Rogers, Allan

Kelly, Ms Ruth

Rooker, Jeff

Kemp, Fraser

Rooney, Terry

Kidney, David

Ross, Ernie (Dundee W)

Kilfoyle, Peter

Roy, Frank

Lawrence, Ms Jackie

Ruane, Chris

Lepper, David

Salter, Martin

Levitt, Tom

Sawford, Phil

Lewis, Ivan (Bury S)

Sedgemore, Brian

Lewis, Terry (Worsley)

Sheerman, Barry

Liddell, Mrs Helen

Sheldon, Rt Hon Robert

Linton, Martin

Shipley, Ms Debra

Livingstone, Ken

Simpson, Alan (Nottingham S)

Lloyd, Tony (Manchester C)

Singh, Marsha

Lock, David

Skinner, Dennis

Love, Andrew

Smith, Angela (Basildon)

McAllion, John

Smith, John (Glamorgan)

McAvoy, Thomas

Smith, Llew (Blaenau Gwent)

McCabe, Steve

Snape, Peter

McDonagh, Siobhain

Soley, Clive

McDonnell, John

Spellar, John

McFall, John

Stevenson, George

960

Stewart, Ian (Eccles)

Ward, Ms Claire

Stinchcombe, Paul

Wareing, Robert N

Stott, Roger

Watts, David

Straw, Rt Hon Jack

Whitehead, Dr Alan

Stringer, Graham

Williams, Rt Hon Alan (Swansea W)

Sutcliffe, Gerry

Taylor, Rt Hon Mrs Ann (Dewsbury)

Williams, Alan W (E Carmarthen)

Williams, Mrs Betty (Conwy)

Taylor, David (NW Leics)

Winnick, David

Thomas, Gareth (Clwyd W)

Winterton, Ms Rosie (Doncaster C)

Thomas, Gareth R (Harrow W)

Wise, Audrey

Tipping, Paddy

Wood, Mike

Touhig, Don

Worthington, Tony

Trickett, Jon

Wray, James

Truswell, Paul

Wright, Anthony D (Gt Yarmouth)

Turner, Dennis (Wolverh'ton SE)

Wyatt, Derek

Turner, Dr George (NW Norfolk)

Twigg, Derek (Halton)

Tellers for the Ayes:

Vis, Dr Rudi

Mr. Clive Betts and

Walley, Ms Joan

Mr. Graham Allen.

NOES

Ainsworth, Peter (E Surrey)

George, Andrew (St Ives)

Allan, Richard

Gibb, Nick

Amess, David

Gill, Christopher

Ancram, Rt Hon Michael

Gillan, Mrs Cheryl

Arbuthnot, James

Gorman, Mrs Teresa

Atkinson, David (Bour'mth E)

Gorrie, Donald

Atkinson, Peter (Hexham)

Gray, James

Baker, Norman

Green, Damian

Ballard, Mrs Jackie

Greenway, John

Bercow, John

Grieve, Dominic

Beresford, Sir Paul

Hague, Rt Hon William

Blunt, Crispin

Hamilton, Rt Hon Sir Archie

Boswell, Tim

Hammond, Philip

Bottomley, Peter (Worthing W)

Harris, Dr Evan

Bottomley, Rt Hon Mrs Virginia

Hawkins, Nick

Brady, Graham

Hayes, John

Brake, Tom

Heald, Oliver

Brand, Dr Peter

Heath, David (Somerton & Frome)

Brazier, Julian

Heathcoat—Amory, Rt Hon David

Breed, Colin

Horam, John

Browning, Mrs Angela

Howard, Rt Hon Michael

Bruce, Ian (S Dorset)

Howarth, Gerald (Aldershot)

Burnett, John

Hughes, Simon (Southwark N)

Burns, Simon

Hunter, Andrew

Burstow, Paul

Jack, Rt Hon Michael

Cable, Dr Vincent

Jenkin, Bernard

Campbell, Menzies (NE Fife)

Johnson Smith, Rt Hon Sir Geoffrey

Cash, William

Chapman, Sir Sydney (Chipping Barnet)

Jones, leuan Wyn (Ynys Môn)

Jones, Nigel (Cheltenham)

Chope, Christopher

Keetch, Paul

Clappison, James

Kennedy, Charles (Ross Skye)

Clark, Rt Hon Alan (Kensington)

Key, Robert

Clifton—Brown, Geoffrey

King, Rt Hon Tom (Bridgwater)

Collins, Tim

Kirkbride, Miss Julie

Colvin, Michael

Laing, Mrs Eleanor

Cormack, Sir Patrick

Lait, Mrs Jacqui

Cotter, Brian

Lansley, Andrew

Cran, James

Leigh, Edward

Curry, Rt Hon David

Letwin, Oliver

Dafis, Cynog

Lewis, Dr Julian (New Forest E)

Davies, Quentin (Grantham)

Lidington, David

Davis, Rt Hon David (Haltemprice)

Lilley, Rt Hon Peter

Day, Stephen

Livsey, Richard

Duncan Smith, Iain

Lloyd, Rt Hon Sir Peter (Fareham)

Evans, Nigel

Llwyd, Elfyn

Faber, David

Luff, Peter

Fallon, Michael

Lyell, Rt Hon Sir Nicholas

Fearn, Ronnie

MacKay, Andrew

Foster, Don (Bath)

Maclean, Rt Hon David

Fowler, Rt Hon Sir Norman

McLoughlin, Patrick

Fox, Dr Liam

Madel, Sir David

Fraser, Christopher

Maginnis, Ken

Garnier, Edward

Major, Rt Hon John

961

Malins, Humfrey

Spicer, Sir Michael

Maples, John

Spring, Richard

Mates, Michael

Stanley, Rt Hon Sir John

Mawhinney, Rt Hon Sir Brian

Steen, Anthony

May, Mrs Theresa

Swayne, Desmond

Michie, Mrs Ray (Argyll & Bute)

Syms, Robert

Moore, Michael

Tapsell, Sir Peter

Moss, Malcolm

Taylor, Ian (Esher & Walton)

Nicholls, Patrick

Townend, John

Norman, Archie

Tredinnick, David

Oaten, Mark

Trend, Michael

Öpik, Lembit

Tyler, Paul

Ottaway, Richard

Tyrie, Andrew

Page, Richard

Viggers, Peter

Paice, James

Wallace, James

Paterson, Owen

Wardle, Charles

Pickles, Eric

Waterson, Nigel

Randall, John

Webb, Steve

Rendel, David

Whitney, Sir Raymond

Robertson, Laurence (Tewk'b'ry)

Widdecombe, Rt Hon Miss Ann

Ruffley, David

Wigley, Rt Hon Dafydd

Russell, Bob (Colchester)

Wilkinson, John

St Aubyn, Nick

Wilshire, David

Sanders, Adrian

Winterton, Mrs Ann (Congleton)

Sayeed, Jonathan

Winterton, Nicholas (Macclesfield)

Shephard, Rt Hon Mrs Gillian

Yeo, Tim

Simpson, Keith (Mid-Norfolk)

Young, Rt Hon Sir George

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

Tellers for the Noes:

Soames, Nicholas

Mr. John M. Taylor and

Spelman, Mrs Caroline

Mr. John Whittingdale.

Question accordingly agreed to.
MR. DEPUTY SPEAKER forthwith declared the main question, as amended, to be agreed to.
Resolved,
That this House condemns the previous administration for its persistent neglect of the countryside over the past eighteen years which resulted in rural unemployment and deprivation and the collapse of the rural transport system; and congratulates the Government on its emphatic commitment to comprehensive countryside policies, to reform of the Common Agricultural Policy, to successful, sustainable United Kingdom agriculture, and on its vision for a countryside that is strong, fair and modern, with a programme for social justice, inclusiveness, welfare reform, improving services, the national minimum wage, education and skills which will ensure prosperity for all in rural areas as well as in the towns.
MR. GRAHAM ALLEN (Lord Commissioner to the Treasury) and MR. JOHN M. TAYLOR, who acted as Tellers in Division No. 187, came to the Table.
Mr. Allen: I have to report an error in the number reported as having voted in the No Lobby in the Division at 7 o'clock on the first Opposition motion. The number voting no was 320, not 329 as reported.
Mr. Deputy Speaker: The Clerk will arrange that the record is corrected.

DELEGATED LEGISLATION
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

NORTHERN IRELAND
That the draft Appropriation (Northern Ireland) Order 1998, which was laid before this House on 12th February, be approved.—[Mr. Kevin Hughes.]
Question agreed to.

Heavily Indebted Countries
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kevin Hughes.]
Mr. Deputy Speaker (Sir Alan Haselhurst): Perhaps the hon. Member for Wythenshawe and Sale, East (Mr. Goggins) should wait a moment while hon. Members leave the Chamber as quickly and as quietly as possible.
10.25 pm
Mr. Paul Goggins: Thank you for protecting my first paragraph, Mr. Deputy Speaker. I am grateful for the opportunity to initiate this Adjournment debate on the problems and opportunities associated with third-world debt. For me the timing is particularly appropriate, since today I accompanied my right hon. Friend the Secretary of State for International Development to meet Church groups in my constituency that have campaigned for many years on behalf of the one in four people in the world who live in abject poverty. My right hon. Friend was extremely well received. It is appropriate, too, because we are merely weeks away from important meetings of the International Monetary Fund and the World bank, as well as the Group of Seven meeting in Birmingham and we have reached a crucial point in the international strategy for reducing the debt of the world's poorest countries—the heavily indebted poor countries initiative, or HIPCI.
I see nothing wrong in any country, rich or poor, borrowing to invest to deliver a developing and sustainable economy. Indeed, one of the problems facing the poorest countries of the world is finding people who want to invest in their countries. In the 1970s and 1980s, many of the poorest countries were given loans that they could never hope to repay. Sometimes the creditors behaved irresponsibly, sometimes the Governments of the debtor countries were corrupt. Also, there were fluctuating interest rates, currency depreciations, falls in export prices, wars and drought, and all impacted on the world's poorest countries.
As an example of how the debt burden grew, in 1962 the countries of sub-Saharan Africa had a total debt of $3 billion, but today that total stands at $235 billion. In 1996, the World bank and the IMF, with considerable support it must be said from the right hon. and learned Member for Rushcliffe (Mr. Clarke), then the Chancellor of the Exchequer, established HIPCI, to provide the most heavily indebted and poverty-stricken countries with a robust exit from the burden of unsustainable debt. They identified 41 countries with a total population of 700 million people, which all had external debts valued at more than double their export earnings. Of course, many countries were in a much worse position. For example, Mozambique has debts of 10 times the value of its export earnings.
The advantages of HIPCI are that it provided a comprehensive assessment of each country's level of debt. It put in place a one-off system of debt reduction via the Paris club of Government creditors. For the first time ever, the IMF and the World bank agreed to provide debt relief themselves and they went beyond the existing Naples terms, which limited debt reduction to 67 per cent., moving instead to a new level of 80 per cent.
964
Moreover—many would argue that this was not an advantage—it was agreed that debt reduction would take place only after a six-year period of compliance, in which debtor countries had to achieve structural adjustment targets. It was recognised that, although the debts of the world's poorest countries were not a threat to the international finance system, they were a tax on economic progress and prevented sustainable growth and development.
That was why HIPCI was started. It was greeted with great acclaim—it was as if James Wolfensohn, the president of the World bank, had come as a modern messiah to bring good news to the poor. The truth is that, 18 months on, HIPCI is in some difficulty, partly because of the framework and the criteria that were laid down, and partly because of a lack of political will from a number of creditor Governments, not—I hasten to add—including the United Kingdom Government. As things stand, of the 41 heavily indebted poor countries, only Uganda and Bolivia will receive help in 1998—the majority will receive no help until into the next century.
The case of Mozambique, the poorest country in the world, has brought into focus the problems of HIPCI. Mozambique built up most of its debt during a 16-year civil war, which ended in total economic collapse. Despite its problems, however, it has started to turn round the situation. In 1996, its economy grew by 6 per cent. and its exports had risen by 30 per cent. Nevertheless, its exports are worth only $225 million—roughly what the country needs to service its debt repayments.
The price of Mozambique's indebtedness is paid by her people: 10 million people have no access to safe drinking water; 1 million children are not able to attend primary school; and 200,000 children will die this year before they reach their fifth birthday. One of Mozambique's major difficulties has been the HIPCI rules, which allow only 80 per cent. debt relief, despite the fact that most experts agree that 90 per cent. is required.
I know that, at the recent Paris club meeting, representatives managed to break through the 80 per cent. ceiling, but there is still a deficit of $100 million. Again, I praise the UK Government, who have contributed a further $10 million to try to fill that gap, in the hope that others will be moved to match that figure. It is clear that, unless creditors are prepared to change the rules and adopt a more urgent and generous approach, HIPCI for Mozambique and for many others is in grave danger.
One of the countries that may suffer is Tanzania, which has been implementing structural adjustment programmes since the mid-1980s, and which has received full marks from the IMF for its economic performance over the past two years. However, it spends a third of its export earnings on servicing its debts; it spends on debt four times what it spends on primary education or on health provision. Under HIPCI's current terms, the best that Tanzania can hope for is that next year its creditors may agree how to share out the debt reduction burden—by 2002, it may receive some actual relief.
Even the two countries that will receive help this year—Uganda and Bolivia—have not gained as much from HIPCI as they expected. Delays have cost Uganda an estimated $193 million, and overestimation of sustainable debt levels has cost Bolivia an estimated $241 million. HIPCI is in danger of delivering too little,

965
too late. Unless something is done, we are in grave danger that it will not deliver what was originally intended.
I offer some proposals, which are supported by a number of development experts and which, I believe, should be considered. We should review the definition of debt sustainability, which currently includes a ratio of debt repayment to export income of 20:25 per cent., and a ratio of total debt to export income of 200:250 per cent. I simply ask why. No one has yet been able to give a convincing justification of those levels—perhaps my hon. Friend the Economic Secretary can. At best, they seem arbitrary, and, at worst, they seem to have been set to suit the creditor, not the debtor.
We should set a limit on the proportion of Government revenue that can be spent on servicing debt—say, 15 per cent. Countries should clearly pay something to wipe out their debts, but every dollar spent servicing debt is another dollar less for education, health and sanitation.
We should review the time scales governing HIPCI. I recognise that it is extremely important for poor indebted countries to have sustainable and sound economies, but to tell a country in which one fifth of children die before their fifth birthday that it will have to wait until 2002 is simply not acceptable. It may be acceptable in the world of economic theory, but in the real world of suffering, six years is too long to wait.
We need more flexibility about the 80 per cent. debt relief ceiling. We should not expect the needs of the world's poorest people to be limited by a technical formula. If Mozambique needs 90 per cent. debt relief, it should get it. I acknowledge the United Kingdom's recent initiative, but that 90 per cent. should be given as a right, not as a fudge, which smacks more of charity than of justice and, more importantly, allows the unenthusiastic to drag their feet.
Rules and regulations count for nothing unless the IMF, the World bank and creditor Governments show more compassion and a greater sense of urgency: the kind of urgency, I might argue, that helped to put together the $100 billion package for south-east Asia in a matter of three months.
I want to emphasise the positive role played by our Government, particularly through the Mauritius mandate. No doubt my hon. Friend the Minister will outline some of the details of that mandate, which was a genuine attempt to speed up the process and deliver some practical help. That spirit is not shared by all creditors. In particular, I cite Italy, Japan and Germany.
Germany's attitude is perhaps the hardest to understand. Last Friday was the 45th anniversary of the London agreement, which arose from Germany's inability to service its debts after the second world war, and under which 50 per cent. of those debts were cancelled; yet now, Germany drags its feet over an initiative that would cost in total 5 per cent. of the cost of reunification.
New priorities and a change of heart are needed. Organisations such as Oxfam, Christian Aid, the Catholic Fund for Overseas Development and, more recently, Jubilee 2000, are playing a vital part. Jubilee 2000 is especially to be praised. The idea of jubilee is rooted in Leviticus. It was an opportunity, every 50 years, to restore balance to economic life; to forgive debts; and to let the slaves go free. As is often pointed out, that did not always
966
happen—people were as human then as they are now—but it was an aspiration and an inspiration, as it can be for us today.
The millennium can be a special time, a one-off moment for doing something extraordinary: cancelling the debts of the poorest countries and releasing the cash to reduce poverty. As a millennium project, that has the capacity to fire our nation's imagination. A nation that overturned the political status quo on 1 May and that mourned so deeply for Princess Diana is ready for a humane project that can bring progress and justice to 700 million of the world's poorest people.
Evidence of the potential popularity of such a scheme was contained in a MORI poll commissioned recently by CAFOD. Given a choice between writing off third-world debt and funding the millennium dome, people opted by four to one for the former. One in five ranked cancelling the unpayable debts of the world's poorest countries as the best way in which to celebrate the millennium.
In total, this country will spend £2.7 billion of public money on millennium projects. That is enough to cancel the debts of the 11 poorest African countries. How do we make the breakthrough? We have to start by talking in a more practical way: perhaps a little less about the telephone number debt figures owed by poor countries, and rather more about the millions of mothers in those countries who die in childbirth. The way we talk—the words and the pictures we use—can add urgency to our initiative and can help us to see that it is achievable. We could deliver the whole HIPC initiative for what Americans spend in one year on training shoes.
We must also think of debt reduction as poverty reduction. Let us forgive the debts, but let us also insist that the money is spent on health, education and clean water. In the first 10 months of our Government, we have seen priority given to health and education, which are popular causes. Let us ensure that we insist on the same standards for the world's poorest people. That is the approach that we are already taking when we link export guarantees to productive investment.
The Jubilee 2000 campaign has a prayer that will have meaning for believers and non-believers alike. It says:
"O God, to whom we owe more than we can count, in our desire to control all that will come to be, we hold your other children in the grip of debt which they cannot repay; and make them suffer now the poverty we dread. Do not hold us to our debts but unchain our fear, that we may release others into an open future of unbounded hope."
Let us take that golden opportunity to remove the burden of debt from the world's poorest countries and give their people real hope for the new millennium.
10.40 pm
The Economic Secretary to the Treasury (Mrs. Helen Liddell): I congratulate my hon. Friend the Member for Wythenshawe and Sale, East (Mr. Goggins) on securing this Adjournment debate, which is most timely because of the significance of the issues and the international conferences that are looming on the subject. It is also timely because, as my hon. Friend reminded us in his closing remarks, we are in the Lenten season, which is a time of reflection. Many of us are impressed by the commitment and compassion that my hon. Friend has shown in raising these important issues.
It is important for all of us who live in the advanced world to recognise that the world's poorest and most heavily indebted countries need urgent help with their

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debt problems. The debate is also timely because, as my hon. Friend said, we must consider the current state of the heavily indebted poor countries' initiative. Given the level of public feeling and the great resolve that has been shown recently by the international community in dealing with financial instability in Asia, it has become doubly important to ensure that the debt problems of the desperately poor countries are dealt with effectively and permanently, and that they are not squeezed out of our international economic debate by the scale of the problems experienced in wealthier economies.
Since the initiative was launched by the World bank and the International Monetary Fund in September 1996, we have seen some progress. Four countries—Uganda, Bolivia, Burkina Faso and Guyana—have had decisions on the level of relief that they will receive under the HIPC initiative. In a few weeks' time in April, Uganda will be the first country to receive relief. My right hon. Friend the Secretary of State for International Development has already announced a contribution by the Government of £6.5 million to help the African Development bank meet the costs of debt relief. Uganda will be followed by Bolivia in September, and Guyana in December. Burkina Faso will receive its relief under the initiative in April 2000. I recognise the problems that those countries will face, but the scale is enormous indeed.
A start has been made, but it does not yet make the HIPC initiative an undeniable success. In the speech by my right hon. Friend the Chancellor of the Exchequer—the Mauritius mandate speech, as it is now known—he set out targets that he felt that the international community should adopt to ensure the rapid and flexible implementation of the HIPC initiative.
One goal is for three quarters of the 20 countries initially identified by the International Monetary Fund and World bank as possibly needing HIPC relief to receive decisions on the timing and level of debt relief by the new millennium. I accept my hon. Friend's point about the significance of marking the millennium not only by celebration, but by recognising that many people in many parts of the world do not have the wherewithal or the will to celebrate if they live in poverty. I believe that the target set in the Mauritius mandate is attainable, but it will not and cannot be reached without very substantial efforts by the international community, as well as by the debtor countries, which must acknowledge their responsibility for putting to rights their economic problems.
My hon. Friend was right to draw our attention to the need for the international community urgently to demonstrate its commitment in the case of Mozambique, which spends twice as much on servicing its debts as on the basic services of health care and education. Even then, it manages to meet only about a third of its debt obligations. It is a severely indebted country which has, as he said, demonstrated its commitment to reform, but it awaits a decision from creditors to provide the necessary debt relief to reduce its debt burden to a sustainable level.
My hon. Friend movingly described the human cost of Mozambique's economic crisis. IMF figures show that to reach debt sustainability, Mozambique will require a debt write-off of about 88 per cent. I shall come to debt sustainability in a minute. The UK has consistently argued that the Paris club of Government creditors should provide debt relief of up to 90 per cent. in the special case
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of Mozambique. Despite that, the Paris club agreed in January to provide debt relief equivalent only to an 85 per cent. write-off. The outstanding amount is some $100 million dollars. Without that money, the IMF and World bank boards have been unable to proceed with HIPC relief for the most deserving candidates. Mozambique is a crucial test case for the seriousness of the international community's commitment to debt relief and the HIPC initiative.
My hon. Friend asked about the debt sustainability criteria. Debt sustainability is defined in terms of an agreed ratio based on empirical studies by the World bank and the IMF on debtors' debt service performance over time. It is only an indicative analysis, but I hope that at least by reducing debts to such a level, we shall come nearer to the point of preventing the build-up of arrears, while allowing debtor countries the necessary development costs of health and education. I understand my hon. Friend's frustration about the time that that is taking, but we must concentrate countries' minds on debt relief.
Tracking the record of reform is a key indicator that sensible policies will be sustained. There is a need to ensure that structural problems are put right to make sure that the situation never again occurs. Countries get help from international financial institutions, donors and bilateral creditors while they are establishing a track record. For countries that have already established long track records, the UK will continue to argue that it is absurd to ask for further lengthy periods of such policies before debt relief is available. We have been successful in doing that for both Uganda and Guyana.
The UK, with some other creditors, has suggested that individual donors contribute bilaterally to raise the necessary $100 million. My right hon. Friend the Chancellor has written to his counterparts in the G10, urging them to help to resolve the problem, and he and my right hon. Friend the Secretary of State for International Development met the president of the World bank last week to discuss possible solutions.
After that meeting, we announced that we—the United Kingdom Government—would commit up to $10 million of aid funds to filling the financing gap. That contribution is on top of the £10 million that my right hon. Friend the Secretary of State for International Development has already committed, through her Department's bilateral aid programme, to help Mozambique to meet the costs of servicing its loans from the multilateral development banks.
I am hopeful that those efforts, along with the considerable work being done at the World bank and the IMF, will bring a rapid solution to the problem. Last month, I was in Washington, where I raised the matter again with the World bank and the US Treasury.
Decisions are expected in the coming months on Cote d'Ivoire, Mali and Mauritania. If those go smoothly and a solution is found for Mozambique, we shall be able to say that the HIPC initiative is well on track. To meet the Chancellor's Mauritius mandate targets, however, greater efforts will be required to ensure that all the countries identified under the initiative receive relief as quickly as possible.
As my hon. Friend pointed out, the United Kingdom is leading the way in making that effort, not least in our capacity as president of the G7. The HIPC initiative will

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be on the agenda in the context of development issues at the summit in Birmingham on 15 to 17 May. I hope, as do the Government, that that discussion can pave the way for more flexible and rapid implementation of the HIPC initiative, in line with the goals set out in the Mauritius mandate.
After the recent meeting of G7 finance Ministers and central bank governors, a communique was published which expressed the hope that all the 41 countries identified under the HIPC initiative would have begun the process of securing the debt relief that they needed by the year 2000.
My hon. Friend referred to the work done by the Churches, and I pay tribute to that. The Government have engaged in regular dialogue with Church leaders and NGO directors on the HIPC initiative. In December last year, my right hon. Friend the Chancellor held a seminar on the issues at No. 11 Downing street. The discussion was constructive, and showed that, although our final objectives may differ in some respects, there is much common ground between the Government and those other groups. On 17 February, my right hon. Friends the Chancellor and the Secretary of State for International Development met the president of the World bank, as well as a smaller group of Church representatives. It is important that that dialogue continues.
My hon. Friend may be interested to know that my fellow Ministers on ECOFIN are already finding that NGOs and Church communities in their countries are putting pressure on them in relation to HIPC. That is a useful development.
In the HIPC initiative, the IMF and World bank have provided the international community with a tool for dealing with the unsustainable debt burdens of the world's
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most indebted countries. We support that initiative and we support a serious commitment by the international community to implementing it flexibly. There must be an equal commitment by the debtor countries to reform. Once that happens, those countries can look toward implementing policies that can lead to sustainable economic growth, which is necessary for long-term development and poverty alleviation.
My hon. Friend mentioned Tanzania, which is one of the countries initially identified as possibly needing extra debt relief under the HIPC initiative. We fully support such relief for Tanzania, providing that it adopts and adheres to economic and structural reforms. My right hon. Friend the Secretary of State for International Development has committed between £5 million and £10 million to help the Tanzanians to meet the costs of servicing some of their loans.
Debt sustainability is, in the case of every poor country, our first goal. It is not, however, the full solution to the problems faced by HIPC. In short, there is a need to act quickly and effectively. It is important to the House, the Government and the British people. In the past six months, I have received 3,000 letters and postcards, many of which were accompanied by donations from 2p to several pounds from ordinary men and women in this country seeking to ease the debt burdens of those who are much poorer than we are.
We as a Government are determined to fulfil the hopes of our own people and of those in the most indebted countries of the world. I am grateful to my hon. Friend for giving us an opportunity this evening to discuss this important and timely subject.
Question put and agreed to.
Adjourned accordingly at six minutes to Eleven o'clock.