Commons Sitting of 14 July 1999

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

  Iran
  Motion made, and Question proposed, That this House do now adjourn.—[Jane Kennedy.]
  9.33 am
  Mr. Steve McCabe: I am grateful to have this opportunity to raise matters concerning our current approach to relations with Iran. I realise that other hon. Members wish to speak in the debate, so I shall not speak for overlong.
  My own interest in events in Iran really began in the early 1980s, when I got to know some young Iranians who had come to the United Kingdom to pursue their academic studies, but suddenly found themselves trapped, unable to return to their home. Many of them were unsure of what was happening to their friends and relatives. I do not think that I need dwell on the horrors that took place in the aftermath of Iran's revolution—suffice it to say that there has been much suffering, which has continued now for more than 20 years.
  My question is whether things are really improving in Iran, and whether we should adopt a more relaxed approach to President Muhammad Khatami. When Khatami came to power, there were high hopes in some quarters; but I contend that Iran is still a rogue state. It is a state with no respect for human rights and no respect for other religions, but it is prepared to acquire and use weapons of mass destruction. It is a state that demonstrates outright hostility to women and rejects the basic tenets of democracy.
  Iran's record in human rights is a disgrace. It is a regime that glories in public executions—420 since Khatami came to power; and goodness knows how many more executions in private. It is a regime that delights in stoning people to death, even girls as young as 13. It is a regime in which, in a two-week period, more than 20 people might have their hands cut off. It is a regime that could easily rival General Pinochet's Chile in the number of people who mysteriously disappear.
  Recently, we witnessed the spectacle of members of Iran's Jewish community being arrested on trumped-up spying charges. We await guarantees of their safety, the protection of their religious beliefs, and their right to a fair trial. Today, can the Minister offer any assurances that those people will receive a fair trial, and that international observers will be allowed to oversee that trial?
  In April 1999, the United Nations Commission on Human Rights passed a motion of censure on Iran: the 44th such censure of the mullahs. Where, therefore, is the evidence of a new approach by the new regime?
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  We have been told that there have been concessions on the fatwa threatening the life of the author Salman Rushdie. Can the Minister say what those concessions are? Is he aware that, on 24 September 1997, the mullahs' Foreign Minister, Mr. Kamal Kharrazi, told CNN:
  "The death decree against Rushdie will never be rescinded"?
  Is it true—as Mr. Ansari, the chargé d'affaires in London said in October 1998—that the fatwa cannot be revoked, and that the British Government have accepted that? Is it true that, as far as Mr. Khatami is concerned, Salman Rushdie's life is just as much at risk as ever?
  One argument used to support Mr. Khatami's regime was that terrorism, and support for terrorism, would subside once he was in power. Why, then, have 35 Iranian dissidents, in countries around the world, been murdered by Iranian Government-sponsored hit squads during the reign of Mr. Khatami? When will Mr. Khatami's Government respond positively to requests from various Governments for information on the murders of Professor Rajavi, in Switzerland; of Mohammed Hossein Naghdi, in Italy; and of Zahra Rajabi, in Turkey?
  Why, on 10 June 1999, did the Iranian Government launch a Scud B missile attack, in violation of United Nations Security Council resolution 598, on an Iranian resistance camp?
  When Iraq acquires and threatens us with weapons of mass destruction, we take action to control that threat. Yet, in Iran, we have a regime that has already successfully test-fired the Shahab 3 missile, which could hit every major city in the region. They are a Government who are working to perfect intercontinental missiles.
  Mr. Tom Clarke: I am very grateful to my hon. Friend for giving way, and congratulate him on raising such an important subject at such a crucial time. Those of us who were on the 1988 delegation seeking the release of Terry Waite, John McCarthy and Brian Keenan at least got the impression that—despite what my hon. Friend absolutely rightly desrcibes in his excellent analysis of what is still happening in Iran—a small candle was still burning, and that there was still an opportunity to move towards pluralism. Does he agree that the new president would be well advised to consider what the students are trying to say, to take on board their message, and not to give the impression that there is the possibility of another Tiananmen square?
  Madam Speaker: Order. I was just going to inform the right hon. Gentleman that his intervention was an enormously long one.
  Mr. Clarke: I apologise, Madam Speaker.
  Mr. McCabe: Thank you, Madam Speaker. I agree with my right hon. Friend's comments and certainly agree that we should be concerned about what is happening with regard to students at the present time.
  In Iran we have a regime that has successfully tested the Shahab 3 missile. The Iranian Government are working to perfect intercontinental missiles that are capable of hitting European capitals. They have devoted $1.5 billion to missile development over a 10-year period—nearly $300 million in the past financial year. There is reason to believe that the regime also has a stockpile of chemical and biological weapons.

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  Is it right that we should ignore the use of Scud missiles by the Iranian Government? Why should they have any immunity when they launch an unprovoked attack on the sovereign territory of a neighbouring country? When Libya stands accused of sponsoring terrorism, we break off diplomatic ties and impose sanctions. Why are similar standards not applied to Iran? How confident can my hon. Friend the Minister be that the Iranian Government are not engaged in acts of terrorism, in sponsoring terrorism and in the acquisition and production of weapons of mass destruction?
  Why do the British Government believe that Mr. Khatami is worth supporting? Does the Minister accept that Mr. Khatami draws his political strength from the clerics? Is he not a son of the theocracy? Is there anything in his words or deeds to suggest that he is not about preserving that tradition and that corrupt, rigid interpretation of Islamic law which suppresses his people and subjects some 70 million people to the obsessions and fantasies of the clerics?
  Mr. Khatami has yet to show any respect for democracy. He could, for example, allow free elections under universal suffrage. Instead, what we saw under his much vaunted city council elections was democracy Khatami style. Only supporters of the mullahs are accepted as candidates. In his version of democracy, there is no room for dissidents, different religions, agnostics or political opponents.
  Many Members of the House support the Iranian resistance movement. In February of this year, some 330 Members showed that support by condemning the lack of publishing freedoms in Iran and supporting the right to form political parties in Iran. There was a time when the resistance could quite clearly number the British Labour party among its friends and allies. What now is the attitude of the Foreign Office to the National Council of Resistance of Iran?
  I make it clear that under no circumstances would I be willing to support a terrorist movement. However, I do not regard the Iranian resistance as a terrorist group. I believe it to be a broadly based coalition, whose public statements and publications eschew terrorism and violent attacks on innocent civilians.
  Like many resistance movements, the national council does, of course, have an armed wing. In this country, we usually support freedom fighters. That is presumably why we have supported the KLA, the mujaheddin in Afghanistan and, of course, Nelson Mandela's African National Congress. I ask you, Madam Speaker, to consider what our relations with South Africa would be like today if we had heeded the advice of those who put trade before principle and sought to end our support for the ANC.
  The freedom fighters of the Iranian resistance do carry out attacks on military targets and centres of repression. They freely admit that they attack the revolutionary guards and the perpetrators of murder and torture, but they do not set off bombs in residential areas. They do not blow up buses and kill and maim innocent civilians, as do the henchmen armed and financed by Khatami's regime.
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  The National Council of Resistance of Iran has a history of condemning attacks on innocent civilians. It spoke out against the February 1996 bombings in Jerusalem, the 1995 Oklahoma bombing and the 1998 Pan Am bombing over Lockerbie.
  The NCRI has made clear its willingness to participate in free and fair elections.
  Now is not the time for us to desert our friends, especially as what we may be witnessing in the current demonstrations in Iran and the violent response to them by the authorities may well be the death throes of a corrupt, violent and profoundly anti-democratic regime.
  On May day, tens of thousands of Iranian workers defied the regime and held protests and marches in Tehran, Isfahan, Khorramabad and several other cities. Fifty thousand people protested in Sanandaj, the provincial capital of Kurdistan, in February 1999. The regime responded by attacking them with helicopter gunships.
  Even as I speak, large-scale demonstrations are taking place throughout the country. This may have started with students at Tehran university objecting to media restrictions, but the attack by the revolutionary guards on the student residences and the violent murder of innocent students have ensured that this is now much larger and is now a confrontation with the clerics—not just factions, not support for Khatami and his alleged reforms, but an all-out attack on the whole system.
  Our Labour Government have rightly called for an ethical dimension and respect for human rights to be part of our foreign policy. The United Nations special representative on human rights, the General Assembly of the United Nations, Amnesty International and the International Human Rights League have all expressed their concern at events in Iran, yet the Foreign Office has argued that under Khatami there have been significant changes. What are those changes?
  It is true that Khatami has worked hard to have the NCRI labelled a terrorist movement. That manoeuvre is part of an older and sordid affair, which has its origins in the secret negotiations with the Americans leading to the Iran-Contra affair. Can we really today want to be part of such politics? Do not ethics demand that we ask much more of Mr. Khatami?
  Why do we want to trade with, and have improved relations with, a regime that may well be on the verge of collapse? There is a real danger that we may be about to repeat the mistakes that occurred in the last days of the Shah. Just as Prime Minister Bhakteyar's promises and concessions were too little, too late to save the Shah, so too are Mr. Khatami's smiles and promises. He has had two years to show us his liberal credentials. If he is still unable to do so now, why should we continue to help him to shore up his crumbling regime when our real friends and the real representatives of the Iranian people may be only weeks or months away from assuming power?
  The mullahs have demonstrated over 20 years, irrespective of leadership, that they support violence, murder and terror. They have a complete disregard for democracy and human rights.
  I believe sincerely that it is time for the Foreign Office to change tack and to adopt a policy which judges Mr. Khatami and his supporters by their deeds, not just their words. It is time to adopt a policy that makes

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  abundantly clear our outright rejection of state-sponsored terrorism and our total commitment to the right of the Iranian people to participate in free and fair elections, and to enjoy a Government who respect human rights and religious diversity and support a pluralistic society.
  The resistance movement offers a much better prospect for such an outcome than does the present regime. It deserves much greater support than is currently on offer from the British Government.
  9.50 am
  Sir Sydney Chapman: The House will be grateful to the hon. Member for Birmingham, Hall Green (Mr. McCabe) for his choice of subject this morning. He spelled out the violence that exists in Iran, and my contribution to the debate can be all the briefer as I do not have to echo all the statistics that the hon. Gentleman gave.
  I remind the House that, under Mr. Khatami's regime, there is continued violation of human rights on an unparalleled scale. More than 400 executions have taken place, including four people hanged for the offence of being insulting to the leader. There have been at least 10 cases of stoning to death in public, and the House will know that, last March, 13 members of Iran's Jewish community were arrested on charges of espionage. Sadly, terrorism is a characteristic of the Khatami regime. Yesterday's events—when the students demonstrated in favour of democracy—are just another case of the brutal actions of the regime.
  The hon. Member for Hall Green told us about 44 United Nations and other international organisation resolutions condemning Iran. There is no evidence of moderation. We all want to promote trade wherever we can—that is in the interests of both parties. However, if an ethical foreign policy means anything, it is not seeking closer ties with Iran, given the present regime there.
  I had an opportunity to speak briefly to the Minister a little time ago, and he readily agreed to see me. We are now trying to arrange a time. However, I want to put on record my deep concern about Iran Aid, a charity whose London office is in my constituency. I am told that the charity has been able to help up to 15,000 Iranian children, mostly children whose parents have, in one way or another, suffered at the hands of the brutal regime.
  I am concerned that there seems to have been a persistent attempt to disrcedit Iran Aid. The Minister may know of information that I do not have, but I understand that some people have accused Iran Aid of links with terrorism. More certainly, Iran Aid has been subject to a inquiry by the Charity Commissioners, and a receiver manager was put in. It is worth reminding the House that this is the second inquiry by the commissioners, and that Iran Aid was cleared following the first inquiry in 1996.
  There is a deep feeling among some of my constituents that the Charity Commissioners have intervened only because of trumped-up allegations by two ex-volunteers of the organisation. Have the people making the allegations to the Foreign Office, the Home Office and the commissioners been checked out for probity?
  The Iranian Government treat the relatives and children of so-called dissidents as infidels—they are being shut out of Iranian society, abused and even killed. I have a great fear that the information that Iran Aid holds about those
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  children may be passed to the Iranian authorities. Action could then be taken against them and their families. I am anxious that information gleaned by the Charity Commissioners should not be passed on to the Iranian regime. That would have tragic consequences—indeed, there is evidence that it has had such consequences already.
  I realise that there are things that the Minister may prefer not to say on Iran Aid this morning, but I hope that he will be prepared to say them to me when we have our hoped-for meeting
  9.55 am
  Mr. Robin Corbett: As we speak this morning, the reality, rather than the rhetoric, of the regime in Iran is clear. Students and others are demonstrating in their thousands in Tehran and several other cities for the freedom and democracy that they have been denied, and which have been stolen from them, for the past 20 years, in the face of the brutality and organised thuggery of the mullahs, who are so fearful of change. That is the background to this short debate.
  When human rights were discussed in the other place on 22 June, my noble Friend Baroness Symons said:
  "It is important to note that some important changes have already taken place under the reformist government of President Khatami. That government remain committed to building a civil society based on respect for the rule of law."
  That claim now lies in tatters, smashed by the so-called reformist president who, around midnight last Thursday, sent security forces to attack students in their dormitories at Tehran university, injuring at least 1,000 and killing at least one. So much for the rule of law. How little has changed since January 1962, when the Shah did exactly the same thing to trigger his demise.
  The president is a claimed reformer whose Government hanged four people—as the hon. Member for Chipping Barnet (Sir S. Chapman) said—for insulting the leader. His is a reformist Government, who have allowed 420 executions, 10 public stonings and the organised murder of 47 opponents of the regime at home and 35 abroad. That speaks volumes about being
  "committed to building a civil society".
  In the debate, my noble Friend the Under-Secretary made more claims:
  "Progress with that commitment is most evident in the unprecedented freedom of expression which the press now enjoys."—[Official Report, House of Lords, 22 June 1999; Vol. 602, c. 866.]
  This is a regime that has just banned the daily newspaper Salam, after it published a report that hardliners were planning new restrictions on the press. This is a Government whose Parliament only last Wednesday approved new press laws which severely restrict the freedom of expression of an already circumsrcibed press. Never have the claims of a Minister turned to tears so quickly, as this president has shown himself to be more mullah than moderate.
  Meanwhile, my hon. Friend the Minister of State—whom I am pleased to see here this morning—was telling readers of The Guardian on 1 July:
  "Thanks to British action, the ILO has passed an emergency resolution penalising Burma for its record on forced labour…We have persuaded the UN to pass a series of resolutions slamming Burma's human rights record. We have suspended government support for British companies doing trade with Burma."

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  Congratulations. Will the Minister now tell us whether he will do the same in the case of Iran? Will he withdraw the support of his Department, and that of the Department of Trade and Industry, for the 25th Tehran international trade fair, from 1 to 9 October, or will that still go ahead, despite current events in Iran? Whoever in the Foreign Office wrote the document on the trade fair deserves a medal, as it is headed, "New Optimism in Iran."
  I hope that the Minister will not argue that somehow Burma's human rights record is worse than that of Iran, so that we can, in effect, turn a blind eye to what the mullahs are doing and go ahead with participation in this international trade fair. I hope, too, that the Department of Trade and Industry will withdraw its support for a chamber of commerce mission from Northampton to Iran later this year.
  Earlier this year, 330 Members of Parliament—half plus one—signed a statement on Iran which said:
  "For Britain to change its policy now over Iran, without evidence to support claims of greater freedom of expression and better human rights, is to run the risk of repeating the mistakes in the last days of the Shah."
  The events of the past six days in Iran give me no reason to change that view. There is no evidence of change by Tehran, or willingness to change.
  I am grateful that my noble Friend at least seemed to retract the view that the National Council of Resistance of Iran is a terrorist organisation. It is no such thing. It represents a coalition of interests determined to offer the people of Iran a democratic, secular state that respects human rights and the equality of every citizen. The armed MKO with which it is associated is there precisely because there is no other democratic way in which the mullahs' regime can be opposed. It claims the support of the universal declaration of human rights for the right to
  "rebellion against tyranny and oppression."
  I hope that the Government will recall our ambassador to Tehran and follow the lead of the United States in issuing a statement like that of State Department spokesman James Foley, who said:
  "The rule of law cannot be achieved through repression of fundamental freedoms, including freedom of expression, association and assembly."
  That is surely the least that we can offer to the people of Iran as they reach out for freedom and human rights.
  10.1 am
  Mr. David Heath: I, too, congratulate the hon. Member for Birmingham, Hall Green (Mr. McCabe). Not even he can have realised how topical this debate would be when he applied for it. This is an especially opportune moment to be discussing Iran.
  There was some optimism when President Khatami was elected about two years ago, and a feeling that at last there would be a shift in the dynamics of Iran, with a move towards greater democracy. I join others who have spoken in questioning whether that has happened. Has there been increasing democracy? To understand the level of democracy in Iran, one must realise that parties in favour of secular government were not allowed to stand for election, so the country was already committed to the prevailing mullahism. In Iran there could be no Labour, Conservative or Liberal Democrat party.
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  Has there been an increase in openness and freedom of expression? The hon. Member for Birmingham, Erdington (Mr. Corbett) has already shown that there has not. The press legislation was passed in the Majlis by 125 of the 215 members. What view is taken of independent journalists? Ayatollah Khamenei says that they are mercenaries who defend the position of the enemies of Islam and the Islamic revolution.
  There is no press freedom in Iran. The decision of the clerical court on 9 July to ban Salam clearly shows what is happening. It was banned for
  "violating Islamic principles, endangering national security and disturbing public opinion,"
  even though it was an organ produced by reformist clerics who were seen as allies of President Khatami.
  Is there increasing liberality? The fatwa against Salman Rushdie has been mentioned, but the position of the 15 Khordad foundation—a Government-organised nongovernmental organisation that has recently increased the bounty on Rushdie's head—has not. We have heard about the suppression and oppression of groups such as the Bahais and the Jewish community, but not about the position of women and the repression that they still suffer in Iranian society.
  What is the right level of engagement with the current Government of Iran? What can we do economically, culturally or diplomatically to promote human rights and influence Iran in the right direction without providing succour to a regime that has not shown the degree of liberality for which we had hoped?
  Mr. Tam Dalyell: The hon. Gentleman makes thoughtful speeches and is a careful man. What evidence does he have of the repression of women in Iranian society?
  Mr. Heath: There is a considerable amount of evidence, not least from those women who are in exile from Iran purely because they cannot live under the regime. I know that the hon. Gentleman has great experience of the region and understands well the differences between the Islamic fundamentalist way of doing things and the western way. I appreciate that there are many ways in which we can be misled about the repression of women by overt symbolism rather than the genuine condition, but I believe that there is abundant evidence that Iranian society represses women.
  We must recognise Iran's precarious geopolitical position. It sees itself as surrounded by enemies. Iraq is an ever present threat on its borders. I hope very much that the Government of Iraq will not take the present troubles in Iran as an opportunity to renew hostilities. Iran sees a Turkish-Azeri-Turkmen axis developing on its northern border and regards it as potentially hostile. It is also worried about Afghanistan.
  Even taking all that into account, we must ask whether our Government's policy of constructive engagement is yielding the desired results. Are there ways in which we can encourage the small moves towards greater liberality without giving sustenance to the conservative elements in Iranian society?
  I do not agree with the hon. Member for Erdington when he says that we should recall our ambassador. I think that Nicholas Browne has an important job to do and I welcome the fact that he is there. At this moment

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  above all, we need a British presence in Tehran to express our view about liberalisation and human rights. I do not by any means underestimate his task; he has an extremely difficult job, especially in the current circumstances.
  There was a cartoon in Le Monde last week of President Khatami with one foot on a minaret and the other on a demonstrator's placard. That shows the position that he is attempting to adopt. It is a precarious and unsustainable position. The Government of Iran must decide where their future lies and whether they want to maintain a policy of suppression guided by the reactionary impulses of the mullahs or to embrace greater liberalism and democracy.
  The test for our Government is whether the current policy is yielding results. That is always the test of constructive engagement. We now have annual human rights reports so that we can see the effects of our policies. The test for the Minister in replying to this debate is to show that we are getting results in Iran, and I suspect that he may find it difficult to do so.
  The hon. Member for Chipping Barnet (Sir S. Chapman) made an important point about the position of Iran Aid, and I have had constituents write to me about that. At first sight, it is a puzzling situation. I would like it to be pure coincidence that, on 20 July, the Minister's predecessor announced a crackdown on Iranian dissident groups and three days later we had the action of the Charity Commissioners in the case of Iran Aid. Many people find it puzzling that, almost a year to the day later, there have been no replies from the Charity Commissioners about the alleged problems.
  I hope that the Minister will be able to shed some light on the position of Iran Aid, because many people feel that something is not right about its treatment. It may be that the Minister cannot do that in the context of this debate, but I hope that he will find a way of letting the hon. Member for Chipping Barnet know the true position.
  10.11 am
  Mr. Tam Dalyell: I am out of tune with virtually all that has been said in this debate and I had better present my credentials for saying that. Eighteen months ago, my wife and I went to Iran on holiday. In the circumstances, I should say bluntly that I accepted not a penny from the Iranian Government. The trip was organised by the British museum travel company. The deputy head of the western asiatic department of the museum was the guide to the party, and there were other Parsee speakers.
  The hon. Member for Somerton and Frome (Mr. Heath) mentioned the position of women. My wife had to wear the chador the whole time, but the Iranians are a warm and hospitable people and we were able to speak to many women. It is an oversimplification to say that women are repressed in Iran. They are emerging quickly to positions of much responsibility, both in business and the public service, besides teaching. If comparisons are to be made with Pakistan, for example, it is clear that Iran is a very different society.
  We must be careful about blanket condemnation of the mullahs. Terrible things may have happened in the past, and I do not doubt that recent events have been heart-rending. I can report to the House only my personal experience. I was involved in long conversations in the holy city of Qum with the mullahs. Some of them spoke English and we had translators for the others.
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  Their attitude can be summed up in what one of them said to me. He said, "We love your Virgin Mary and we respect your Jesus Christ. It is only the British Government that we do not trust." That is a result of unfortunate relations between the countries that go back to the time of Dr. Mussadeq and the whole history of relations between Iran and the west.
  Some of us hoped that there had been a great improvement. Since his name has been mentioned, I pay tribute to Mr. Ansari for the work that he has done in trying to bring about better relations, which have received approval in various Foreign Office statements. The Minister will know from his briefings that the late Derek Fatchett was becoming optimistic about relations with Iran.
  I do not want to say that everything that my colleagues have said is wrong, but I will put one point to them. Iran has enormous problems. It is a very young society, with more than half the population under 15. On recent events in Iran, I just reflect that it is one enormous megalopolis. Given the heat in sweltering July—it is one of hottest Julys that they have experienced—one can understand why tempers are tinder-dry. That does not justify everything that may or may not have happened, but it behoves us to show some understanding.
  I agree with the hon. Member for Somerton and Frome that the last thing we should do is withdraw our excellent former chargé d'affaires, now the ambassador in Tehran. I was on a private visit and did not meet our diplomatic staff, but their reputation among the non-political people we met in Iran is extremely good. The Foreign Office deserves all credit in that respect.
  I say "in Iran" because we should be careful about distinguishing Tehran from the rest of Iran. Isfahan, Sharaz, Hamadan, Kashan and Tabriz are totally different from the capital city. It is a huge country and we should be careful about generalisations.
  I have one request that may seem trivial in the face of the events reported today, but it is important. Iran contains some of the greatest remnants of ancient civilisations in the world. We had the good fortune to visit Persepolis and Passagardae in the south and Sulamaniyah in the north, and, because it was a cultural visit, we saw many of the old mosques. They are in a serious condition and anything that Britain can do to help to save them from road and pollution problems would be welcome. One of the tragedies of the awful Iran-Iraq war was that the oil refineries near the Iraq border had to be hastily moved to an area between Sharaz and Isfahan. The result was that Persepolis had never known pollution like it. In those circumstances, technical help from the west is urgently needed to save part of the history of Persia and of the world
  10.18 am
  Mr. David Atkinson: I congratulate the hon. Member for Birmingham, Hall Green (Mr. McCabe) on initiating this debate on Iran, which is timely in view of the student revolt taking place in Tehran, which may—as he suggested—prove to be a defining moment for that country. This debate enables me to refer to a parliamentary visit I made to Iran nearly four years ago. The conclusions I reached then are, I believe, even more correct today in the light of what is taking, and has taken, place in Iran.

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  My conclusions, like those of the hon. Member for Linlithgow (Mr. Dalyell), are different from the negative approach that the hon. Member for Hall Green and others have adopted to our response to the political situation in Iran.
  Like other hon. Members, my interest in Iran has been longstanding and was motivated by the appalling atrocities perpetrated by the ayatollahs' regime which overthrew the Shah, by its promotion of Islamic fundamentalism, its support for international terrorism, its intolerance of other religions and, especially, by its failure to protect its Christian citizens. In particular, I have been appalled by the testimonies of the members of the Bahai community, including some of my constituents who have sought my help over the years in obtaining visas for their families to be reunited in this country.
  Because of my involvement with the Christian human rights organisation, Christian Solidarity Worldwide—it is well known to many right hon. and hon. Members, including the right hon. Member for Coatbridge and Chryston (Mr. Clarke) and my hon. Friend the Member for Southend, West (Mr. Amess)—I was approached four years ago by the then Iranian chargé d'affaires, Mr. Ansari, who has already been mentioned and is now the ambassador, when he told me that I should be aware that the regime was moderating its policies. I told him that I wanted an all-party group to go and see the situation for itself. He arranged for us to receive an invitation from the Majlis, the Iranian Parliament.
  In the end, only two of us went. Others were warned off by the MKO, although our visit was welcomed by the Foreign Office. Our charge in Tehran accompanied us to most of the meetings, to which he would not otherwise have had access.
  Our programme was as we had requested. We wanted to pursue issues including human rights, women's rights, protection of Christians, the persecution of the Bahais, the Salman Rushdie affair, support for international terrorism, and so on. We met political Ministers, religious leaders, women's leaders, representatives in the Majlis, people from the media and business, and many others.
  We did not mince our words with the regime. We said that as long as the Majlis was subject to srcutiny and veto under the law of shariah, as interpreted by the council of guardians, there could be no tolerance, freedom or democracy in Iran.
  We were also surprised to find that embryonic party groups had established themselves in the Majlis, and that there existed an organisation for defending victims of violence and prisoners of conscience. There was a growing role for women in all walks of life, including the legal profession and the judiciary. There was also a tolerance—within limits—of Armenian Orthodox Christians, who make up the largest Christian community and who are part of Iranian heritage and tradition.
  I concluded that what we found had the potential and momentum for considerable progress to be made, given the right climate. Although we perceived no tolerance for the Bahais, we obtained invitations for CSW and other human rights organisations to make fact-finding visits similar to ours, and for Amnesty International to investigate internally the veracity of its reports on behalf of the MKO.
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  Everyone we met in connection with the issues that were of importance to us emphasised that dialogue and contact were more conducive to change than is international isolation. That is why I urge support and encouragement for those internal forces pressing for reform in Iran.
  I also wish to press for a visit by the all-party British-Iranian parliamentary group, which I believe is chaired by the hon. Member for Leominster (Mr. Temple-Morris), to develop contacts with the Majlis. I found that there was an interest among the Majlis in establishing an Iranian-British parliamentary group. I also urge support for fact-finding visits to be undertaken by CSW and Amnesty International on their own terms, as I was promised.
  Moreover, minorities such as the Armenians, Roman Catholics and the evangelical Christians need to be supported and shown that they are not forgotten. Personal contact in Iran and in Britain is the best way to achieve that. Visits for religious conferences, for example, should be classified as acceptable for the issuing of visas to Britain. However, I agree that, as long as Iran disrciminates against and persecutes the Bahais and those who convert from Islam to Christianity, it cannot be fully accepted into the international community.
  Since my visit four years ago, there has been some encouraging progress, most notably that achieved since the election of President Khatami, who promised to make Iran a more democratic and pleasant place. He has used his popular support cautiously to test the limits of the clergy's tolerance, although regrettable problems still arise—the mayor of Tehran was imprisoned, there was a clampdown on the Bahai institute of higher education—an organisation similar to our Open university—the leading liberal newspaper Salam was closed, and recently there have been arrests of Iranian Jews.
  I have signed early-day motion 712 on the Jewish community in Iran, but it would be wrong to make judgments until all the facts and evidence are known. In any case, I do not consider that the continuing pressure for reform in Iran and for the introduction of liberalisation—to which I believe President Khatami is genuinely and courageously committed—will be better served by boycott, sanction, isolation and support for the MKO-NCRI.
  We should encourage Iran to expand its economy, increase its trade and open up to the real world. That will allow prosperity to grow and will extend the western influence so long denied by the Ayatollah's regime. I urge the hon. Member for Hall Green and those who have supported him in the debate to go to Iran. They will then see for themselves that although the country that they desrcibe remains unacceptable in many ways, it is moving in the right direction. Such visits can only add to the momentum for change.
  10.25 am
  Mr. David Amess: I seem to have won the booby prize in this debate, as my hon. Friend the Member for Bournemouth, East (Mr. Atkinson) is a very great friend of mine. We did not compare notes beforehand, and it is clear that our views are rather different. However, I recognise that he is an expert on the question of human rights, and I shall certainly not dismiss what he has said.

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  I congratulate the hon. Member for Birmingham, Hall Green (Mr. McCabe) on securing this debate. I offer him my sincere praise for his splendid and brave speech, and I agree with every word that he uttered. I also thought that the hon. Member for Birmingham, Erdington (Mr. Corbett) made a splendid speech: he and I had the privilege some weeks ago of addressing a conference on these matters.
  I do not want to get involved in the politics of the matter, but the new Labour Government flagged up—in a most immodest way—the notion that their foreign policy would be different from that conducted in the 18 dreadful years of Conservative Government. The new Government said that they would adopt an ethical foreign policy, and although the Minister of State is fairly new to his job and may make some barbed comments about policies that I have supported, I seek from him a defence of the Government's approach.
  The hon. Member for Linlithgow (Mr. Dalyell) disputed the suppression of women in Iran, but how can the Government's foreign policy be considered ethical in the light of what it condones in Iran? We are approaching the millennium, but in the four years of President Khatami's rule there have been 420 executions and 10 public stonings. Women are suppressed and religious minorities persecuted. There have been 47 political killings, in Iran and abroad. In crackdowns on Tehran university students, several have been killed and thousands wounded, while 1,000 have been arrested. In the past month, the number of fingers cut off men amounted to 21.
  What has any of that disgraceful story got to do with the Government's ethical foreign policy? I am sure that the Minister of State will argue that the new regime should be encouraged, as my hon. Friend the Member for Bournemouth, East suggested, but I do not accept that.
  I hope that the Minister will explain why the Labour party has changed its view on the matter. There is no dispute that the Labour party formerly practically recognised the National Council of Resistance as the democratic alternative to the clerical regime. In 1984, the NCRI' s representatives were official guests of the Labour party. The council's president, Massoud Rajavi, visited the UK at the invitation of the then leader of the Labour party, Mr. Neil Kinnock. In 1985, Mrs. Rajavi was officially invited to the Labour party conference, where the Labour leader declared the party's support for the NCRI, and specifically lauded Mrs. Rajavi's efforts towards the establishment of democracy. That cannot be disputed. It happened, and although there was a huge intake of new Labour Members at the general election, many of those involved in those events are still Members.
  Relations continued until 1997; that, too, is indisputable, because the Labour conference adopted a resolution that condemned the Iranian regime and Khatami and supported the Iranian people's resistance. The Foreign Secretary was in the chair when the resolution was discussed, and it was later endorsed by Labour's national executive committee. Given the Government's style, I cannot believe that they had not carefully thought through what the NCRI was all about. The Foreign Secretary, at least, must have known.
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  What has changed since Labour came to power? I am puzzled. I am perhaps lowering the tone of the debate by saying all this—
  The Minister of State, Foreign and Commonwealth Office (Mr. Geoffrey Hoon)indicated assent.
  Mr. Amess: The Minister seems to think so, but why should I not lower the tone? The Labour Government support an ethical foreign policy, but there is nothing ethical about events in Iran over the past four years, and nor is Labour's change of policy ethical.
  We are told how splendid it is that political parties, including the Servants of Construction and the Islamic Iran Participation party, were licensed in 1998. But my research shows that those parties are factions of the ruling regime. To wheel them out as examples of improved democracy is a load of garbage. We are told that the Islamic Council's elections are a sign of change in Iran. The Government peddle the official line that the first local elections are due this month to put power in the hands of the people. But there is plenty of evidence to confirm that the elections are not free, and they cannot be construed as restoring freedom or transferring power to the people.
  I fully accept all that my hon. Friend the Member for Bournemouth, East said, and he and I may discuss these matters privately. However, regardless of what hon. Members may wish, the situation on the ground demonstrates that the Iranian Government are unstable. The hon. Member for Hall Green did not know when he asked for this debate that the current events would be happening in Iran, and he has given the Minister a wonderful opportunity to put his feelings on the record. It would be a mistake to believe that our support for Khatami will save or moderate the Iranian regime. That approach would merely tarnish our relations with the Iranian people and drive them towards more anti-western radicalism.
  Some of my critics may say that my highly partisan contribution has lowered the tone of our debate, but I am glad to have put on record the paradox that the Government who believe in an ethical foreign policy are not pursuing one in Iran. For the sake of decency, will the Minister say something supportive about the resistance movement?
  10.34 am
  Mrs. Cheryl Gillan: I congratulate the hon. Member for Birmingham, Hall Green (Mr. McCabe) on obtaining this debate. He speaks from the heart, and I can take something from his speech, and from all the others that we have heard, even if I do not agree with all that has been said. The hon. Gentleman has given the Minister of State a golden opportunity to set out the Government's attitude to current events in Iran. On the press wires this morning, I read that the United States of America has called on the Iranian Government to protect the student demonstrators against repression, and I hope the Minister can tell us what action our Government are taking in response to the alarming reports and frightening pictures of the past 48 hours.
  My hon. Friend the Member for Chipping Barnet (Sir S. Chapman) spoke briefly but powerfully about Iran Aid, the charity based in his constituency which helps children. The attempt to disrcedit it is well known, and I

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  hope that the Minister will tell us what he knows about that. The hon. Member for Birmingham, Erdington (Mr. Corbett) also spoke forcefully about what he sees as a lack of progress in Iran, particularly the retrograde step of legislating to curb the press that has resulted from recent events. Will the Minister comment on our Government's attitude towards that legislation?
  The hon. Member for Linlithgow (Mr. Dalyell) makes a measured and thoughtful speech in every debate in which he participates. He speaks from great personal experience; unlike him, I have not travelled to Iran. I always listen carefully to him, but he and I must part company on the subject of women. I had some ministerial responsibility for women during the previous Government, and I know from my extensive reading that the treatment of women in Iran is reprehensible. Adultery is still punished by stoning. In a court of law, the testimony of a man is automatically taken over that of a woman. It takes two women to challenge the statement of a man. That cannot be right in a modern society in the modern world.
  I should like to know whether in his visits to Iran the hon. Gentleman saw separate entrances for men and women to government institutions, universities and airports. Women are often searched for cosmetics, and it would be interesting to hear whether the hon. Gentleman can confirm what I have read. If those things happen, they must be condemned out of hand. I could give many more examples.
  Unlike some hon. Members, I believe that there is much reason for hope in Iran. Two years after his election victory, President Khatami has indicated that he would like to move towards the tolerance and political liberalisation which could form the bedrock for transition to an Islamic democracy. There is much room for progress, although the hon. Member for Linlithgow was right to say that women have moved into senior managerial positions and that the doors have been opened a little, if not yet enough. That is a glimmer of hope.
  The United Kingdom has improved its bilateral relations with Iran, not least because of the progress made in the holding of elections and in the regime's move from confrontation towards international tolerance and reconciliation. Relations with Saudi Arabia have been rebuilt, which amounts to a striking difference from the policy of previous regimes. The fatwa imposed on Salman Rushdie was a major stumbling block for the UK, but its lifting resulted, rightly, in a symbolic upgrading of diplomatic relations to ambassadorial level.
  I would however like the Minister to comment on the points that hon. Members have raised about the fatwa on Salman Rushdie. President Khatami has certainly tried to change direction, not least because he recognises the need for foreign investment and the fact that it will not be forthcoming unless there is radical change. There has been some increase in press freedom, despite recent events, and certain powers have been decentralised in the President's attempt to reposition Iran both regionally and internationally.
  Therefore, on the whole, I want to be optimistic; but I certainly do not want to be less than realistic about the barriers that still exist and which hon. Members have touched on today.
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  Iran Han has huge assets of oil, gas and other minerals, a reasonable education system and a significant business and industrial base. However, as the hon. Member for Linlithgow (Mr. Dalyell) said, Iran is a young nation. The population has doubled in 20 years and to improve the standard of living for Iranians will require some drastic economic reforms and ambitious targets.
  There have been some moves towards privatisation—the buy-back contracts for oil and gas, for example—but the process is not far advanced and will certainly need to be progressed to attract investors. I want the Minister to tell us how he sees the economic future for Iran and the trading possibilities for this country with Iran.
  Despite the progress that I have mentioned, there are still some dramatic questions about Iran, not least major human rights issues. An article by a journalist called Adam Indikt last week started with the recollection of a conversation that he had had with an Amnesty International worker. When he asked for the most recent report on human rights in Iran, the worker replied, "What human rights?"
  One of the most prominent cases has been the arrest of the 13 Jews from Shiraz and Isfahan in southern Iran, who were accused of spying for the Zionist regime and world arrogance. I want to know what the Minister has done about those arrests. What representations has he made to the Iranian Government? Benjamin Netanyahu, in association with Prime Minister Barak, has contacted the Prime Minister on the issue, but I hope that the Minister will be able to tell us what progress our Government have made in making representations about the arrests, and whether the Prime Minister has made any representations to the President of Iran.
  Obviously, there are questions concerning the outcome of any trial, but the Minister is on record as saying:
  "Clearly, if they"—
  those Jews—
  "are…put on trial we and other members of the international community will be monitoring that trial very carefully."
  If possible, I want the Minister to say today how he anticipates such monitoring taking place and how he will make strong representations on behalf of those detainees and their families, as he and the Prime Minister have been requested to do.
  In my constituency I have a community of Bahais. The attitude of the Iranian authorities towards the Bahais is no secret. Hon. Members mentioned that today—not least my hon. Friend the Member for Bournemouth, East (Mr. Atkinson), who made an excellent speech that was both optimistic but critical and realistic, and my hon. Friend the Member for Southend, West (Mr. Amess). The Bahais are a gentle people. They do no harm to anyone. They are good people and yet they suffer the most amazing oppression and are harassed solely on religious grounds. Again, I hope that the Minister will tell us what progress he has made with representations on behalf of Bahais who are so concerned about their relations in Iran.
  There is an awful lot for the Minister to pick up and I am conscious that time is moving on. Although I would like to mention weapons of mass destruction, the development of the nuclear programme and the security of the region, I want to give the hon. Gentleman time to respond to the various questions from both sides of the Chamber.

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  I expect the Government to pursue all avenues that are of interest to British citizens and are in the interests of this country. However, I hope that the Government will not lightly dismiss the serious issues of human rights, the proliferation of weapons in the region, and the freedom of information and speech; and that they will have the courage to speak out whenever necessary, using their new-found diplomatic status with Iran. I hope that the Minister will be able to give us the comfort that we have all sought in this debate.
  10.45 am
  The Minister of State, Foreign and Commonwealth Office (Mr. Geoffrey Hoon): I am grateful to my hon. Friend the Member for Birmingham, Hall Green (Mr. McCabe) for this opportunity to discuss the Government's policy towards Iran and I congratulate both him on the topicality of his choice and other hon. Members on their contributions.
  The Government pursue a twin-track policy towards Iran, in line with our European Union partners, encouraging the reforms under way there while maintaining significant pressure on areas of concern. We believe that it is right to pursue a better relationship with Iran, but recognise that there will be obstacles to be overcome.
  Events overnight give further cause for concern and we will continue to monitor the situation closely. Notwithstanding those concerns, there have been positive developments in Iran in the past two years. The Iranian Government under President Khatami have undertaken a programme of significant change—enforcement of the rule of law, facilitation of freedom of expression and a more open and co-operative foreign policy.
  The Iranian Government have made significant progress with that programme. The effort to establish a civil society based on the rule of law has also made progress. Democracy has been extended. The first local elections took place on 26 February and showed overwhelming popular support for the reforms that are taking place. The Iranian Government are steadily improving their relations with their neighbours, in particular in the Gulf, which is an especially welcome development. Iranian co-operation is vital for future stability in that region.
  The views of my hon. Friend the Member for Birmingham, Erdington (Mr. Corbett) notwithstanding, real progress is being made towards freedom of expression. I hope that he will accept that that is exemplified by the profusion of hundreds of new publications dealing with a range of previously sensitive subjects. About 200 new publications opened between May 1997 and December 1998. There has been a significant increase in their circulation and the clear majority support reform.
  Mr. Tom Clarke: When I last spoke with the late Derek Fatchett, I got the impression that he had the possibility of a ministerial visit in mind. Has my hon. Friend had the chance to think about that possibility?
  Mr. Hoon: That possibility is still in mind and we will consider it carefully, depending on the circumstances and when appropriate dates can be arranged.
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  The trend towards more open press discussion is apparently irreversible. My hon. Friend the Member for Erdington mentioned the closure of certain publications, but many of those reopened under a different name, so a vigorous debate is taking place in the press. Any examination of those publications demonstrates that previous issues, including human rights, which could not have been discussed are now openly discussed in a vigorous and lively way.
  Reference has been made to the local elections and I am sorry that my hon. Friend the Member for Erdington was rather disparaging about them. The reality was that they were vigorously contested. There were real candidates on both sides and male and female candidates participated, offering a lively political debate to the Iranian people.
  Mrs. Gillan: Before the Minister moves from the subject of the press, will he comment on the reasons for the court closing the liberal Salam newspaper on 7 July and the new legislation that has been introduced to curb Iran's free press? That is a retrograde step and I want to know the attitude of the Minister and our Government to it before he leaves his passage on the media:
  Mr. Hoon: I am grateful to the hon. Lady for those observations. I will not pretend—nor will the Government—that all developments take the same direction. Some developments are positive, but I realise that, in a fast-moving situation—especially recently—there are retrograde steps, as the hon. Lady says. However, there is also progress; I want to get that message across.
  There is a debate. Candidates were elected because they represented reformist views and because they stood against candidates who represented more conservative views. The political parties established in Iran will not be of the kind that we are used to in this country, but that does not mean that there is not a vigorous debate between those who want greater reform and those who take a more conservative approach. Reformist candidates won about 70 per cent. of the votes in the local elections.
  A matter of great symbolic significance is the arrest last year of a number of officials from the Ministry of Intelligence for the alleged murder of some intellectuals. The Minister of Intelligence was dismissed, and a senior police officer was tried on allegations of torture. That demonstrates that the Iranian Government will not tolerate extra-judicial murder or activity outside the framework of the law. It is right to mention those matters because their symbolic significance cannot be overestimated. In recent weeks, the Iranian Government have again stressed the importance of building solid political and civil institutions to underpin their domestic reform agenda.
  Several hon. Members have rightly expressed concern about the demonstrations in Iran during recent days. Pro-reform demonstrations led by students began in Tehran last week, and spread to other cities in Iran. Attacks on those largely peaceful demonstrations were condemned by the Iranian Government at the time. However, tension has increased and, overnight, there has apparently been a regrettable increase in violence.
  I hope that hon. Members will accept that it would not be wise or sensible of me to comment on those fast-moving and complex events. I emphasise that it is

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  primarily a matter for the Iranian people to resolve within Iran. However, we urge all groups in Iran to refrain from violence. Today, I have been in touch with our embassy in Tehran, and we have been kept informed of events as they developed. The picture is far from clear, but the Foreign Office will be issuing updated travel advice for Tehran.
  That is one side of the picture. I accept that outstanding concerns remain about Iran' s human rights record. The Government believe that human rights are an important component of our foreign policy. Our policy towards Iran takes full account of the human rights situation there. Both in our bilateral dealings and in the EU' s dialogue with Iran, we support and encourage change and, whenever appropriate, take up particular human rights issues.
  Most recently, we have been anxious about the detention of several members of the Jewish community on espionage charges. As my hon. Friend the Minister of State told the House on 5 July, we and our EU partners have raised those concerns with the Iranian authorities. Before that news broke on 7 June, the German EU presidency, on a visit to Tehran on 20 May, had already expressed the concern of all EU member states over those detentions. That was followed up by a formal EU representation in Tehran on 30 June. On 10 June, I made a statement expressing the Government's concern about the detainees. On 1 July, I invited in the Iranian ambassador, and pressed for a fair trial, access for visitors, and legal representation. I understand that visits have now been allowed.
  Many of our EU partners have taken similar action. Our ambassador in Tehran has also raised our concerns bilaterally with the Iranian authorities. We welcome the Iranian Government's recent confirmation, following those arrests, that they are responsible for individuals of every religious persuasion in Iran—specifically including the Jewish community—and for guaranteeing a fair trial. We shall continue to monitor the situation, and will take further action as necessary. Our priority will be action that is most likely to help those who have been detained.
  The hon. Member for Bournemouth, East (Mr. Atkinson) raised the position of the Bahais. Persecution of the Bahai community in Iran has been of serious concern for some time; I assure him that that remains true. We and our EU partners have raised those questions with the Iranian authorities on many occasions. Persecution of individuals on religious grounds is totally unacceptable. The EU-sponsored United Nations Commission on Human Rights resolution on Iran, adopted on 23 April, once again reaffirmed international concern about the plight of the Bahais.
  The hon. Gentleman also spoke about the Christian community in Iran. Like the Jewish and Zoroastrian communities, that community is recognised under the Iranian constitution and represented in the Iranian Parliament by a dedicated deputy. Christians are free to practise their religion. However, they have faced persecution in the past, and we and our EU partners continue to monitor developments.
  The hon. Member for Somerton and Frome (Mr. Heath) mentioned the position of women—as did the
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  hon. Member for Chesham and Amersham (Mrs. Gillan). There have been some important developments for women in Iran. Despite some legal constraints on the jobs that women can undertake, they play an increasingly visible and active role in Iranian politics and society. Over the past two years, we have seen the appointment of Iran's first four women judges and the first woman vice-President. Female candidates were particularly successful in the local elections on 26 February; in Tehran, two women won the third and fourth largest number of votes—recording more than 700,000 votes. There has been some progress. Women were also elected in several other cities.
  However, it is important to emphasise that much work remains to be done. We and our EU partners will continue to encourage ban to resume co-operation with human rights mechanisms, especially through the UN. We are keen that the visits of the UN special representative, Maurice Copithorne, should be resumed. We shall continue to maintain pressure on ban through UN resolutions, where appropriate. Such resolutions record progress, but they also point out abuses.
  Mr. Corbett: Will my hon. Friend comment on the point that I made in relation to his Department's support for the 25th international trade fair in Tehran, given his magnificent withdrawal of support for trade between this country and Burma?
  Mr. Hoon: My hon. Friend is too experienced a Member of the House to believe that it is possible to make neat comparisons between different countries. The hon. Member for Chesham and Amersham raised the question of trade, so this is an appropriate time to deal with it.
  Iran is already an important market for many UK companies, especially those involved in the manufacture of capital goods. There are substantial exports and a considerable interest in trade with Iran; several outward trade missions and exhibitions will take place during this financial year. That benefits UK companies, and will go a long way towards rehabilitating the UK-Iran relationship.
  My hon. Friend the Member for Hall Green and others have spoken of Salman Rushdie. Last September, the Iranian Foreign Minister made an unequivocal statement of the Iranian Government's position on the threat to Salman Rushdie, and made it clear that his Government will take no action whatever to threaten the life of Salman Rushdie or anyone associated with his work; nor will they assist or encourage anyone else to do so.
  The hon. Member for Chipping Barnet (Sir S. Chapman) raised the subject of Iran Aid. That is a matter for the Charity Commission, which has been conducting a statutory inquiry into the charity. Although it is not a matter for Ministers, I shall of course be delighted to discuss it in more detail with the hon. Gentleman.
  The Government remain committed to the development of our relations with Iran, and we find encouragement in the reformist policies of the Government of President Khatami. We will continue to encourage those reforms, while pressing for improvements in those Iranian policies that cause us particular concern. We believe that policy to be right, and intend to continue to develop our relationship, to the benefit of both nations.

Urban Renaissance
11 am
Mr. Anthony Steen: Here we go again: the same Minister, and the same hon. Member trying to persuade the Government to do better, to do more and to do it quicker. I am glad that the Minister for London and Construction has heard my previous speeches because we have known each other for a long time and he knows that I hold his job in high regard, and him in relatively high regard too.
We must congratulate the Government on commissioning "Towards an Urban Renaissance", and Lord Rogers on a tour de force. The report contains the same aims and ideals to which we all aspire and which were well rehearsed at the Rio Earth summit in 1991, where "sustainable development" and "integration" became the new buzz words.
Many of the conclusions in "Towards an Urban Renaissance" are similar to those in my book "New Life for Old Cities", which I published in 1982. My book only received coverage in the leader in The Daily Telegraph; it was not launched as dramatically as the Rogers report, and I did not have such a distinguished team of advisers. However, much of the report draws comparisons with my work of the early 1980s. During the intervening 17 years, the problems, strangely, have remained, and solutions still need to be found.
I was an inner-city Liverpool MP for nine years and have been an MP for south Devon for 15 years. In addition, I have worked as a social worker, community leader, youth worker and director of two national charities, one of which was launched by the then Prime Minister, Harold Wilson, in the late 1960s. The House may therefore feel that my experience has some relevance.
Every Government, for as long as I can remember, have launched urban initiatives with a fanfare of trumpets and announcements from the Front Bench. In the '60s and the '70s, there were social programmes. I believe that the Minister worked in the voluntary sector at the time, and he will remember the urban aid programme and its good work; the community development project; educational priority areas; and 1,001 other schemes with similar names.
The '80s saw a shift from social schemes such as the community development project to economic schemes. There were public-private partnerships to assist in urban regeneration. "Partnership" was the buzz word of the '80s. Free ports, development corporations and enterprise zones were dotted all over the country. In the early '80s, we saw my right hon. Friend the Member for Henley (Mr. Heseltine) swinging—if that is the appropriate term—into Merseyside, where he sought to inject new private finance. I remember that he frequently held breakfasts with the leaders of all the political parties. As I was the sole Conservative there, I always felt slightly left out because I was not asked to those breakfasts. If my right hon. Friend cannot achieve an urban renaissance, who can?
The Rogers report highlights the fact that in England, urban areas account for 90 per cent. of the population, 91 per cent. of the economic activity and 89 per cent. of the jobs. Unemployment in the inner cities runs at almost double the rate elsewhere, and 1.3 million residential and commercial buildings are currently empty. It is no wonder
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that, according to the report, one in four people living in urban areas thinks that things are worse there. The problem of lack of public transport is well rehearsed and it is high on the agenda.
In the late '80s, the cry went up, "Let's utilise derelict public land for urban regeneration." Our Government introduced the public land register to identify land for that purpose, and about 200,000 acres was identified. However, privatising the major public utilities—British Rail, gas and the water companies—to which much of that land belonged meant that land passed from public to private ownership overnight, so the public land register figures decreased dramatically as the privatisation of those utilities went ahead. We do not have much idea of the extent to which there is private vacant land because there is no register for that. We do not know exactly how much public vacant land there is—although we have a very good idea—because the register was closed in 1996.
One way to ensure that land is used, whether it is public or private, is to penalise financially those who hold on to it for commercial gain, rather than commercial use. Business rates could be doubled every year as long as the land remained unused without good reason. Although that sounds a draconian suggestion, the only way to ensure that private and public vacant, derelict or dormant land is used is to take a stick to the landowners to encourage them to develop their land. The best way to do that would be to use the business rate mechanism to punish them. There are so many thousands of acres of under-used land in cities that the idea strikes me as fitting in well with the Government's policy that 60 per cent. of all new house builds should be on brown-field sites.
The Rogers report is a wish list of things that cannot be achieved without political will. Regeneration cannot take place only with public money. Partnerships between the public and private sectors are a start, but without the political will, they are not enough. In addition to having the political will, we must lift the restrictions and burdens that suppress enterprise. We cannot change the location of Liverpool, which faces the United States, not the European Union. Nor can we change the pattern in which freight now comes by air rather than sea. The real change is to cultivate and sustain the enterprise culture, while protecting the community from possible abuses.
If our principal cities are to be places to which people will return to live and work, we must do more than tinker with the edges of council estates or refurbish listed buildings. If we are to inject enterprise so that our cities buzz like Hong Kong, we have to start by changing the attitude of the people living in those cities. There must be fewer rules, fewer regulations and fewer restrictions to inhibit enterprise. In effect, I am calling for a cultural sea change. The Government can provide the basic infrastructure and the climate in which city regeneration can and should happen.
Approximately 50 per cent. of the population of Liverpool, Newcastle, Manchester and Glasgow has poured out of those cities since the end of world war two. The principal reason for that was the demolition of the inner-city slums and the cry that we must provide "homes fit for heroes". As the bulldozers smashed slums in the inner city, new slums were being built on the outer edges of cities. The inner city remained a repository for the old, the unemployed and immigrant communities, whereas the outer city was for upwardly mobile, younger people who moved there from the inner city but created new slums on

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the arc of council estates that surround many of our principal cities today. London may be the exception, but by and large people prefer not to live in inner cities, regarding the new towns and green-field sites as attractive places to bring up their families. If we want to make our inner cities comparable with Boston, Baltimore and Atlanta, there has to be more than the will; we need a financial carrot so that if the developers develop inner cities, they get the cream and strawberries, but if they build on green-field sites, they pay a financial penalty. There has to be some incentive.
The whole House—certainly the Conservative party—was disappointed that the Chancellor did not include that in his Budget, as we were all looking to him to carry out what we thought was the Government's policy towards urban regeneration and give people incentives to build in inner cities. The Rogers report also makes that point.
Local authorities cannot be expected to put the cities right. Their track record, however well-meaning, has been rather lacklustre. They are capable of spreading butter on the bread, but they have no idea about the ingredients or about how to bake the bread. It is not their fault; it is simply not their job.
Lord Rogers' s report lacks the political dimension without which the possibility of many of his recommendations being put into practice is unlikely.
Urban regeneration will not happen without a cultural and economic sea change. That entails a shift from increasing centralisation and enforcement to spreading responsibility and opportunity across an entire community. Downtown Atlanta is exciting and vibrant because the neighbourhoods hold real political clout and power and the mayor, who is the chief executive as well as the political leader, has maintained strong links with business communities, enabling him to drive through billion-dollar programmes to rebuild Atlanta. Did any of the money come from central or local government? I think not. It came from lifting restrictions and offering incentives to private enterprise. Britain lacks the climate in which cities can revive themselves.
The United States has offered real tax breaks and virtually no planning constraints, bar certain regulations ensuring that new buildings are safe. By constraining developers, British planners have unwittingly colluded with bad design and, in addition, have imposed their limited vision on our entrepreneurs, innovators and developers. If developers were given free rein, they would not build ugly buildings, because ugly buildings do not sell. They would build attractive buildings with high-quality design, because bad design does not sell. The market will see to that. Good design will sell. In any case, one can hardly imagine any of our major cities looking any worse if they did not have planning restrictions. Some of them look disgraceful despite all the planning restrictions that have been passed down over the years.
Each year, the srcutiny Committee, on which I have the honour—I am not sure that it is a privilege—to serve, approves around 2,200 rules and regulations from Brussels, each of which has some tiny impact on our daily lives. Those rules and regulations add layer after layer of additional bureaucracy. Additional fire, health and hygiene regulations make the regeneration of our cities that much more difficult, and there is no limit on public
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funds to be found if one shouts any of those three buzz words. There is always public money to deal with a fire risk, a health hazard or unhygienic conditions.
Cities such as Liverpool cannot be revived so long as there are competitors that are better placed to attract new enterprise. The Chancellor had an opportunity to offer in his Budget incentives linked to regeneration. The Rogers report relies heavily on local authority initiatives, assuming that local authorities are the engine for regeneration. Local authorities cannot take on that burden, largely because their traditional and accepted role is that of agents of Government. They merely do what they are told and the Government pay them. They have very little scope for enterprise, as they have very little money left over. Their hands are tied by central Government and they have very little spare cash, as most of their resources are spoken for by salaries. They may have a few bob left over, but they cannot fund massive change and city regeneration.
Where neighbourhoods are revived, it is usually because of a few exceptional leaders or an injection of special help such as the projects in the 1960s and 1970s initiated by Labour and Conservative Governments. Regrettably, people in the poorest areas have become too dependent and expect the state to do whatever is necessary to look after them. What I call the council estate mentality presents a problem for urban regeneration. In the inner cities and elsewhere, it robs people of the emotional ability to change the location and environment in which they live. They are totally unhelped by their local authority, often for good reasons.
Instead of public officials in town halls dealing with thousands of people in the community, we need those thousands of people to be active and fewer officials. In fact, if local government were scaled down, with correspondingly less bureaucracy and fewer rules and regulations, that might be sufficient to kick-start urban regeneration and self-help. Creating an elite to deal with urban regeneration and ordering change, as Rogers has proposed, is unlikely to do very much, but if planning regulations were lifted and taxation dramatically reduced, inner-city regeneration would occur spontaneously.
There is a new joker in the pack, and I am not referring to the Minister—although, if the hon. Gentleman plays it properly, it could be the catalyst for urban regeneration and inner-city revival: it is the 4.4 million new homes that were planned to be built by 2011. The Government have quite rightly reduced that number to 3.8 million, and I welcome that. The last place that such homes should be built is in the countryside, however; they should be in urban areas. That is why I welcome the Government's commitment to building 60 per cent. of new homes on brown-field sites—the sites that I identified in another of my excellent publications in the late 1980s, called "PLUMS—Public Land Utilisation Management Schemes". I proposed a glorious auction whereby every bit of vacant public land would be sold to the highest bidder with a covenant that they had to develop it within two years. Sadly, that did not happen, although it nearly did, as I shall explain in a moment.
Mr. Adrian Sanders: Before the hon. Gentleman moves on, I have read his booklet, "PLUMS". What he suggests is very close to the idea of site value rating. Does he consider that the taxation of the value of sites in a number of cities overseas ensures that

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brown-field sites are developed? Will he also congratulate the local authority, a quarter of which is in his constituency, on achieving well over 60 per cent. of new house building on brown-field sites?
Mr. Steen: The hon. Gentleman always has a little dig. It is clear that he would like me to congratulate the Liberal local authority on achieving 60 per cent. brown-field site development. Whatever the political complexion of a local authority, if it achieves 60 per cent. it has done very well. However, local authorities must do a little better. I hope that with the hon. Gentleman's help—and a quarter of mine—we might be able to get the Torbay unitary authority up beyond 60 per cent.
A problem with site valuation that is tied up with all the rules and regulations is historical value. A great deal of land has a value on it which it cannot command. If the Government and local authorities remain committed to historical value, they will not be able to get rid of it. I have a feeling that it is not possible to write down values at local authority level if they have reached an astronomically high level as a result of historical increment. That may need to be considered in the context of brown-field site development. Is that what the hon. Gentleman was considering?
Mr. Sanders: No. This is becoming quite an interesting debate—certainly between the hon. Gentleman and me. Putting a tax on the value of land to ensure that it is properly developed is a way of reducing the number of derelict sites in inner cities. 1 have in mind particularly taxing boarded-up shops, which are subject to a council tax reduction. Yet that reduction in footfall affects neighbouring businesses. That seems unfair to businesses that are still trading.
Mr. Steen: On this occasion, the hon. Gentleman has made rather a good point. All devices need to be considered to ensure that urban regeneration is occurring in the round and not only where there are individual Government projects. I welcome the hon. Gentleman's intervention in this instance and I hope that the Minister may be able to throw some light on the point that he has made.
I have mentioned the need for 60 per cent. of new developments to be on brown-field sites. I move on to the Government's consultation paper, planning policy guidance note 3. The new word is PPG3. As I walk down the Corridors in this place I hear colleagues asking, "What is going on with PPG3?" I hope that the Minister will tell us what is going on with it. There is a high level of expectation that any day now—I hope that it will be today—he will say something meaningful about the implementation of PPG3. I think that it is an excellent document. It was discussed widely throughout the country by interest groups, forums and focus groups. Many groups throughout the country were concerned that the Government should get PPG3 right.
The document contains a rather unusual idea—a sequential approach to building. I have never seen it before and it is extremely interesting. If the Government pull it off, it could be the beginning of a 20th-century urban renaissance. The idea is that green-field development would be halted until city sites had been used up. That would force developers to fill unused,
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under-used, vacant, dormant and derelict land in both the public and private sectors. If that was accompanied by tax incentives, urban regeneration would really take off.
If anyone doubts that successive Governments have failed, they should study the population shifts in our major cities. In the 1950s, Liverpool and Manchester were each represented by 11 Members. At the 1997 general election, that number had declined to five. The populations of Manchester and Liverpool declined by more than 50 per cent. between 1950 and 1997. Other principal cities throughout the country showed similar trends.
Developers need to be directed both to the inner city and the outer city. Some of the worst conditions remain in the outer city. There needs to be a central Government commitment to renew antiquated infrastructure. Rail links are only just able to cope and they are often unreliable. Main downtown stations are not properly served. If people are to flood back to the cities, the public sector must dovetail with private enterprise to provide the necessary schools, hospitals and recreational facilities. I am at a loss to understand why the Government have gone on talking—perhaps they have not, but we have—about road building. Why do we not have new rails? Instead of having new roads planned, why do we not ensure that in the next 10 years new railways appear throughout Britain? That is what I would like to see.
Mr. David Drew: Is that the new deal for the motorist?
Mr. Steen: Let us not worry about that. Let us worry about a new deal for the railways.
There is no point in building in the inner city if people have to commute to the outer city, to motorway intersections where many of the new business parks are located. The mismatch is a national problem. People criss-cross cities throughout the country and beyond, spending hours travelling in opposite directions, when the job could be just down the road. Jobs should be closer to home or people should be working at home.
Some say that high-rise flats are things of the past. However, high-rise, high-density housing can be beautiful and can provide alternative high-quality living. It is to be found throughout Europe and in the capital cities of the world. Middle-income earners will buy such properties, even on the 18th floor, if the flats are properly managed and there is a swimming pool and, particularly, a gym. Such housing needs to be well designed and made of high-quality materials and located in a community that is vibrant, exciting and safe.
Every Government, from Wilson's to Thatcher's, and including the new Labour Government, have initiated an urban inner-city strategy. However, they have been piecemeal and have succeeded only spasmodically because they have been based on small projects rather than on the social and economic regeneration of our cities. The best way of regenerating run-down cities is to offer special incentives to developers as well as additional financial incentives to those who choose to live in areas such as Brixton in London, Toxteth in Liverpool and Moss Side in Manchester.
There are fairly radical views that could be laughed at, but I do not see why. For example, what I said in the 1980s about selling off derelict land was laughed at. I wrote my book "New Life for Old Cities" 17 years ago.

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People said that what I advocated could not be done. Seventeen years later, however, people are now asking, "Why cannot we give tax incentives to those people who live in the poorest parts of a city?" Instead of paying 20 per cent. tax, they would pay 10 per cent. There would be an incentive for them to make money. There might be the problem of the yuppies returning, and so on, but we would be regenerating the areas about which we are all complaining.
Planning policy guidance note 3 could provide the rocket fuel by changing priorities and refocusing development from the countryside to the cities. I accept that there are problems. We have a problem with structure plans, which are fixed and are the basis for local authority local plans. I invite the Minister to advise district councils that, in preparing their local plans, they should be calculating the figures for new house build on the basis not of 4.4 million units but of 3.8 million. He has got himself in a bit of a fix. He has reduced the national figure from 4.4 million to 3.8 million, but county structure plans have already been fixed on the basis of 4.4 million. Local authorities are making local plans on the false original figure. The Minister should make a little adjustment so that local authorities do not continue planning for a figure which the Minister says is unsustainable nationally.
Unless PPG3 forces county councils to reduce the present projections in line with the Government's new target, we shall not even start to change thinking on numbers. We need to find the political will, which must go beyond one Minister and one Department—however good their work may be.
The vision of urban regeneration which Lord Rogers's report favours should herald a Cabinet commitment to a city pincer movement to squeeze out poverty and bad housing from down-town areas and out-of-city council estates, and replace them with new modern buildings for upwardly mobile young people, who can resettle in the area with their families—rather like settlers in the holy land in the 1950s and 1960s—as part of the urban regeneration dream.
This country has produced fine reports over the past 30 years, but little has changed. When I spoke in successive debates in the 1980s on these matters it was like preaching in the wilderness. When I suggested the privatisation of public land, everybody thought that I was mad. But they were wrong. When I suggest the privatisation of public land now, everyone thinks that it is a jolly good idea. I pay tribute to my right hon. Friend the Member for Henley who had the vision of urban regeneration necessary to take it forward, and to my hon. Friend the Member for West Worcestershire (Sir M. Spicer), who was on the verge of implementing my proposals on the auctioning of public vacant land when he was promoted.
Cities remain sad places. In her book "The Life and Death of a Great American City", June Jacobs focused on how America has reformed its ailing north-eastern cities, rebuilding them as places where people where people want to live and work. Professor Alice Coleman of King's college has done amazing work in this country on how to rebuild safe inner-city council estates. I pay tribute to both of them, and I warmly welcome Lord Rogers's report.
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The aspirations of the report would largely be killed off if it were placed in the unimaginative hands of local government for action. I have explained why. City councils often reflect the deprivation of the people living within their boundaries, rather than having the people needed to rebuild run-down communities and restore confidence by attracting new investment and funding. Only Government can provide the climate and fund the infrastructure. A pilot scheme for the city, with low taxation for those who return to live in it and incentives for those who build in it, could produce a Hong Kong mentality in microcosm across an entire population.
I am sorry that my party never ran with the ideas that I formulated and proposed to the House time and again. As a practising community worker, I thought I knew what I was talking about. Let us hope that the new Labour Government seize the opportunity for real regeneration of our cities, while also recognising the importance of protecting our rural heritage and our countryside.
11.31 am
Mr. David Drew: I am delighted to take part once again in a debate initiated by the hon. Member for Totnes (Mr. Steen), who deserves a prize for persistence, if nothing else. Given his wonderful self-justification and explanation of why his books did not sell as well as they should have done, and why his ideas were not taken on board as they should have been, perhaps his time has come, and the Government will reread some of his proposals.
The hon. Gentleman was a little churlish in some of his remarks about the impact of the report by Lord Rogers and the other members of the task force. I pay tribute to their work, which is a blueprint for the way forward. Their ideas could produce valuable work. The report contains more than 100 recommendations, and it is easy to say that many of them will fall by the wayside, but I hope that each will be considered by the Government in due course.
Although I was unable to attend the launch of the urban task force report, I know that there were slightly different interpretations in the press of what my right hon. Friend the Deputy Prime Minister said. From what I have read, I think that he gave the report a warm welcome. The Government are committed to an urban White Paper and, linked to that, a rural White Paper, so they will have to be judged by what they do.
The Government certainly intend to make a start on the biggest national issue—the decline of our cities. That affects everything that we do, whether we live in the city, in a village, or, as I do, in a market town, because they are all inextricably linked.
I invited the task force to visit two of my market towns, Stroud—the main market town of the constituency—and Nailsworth. It was an enjoyable day. Members of the task force were open-minded and they listened, and I hope that the evidence that they took back helped to make the report the weighty document that it is. Unfortunately, we seem to have slipped out at the final editing stage, but I am assured that the ideas that we presented to the task force played an important part in its considerations.
We should not deal with the report in isolation, or see it merely in relation to the inner city. It has much greater resonance than that. The welcoming remarks of the

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Council for the Protection of Rural England sum up why it is such an important document:
"Urban renewal is essential if we are to tackle effectively the problems and pressures facing our rural areas. We now have a route map towards an urban renaissance. The Government as a whole needs to follow it with vigour and determination."
The CPRE's director, Kate Parminter, said:
"Paradoxically the renewal of our towns and cities is the key to tackling some of our most pressing rural problems."
I heartily concur. My main purpose in inviting the task force to visit the Stroud area was to enable its members to study problems on a different scale from those of our cities. Market towns, too, have experienced decline and face problems of their own. It is increasingly recognised that if we are to deal with the problems of the cities, we must deal with the problems of the market towns, and that we ignore rural decline at our peril.
I shall make five points—briefly, as I know that other hon. Members want to speak. My starting point is the urban-rural connection. If we adopt the report's recommendations, we must appreciate their knock-on effect on rural Britain.
As the hon. Member for Totnes said, housing development is a central issue, although it should not be seen as the only one. I myself could be accused of being obsessed with housing development and housing numbers, but other factors, such as where jobs, shops and leisure facilities are located, are important, too. Our postbags are full of letters from people who do not want a particular housing development, or do not want it on the proposed site, and so on.
The report revisits the questions of how we will achieve the goal of 60 per cent. of development on brown-field sites, how we will introduce a sequential test, and how we will manage the land supply more successfully than in the past. All those aims require us to get the relationship between urban Britain and rural Britain right. It is generally accepted, as the hon. Gentleman argued, that that relationship has been unsatisfactory for a generation, if not longer.
My second point is that to put matters right, we must revise and improve the planning mechanism. That is central to Rogers's argument. It is easy to cast aspersions, but we know that the planning process has been misused and even abused. People are dissatisfied. They think that it has been over-centralised and that local decisions do not hold sway.
The hon. Gentleman was a little unfair to local authorities. I agree with him that they do not have the means of reforming the planning process, but they can provide community leadership, which is vital to the Government's aim of making local government fit for the 21st century. That community leadership must work with the private sector, the public sector and the independent and voluntary sector.
Mr. Steen: I am a great supporter of local government, and would not want anyone to think otherwise, but I just do not think that it has the tools to do the job. if it had, it could make some progress, but unfortunately, local authorities' track record is not as good as the hon. Gentleman or I would like.
Mr. Drew: I do not disagree with that. We must renew local government, not it its traditional role as the only
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funder, but in partnership with other sectors. We must get the planning process right. I am pleased that the Minister for London and Construction and the Minister for the Regions, Regeneration and Planning have spent time on issuing consultation documents. People might say that that is a cop-out and avoids action, but I do not agree. We must take people along with us by ensuring that planning proposals are, if not universally popular, as consensual as possible. We all want the same outcome; the question is by which means we achieve it.
Given his interest and background, it is not surprising that Lord Rogers has a lot to say about the role of urban design in successful planning. I welcome much of what the report says about the need for that design factor to be paramount to make people want to live in our urban centres. We all know why they do not want to live there, and we must turn that round. Britain's cities are, if not unique, at least unusual by comparison with many continental cities that we all visit from time to time, which seem to be able to attract people to live in them. Even if those people have places elsewhere, their main residence is still in the city. As the hon. Member for Totnes made clear, the outward drift of people has become a torrent in Britain. We must turn that round, because we cannot afford to go on as we are.
Fiscal mechanisms are important. The criticism of my right hon. Friend the Chancellor was a little premature, because we have been waiting for the report for some time. It would have been wrong to introduce legislation, and certainly to introduce changes through budgetary mechanisms, beforehand. One is always open to criticism if one makes one's mind up in advance of a report. I hope that the fiscal measures suggested in the report are treated seriously. They do not involve a green-field tax, which some would feel is not a particularly adventurous decision. None the less, it is right to make it more difficult to develop green-field sites, whether by way of impact fees or any other means.
In addition, it is important to harmonise the VAT regime and ensure that developers and owners have real incentives to use the more urban settings and bring contaminated land back into use. So much of our inner-city landscape has been blighted, and putting it right will cost real money. It is no good talking as if that will occur as a matter of course. There are significant problems, and we must offer incentives.
I also welcome the renaissance fund of £500 million over 10 years. The hon. Member for Totnes said that it was small beer—unfortunately, it is—and he talked of the need to put in place some form of catalyst. The fund is a start, but much greater resources will be required. We are trying to solve the problems of our cities for the next millennium.
If I have a criticism of the report, it is that, although I agree that planning is the key, it looks more at structural approaches than at people. To encourage people back into our cities we must get the schools and the health service right. Therefore the social and economic environment—and, dare I say, the political agenda—must be put in place. The report was intended to consider the planning agenda, so it would be daft if it did not concentrate on that, but I hope that the two White Papers will ensure that there is an underlying emphasis on how people's lives can be improved. If that is done, the outward drift will at least

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be slowed down, and eventually it will be turned round. That is a criticism, but I understand why there is not much in the report about that aspect.
Planning is at the forefront of the way in which we genuinely want to turn things round, but more central to achieving that than anything else will be the way in which we improve transport, not just in the urban centres but in the rural areas. Transport is crucial to everyone's lives, and if we do not get that right, everything else will fall by the wayside, regardless of whatever wonderful new plans are put in place, and regardless of our attempts to improve design.
I welcome what the report says about planning for a different transport system. Some of its proposals, such as home zones, may be a little zany, but there is genuine evidence of the need for people to accept reductions in the number and use of cars—for example, by accepting parking space for one rather than two, three or even more cars. That seems a fairly minor matter, but try persuading planning authorities, let alone the people who submit plans, that it is the right approach.
We must change attitudes. We have the ambitious target of reducing car journeys by 65 per cent. That will be difficult to achieve. We know the problems and the pain that it will cause, and we know that people must be encouraged to consider alternatives. It is important to encourage rather than to make people take action, because people must have a choice. But we cannot pretend that our cities can survive into the next millennium unless we consider the thorny problem of transport and ensure that people have alternatives—not just those who live in the cities but those who travel there to work or for other reasons.
I welcome the report. I hope that it will do more than see the light of day and cause a bit of pzazz for a few hours. I hope that it will genuinely form the basis of the urban and rural White Papers, and help people to understand that this debate can affect their lives for the better. I hope, too, that it will ensure that appropriate resources will be provided. We are all grateful to Lord Rogers and everyone else involved for what they have done.
1.48 am
Mr. Richard Allan: I congratulate the hon. Member for Totnes (Mr. Steen) on securing the debate. He has inspired me to look up his books in the Library. If they refer to concepts such as site value rating, they will be excellent bedtime reading for a Liberal Democrat, as we find such things fascinating in the extreme.
Mr. Sanders: Better than mogadon.
Mr. Allan: Indeed.
The report is an excellent contribution to the debate on urban policy. I have been conducting an urban policy review for my party, and often, while reading the report, I wished that I had thought of something that was in it. We may have to review our review.
Cities have had a bad press. Many people love living in cities. Most people in Britain do so. I love Sheffield, and I think that I speak for most Sheffielders when I say
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that I live in Sheffield because I want to. Nobody forces me to stay there. We can overdo the suggestion that cities are a zone of desperate flight out when in fact they are tremendously attractive places in which to live. I hope that we can move the agenda on to talking up cities a little more, talking about their advantages, particularly in terms of access to facilities.
Within striking distance of my home I have two excellent universities, two large and comprehensive hospitals offering a full range of services, two professional theatres and any number of amateur theatres to provide me with entertainment, and I can walk down Ecclesall road near my house and choose between 15 and 20 good restaurants. Not many rural dwellers have access to such a range of services. Those are real things that affect real people. To be able to walk out of one's door and have access to such a range of services is one of the principal attractions of living in a city. The real challenge is how to extend those advantages to everyone throughout the urban areas, and how to deal with some of the problem parts of those urban areas.
There is a huge difference between one part of a city and another. I am fortunate enough to represent the relatively well-off part of my city, but I know that, in terms of all the indicators—such as educational expectancy, and even life expectancy—there is a huge disparity between my area and other areas. We need to spread the advantages of living in some parts of a city across the whole urban area.
I want to discuss some key elements in the report. Mixed-tenure housing is crucial. Sheffield contains large estates where there is single-tenure housing, meaning that there is only one kind of tenant—the council tenant. It also contains housing association areas, where virtually everyone receives housing benefit. One problem is people's inability to stay in their areas; as soon as they can trade up, they get out. We should adopt some of the report's suggestions and bring about more imaginative sets of housing tenure. If we can do that, as people move up the social and economic spectrums they will choose to stay in their own areas, rather than fleeing to attractive suburbs.
Most cities suffer from the same inability to retain people in deprived areas as they move up the social spectrum. That is largely because the quality of housing that people expect as they move up the income scale simply is not there. Not many areas blighted by deprivation contain four and five-bedroomed homes with gardens. Sheffield has bold plans to redevelop some of the larger areas. I think that when cities redevelop they should concentrate on mixed tenure, rather than simply providing new housing with the same tenure as before.
A particularly bizarre scheme involves housing associations paying tenants to move out as soon as they have jobs and can afford their own housing. When those people are able to contribute to the local economy because they are in work, the housing associations want to replace them with people on housing benefit. That makes sense in terms of the housing association's role as a social housing provider, but I do not think that it does the areas concerned any good to bribe people to move out as soon as they become financially active.
Density is another important issue. The hon. Member for Totnes mentioned high-rise living. As we redevelop, there is a trend towards lower-density housing, but there

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is now scope for us to consider, for instance, new urban terraces. Terraced houses were very attractive in Georgian times: people do not think of terraces in Bath as being deprived housing. I think that we can move back towards higher-density housing if we can overcome some of the other problems, such as transport and parking. If we simply redevelop all inner urban areas with much lower-density housing to make them more attractive, we may miss some of the benefits of being able to absorb extra housing stock in urban areas.
Attracting jobs into cities is vital. In terms of job creation, the north-south divide is very evident, but I think that it can be reversed. There was a fair amount of scepticism when the Midland bank—or HSBC, as I think we are now supposed to call it—moved its headquarters to Sheffield and began shipping in people from other parts of the country, but I understand that the staff love it there. They do not want to move away from Sheffield, where they have a tremendous quality of life.
If firms are bold enough, they can put jobs into cities in the north, in particular, without experiencing the problems that some may fear. EDS, the computer company, has just brought several hundred jobs in information technology into Sheffield. It understands that Sheffielders love Sheffield. It knows that if it recruits Sheffielders it will keep them for a few years, whereas if it sets up a business in the south-east—as it has in the past—it will train people, and a year later they will be gone. Urban areas, especially those outside the south-east, have a great deal to offer in terms of recruitment and retention. We should take advantage of that, rather than simply tipping the whole population out of the north and into the M4 corridor—where I am sure they are often unwelcome, because of the extra development requirements that they impose.
As the report points out, new technology is a key aspect. I hope that we can take advantage of the universities that are generally found in our urban areas. Cambridge is a leading example of the university cities that have introduced science parks. York is trying to do a similar thing with its "science city York" initiative, using the university to add value to the local economy. I hope that the Government will encourage that trend and work with universities to enable them to add value in that way. Such action can give us a leading market edge. It will be easier for us to attract jobs into urban areas if there are high-quality universities producing high-quality graduates who can offer the industrial marketplace something that other areas cannot. Our cities need unique selling points, and universities can provide them.
The brown-field site development initiatives are welcome, but, as has been said, they require incentives. I would look favourably on a green-field development Act, especially if it enabled us to absorb the extra money from such development and recycle it into the brown-field clean-up. The absence of such a virtuous circle often presents a barrier. British Gas sites, for instance, are often left empty because of the phenomenal costs of cleaning them up. Not everyone can put up a dome to help with those costs.
As the report suggests, compulsory purchase orders need looking at. We need to assemble attractive packages of land, but new development is often prevented by the holding of "ransom strips", which means that developers cannot secure the attractive packages that will make their developments viable.
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We should also examine the role of city centres. Sheffield has a famous—or infamous—shopping centre, Meadowhall. It was recently sold, and I understand that some of the proceeds will fund the anti-euro campaign—courtesy of Mr. Paul Sykes, one of the developers of the site. Given that many shopping facilities have moved out of the city centres, we should consider their future role.
There are some very hopeful signs. I do not often praise the former city council regime in Sheffield, but I praise it for having introduced a new redevelopment scheme to make our open spaces in the centre more attractive. There is, I think, a significant role for the city centre as an area of public open space, offering entertainment and service facilities of every kind and, perhaps, moving away from the model of the centre as primarily a shopping area. Of course we need shops, but we should accept that time moves on and that city centres can provide more than a monoculture of retailing. Certainly Sheffield is trying to provide more attractive facilities to bring people in.
As has been said, public transport is important, and mistakes have been made. I hope that the Government will think about that, and also that they will consider the issue of equalisation of VAT on refurbishment and redevelopment. There is also the question of local authorities and the repairing of listed buildings. Authorities are often scared to act because they fear that they will not be able to recover the money. I hope that the Government will consider ways of supporting local authorities wishing to serve repair orders on the owners of listed buildings who allow them to fall into disrepair, and guaranteeing the money if the authorities fail to recover it.
I commend the report and hope that the Minister will tell us that the Government intend to act on its recommendations.
11.58 am
Mr. Shaun Woodward: I congratulate my hon. Friend the Member for Totnes (Mr. Steen) on securing this important debate. I also join others in congratulating Lord Rogers and the members of the urban task force.
There is no doubt that it is right for us to consider this issue—albeit, as my hon. Friend said, yet one more time. The question is, what will now be done? Hon. Members have rightly praised aspects of the report, but where do we go from here? The report contains 105 recommendations, and yesterday the Government proudly claimed that they had already implemented one of them. That leaves 104. At that steady rate of progress, the Government should have worked through the report by 2003.
The Minister is clearly anxious for the White Paper to be published soon. It will be interesting to see whether the Deputy Prime Minister is prepared to take on what are undoubtedly powerful political interests. The crucial question is whether he will win the battle for money from the Treasury—and, indeed, where the extra money will come from for investment in public transport and housing. Is the right hon. Gentleman prepared to tackle local authorities, and ensure that their planning powers are loosened? Hon. Members have rightly mentioned that. The need for urban regeneration arises from the need to find 3.8 million extra homes in the next 25 years. Again, the crucial question is: where will they be?

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In some respects, the report makes uncomfortable reading for the Government. Lord Rogers highlights the failure so far to meet the Government's targets on brown-field sites. As he says:
"Our model leads us to estimate that on the basis of current policies, just over two million dwellings will be developed on recycled sites over the 25-year period of the housing projections. This equates to 55 per cent. of the projected 3.8 million extra households being accommodated on brownfield sites. In other words, if we continue on the current path, we will fall short of the Government's target."
The Deputy Prime Minister's response to that was interesting:
"We shouldn't become obsessive about the figure."
That is an extraordinary signal for him to send. It is precisely the wrong signal to send to local authorities and to those involved in planning. As long as such sloppy signals are sent, green field will be built on and brown field will remain vacant. Such indifferent sloppiness from the Deputy Prime Minister will have a continually devastating impact and the targets will be missed.
By the same token, as we can see from the report, if the Deputy Prime Minister were to adopt a more rigorous, exacting attitude, enormous benefits would accrue and many areas of the countryside would be saved. Indeed, if he had read the report in detail, he would have seen that the potential for things to get worse in relation to the proportion of housing to be developed on previously developed land is considerable. We could fail to hit not just the target of 60 per cent. but the target of 55 per cent. Even worse, it could easily fall to 47.4 per cent.
By the same token, if the Government were to discount their sloppiness and go for a rigorous approach, as Lord Rogers rightly points out, increasing average density of new development on previously developed land by just 10 per cent. would allow them to hit the 60 per cent. target. He recommends other ways in which the Government could improve on their appalling record.
The report makes uncomfortable reading for the Deputy Prime Minister for other reasons. Despite Government claims, the report shows that Government spending on inner-city regeneration is behind Conservative levels when we left office. As the report says—[Interruption.] The Minister nods.
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Nick Raynsford)indicated dissent.
Mr. Woodward: Let me refer the Minister to page 286 of the report, which is headed, "The big numbers". It states:
"Following the Government's Comprehensive Spending Review…the Government promised to increase its regeneration expenditure over each of the next three years. In real terms, however, the increase in expenditure only means that by 2001/02 we will have just overtaken the amount that the previous Government was spending in 1993/94."
Mr. Raynsford: What happened after that?
Mr. Woodward: The report shows that the levels in 1995, 1996 and 1997–98 were above the Government's levels in 1998–99. If the Minister doubts it, he should turn to page 286 and see for himself.
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The Deputy Prime Minister must know the trouble that he and his Ministers are in with the report. Schemes to cut VAT rates on construction will not endear him any more to the Treasury. His disastrous transport policies will not win support in the country if he adopts the report's proposal to cut road spending. Perhaps the Minister could tell us this morning whether he intends to cut road spending further.
The hon. Member for Stroud (Mr. Drew) rightly drew attention to the report's emphasis on the importance of public transport, yet the Deputy Prime Minister continues to preside over some of the worst transport chaos in decades. If we had to take just one example, we would take London. Let us look at investment levels on the tube in London. In 1996, the Government put in more than £1 billion. This year, it is half that: £564 million.
People cannot get to work in London. They cannot get from work to their homes in London. How on earth does the Minister intend to persuade people to follow the report's recommendation and to come to live in the capital when the Government have engineered chaos on its public transport?
People do not need Lord Rogers's report to tell them the truth. The Government have cut spending on the tube and it is getting worse by the day. The Deputy Prime Minister still has no proper agreement and implementation date for his PPP—the public-private partnership. He will almost certainly not be able to hand over London Underground to the mayor next April or May. He still has no agreement for extra money to finance the tube next year and beyond.
The report rightly highlights the fact that it is no use adding to all the derelict land throughout the nation and demanding that it be covered in new houses if no one wants to live there. Houses follow jobs, as all those Ministers who live in Admiralty Arch and Dorneywood know.
The report does not confront directly the fundamental loss of jobs in the north, which has led to the north-south migration. People are leaving the north in huge numbers. The Government continue to preside over that tragic collapse of northern urban areas. After two years, there is still no clear policy on how to reverse it.
At the heart of the report lies the following question: who will pay to halt the decline in our inner cities? Where will the money come from? It will be interesting to see whether the Minister even begins to answer that question.
Briefing before the report was published—unfortunately, as always with the Government, there is a fair amount of leaking before reports ever find their way to the House—estimated that, net, it would cost between £1 billion and £2 billion a year to implement the report's recommendations. The report believes that inner-city regeneration could best be achieved by, among other things, cuts in council tax in inner-city areas, cuts in stamp duty and, crucially, cuts in VAT on conversion properties.
In addressing that crucial question—it is crucial; it will be interesting to see whether the Minister addresses it this morning—the report says on page 255:
"Refurbishment or conversion of existing residential properties carries full VAT at 17.5 per cent. New housebuilding incurs no VAT, nor does conversion of commercial buildings for housing. There is therefore a strong case for harmonising the different rates, preferably by removing VAT on refurbishments or conversions of residential buildings, or introducing zero-rating."

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Therefore, as the report says:
"It is essential that the UK presses the European Commission to enable harmonisation to occur without the need to impose VAT on new build housing development."
The crucial question for the Minister is: are the Government pressing the European Commission to enable harmonisation to occur without imposing VAT on new houses? If they do not, if the Treasury does not make extra money available and if the Minister's only solution is to cut VAT on converted property and to raise VAT on new houses, anyone who wants to buy a new home, any young couple, any starter group embarking on a new home, had better realise that the report carries a serious probability—unless the Minister will tell us today that he rules it out: a 5 per cent. tax on new homes over the next 25 years. Perhaps he will tell us whether the Government have plans to introduce that 5 per cent. tax, or say categorically that there will be no 5 per cent. tax on new homes, now or in the foreseeable future
There is no question but that harmonisation at 0 per cent. across the board would be welcomed by everyone. However, how will that be paid for? [Interruption.] The Minister rightly says, "Dream on." We look forward to seeing the White Paper, but can he tell us when it will appear? Will it be like his Department's Railways Bill, which was cancelled last year by No. 10 and delayed this year by No. 10? It is now anyone's guess when it will arrive, let alone be implemented.
Sadly, the true fate of the report rests in the hands not of the Minister or the Deputy Prime Minister, but of the Chancellor of the Exchequer. In the Deputy Prime Minister's extraordinarily unwieldy and stagnant empire, it is not he but the Chancellor who makes the decisions. The Chancellor will decide which, if any, of those policies can be implemented. He will make the money available and he will tell the Deputy Prime Minister whether he can have his report.
From where will the money come, if not from the Treasury? The Minister nods, but perhaps he will answer that question. Will it come from current revenues—if so, what will be cut? Will it come from new taxes—if so, on whom will they be levied?
As so often, the success of the Deputy Prime Minister's policies rests in the Chancellor's hands.
Mr. Steen: My hon. Friend is, as usual, making a very powerful speech, for which we are grateful, but I think that he needs to deal with one point. He is going down the track—successive Governments have gone down it, as has been apparent in all the projects—of thinking in terms of injecting funds into bits of the inner or outer city. I was talking about creating an entirely new climate in which cities will regenerate themselves, rather than about pushing in bits of money to create an action area here or a rejuvenation or regeneration there. Although I support my hon. Friend's argument entirely, could he deal with that matter too?
Mr. Woodward: My hon. Friend makes an important point, on which he expanded at length in his speech. He is also quite right. However, that matter is not the report's fundamental tenet, as that wonderful new Labour document is all about going to the Chancellor for money—or going to the taxpayers and finding new ways of fleecing them to pay for regeneration. The
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report is not about enabling individuals to be free from the planning miasma that has developed, and it will be interesting to hear whether the Minister has anything to say about that.
I ask the Minister: what will be the report's fate? As The Independent recently inquired:
"But action? For all his bluster, it is hard to point to many of the Deputy Prime Minister's achievements. This is either Mr. Prescott's chance to show his worth, or, more likely, the final proof that nothing concrete will emerge to help our inner cities without a change of minister."
12.12 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Nick Raynsford): I congratulate the hon. Member for Totnes (Mr. Steen) on raising this issue and, above all, for his tenacity, over a long time, in expressing his concerns about the importance of urban regeneration.
The hon. Gentleman mentioned his own two books on the subject—"New Life for Old Cities" and "PLUMS"—and, rather wistfully, commented that the first of them was published 17 years ago, when he found himself preaching in the wilderness. I am sorry for that, but, hope that, as I make my speech, he will realise that the Government are committed to pursuing policies designed to give effect to many of the ideas that he has expressed. Although I cannot accept all those ideas, many of the views that he has expressed today and in those books chime very closely with the Government's approach to regeneration.
The urban task force's report has attracted great interest, and I very much welcome hon. Members' comments on it today. The report has been widely welcomed, and the welcome that has been extended to it outside the House has been reflected in the comments made today by hon. Members on both sides of the House. I add my congratulations to my noble Friend Lord Rogers and all his team on a very comprehensive and detailed analysis of one of the most crucial issues confronting our society.
The hon. Member for Totnes mentioned London's relative success, but some northern cities—such as Manchester and Leeds and others—have also shown relative success. The nub of the issue is that, although some urban areas are successful, in past decades others have suffered serious decline. There has been an exodus from inner cities, driven by a lack of confidence in schools, fear of crime, an unhealthy environment, economic setbacks—such as loss of industry—and poor housing. One of the key challenges facing us is to make Britain's towns and cities not only fit to live in but thriving centres of human activity in the broadest sense, comprising economic and social activity, and other activity enticing people to move to and live in those locations.
The Government are trying to promote new thinking in reaching that objective, which is why we asked Lord Rogers and his team to undertake the study. The task force was asked to consider the reasons for urban decline and to recommend how to breathe new life into urban areas.
The task force's report was published on 29 June, setting out its vision for the future of our urban areas. It called for well-designed, more compact and better connected cities that support a range of diverse uses

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within a sustainable urban environment, with good transport links, and within a framework that is adaptable to change. We welcome the task force's broad vision and the various forward-thinking recommendations in its report.
It would be premature now to provide a full response to the task force's specific recommendations—of which, as all hon. Members will know, there are more than 100—as they merit detailed consideration. However, we shall be doing that in the next few months, before we publish a White Paper on urban policy.
The hon. Member for Witney (Mr. Woodward) and others have asked when the White Paper will be produced. The Deputy Prime Minister has made it clear that we shall be producing it within the next 12 months. As it will be the first urban White Paper for 20 years—and should be prepared thoroughly and carefully so that it addresses all the issues—we are not committed to a fixed publication date. It would be a mistake to rush out a White Paper simply to give a quick response on an issue that really does merit thought and care.
We have, however, been able to respond immediately to one of the task force's recommendations—to create urban regeneration companies. The day after publication of the task force's report, my right hon. Friend the Minister for the Regions, Regeneration and Planning launched the "Liverpool Vision". As the hon. Member for Totnes, in an earlier life, represented a Liverpool constituency, I am delighted that the city of Liverpool has benefited first from the Government's response to the task force's recommendations.
We also have invited a proposal for a second pilot, in east Manchester. We expect early results from the pilots to provide valuable information to feed into the urban White Paper and to provide a model for similar urban regeneration companies in other towns and cities across England.
The urban White Paper will deal with the challenges that must be met if we are to secure an urban renaissance. We must have cities that are prosperous, sustainable and socially cohesive, and offer attractive living and working environments. The urban White Paper will provide a framework showing how policies can be integrated effectively to achieve those objectives.
The task force rightly emphasised that there is no single solution to the problems faced by urban areas: we have to deal with economic, social and physical problems as a whole. The hon. Member for Totnes spoke, perfectly reasonably, about the limitations of local authorities' ability to achieve on their own a turnaround of urban areas. Although they have an important contribution to make, their contribution must be part of a wider partnership—and there must be the full engagement of the business sector, the voluntary sector and local communities. It must be a broadbrush and holistic approach.
I also noted that the hon. Gentleman mentioned the achievements of some American mayors. It is an interesting issue, as it suggests that there may be models of local government that may be more successful than others in helping to galvanise those partnerships and creating impetus for change. He will be aware that the Government are seeking to promote innovative thinking
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in local government on how best to meet the challenges facing local authorities. He will also know of my own role in creating a framework for London where there will be a directly elected mayor who we hope will perform exactly the role of acting as a leader for London, bringing together all the parties and helping to galvanise London in various ways.
Mr. Steen: I take the Minister's point, but the problem in London is the candidates.
Mr. Raynsford: I shall make no comment on that.
Planning is an essential tool in turning the vision for urban areas into reality. The hon. Member for Totnes rightly focused on planning issues, in which he has shown particular interest over the years. The Government have started work on modernising the planning system and welcome the overall direction proposed in the task force's planning proposals, many of which reflect our "Modernising Planning" initiative.
There is widespread support for our policies from a surprisingly diverse range of bodies, including the Confederation of British Industry and the Council for the Protection of Rural England. A recent CPRE press notice said:
"The Government's new planning policies begin to put teeth into its commitment to protect the countryside and revitalise the towns. They should have a significant impact on the geography of new building and help to contain urban sprawl."
I quote that press release, bearing in mind the comments by the hon. Member for Witney, who used several selective figures, combined with a certain amount of political bluster, to imply that all the problems have arisen in the past two years and that nothing that went on in the previous 18 years, when the Conservatives were in government, contributed to the problems. A brief study of history will reveal that the impact of economic decline during the recessions of the early 1980s and early 1990s, and of the "let it rip" development mania of the 1980s, in which developers were encouraged to develop wherever they wanted—green-field site or not—entirely gives the lie to his extraordinary claim that the problems are associated with the present Government. I am not making a party political point when I say that we are seeking to deal with problems that have a long history. We are seeking to tackle them in ways that genuinely address the economic, environmental and social problems, to try to ensure a more sustainable and better basis for future planning.
We have already taken several steps. "Planning for the Communities of the Future" marked a break with the past and set out our objectives for an urban renaissance. It signalled a departure from the days of "predict and provide" in planning.
The hon. Member for Totnes mentioned the transfer from the previous arrangements to the current ones. That must be handled in an orderly way, taking into account the fact that structure plans and local plans in different parts of the country differ in their preparedness, but we are making that transformation. PPG3, which the hon. Gentleman mentioned, is an important part of that process.
I very much welcome the very positive support that the hon. Gentleman has given to PPG3. We believe that it is the right way forward. It will help to encourage

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redevelopment in urban areas and to focus on quality, both of which are vital. We should be thinking as much about the quality of new development as about the numbers, because in the past one of the great banes of housing and planning policy was thinking mechanistically about numbers instead of thinking about quality and creating environments that people would want to live in and enjoy living in.
Mr. Steen: I think that we agree about PPG3. The only snag is, when will it happen?
Mr. Raynsford: As the hon. Gentleman knows, the procedure in respect of issuing planning policy guidance is that the document must be issued first for a period of consultation. We are considering the responses to PPG3, and we shall make a more definitive statement in the relatively near future. However, PPG3 is a material consideration already, as a draft document, and authorities may have regard to it in considering appropriate planning matters. Once the process of issuing new planning guidance starts, that becomes an influence on future planning decisions, so the impact of PPG3 policies, which the hon. Gentleman welcomes, should already be starting to be felt.
Mr. James Gray: I presume that the Minister will wait to hear the outcome of the consideration by the Select Committee on the Environment, Transport and Regional Affairs of PPG3 before he comes out with the final version.
Mr. Raynsford: The hon. Gentleman, who is a member of the Select Committee, is well aware that we consider Select Committee reports very carefully. We do not always agree with everything that they say—he would not expect that—but we will look carefully at the Committee's conclusions.
Mr. Steen: Assuming that PPG3 comes into effect, whether or not it reproduces the original consultation document, the implication is that local district councils—planning authorities—will be able to refuse planning consent on green-field sites. If they do not have a city in their district, can they point to the neighbouring town and tell the developer, "Develop there"? What happens if the developer who wants to develop on the green-field site in the district council area appeals to the Secretary of State? Will the Secretary of State be able to turn down the appeal, pointing to PPG3 and saying, "Look in the city next door"?
Mr. Raynsford: The hon. Gentleman will be aware that, under the plan-led system, we are seeking to encourage an approach in which sites are identified in advance—in which there is a more proactive approach to planning—so that developers are encouraged to consider appropriate sites. As I shall mention, the national land use database is designed to make it easier to identify brown-field sites in urban areas for development.
However, the hon. Gentleman must accept—as we all do—that, even if we achieve the 60 per cent. target, a certain proportion of development will continue to take place in non-urban areas. Indeed, there is a need, for the vitality of rural areas, for some development to take place in many of those areas, to provide employment and
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opportunities for people who must live there. A balance must be maintained. We cannot have a mechanistic approach which automatically refuses any green-field development. The purpose of the sequential approach that we are adopting is to steer development towards brown-field areas wherever possible.
I mentioned the national land use database. The hon. Member for Totnes highlighted the lack of knowledge about the extent of vacant urban land. We must have a better understanding of where the land is and where it is available. The national land use database published its first results on 20 May. I find it slightly shocking that that is the first effort of its kind to identify such land. Obviously, it must be developed. Although we only have the initial findings at the moment, it is a step in the right direction and will help us to pursue our policies.
In all these initiatives we are attacking the causes of urban decline and people's tendency to look for alternatives to urban sites for development. We want to reinvigorate cities and encourage people to return to and develop in cities. If we can reverse the decline—if we can make our urban centres more vibrant, exciting and pleasant places in which to work, live, and play—we shall have gone a long way to protect the countryside from unreasonable pressures for development.
I stress, therefore, that the Government are not only focusing on urban areas. We shall publish a rural White Paper to express our concerns for the countryside and the need for appropriate policies relating to rural areas.
My hon. Friend the Member for Stroud (Mr. Drew) made several very pertinent comments. He has taken a serious interest in the subject of development in both urban and rural settings and the inter-relationship between the two, which is rarely the subject of the careful thought of which he gave us the benefit this morning. From his perspective, the inter-relationship between urban and rural areas is hugely important.
The hon. Member for Sheffield, Hallam (Mr. Allan) spoke about the benefits of city life and the need for more diverse tenure patterns and for more diverse mixed developments in city centres. I wholeheartedly concur with him. We believe that a greater diversity in tenure patterns and a mixture of residential, commercial and retail activities in city centres helps to keep vibrancy and avoid their going dead at night, which was often the problem of mono-tenure or mono-activity cities where all the business closed in the evening, people left and the areas were often very unwelcoming and sometimes crime-ridden. Bringing people back to live in the city centre can help to create greater security and vitality. There is an enormous amount to be said for that.
The hon. Member for Witney raised several issues, including that of fiscal instruments. The task force did make several recommendations on fiscal instruments, which the Government will want to consider carefully before replying. As he knows, final decisions on taxation are a matter for the Chancellor of the Exchequer, but it was always thus, even under Conservative Governments. I have no doubt that the Chancellor of the Exchequer will want to respond on several of those issues in due course.
The future is about harnessing growth to promote a better quality of urban living and to bring back life to the hearts of our towns and cities. Achieving an urban renaissance goes hand in hand with relieving pressure on the countryside. The task force's report is a challenge to

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the Government, public agencies, the private sector, local neighbourhoods and individuals. We must all play a part in ensuring that cities and towns become places where we are proud to live and to work. We need to think positively and work across all sectors to make an urban renaissance a reality. This is not a short-term programme—it is about long-term sustainable development.
The task force's report sets out the task before us. It has already started a major public debate about the quality of life in our towns and cities. The Government will continue to work in taking up that challenge.

St. Vincent's Hospital, Middlesex
12.30 pm
Mr. John Wilkinson: I am grateful for the opportunity to raise the subject of the future of St. Vincent's hospital, Eastcote, Middlesex. The hospital lies in an ideally peaceful location—at about the highest point in my constituency—on Haste hill, on the edge of Ruislip woods nature reserve. From the windows of one of its sadly now-unoccupied wards, one can look down across the broad sweep of Middlesex towards London airport at Heathrow.
St. Vincent's has been in this perfect setting for some 75 years. It is a religious medical charity, registration No. 1014889, and a company limited by guarantee, No. 2721809, under the auspices of the Sisters of Charity of the order of St. Vincent de Paul. Their tradition of devoted, selfless care of patients has been St. Vincent's enduring characteristic to this day, and that tradition is maintained by the admirable clinicians and staff who work there.
That is exemplified by the inspiringly radiant photograph and the warm tribute to three St. Vincent matrons in the May 1999 newsletter of the hospital's dedicated league of friends. The newsletter says:
"Our Photograph shows three generations of Matrons who between them have served St. Vincent's for 56 years. Sister Angela Murray first came to St. Vincent's in 1943, and was appointed Matron in 1959. She was later followed by Sister Carmel Cussen who first came to St. Vincent's in 1964, and was Matron for 20 years, until Jacquie Scott took over from her at the beginning of last year."
I pay tribute to Jacquie Scott and all those under her who are driving the process of change forward and seeking to ensure a long-term viable future for the hospital. The newsletter continued:
"Sister Angela and Sister Carmel have guided St. Vincent's through many great changes in both the world around them, and in the services provided by the hospital. Jacquie Scott, who, in keeping with the times, has the title of Director of Nursing rather than Matron, has also been appointed Head of the Hospital, and she will undoubtedly be guiding the hospital through many more changes in the coming years.
Sister Angela is at last retiring to her native Lanarkshire, where we wish her well, while Sister Carmel will continue to be available to us, as she resides in the Sisters' home at the hospital and is now able to devote her time to pastoral care. So, although Sister Angela's departure undoubtedly marks the end of an era, it is all part of the continuous process of evolution of the service that our hospital provides, under the care of the Sisters of Charity of St. Vincent de Paul."
It is instructive to give a brief outline of the hospital's history. At the turn of the century, Archbishop Bourne, who later became Cardinal Bourne, set up a home for 25 boys, mostly victims of tuberculosis and polio. Without this home, their chances on the streets of London—as hopeless incurables and social outcasts—were slim.
In 1906, the fate of the home and the children was in jeopardy through lack of funds, as the Archbishop failed to obtain financial support. The future looked bleak until, in 1907, an old coaching house was found in Clapham, and the Sisters of Charity of St. Vincent de Paul agreed to take over its running. This was founded as the St. Vincent's home for crippled boys.
Three years later, Mr. McCrae Aitken, a surgeon, visited the home and treated 19 of the children. As a result of his skill, 12 were earning their own living within three

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years. The work expanded and, in 1912, the home moved to Eastcote, Pinner, and became known as the Eastcote cripples home. That is its present location. An operating theatre was built and a physiotherapy department added in 1923.
In 1923, St. Vincent's adopted the name of St Vincent's orthopaedic hospital, becoming only the second orthopaedic hospital to be opened in this country. In 1925, a ward of 20 beds was opened for girls, and this was followed by yet another ward in 1930, which accommodated a further 25 patients. St. Vincent's continued to treat children and it was only during the second world war—when it had to care for casualties—that it first began to admit adult patients as part of the emergency medical service.
In the post-war period, the hospital's orthopaedic work has, until recently, continued on a major scale, although, as I will explain, it has had to be phased out to a large degree. The hospital has had a high reputation and was always immensely appreciated by the local community, which has selflessly supported the hospital's summer fetes and other activities and has recently helped to finance the opening of a shop on the site.
The range of services provided by the hospital includes work on joint replacements, care of the young chronically disabled and treating patients with severe multiple sclerosis and those who have had strokes or brain injuries. In 1996, the name was changed to St. Vincent's hospital to reflect the fact that orthopaedic surgical work was being phased out and to demonstrate that the hospital had a wider role as a community hospital.
Following a joint fund-raising appeal by the hospital and the Alzheimer's Disease Society, a specialist unit day centre for Alzheimer's patients called the Templeton centre was opened in 1997. The Holding Hands appeal did a wonderful job, and the Templeton day centre—named after its inspired promoter, Hazel Templeton—has as its object to provide high-quality care for those with dementia and to provide assistance and facilities on the site for their carers.
In 1998, a change of Government policy insisted that NHS patients should be treated in NHS hospitals where possible, and not in so-called private hospitals. Although St. Vincent's is a wholly charitable institution, it was considered a non-NHS hospital, and that led to the decision to phase out orthopaedic surgery.
The board and management at St. Vincent's agreed to continue serving the community, and that work continued in its current community hospital role. It is worth looking at the circular issued on 3 September 1997 from the NHS headquarters in Leeds and, in particular, paragraph 17—which, paradoxically, comes under the heading, "Ensuring Fairness." The paragraph said:
"In preparing for the new approach, Health Authorities, GPs and NHS trusts should explore the scope to make maximum cost-effective use of local NHS capacity before contemplating recourse to private sector hospital provision. Where care is nonetheless commissioned from private hospitals, the reasons must be reported to the Regional Office."
This is an extraordinary ideological predilection to support NHS hospitals, regardless of local circumstances and the cost-effectiveness of other institutions such as St. Vincent's, which is a wholly charitable hospital whose profit—when there is one—is always ploughed back into the care of patients.
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With the demise of the internal market, change and adaptation have been uppermost in health care planning, and never more so than at St. Vincent's hospital recently, which has had to adapt drastically and fast.
GP fundholding ended this March and was replaced by primary care groups on 1 April. Both systems were set up to arrange health services for all local residents. They were intended to work with the providers of local health services to ensure that local people receive the best possible treatment and care, but, in the transition from fundholding to the new PCG approach, St. Vincent's suffered and, whereas once there was a thriving orthopaedic surgical unit providing care at operative, post-operative and rehabilitation and discharge stages, the hospital can now provide only non-surgical care management.
In 1998, orthopaedic surgery ended at St. Vincent's, and the Hillingdon health authority decided to build up the orthopaedic surgical facilities at Mount Vernon hospital nearby. Anomalously and strangely, surgical work is being reduced at Mount Vernon overall; the rationale between the first decision and the second is hard to fathom, especially as the other hospitals in the area to which orthopaedic patients are referred have historically had long waiting lists whereas St. Vincent's has always been short.
In November 1998, 48 members of staff were made redundant, extending right across the board to clinical, medical, surgical and ancillary staff. The hospital has only two wards open: a busy physiotherapy service and an X-ray department, which is also likely to close in the very near future. We do not know what services will be commissioned by the NHS at St. Vincent's. The future is extremely bleak unless favourable decisions are taken. Very little time is left if this cost-effective and dedicated institution is to survive.
St. Vincent's has a small contract with Northwick Park Hospital NHS trust to provide in-patient services focusing on post-operative rehabilitation for orthopaedic or trauma patients who have had surgical procedures and require more time to get back on their feet or are waiting for social services decisions. Many people have to wait many weeks for decisions about residential or nursing home places, so the service at St. Vincent's is very relevant and worth while, enabling Northwick Park to free precious beds that would otherwise be unnecessarily occupied.
St. Vincent's also offers respite beds, but they are not NHS funded. Physiotherapy is an expanding service, which St. Vincent's has provided for the local population since its inception. The service is immensely appreciated and the physiotherapy department, which has contracts with both Hillingdon and Harrow, has a waiting list, on average, of only two weeks, whereas the district general hospitals in the area have waiting lists of about six months.
The Government have made it clear that NHS patients are to use so-called non-NHS establishments only if there are no NHS facilities available for the service required. That is wholly illogical. St. Vincent's is cost-effective, with the lowest possible overheads. There are double standards involved, as about 98 per cent. of the work done at St. Vincent's has always been for the NHS.

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The community services development plan for Hillingdon for the financial year 1999–2002 for services for older people is due for publication on 23 September. The content of that crucial document will decide much of the future, if not the eventual viability, of St. Vincent's.
I know that the hospital's geographic location in the north of the Hillingdon borough poses certain problems, because we have the excellent Northwood and Pinner cottage hospital—which was already in existence as a great war memorial hospital—and Hillingdon health authority is determined to build up Mount Vernon as a community hospital and to run down its burns and plastics unit and its oral and maxillofacial unit, which did greatly admired cleft lip and palate work that was prized by local people.
St. Vincent's can make an invaluable contribution to the health service in many sectors, including the care of older people and respite management; physiotherapy and occupational therapy; radiography; the provision of a healthy living centre; locality phlebotomy; post-operative rehabilitation; in-patient provision for those waiting for residential or nursing home placement; out-patient services in chiropody and rheumatology; and day-care surgery.
St. Vincent's is exactly the kind of small unit that the Government should support if they genuinely believe in a wide range of health care provision for our people. In the whole period from 1979–97, I had occasion to request only one Adjournment debate on hospitals in my constituency: I asked in 1979 about the future of the accident and emergency department at Mount Vernon. In this Parliament, I have had Adjournment debates on 6 March 1998, on the future of Mount Vernon, and on 27 December 1998, on the future of Harefield hospital. This is the third time that I have had to request such a debate.
It seems that the Government are obsessed with big private finance initiative hospitals, such as the Paddington basin project or the great new hospital project in the west of Hertfordshire whose location we still do not know. If that is to the detriment of dedicated charitable institutions such as St. Vincent's, it will be a great tragedy. With good will and imagination, such a tragedy can be averted. The hospital can continue its admirable work if only it can have the contracts and backing that it and its staff fully deserve.
12.48 pm
The Minister of State, Department of Health (Mr. John Denham): I congratulate the hon. Member for Ruislip-Northwood (Mr. Wilkinson) on his success in securing this debate. I appreciate the importance of this topic to his constituents, for many of whom St. Vincent's is a much-loved and respected local hospital.
I do not believe that there is any connection between the Government's success in getting under way the PFI hospital-building programme—the largest ever in the history of the national health service—and the future of St. Vincent's. Nor do I believe that the connections made by the hon. Gentleman between other policies and what is happening at the hospital will stand examination.
St. Vincent's hospital, which is under the pastoral care of the Sisters of Charity of St. Vincent de Paul, has a long history of serving the community and the public at large.
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Beginning in the early 1900s, it later began to provide surgery and treatment and in 1925 it expanded further to include facilities for girls as well as boys. The advent of the second world war meant a further change of direction, with services being provided for adults or casualties of the war as part of the emergency medical service. The hospital has continued to develop services over the years.
This debate provides me with an opportunity to pay tribute to the work of such charitable organisations. In the past, and in the present day, they have proven to be beneficial for their communities. I, too, wish to pay tribute to all those who have worked, or are working, at St. Vincent's hospital. It is clear that local people have benefited greatly from their endeavours over the years and the hospital has been, and continues to be, an important provider of local health services. It currently has a reputation for providing an excellent physiotherapy and rehabilitation service, and I am aware that local NHS patients have been very happy with the care and treatment they have received at St. Vincent's hospital.
The House will be aware, of course, that St. Vincent's hospital is a hospital outside the NHS and it might be helpful to set out several aspects of the relationship between the NHS and the private and voluntary sectors. Under the new arrangements for commissioning health services, general practitioners and consultants retain the clinical freedom to refer patients for the most appropriate treatment, and we would not have it any other way. However, it is still the case that health authorities, GPs and NHS trusts should explore the scope to make maximum cost-effective use of local NHS capacity before contemplating recourse to independent sector hospital provision.
When care is none the less commissioned from private hospitals, the reasons must be reported to the regional office of the NHS Executive. That was set out, as the hon. Member for Ruislip-Northwood said, in the planning and priorities guidance for 1998–99, which was issued to the health service in September 1997. The same applies to any hospital outside the NHS, be it a charitable organisation such as St. Vincent's or a voluntary sector provider of health care services.
It is clear that NHS facilities should be utilised where available and contracts with voluntary and private health care providers will be subject to the same standards of quality and effectiveness as NHS service agreements. The NHS has a responsibility to place its contracts with, and to commission, the voluntary and private sector only when it is most cost effective to do so after ensuring that the quality of services provided meets NHS standards. However, we accept that people should be free to choose private health care if they wish.
Ministers' relationship with the NHS is different from our relationship with the private and voluntary sector. We manage the NHS: we regulate the non-NHS sector. There is quite a difference. We have recently brought forward for consultation proposals for the regulation of the private and voluntary health care sectors.
The decision to commission services provided by voluntary and private health care providers is a local one and it will continue to be made locally and in the interests of patients. It is not the case that decisions are taken irrespective of local needs or circumstances. Indeed, two local health authorities currently have service agreements with St. Vincent's hospital. The local health authority of

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the hon. Member for Ruislip-Northwood—Hillingdon—has a service agreement with St. Vincent's hospital for physiotherapy and for rehabilitation services. That service agreement covers 8,200 physiotherapy contacts and a rehabilitation service for 12 long-stay residents as well as on-demand respite care. Hillingdon health authority and primary care groups will invest more than £730,000 at St. Vincent's in 1999–2000. The health authority and local primary care groups are of the view that St. Vincent's provides excellent physiotherapy and rehabilitation services and that that investment decision, made locally, ensures that cost-effective, high-quality services are available to Hillingdon residents.
Brent and Harrow health authority and the five primary care groups in Brent and Harrow also have a service agreement with St. Vincent's hospital for physiotherapy services. That covers 3,500 treatments for local patients and means that more than £56,000 is being invested in St. Vincent's. That reflects the high regard with which the physiotherapy service is viewed by many Brent and Harrow GPs and by patients in the area. So far as I can establish on the information available to me, the transition from GP fundholding to primary care groups has had no impact on the utilisation of physiotherapy services by the doctors in the two local health authority areas.
It is true that St. Vincent's used to provide a variety of other services. It used to provide orthopaedic services for both NHS and other patients. It no longer does so following a hospital board decision, taken in summer 1998, to cease offering orthopaedic surgery as one of the hospital's services. The hon. Member for Ruislip-Northwood suggested that that was a reflection of the priorities guidance to which I referred earlier. My understanding is that the hospital was experiencing difficulty in maintaining surgical facilities to modern standards, given the prohibitive cost. That was certainly an important factor in the decision. However, as the hon. Gentleman said, a wide range of services is offered at St. Vincent's, including facilities for younger chronically disabled, post-operative rehabilitation, respite care, physiotherapy, and radiography.
Given that health authorities and primary care groups have a responsibility to ensure that they make the best use of the public money that they receive, Hillingdon and Brent and Harrow health authorities and PCGs have decided that it is more cost-effective and appropriate in terms of ensuring that their populations receive the highest quality of care to look to St. Vincent's hospital to provide physiotherapy and rehabilitation services. I must reiterate, however, that those decisions are made locally. I am sure the hon. Member will appreciate that it would be unfair for Ministers to get involved in such decision making. We want health authorities and primary care groups to have responsibility for local decisions because of their expert knowledge of the health care needs of the
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local population. Our responsibility as Ministers lies in setting the strategic direction of the NHS, not in deciding which local service is most appropriate.
We are determined to ensure that the NHS in London provides Londoners with top-quality care. That is why better GP premises are being provided, new hospitals are being built, and more resources are being invested in mental health and community services. We also have a London region of the NHS looking at the capital's health needs Londonwide and providing Londonwide plans for improvement. A document, titled "The modernisation plan for the NHS in London 1999–2002", sets out what is planned for the next three years and beyond. So we have targets in place and we need to ensure that they are delivered
The key objectives of the Government policies for health and social services are longer, healthier lives; a reduction in inequalities in health and health care; and an NHS which is modern, dependable and there when it is needed. We want to focus on improving the health of all Londoners, including addressing cultural, social and ethnic diversity, and we want to work effectively with others to reduce inequalities in health. We also want to ensure that all Londoners have fast and convenient access to quality local services and that London continues to lead the way nationally and internationally.
I wish to make it clear to the hon. Member for Ruislip-Northwood that I understand that there are no plans to disinvest from the services that are currently provided at St. Vincent's hospital. I understand that that on its own may not be sufficient to secure its future, and I understand why that is a cause of concern. If the St. Vincent's board were to decide not to offer the services any longer, the local health authorities and primary care groups would need to consider how to ensure that people requiring those services were treated. That would, as I have said, be a local decision.
The Hillingdon health authority, local GPs and patients share the concern about the future of St. Vincent's. Hillingdon health authority has been in regular contact with the hospital, and discussions have been held to try to find a solution for the problems facing St. Vincent's. The hospital is seen as an integral part of the local health economy along with local NHS providers, and the health authority is encouraging St. Vincent's to look at what opportunities may exist locally and has entered into discussions with local social services on how to take that forward.
I am confident that St. Vincent's hospital is being included in local discussions and is viewed as a stakeholder when future service provision is under consideration. A local community conference will be taking place in north Hillingdon on 29 July and St. Vincent's hospital will have every opportunity to be involved and to contribute to that conference. Its role must, however, be viewed in the context of the needs of the local NHS and of other NHS providers in the area.

Employee Share Ownership
1 pm
Mr. Denis MacShane: I am grateful for the opportunity to have this Adjournment debate.
I strongly welcome the proposals in my right hon. Friend the Chancellor's Budget statement seeking to double the level of employee share ownership in the United Kingdom. I should declare an interest. I am an unpaid member of the board of Job Ownership, one of the organisations working in this sector. I have long been a supporter of employee share ownership plans, which I saw in practice in the United States—where about 9,000 firms with about 10 million employees are organised as ESOPs. Some are big, such as United Airlines, the world's fourth biggest airline, which has about 88,000 members in employment, but ESOPs have also saved small steel firms that otherwise might have gone out of business.
In addition, I saw how ESOPs, in the form of care assistant firms, gave employment to black women in the poorer parts of Boston. Those women would otherwise be without work and I was impressed with the way that they were able to make a living and feel that they owned their jobs. Also, as many hon. Members will be aware, the success of silicon valley is based on employee share ownership.
The structure works well: ESOPs have outperformed conventionally owned firms in productivity, share value and overall economic performance, both in the United States and the UK, where there are a small number of such firms. Savings put into employee-owned firms have grown faster than savings put into firms listed in the FTSE or Dow Jones indices.
We need more creativity and entrepreneurship, and more ownership of our economy, but we also need more than one model of ownership. The previous Conservative Government, in their long reign, believed in the public limited company, which is a monopoly form of ownership. I want the UK to adopt the competitive market in forms of ownership that is evident in the US. Giving employees a stake in their company seems to make the firm's success their success. It is a third way between state nationalisation and the plc, in which institutional shareholders own the stock, managers manage and workers who are not stakeholders in their own economic future do as they are told.
In 1969, almost half the UK's marketable wealth—broadly speaking, stocks and shares—was owned by individuals. Today, the figure has shrunk to just 16 per cent., according to the Office for National Statistics. As Prime Minister, Baroness Thatcher sold large chunks of the UK to Sid, but Sid's reaction was to sell on as quickly as possible to cash in the windfall.
Far from creating a share-owning society in the UK, the Conservatives presided over a remarkable concentration of ownership. Today, just three groups—insurance companies, pension funds and overseas investors—own two thirds of all the shares in UK companies. Although I have no problems with overseas investment and ownership, in the next century we should seek to return more of the ownership of Britain's marketable wealth into the hands of more of the British people, so that in the future they can be shareholders in their companies and in the country.
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Some UK employee-owned companies offer interesting success stories, and I shall mention just one. I often wonder whether the Sloane rangers and Chelsea shopaholics, for whom the Peter Jones store a little way down the road from here is the sine qua non for shopping dreams, know that they support an employee-owned firm. The John Lewis Partnership is one of the world's most successful trading companies in the retail sector. If it were quoted publicly, it would be firmly in the FTSE 100 index. It owes its success to its ownership by its employees.
Ever since the first employee share ownership schemes were introduced by Lord Healey when he was Chancellor, successive Governments have sought to promote the concept. I have never fully understood why the matter has been exclusively for the Treasury. My hon. Friend the Financial Secretary, in her previous incarnation, was Minister for Small Business at the Department of Trade and Industry. I hope that she will agree, when she replies to my speech, that we need not only tax arrangements to encourage employee share ownership but the active promotion of the concept.
I was disappointed that the recent DTI document on small enterprises contained no reference to ESOPs. In the United States, ESOPs are an important part of the process of handing small and medium-sized firms on from founders or owners who want to get out of the business. Those owners look for buyers, and in this country the buyer too often will be a bigger firm happy to absorb productive capacity to limit competition. The possibility of selling to employees is commonplace in the United States, but it is not part of the culture of business succession here.
When plans are being finalised for next year's Budget, I hope that my hon. Friend the Financial Secretary will consult her colleagues at the DTI and those responsible for regional development agencies and ask them to do some hot gospelling on behalf of employee share ownership.
We have some excellent outfits in the UK. I have already mentioned Job Ownership, and wish also to mention the Employee Share Ownership centre and Pro-Share, which does extremely good work. Capital Strategies was launched a couple of years ago, and the Unity Trust bank has much expertise in the sector. Specialist accountants and lawyers have worked hard to promote different forms of ESOPs.
There is a growing European interest in the concept. The European Commission is now seriously considering promoting employee share ownership in Europe. The EU estimates that up to 700,000 small and medium-sized firms go out of business every year because there is no obvious ownership successor: they simply shut down or are absorbed because the transmission of company knowledge and marketing cannot be assured.
The problem in the former communist countries of central and eastern Europe and the former Soviet Union and its successor states is to create capitalism when there are no capitalists and a market economy when people have no experience of ownership. Employee ownership can help to bridge that gap, as it has already done in some instances in those countries.
I hope that the UK will become Europe's centre of excellence for employee share ownership and that we can export successful models to other countries in Europe.

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I appeal to my hon. Friend the Minister, as she goes through the legislative process in the next 12 months, to go in for a little joined-up government on ESOPs.
My right hon. Friend the Chancellor set himself an ambitious target when he said that he wanted to double the number of ESOPs in the UK as a result of the measures to be introduced in the next Finance Bill. I welcome his decision to announce a general strategic policy objective, but then allow a year for discussion and consultation. In opposition, I sat on Finance Bill Committees and I saw how Treasury weevils hollowed out proposals to promote employee share ownership and allowed only miserable little measures to reach the statute book. The new process is more sensible and allows proper discussion and consultation.
It will be difficult to balance all the interests involved, but I hope that the proposals that my hon. Friend will take to the Chancellor for approval will be bold, simple and easy to grasp. The Government should raise the issue of employee ownership to the status of a new theory and practice for ownership and partnership, so that more British firms can be wealth creators, world beaters and job makers.
What needs to be achieved? We need to move the idea of employee share ownership and involvement to firms that are below the level of the big, FTSE-listed companies. Although many such large firms already run good share-save schemes, they are the big fish in our company pond. We must ensure that all employees have access to company shares. In any future privatisation. I should like at least 10 or 20 per cent. of the stock to go to employees. In Ireland, 20 per cent. of Telecom Eireann stock went to employees, and in France, Air France is privatising and 3 per cent. of stock is reserved for employees.
There may be a case for promoting employee buy-outs to form ESOPs in public sector operations, including some in local government. If more public services were delivered by men and women who owned the relevant organisation, there might be fewer scars on our backs and less frustration among Ministers and councillors who pull levers in Whitehall or in town halls without any result.
Partnership and trust are key concepts of British commercial history. I am talking not about industrial relations, but about fiscal relief given for decades, if not centuries, to professional partnerships to help them to promote themselves. The legal concept of a trust exists to protect wealth against too easy or frivolous dispersal. The Treasury should consider providing serious fiscal relief for employees who put part of their existing or future earnings into an ESOP. All successful market economies work on credit—paying back what one borrows from future earnings. That exciting theoretical concept underlies ESOPs as everyone involved in the economic process could take a stake in what would be earned in future rather than finding the money from the limited savings that most ordinary employees can call upon.
We need changes in company law to make it easier to establish and administer a trust as a form of ownership. Will my hon. Friend concentrate on tax relief that could be offered to an employee-owned trust and used to borrow against the company's assets? The Treasury should seek to expand ESOPs into the small and medium-sized enterprise sector. Jointly with the DTI, the Treasury should also organise regional conferences to get the ESOP message across.
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Will my hon. Friend be careful not simply to expand schemes in big companies? When in opposition, I helped to expose the scam that profit-related pay became. A perfectly good idea—linking pay to a firm's performance and profits—was turned by clever financial directors of big companies into a tax-reducing dodge that cost £4 million in lost revenue without fulfilling the purpose for which the scheme was intended. The right hon. and learned Member for Rushcliffe (Mr. Clarke) was forced quickly to shut down the scheme, so we must ensure that ESOPs serve the real purpose of involving employees in their firms rather than becoming a tax-avoiding fiddle.
I should like to see made concrete the ambitions of my right hon. Friend the Chancellor of the Exchequer to double the number of participants in ESOPs and firms operating as full ESOP companies. Options are a simple way to provide incentives, especially in start-up firms, but a measured form of options would command wider support if it met three simple criteria: all employees must be able to participate; there must be a balance between options linked to a trust or a permanent form of shareholding and those that can be cashed in immediately; and fiscal relief must be limited to prevent the kind of abuse that would arise if options acted not as a true incentive but as a top-up to the handsome salary and perks of fat cats.
Like you, Mr. Deputy Speaker, and like my hon. Friend, I am a Labour Member of Parliament. By definition, we are poor. However, I have no objection to people becoming wealthy if, en route, they create wealth and spread it among others. The problem is not how many millionaires there are in South Yorkshire or in Hornsey and Wood Green—it is how few there are. If my hon. Friend's new employee share ownership package helps to create and spread more wealth, she will earn a modest place in history.
Employee share ownership could be a significant new step in the economic organisation of our nation. Owning shares in the company for which one works is no substitute for proper pay, and ESOPs do not do away with the need for proper partnership relationships between employees and managers. Evidence from both the USA and the UK implies that ESOPs work best when the workers and trade unions are involved in their creation. We need merely ask pilots or machinists unions in America about United Airlines to see the truth of that.
I strongly welcome new Labour's share ownership policy. I urge my hon. Friend to be radical and bold, and to bring to the House next spring a package that will give as many employees as possible a stake in their own business. Thus will we make employees the owners of their economic destiny.
1.15 pm
The Financial Secretary to the Treasury (Mrs. Barbara Roche): I congratulate my hon. Friend the Member for Rotherham (Mr. Mac Shane) on obtaining the debate and on the manner in which he has advanced his argument. His knowledge and expertise on these matters are well known, and he has demonstrated them again today. I am grateful for his encouragement on this important matter, and I assure him that we are keen to make progress.
The Government are firmly committed to increasing employee share ownership. Research in both the United Kingdom and the United States of America implies a clear

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link between employee ownership of shares in the company for which they work and an increase in productivity, particularly when modern management promotes active participation in the business by employees. Employee ownership schemes and the other policies that the Government have pursued over the past two years provide a package of measures to promote productivity.
Employees who are also owners have a real and identifiable interest in how their company does. They can benefit directly as stakeholders, and that increases commitment and motivation. They become more aware of their companies' aims and objectives because they own part of the companies, even if it is a small part. Quite simply, employee share ownership can bridge the gap between employees, managers and shareholders by aligning more closely the interests of the work force and those of the owners of the company. It offers a way of working in partnership. We are committed to people working in partnership in many different ways. Where employee ownership works properly, the results are wonderful. Employee owners have an incentive to contribute more actively to the development of their business by raising productivity, from which they can benefit directly.
Employee ownership is not supported only by the Government; companies have experienced the benefits. A senior manager from Fl Group, an information technology company, has said that its directors believe that the
"cornerstone of workforce share ownership has been a key feature in developing a culture of shared success in the group, helping to foster a high level of workforce commitment and loyalty."
If I had to pick out one word from that quote, it would be "culture", to which my hon. Friend alluded.
The second reason why the Government support and promote employee share ownership is that through the tax system we can encourage participation by all employees, not merely the few senior staff. The current Inland Revenue approved schemes have enabled many lower-paid employees to become shareholders in the company for which they work.
The third reason why we support and promote employee share ownership is that it can be a useful and cost-effective tool for some companies, especially smaller entrepreneurial businesses and start-up companies—again, my hon. Friend has mentioned that today and in previous discussions—to help them attract and retain key employees in an increasingly competitive global market.
The qualifying employee share ownership trust, or QUEST as it has become known, offers tax advantages to companies, particularly small companies, to set up ESOPs. We are looking at a number of representations about QUESTs made by some of the organisations that my hon. Friend mentioned. In particular, there are concerns that QUESTs are not being used for their originally intended purpose, which was, as I have said, to help small family-owned firms transfer ownership to their employees.
At present, three tax-advantaged share schemes are designed to promote employee share ownership in the UK. Those enable employees either to acquire shares free or to buy them through an option arrangement. Although
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those schemes have been popular with employers and employees, they have not sufficiently harnessed the ability of employee share ownership to encourage corporate vitality, to create partnership in business and, importantly, to boost productivity.
The Government want to reward long-term commitment by employees. We want to encourage the new enterprise culture, in which everyone contributes and benefits from success. The way that we are going to do that is by taking a fresh approach to the whole subject. I take my hon. Friend's point that it is a question not merely of the design of the new scheme, but of being evangelical about the whole concept. I certainly regard that as part of the approach that we will adopt.
My right hon. Friend the Chancellor of the Exchequer has set a target to double the number of companies that offer shares to all their employees. We are not going to do that just by tweaking the existing schemes. Instead, after consulting widely, we have announced a revolutionary new scheme, which unites the interests of employer and employee in a new partnership.
That scheme, aimed to promote shares for all, will for the first time offer employees the opportunity to buy shares in their company out of their pre-tax salary. By owning shares directly rather than simply through share options, employees will have a real opportunity to make the company in which they work succeed. They will also enjoy greater tax benefits the longer that they hold their shares. Companies will also enjoy tax breaks for introducing and operating the scheme. All in all, this will be the most tax-advantaged share scheme ever introduced in the UK.
The Government want to get this right. We want a scheme that meets our objectives and is attractive to employees and companies. To achieve that, I have asked an advisory group, made up of representatives from leading share scheme practitioners, companies, academics and trade union members—some of them mentioned by my hon. Friend—to work with the Inland Revenue to play a key part in the development of the new scheme. Using people in that way is a radical new idea. It is, perhaps, a third way ahead, to echo my hon. Friend. It is one that has been successful so far and I am grateful for the great contribution that we have made.
We are also listening to companies directly though the focus groups that Pro-Share, a leading supporter of employee share ownership, has organised. We are also extending the consultation process across Departments—my hon. Friend also made that point. That includes the Department of Trade and Industry as well as the Revenue and the Treasury. The initiative is a good example of how the Government are bringing private and public sectors together to create policies that work well in practice.
Let me reassure my hon. Friend. We are not merely looking at public limited companies; the Government also recognise the particular difficulties faced by small businesses and start-up companies. I have therefore asked the advisory group to consider the problems that small companies have when operating share schemes to find out what we can do to make this easier for them. They have already made a number of useful recommendations, which will help small companies give shares to all their employees.
At the same time, the Government recognise that one of the key constraints on growth for small ambitious companies is the quality of its management. I know that

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that area interests my hon. Friend. It can be difficult for companies to attract high-calibre managers from mature companies to a more risky venture. Therefore, I have also asked the advisory group to consider a specifically targeted scheme, known as the enterprise management incentives scheme. That will help small, higher-risk companies to attract and retain key managers. That is essential for our productivity and growth and for the entrepreneurs of the future.
Of course, we recognise that other forms of employee ownership and participation are also important. Businesses are able to and do operate employee participation policies without shares. The John Lewis Partnership, which my hon. Friend mentioned, is a good example of that.
We will be publishing draft clauses for the new schemes later this year for further consultation. The finished legislation is to be included in next year's Finance Bill.
These measures will give companies new tools to promote partnership with employees and also a means to increase productivity. I am pleased to say that there are clear indications that companies both big and small are excited by the prospect of these new schemes.
My hon. Friend was right to say that we need to bring about a change of culture. He was also right to say that this is an issue not merely for the Treasury or the Revenue, but for the Department of Trade and Industry and other interested Departments.
We have a task—to engage our companies, particularly the new high-growth sector, with possibilities and schemes of this kind that can take the productivity and growth agenda forward. We are determined to do so.
I congratulate my hon. Friend on securing today's debate. It really takes the agenda forward. I can assure him and the House that we will discuss this matter further.

Major Milos Stankovic
1.28 pm
Mr. Martin: I am grateful for the opportunity to raise the case of Major Milos Stankovic, MBE, of the Parachute Regiment. I last did this in an Adjournment debate 19 months ago. A great deal has happened since then. The injustices suffered by this serving major of the British Army have continued and intensified. His has been a long and lonely ordeal. At the same time, the excuse available to the Government last time, that this was an operational policing matter, has faded because the Ministry of Defence police have investigated and that phase is over.
What else is new is that there is an increasing awareness in the country, the House and the British Army of the importance of this case and its scandalous nature. In that respect, I am especially grateful to see the right hon. Member for South-West Surrey (Mrs. Bottomley) and the hon. Member for South-East Cornwall (Mr. Breed) here. I pay tribute to them and thank them for their personal and special interest in this case on behalf of Major Stankovic and his mother—an elderly lady, who has suffered immeasurably from the ordeal through which he has been.
Mr. Colin Breed: I reinforce the point that the hon. Gentleman has just made. Mrs. Stankovic is my constituent; she and the whole family have experienced considerable suffering. That should be taken into account when considering the case of Major Stankovic—the matter has had wide ramifications within the family.
Mr. Bell: I thank the hon. Gentleman for that intervention.
Some background is in order. Major Stankovic is a British citizen; he is a serving officer in the Parachute Regiment of the British Army. As it happens, his father was a Serb and his mother is partly Serb and partly Scottish. They both fought against the Germans in Yugoslavia during the second world war, and were lucky to escape with their lives. They came to this country and made a new life. Milos was born a British citizen; and he is a British citizen. He was educated in British schools. He was accepted into Sandhurst and the Parachute Regiment, and embarked, as a captain, on a conventional military career. He undertook tours of duty in Northern Ireland and with the UN force in Kuwait.
In autumn 1992, when the wars of the dissolution of Yugoslavia began, the British Army was looking for someone in its ranks with knowledge of Serbo-Croat. Two officers had such knowledge; Major—then Captain—Stankovic was one of them. He was renamed Captain Mike Stanley by the Army, in order to mask his family's Balkan connections. The other officer was renamed Captain Costello. Together, and in rotation, they acted as interpreters and advisers to General Rose and General Smith—successive British commanders of UNPROFOR in Sarajevo, and did signal service.
Together, they were the key players in a covert operation, known to insiders as Schindlers. At the height of the war, that operation was responsible for spiriting out of Sarajevo 200 people—Muslims, Serbs and Croats—and reuniting them with their families abroad. Stankovic has

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been desrcibed as the Schindler of Sarajevo. He served longer in Bosnia than any other British soldier. He was the go-between—the liaison officer—between UNPROFOR and the Bosnian Serbs. His job was to get close to them, to get them to trust him, to understand them and to report back on them. He did that. He unblocked convoys; he saved lives; and he set up the cessation of hostilities agreement in December 1994. He did all that. In December 1993, he risked his life to save a wounded Muslim woman, under fire, in a street in Vitez in central Bosnia. He was awarded the MBE by the Queen at Buckingham palace. In the spring of 1995, he was allowed to return to normal regimental duty with the Parachute Regiment, which he did with distinction. Two years later, he was accepted into the Joint Services Command and staff college, which, as the Minister is aware, is the necessary step to further promotion. It was there, on 16 October 1997, that the Ministry of Defence police came for him. They arrested him under the Official Secrets Act 1911 on suspicion of spying for the Bosnian Serbs.
A word about the Ministry of Defence police is in order. It is a relatively new force and does not seem to share the accountability of other police forces. It had had no previous experience of a case of that kind and no experience of the realities of the Balkans; nor did it possess even those fragments of knowledge that might have illuminated—like a parachute flare—the landscape of its ignorance.
The Ministry of Defence police arrested an officer with a quite unblemished record; they threw him into a cell where they wanted to hold him incommunicado for eight hours while they ransacked his house. From his house in Farnham, they took not only his diaries of Bosnia and his souvenirs, but everything that they could find—an old copy of Playboy, Christmas cards and a piece of sandpaper. They did not know what they were looking at, and they did not know what they were looking for.
The police disturbed a collection of medals and photographs that he kept in his home as a shrine to his father. From his mess uniform, they seized and confiscated his medals. When the list of witnesses was made known to us, we discovered that they had interrogated a Ministry of Defence official and inquired of him whether Major Stankovic was entitled to those medals. That was the first instance of the clear prejudice and animus against Major Stankovic. Of course, he was entitled to the medals; there were four of them—the UN Kuwait medal, the general service medal, the UN Bosnia medal and the MBE. All of them were earned the hard way; none of them came up with the rations.
The injustices multiplied. We discovered that the Ministry of Defence police were trying to turn neutral witnesses into hostile witnesses. A distinguished former soldier, who knew Stankovic well, had recently left the service and set up a private business. He was threatened with damage to that business, if he did not co-operate with the MOD police in the way that they wanted. We have documentary proof of that.
Another distinguished ex-soldier, who had held command, testified to the MOD police that, to his certain knowledge, Stankovic had acted in Bosnia with loyalty and propriety at all times. The investigators told him that, in that case, he might be interested to know what Stankovic had written about him in his diary. Stankovic's
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diary contained the kind of personal assessment that any man might make in his diary of another. I protested personally about that to the chief constable of the MOD police—Mr. Walter Boreham—and pointed out that it was a flagrant attempt to turn a friendly witness into a hostile one. The chief constable could not even see the point. That is what is wrong with the MOD police; they have no sense of the difference between right and wrong.
There was another strange gap in the evidence. A key witness was Lieutenant-General Sir Mike Jackson—a true British hero, who now leads the NATO force in Kosovo, and is the colonel commandant of the Parachute Regiment. He submitted written evidence to the MOD police, stating what he knew about Major Stankovic. However, when we saw the list of witnesses provided by the MOD police, there was a declaration on the front cover that General Jackson had refused to give any evidence. That was a demonstrable lie. The Ministry of Defence police proceeded with their case on the basis of that kind of mendacity, half-truth and lying.
The greatest injustice of all was the length of time taken over the case. From the time of the arrest to the time when the papers were handed over to the Crown Prosecution Service was 13 months and two weeks. During that time, Major Stankovic was left to twist in the wind. The CPS examined the papers for almost five months, concluding, on 23 April this year, that there was no case to answer. Of course, there was no case to answer, because there was never any evidence.
The spotlight now turns on to the Ministry of Defence itself. There are questions that the Ministry and its advisers must answer. Why was Major Stankovic taken out of the staff college, thereby certainly ruining his career? Where was the presumption of innocence? It could not possibly have been on security grounds, because officers from foreign armies, who have no British security clearance, study at the college. No documents with a level higher than restricted circulate at the staff college.
Why was Major Stankovic not allowed a soldier's friend for the first two months after his arrest? That is the basic right of even the humblest private facing the possibility of a serious charge. When a soldier's friend was nominated—Brigadier Andrew Cumming of the 9th/12th Royal Lancers—why did the MOD police try to block that?
Why did a colonel sign a memorandum for internal distribution at the Ministry of Defence, warning serving soldiers who had been asked by the major's lawyer to give evidence on his behalf? The soldiers were warned that they did not have to do so. That means that those serving soldiers had an obligation to give evidence to the potential prosecution—the Ministry of Defence police—but were advised against giving evidence to the defence. We know for certain that some of them felt that they were intimidated and that, if they had given that evidence, their careers would have been affected. This is not a Kafkaesque police state; this is Britain, which is a free country with a loyal Army to defend it.
My next question relates to the cost. I believe that to prepare his defence—which he had to do—Major Stankovic has run up legal fees of up to 10 times his salary as a serving major. I shall not ask the Minister what contribution the Ministry of Defence has made because I know the answer, which is that not one penny piece has come from the legal defence fund.

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I assure the Minister that the Army is watching carefully. It is aware of the injustice, and if Major Stankovic is not well treated, that will have serious repercussions throughout the ranks. Yesterday, I received a letter from a serving soldier who knew the major well in Bosnia. He said:
"This case is something that astonishes and angers me in equal measure. I hope fervently that some of those responsible will be held to account for the appalling way he has been treated. Only then will I be convinced that there remains some hope that the rest of us will be fairly treated in future."
Major Stankovic is entitled to answers to further questions. Who were his shadowy accusers in the first place? Did the accusations come from the intelligence service of a foreign power? If so, which intelligence service of which foreign power? Who signed off those accusations in the Ministry of Defence in the summer of 1997? I doubt whether the decision could have been made at a level lower than that of the Chief of the General Staff. Major Stankovic is entitled to an answer to those questions.
What about the rest of the major's career? Where is the apology? Where is the reinstatement? Where is the sense that the duty of care has not been exercised? He is entitled to answers on all those points.
I do not know, Mr. Deputy Speaker, whether you saw in The House Magazine last week a perceptive piece by Anne Perkins about this case, in which she drew a very apt analogy when she said that this is the British Dreyfus case. Alfred Dreyfus, a French officer of Jewish origin, was arrested over 100 years ago, also on suspicion of giving information to a foreign power. He was the victim of the anti-semitism of the French army and political establishment at that time. His sword was broken on the square and he was sent to the penal colony of Devil's island.
Major Stankovic's ordeal may not seem that extreme, although I suspect that it seems so to him, but he, too, is accused of not being one of us. It is the very qualities for which he was valued in Bosnia, such as his ability to make the mental leap across the linguistic and ethnic divide and to translate the people as well as the language, for which he is now being penalised.
The time has come for reparations. There are very few people who can act quickly to ensure that there is justice in this case. The Minister is one of them, along with the Chief of the Defence Staff and the Chief of the General Staff. I am sure that they are all aware of the importance of this case.
One other officer has a significant role to play: the major general who sits on the board that oversees the Ministry of Defence police, who seem to me to be unaccountable in a way that no civilian police force is. They are the equivalent of a police authority. Have they been asleep at the wheel for the past year and three quarters? Do they merely rubber-stamp the orders of the chief constable, Mr. Walter Boreham?
Mr. Julian Brazier: Name the general.
Mr. Deputy Speaker (Mr. Michael J. Martin): Order.
Mr. Bell: Last December, I received an assurance from a senior general that when the Ministry of Defence investigation and that of the Crown Prosecution Service
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had been completed and the case returned to the Army, it would be dealt with very quickly. We have been waiting for 10 weeks, and Major Stankovic was told that he would receive an answer within two weeks. We need clarification.
1.45 pm
Mrs. Virginia Bottomley rose—
Mr. Deputy Speaker: Order. The right hon. Lady must have the Minister's permission if she wishes to speak.
The Minister for the Armed Forces (Mr. Doug Henderson)indicated assent.
Mrs. Bottomley: The House and my constituent, Milos Stankovic, are greatly in debt to the hon. Member for Tatton (Mr. Bell) for raising this case in an Adjournment debate. Having raised this case myself and having visited Major Stankovic in Farnham recently, I know that it is hard to exaggerate the suffering and distress that he has been caused. This is an appalling case. There are questions to be answered about his career and the uncertainty and lack of information. Those questions have been well set out by the hon. Gentleman.
The case now raises wider questions. How will others be encouraged to serve in such sensitive situations if they feel that they may become vulnerable to accusation and the destruction of their career? More than that, their lives may be destroyed. If it were not for Major Stankovic's courage and fortitude, his situation would be even more precarious.
We have reached a point where the integrity of the Ministry of Defence police is in question. Everyone in the Ministry needs to consider not only how they can make good this matter to Major Stankovic, but how they can work to regain any respect and confidence in the accountability, management and supervision of the Ministry of Defence police. We are all aware that Major Stankovic has acted with great courage. The number of individuals who have been prepared to comment on his integrity, service and ability is formidable.
I have written to the Ministry on numerous occasions in recent months and to the Defence Committee, asking whether it would be prepared to examine the matter. I appreciate its reasons for rejecting that request, but the issue comes back to the Minister and his Department. How can he reassure my constituent, Major Stankovic, and his family—and, furthermore, the House and the country at large—about this matter?
1.47 pm
The Minister for the Armed Forces (Mr. Doug Henderson): I recognise that several hon. Members have a genuine interest in this case. That has been particularly demonstrated by the hon. Member for Tatton (Mr. Bell) and the right hon. Member for South-West Surrey (Mrs. Bottomley), who have spoken in the debate. I am very pleased that the debate was secured. I hope to be able to answer the specific points, most of which were raised by the hon. Member for Tatton. If I run out of time, I will be happy to try to answer his questions in writing.
I want briefly to explain my obligations in this matter. First, I have an obligation to be mindful of the public interest and the security and defence of the nation. I have

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to be mindful also of the strict application of the Official Secrets Acts. I take that obligation extremely seriously. I also have a responsibility to refer any allegations of a breach of the Official Secrets Acts to the appropriate channels.
It is not my obligation to intervene on investigations undertaken by the Ministry of Defence police. It is their responsibility to investigate allegations, and I know that they do so in consultation with the Crown Prosecution Service, which decides whether charges should be pressed. However, in the case of the Official Secrets Acts, the Attorney-General must also be brought into the calculation.
In relation to Major Stankovic's current situation, it is not my responsibility to decide whether further action should be taken against him. It is a matter for the Army chain of command to decide whether there was a breach of Army regulations or whether it could lead to administrative action.
I am also strongly aware of my obligation to ensure fair treatment for every serving member of our armed forces in whatever service and whatever circumstances. I take that responsibility equally seriously with my other obligations and responsibilities.
I now turn to the points that the hon. Gentleman raised in relation to the activities of the Ministry of Defence police. One allegation was that the MOD police had ransacked Major Stankovic's house. A second was that the MOD police showed prejudice by their action in relation to his entitlement to medals. Another allegation was that the MOD police had tried to convince witnesses who would otherwise have been seen as neutral to support the evidence that they had brought to the case and that at least one individual's business had been threatened if he did not comply.
The hon. Gentleman has made serious allegations. He will know that it is not my responsibility to investigate the details. That would be a matter for the Police Complaints Authority. If the hon. Gentleman and others believe that the MOD police did not act properly, they should know that the MOD police are subject to the same srcutiny as other police forces and I suggest that they raise the matter through the Police Complaints Authority.
Mr. Bell: I accept the Minister's point. Will he ensure that the board to which the Ministry of Defence police is theoretically accountable takes note of those allegations, if necessary, asks Major Stankovic's lawyer to appear before it and holds the chief constable to account, which it has never done before?
Mr. Henderson: I have every confidence in the MOD police. In fact I attended their most recent board meeting.
If there are referrals to the Police Complaints Authority, the results of any investigation would be subject to monitoring by the Minister of Defence board and by Ministers. I give the hon. Gentleman a guarantee that I will do that should those allegations be made through the Police Complaints Authority.
The hon. Gentleman asked why it took 13 months and two weeks before the Crown Prosecution Service decided that no charges should be brought against Major Stankovic. Hon. Members will be aware that, in most
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democratic countries, legal processes are often slow acting because balances are built in and there is an obligation on those investigating to make sure that they get to the bottom of the evidence. In this case, 88 witnesses were interviewed, some on two or three occasions; 107 statements were recorded and tens of thousands of documents had to be examined, many of which had to be translated into English. I hope that those figures give a flavour of the complexity of the investigation that was undertaken by the MOD police.
In relation to the further delay since April, given the speed with which legal processes operate—as hon. Members will know from personal and constituency experience—it is not an inordinate delay from 15 April until now. After the Crown Prosecution Service decided not to press charges because of insufficient evidence, the Army chain of command then had to decide whether there were sufficient grounds to consider taking further evidence which might lead either to charges that could lead to a court martial or to charges that could lead to administrative action. The consideration was that the Army chain of command needed access to at least some of the documents that were held by the MOD police. It took from 15 April until 13 June before a request was made for those documents. Given my knowledge of legal processes, I do not think that that was an inordinate delay.
On 25 June, just over a week later, Major Stankovic's solicitors were informed of the request for that documentation and, on 30 June, they objected to the release of some of the documents. The MOD police are taking advice on whether to release those documents to the Army chain of command. Hon. Members and serving officers in the Army will understand that until the legal processes have been undergone, it would not be proper for the Army chain of command to take a further decision on what the future holds for Major Stankovic.
I hope that I have explained why there have been delays and that the House will accept that they were not inordinate. There certainly has been no attempt by anyone in the MOD or the MOD police to delay the proceedings.
The hon. Gentleman asked why Major Stankovic was taken out of the staff college. He was able to consider classified information there and that would not have been appropriate, given the charges that he might have faced, so it was decided to transfer him to regimental duties where that would not be a problem.
The hon. Gentleman asked why Major Stankovic was not allowed a soldier's friend. In fact, he was allowed a soldier's friend.
Mr. Bell: He was not allowed a soldier's friend for two months. What kind of justice is that?
Mr. Henderson: I understand that, within the normal time scale, he was allowed a soldier's friend, but I shall investigate further to find out whether there was any delay of which I was not aware and write to the hon. Gentleman.
The hon. Gentleman then asked why serving soldiers were warned about giving evidence. The answer is that serving soldiers were told that they could give evidence if they wished and if they had relevant evidence to give. As we have a duty of care, we explained to those serving soldiers that if they decided to give evidence they would have to be mindful that they could not disclose any secure information or they could get into difficulty.

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The hon. Gentleman asked who the accusers were. I know that the House would not expect me to answer that, as it would be improper. No police authority will divulge its original source of information. It will be a different matter if the case gets to court.
In respect of the future career of Major Stankovic, now that there are no charges to face from the Crown Prosecution Service, Major Stankovic can return to a normal career in the Army, once the Army chain of command has examined the documents from the MOD police and has made a judgment as to whether there were other irregularities which could lead to a court martial or to administrative action. On the assumption that that does not happen and he is again granted security clearance, I see no reason why he should not re-establish his career in the Army. Indeed, I would expect that. I am determined that justice be done and be seen to be done and that everyone who serves in our armed forces should be treated fairly.
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As I said in my introductory remarks, I have wider responsibilities and I need to consider the public interest and the security of the nation. I take that very seriously and it has to be balanced against the rights of any individual in any circumstances. I hope that I have answered the points that the hon. Gentleman raised—
It being Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Sitting suspended, pursuant to Standing Order No.10 (Wednesday sittings), till half-past Two o'clock.

MESSAGE FROM THE QUEEN

  DOUBLE TAXATION RELIEF
  The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's answer to the Address, as follows:
  I have received your Address praying that the Double Taxation Relief (Taxes on Income) (Kuwait) Order 1999 be made in the form of the draft laid before your House.
  I will comply with your request.

Oral Answers to Questions
  INTERNATIONAL DEVELOPMENT
  The Secretary of State was asked—
  INTERNATIONAL DEVELOPMENT

    Commonwealth
    Dr. Rudi Vis: What steps her Department is taking to strengthen the Commonwealth's role in development activities. [89752]
    The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): About 57 per cent. of our bilateral programme goes to Commonwealth countries. We are also supporting work with Commonwealth Youth, local government, media and science organisations and a large programme of Commonwealth scholarships and fellowships, as well as other programmes administered by the Commonwealth Secretariat. At the Commonwealth Heads of Government meeting in Edinburgh our agenda for poverty eradication was adopted, and we hope this will be taken further at the next CHOGM in South Africa in November.
    Dr. Vis: I thank my hon. Friend for his answer. Does he agree that trade is vital in assisting development in Commonwealth countries? What is he doing about that, with particular reference to the next multilateral trade round?
    Mr. Foulkes: My hon. Friend is right. I did not mention trade, and he is right to ask me to do so. Britain is contributing to the trade and investment access facility, which was set up at the CHOGM in Edinburgh in November 1997. One of the best examples of British assistance that I have seen is the regional negotiating machinery in the Caribbean, where we are helping to improve the capacity to negotiate and put forward a case in the trade round. With three trade rounds coming up—the discussion on free trade areas of the Americas, the post-Lome negotiations and the next World Trade Organisation round—it is vital that Caribbean countries have that capacity. I am proud that Britain is helping them in that way.
    Mrs. Cheryl Gillan: Despite the Minister's statements, does he share my concern about the fact that the economic growth of countries in the developing world—South Africa, for example—has been harmed by the Chancellor's sale of our gold reserves? Does he regret the fact that the Government's actions have sent the markets on which those countries depend plummeting? Was he or the Secretary of State consulted about the Chancellor's decision? Did his Department object or make any protest about the effect that the sale would have, and has had, on some of the poorest countries in the world? Perhaps he will tell us what is the point of his Department giving aid with one hand when another Department takes away countries' economic health and strength with the other.
    Mr. Foulkes: I think that the hon. Lady has missed the point. The price of gold has been decreasing
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    progressively. Other countries are selling gold. We advocated the sale of the gold of the International Monetary Fund to help to pay for the debt cancellation for developing countries, so as to help those countries. We are talking about a small fraction of the amount of gold held in the world. The hon. Lady is becoming agitated when she need not. I hope that she will support us in getting the IMF gold sold, so that debt cancellation can be swift and effective.

    Horn of Africa
    Sir Teddy Taylor: If she will make a statement on the humanitarian situation in Ethiopia and Eritrea. [89753]
    The Secretary of State for International Development (Clare Short): Recent estimates suggest that nearly 4 million people need humanitarian assistance in Ethiopia because of crop failure, and a further 400,000 because of displacement as a result of the war with Eritrea. In Eritrea, some 268,000 people need emergency assistance as a result of the conflict. Since January 1998, we have provided £6.8 million in humanitarian relief to the two countries.
    Sir Teddy Taylor: As the horrendous suffering and loss of life in the dispute between those two countries appear to be almost on the scale of the first world war, and as the issue seems to be a piece of land of no great value or significance, could the Government play a role by inviting representatives of both countries to London and bringing them together to try to stop that crazy and appalling war, which is killing so many people and achieving nothing, and in which we have a responsibility as another nation of the world?
    Clare Short: The hon. Gentleman is right. The war is very like the first world war, with many deaths, and young men being flung at each other over a barren piece of land. Both sides have accepted the Organisation of African Unity's proposals but not each other's good faith, so the war continues. Ethiopia is one of the poorest countries in the world, and we cannot help it to feed its people better if the war goes on. We have been doing all that we can bilaterally, by supporting the OAU process, and at the United Nations to try to get a settlement, and we will continue to do so.
    Mr. Mike Gapes: Does my right hon. Friend recall that Eritrea got its independence from the Ethiopian empire after many years of hard struggle, and is a very small country with a much larger, more powerful neighbour? Is it not tragic that the conflict continues, and that the people of the region have suffered many decades of conflict and poverty? Is it not time that far more was done to protect small nations in Africa from large and powerful neighbours?
    Clare Short: I agree with everything that my hon. Friend has said, except the implications of his last sentence. It would not be fair to suggest that the conflict was Ethiopia's fault. As the hon. Member for Rochford and Southend, East (Sir T. Taylor) said, the war is disastrous. It is not in the interests of either country, and is a tragedy for the development of both. It is even more tragic that both sides have accepted the OAU proposals

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    but not each other's good faith, so the killing goes on. Both sides need peace, and we should do all that we can to bring that about.
    Mr. Nigel Evans: Crop failure adds to the misery that both countries are experiencing. The Minister knows of the expertise in agricultural colleges throughout Britain—in none more so than Myerscough agricultural college in Lancashire. What initiative is she taking to use such expertise in countries such as Eritrea and Ethiopia?
    Clare Short: Unfortunately, I do not know of the wonderful college in the hon. Gentleman's constituency, so I do not know whether it has expertise in tropical agriculture, but we support a worldwide research programme and the application of the best research to agricultural methods in countries such as Ethiopia, which cannot grow enough food for their people. We work extensively with the scientific community in Britain. I shall find out whether we have any engagement with that college and write to the hon. Gentleman.

    Cairo Conference (Population)
    Mr. Martyn Jones: What key actions were agreed at the recent United Nations General Assembly special session on the five-year review of the international conference on population and development plan of action, Cairo 1994; and if she will make a statement. [89754]
    Mr. David Chaytor: If she will make a statement on the recent Cairo plus five meeting on population control, maternal mortality and reproductive health. [89756]
    The Secretary of State for International Development (Clare Short): The recent UN General Assembly special session reaffirmed the breakthrough made at Cairo five years ago, which stressed the need to provide all people with the information and opportunities necessary to control their fertility and protect their sexual health. We also agreed key future actions to curb the spread of HIV, to reduce maternal mortality and to improve education and access to services for young people. The agreement included key targets and milestones to ensure that the policies are effectively implemented.
    Mr. Jones: I support the stand made by my right hon. Friend on reproductive health issues in her speech to the special session. As one way in which to push forward the decisions taken at Cairo is for all countries involved to give their full donation up to the 4 per cent. OECD recommended level, has my right hon. Friend made any progress in ensuring that other countries involved in the Cairo decision will put that full 4 per cent. into the projects?
    Clare Short: I am grateful to my hon. Friend for his support for our position. With regard to financial support, it is important that reproductive health care is not seen as a separate programme, but that basic health care systems should be in place for everyone in the world, providing reproductive health care, inoculations for children and all the other basic care that people need. That makes it less
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    easy to define the money spent on reproductive health care. At the UN special session we agreed targets to roll forward improvements in services across the world. That requires co-operation between donors, the World Health Organisation, the World Bank and local Governments to improve health services and reproductive health services, and that is how I hope services will develop.
    Mr. Chaytor: I, too, congratulate my right hon. Friend on the way in which she has pursued the issue at international level. Is it not a frightening prospect that there are now 40 million HIV sufferers in the world, more than half of them young people—of whom half are women—and that the maternal mortality rate in poor countries is 500 times worse than that in western Europe? Can my right hon. Friend assure the House that she will continue to ensure that the issue has a high profile? Will there be a Cairo plus six?
    Clare Short: My hon. Friend is right. There are now 40 million people with HIV or AIDS. The disease is concentrated in Africa, but it is now spreading in Asia and Latin America. Half the new infections are in young people, half of whom are young women. One of the issues discussed at the UN special session was the need for proper sex education for young people. Traditionalists tend to say that that will encourage sexual activity, but they are wrong. Young people who know about their sexual health tend to delay their sexual activity and protect themselves much more, and that is crucial for the largest generation of young people that we have ever had. Since Cairo, there has been no improvement in the number of women who die as a result of pregnancy-600,000 a year. My hon. Friend is right to say that we must make faster progress. There will not be another special session next year, but we have milestones by which to measure progress.
    Dr. Jenny Tonge: I congratulate the Secretary of State on her speech to the special session. I read it carefully and I agree with every word. Recognising, as she does, that unprotected sexual intercourse leads to unwanted pregnancies, abortions and disease—indeed, it is reported that rape has now become a recreational activity in South Africa—will she undertake that her Department will make emergency contraception available in all the projects that it supports in Africa and Asia? Will she also suggest to her Cabinet colleagues that, to set an example, emergency contraception should be more easily available in Britain?
    Clare Short: I am grateful to the hon. Lady for her support. In the preparation for the special session we had a big argument about emergency contraception for refugees. The traditionalists argued that it should not be made available to women many of whom are fleeing having been raped, such as those from Kosovo. It is unbelievable that anyone should suggest that such women should not be entitled to emergency contraception. I am pleased to say that, in the end, we won that argument. I agree with the hon. Lady that all forms of contraception should be available, but, wherever possible, we should give people knowledge and control over their sexual lives so that they do not have to have to resort to abortion or even emergency contraception. None the less, the services must be there for people to make their own choices.
    Mr. John Bercow: To what extent does the right hon. Lady intend to press for the development

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    of the role of the private sector in the provision of reproductive health services to complement the allocation of public resources?
    Clare Short: I support the hon. Gentleman's point. We are working in many countries to make comprehensive services available. That includes public sector, private sector and non-governmental organisations, and sometimes subsidising the cost of products, making them available through the private sector. We need to make provision through all outlets, so that everyone has access to contraception in the best way possible.
    Mr. Jim Murphy: My right hon. Friend will know of the great efforts that have been made in South Africa to combat the growth of AIDS, notwithstanding all the other priorities that the new South African Government have. What does she think is being done, and what can be done, to help that Government to overcome the increasing epidemic?
    Clare Short: My hon. Friend is right; I think that the AIDS epidemic is growing faster in South Africa than anywhere else in the world. A big effort is now being made, but there was a delay at the beginning.
    Uganda and Thailand teach the big lesson. Uganda has stemmed the increase in infections through public campaigns, both from the President and in every village. People in Uganda now know how to protect themselves; condoms are available, and the incidence of AIDS is no longer increasing. Other countries, including South Africa, need to learn from Uganda. When my right hon. Friend the Prime Minister visited South Africa, he announced big new support for the programme to combat the spread of AIDS and HIV there.
    Mr. Gary Streeter: Conservative Members fully support the provision of the best possible education about health care, sex and reproduction for everyone in the developing world. However, does the Secretary of State accept not only that her comments in The Guardian two weeks ago—she branded the Catholic Church as pursuing a disgusting and unholy agenda and being in favour of more women dying—were gratuitously offensive, but that they clouded an important message about family planning that needs to be communicated skilfully and tactfully? Does the right hon. Lady now regret those insensitive and insulting remarks?
    Clare Short: I do not know whether you, Madam Speaker, have received a message from the Vatican to the effect that the hon. Gentleman has been appointed to represent its interests. Given that the Catholic Church is my Church, however, and given that I have many contacts with it, I do not accept the idea that he should represent it to me; I consider that entirely inappropriate.
    The sad reality for the Catholic Church is that most Catholics throughout the world do not think that its teaching on contraception is right. I am one of those people. I think that the Vatican's attempt, behind closed doors in New York, to reverse the progress made in Cairo—progress that gave people the right to choose for themselves—was deeply wrong. It had allied itself with some fantastically reactionary countries, such as Sudan, Libya and Algeria, in its endeavour, and, in the early days, it was succeeding. But when this became a matter of
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    public knowledge, it was driven back. I am glad about that, because I think it important for people to know the truth.
    Mr. Streeter: None of that excuses the intemperate language used by the Secretary of State, which has masked an important message. Why does she not model herself on Geri Halliwell, the United Nations goodwill ambassador, who recently spoke out about reproductive health care, but in a skilful and tactful way, and got the message across? If a former Spice Girl can get it right, why cannot the Secretary of State?
    Clare Short: The hon. Gentleman's ever more desperate attempts to generate publicity are not very impressive. He was quoted in the Daily Mail as saying something very different: he aligned himself with the reactionary forces who do not believe that people should have choices and control over their sexual health. Perhaps he would like to tell us whether he supports the declaration agreed by all the countries of the world at the United Nations. [HoN. MEMBERS: "Question?"] Indeed, I do not usually ask the hon. Gentleman questions; but if he has any aspiration ever to become an International Development Minister, he ought to tell us whether he will act responsibly in that area.

    Kosovo
    Mr. Tom Brake: What assistance the Government are providing for demining activities in Kosovo; and if she will make a statement. [89755]
    The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): We have provided resources, through the United Nations mine action service, to establish the co-ordination centre in Pristina. We have also funded the Halo Trust to survey the main areas of risk, and the deployment of 12 rapid response teams. So far, we have committed £1.7 million to this work.
    Mr. Brake: I welcome that news, but can the Minister tell us how many casualties have been reported as a result of land mine incidents? Can he also tell us what has been done to educate and inform refugees in the camps of the dangers before they return to Kosovo?
    Mr. Foulkes: We are not certain about the exact number, but it is about five a day. That is tragic, but there are fewer casualties than we feared initially. We are funding education programmes, and we are helped by the fact that the Yugoslav army has identified 425 of the 625 mine fields. We have information about the unexploded ordnance, and we are passing that information on to people, particularly families with young children who might be vulnerable.
    Mr. Tam Dalyell: I applaud the work of the Halo Trust and the brave men who work for it. How do the Government see Serbia's role in helping to clear the mines?
    Mr. Foulkes: Serbia has been very helpful in providing us with detailed information about where the mines were laid. We must admit that that has been helpful in our work of trying to clear mine fields as quickly as possible.
    Mr. Andrew Robathan: I welcome what the Minister has said, but has he had any discussions with the

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    Ministry of Defence to ensure that Royal Engineers can assist in that vital work before the winter sets in and snow covers up the mines, although it will not lessen their destructive impact? Will he accept my assurance that hon. Members on both sides of the House welcome the money being put into the reconstruction of Kosovo, and believe that we should give as much as we can, commensurate with the amount that we spent on bombing Serbia during the conflict?
    Mr. Foulkes: I have already said that we have put in a significantly large amount. Other countries and agencies are, of course, also contributing. The armed forces are undertaking some mine clearance, but that is increasingly being taken over by civilian organisations, which we are funding. I hope that the hon. Gentleman will agree that Britain is making a substantial contribution to mine clearance, just as it has to all humanitarian work in Kosovo.
    Mr. Vernon Coaker: What assessment she has made of the educational and medical needs of refugee children in Kosovo; and if she will make a statement. [89757]
    The Secretary of State for International Development (Clare Short): Assessments of children's needs are the responsibility of the United Nation mission in Kosovo. We are providing financial and other support to the World Health Organisation and UNICEF, which, among other things, are trying to ensure that all children are back at school by September.
    Mr. Coaker: I thank my right hon. Friend for that reply. Following my visits to the area, may I ask whether she agrees that one of the most important things for children in Kosovo is psycho-social support, which is necessary to help them overcome the trauma that they have experienced over the past few months? Will she also do all that she can to help children in the region who have special needs?
    Clare Short: There are two views on psycho-social support for people who have been traumatised, but the predominant view is that getting back to normality is the most important thing—getting children back home and back to school, and getting normal society up and running. They might need additional help, but what they really need is a sense of normal life returning.
    As for children with disabilities, obviously we have to stop people. particularly children, being hurt in mine accidents, but we need to get the schools and the health systems up and running. Rather than providing special projects, we need to support the UN mission and the World Health Organisation in getting the health and social services working in Kosovo—and that is what we are doing.
    Mr. Tim Boswell: I in no sense disagree with the exchanges so far, but will the Secretary of State remember the importance of ensuring that people who have children in their care, such as teachers and others, are advised and encouraged by those with experience of dealing with traumatised children? It is important that teachers come to terms with the difficulties that their pupils are suffering.
    Clare Short: The hon. Gentleman is right, but the question is how best to do that. Much effort was made to
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    provide counselling after the mass rape of women in Bosnia. Putting the same amount of money and energy into getting people's lives back to normal and getting their homes into some sort of order seems to have a more immediate impact, so we need to concentrate on both things.

    Heavily Indebted Poor Countries
    Mr. Andrew Reed: What discussions she has had with the Chancellor of the Exchequer on measures to increase the priority given to poverty reduction within the heavily indebted poor countries initiative. [89758]
    The Secretary of State for International Development (Clare Short): The Chancellor of the Exchequer and I—good timing; my right hon. Friend has just arrived—strongly believe that the purpose of debt relief is to enable Governments to tackle poverty more effectively. We welcome the G7 Cologne statement that the central objective of the HIPC initiative is to release resources for programmes to reduce poverty. The second phase of that review is under way, and is examining ways in which the link between debt relief and poverty reduction can be strengthened. We have submitted our ideas to the review team and will push for a strong poverty link to be agreed at the annual meetings of the World Bank and International Monetary Fund in September.
    Mr. Reed: I thank my right hon. Friend for that reply—and the Chancellor for coming to listen to my question. Does she agree that, in the past 11 months, we have made tremendous strides, and gone much further than many Labour Members would have dreamt possible? However, will she ensure that, while we are on that roll, we manage to push in the forthcoming negotiations for real change in the IMF structural adjustment programmes, so that they—unlike current programmes, which many believe push the poorest into increasing poverty—really make a difference to the world's poor?
    Clare Short: My hon. Friend makes a very important point. Although we want deeper and quicker debt relief, we also want the general IMF conditionality to protect social spending benefiting the poor, and the economic policies that promote economic growth and will reduce poverty. We are currently working on that side of the equation. Although we have made good progress on deeper debt relief, we do not yet have all the funding for it that was agreed at Cologne; we need countries to come forward and make pledges. We hope to persuade the European Commission to make a considerable pledge, so that we can operate the improved formula agreed at Cologne.
    Mr. William Cash: Does the Secretary of State, who mentioned her close working relationship with the Chancellor of the Exchequer, accept that there is very deep disquiet about the relationship between gold sales and the reduction of third world debt? Does she accept that Mr. Bobby Godsell, the president of the Chamber of Mines of South Africa, and Mr. Motlatsi, the president of the South African National Union of Mineworkers, are in the United Kingdom precisely because there is such deep disquiet? Does she also accept that there is no point in

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    selling gold if the effect of such sales is to depress the opportunities of people in South Africa, and in other parts of Africa and the rest of the world, to get jobs? Does she agree—I hope that she will answer this question—that there is no point in causing job losses that would cause even more poverty than that caused by debt?
    Clare Short: I doubt whether the hon. Gentleman supported many of the previous Administration's policies, but he probably did support their policy of gold sales to fund debt relief—[Interruption.] Conservative Members supported gold sales to fund debt relief, and it is not a good idea for them suddenly, when the idea has become popular, to change their minds. Although we are all concerned about the people who work in South Africa's gold mines, there has been a long-term decline in the gold price. Around the world, banks are no longer using gold to back their currencies. The pretence that Britain's recent decision explains the recent decline in South African gold prices just does not hold up.
    Mr. Peter L. Pike: Debt relief is of great importance to my right hon. Friend—as it is to the rest of the Labour Government—but she has always been noted for her fair and blunt speaking. Does she believe that the countries that we are trying to help through debt relief fully understand her message that we cannot tolerate corruption in those countries, and that debt relief is sometimes subject to their putting their own houses in order?
    Clare Short: My hon. Friend makes a very important point. Some of the enthusiasts for debt relief say that it should be unconditional, but we have made it absolutely clear that it should not be unconditional, but must be designed to reduce poverty, and that the countries concerned will have to bear down on corruption. We are ensuring that, in the detail of the way in which debt relief is linked to poverty reduction, debt relief will not be used to support corrupt regimes that are simply wasting resources. My hon. Friend is absolutely right.

    Water Companies
    Mr. Michael Fabricant: When she last met representatives of the water companies to discuss the aid which they donate to developing nations. [89759]
    The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): My right hon. Friend recently met the outgoing director of Water Aid, and earlier this year, on a visit to Nepal, saw some of Water Aid's projects. We greatly respect Water Aid's work, and the generosity of the water companies' staff and customers. We also recognise the importance of the increasing commercial activities of a number of United Kingdom water companies in developing countries. We are seeking to ensure that they recognise the fundamental right of the poor to affordable, safe and reliable water and sanitation services.
    Mr. Fabricant: What a welcome change in tune. Only two years ago, the Secretary of State said to me:
    "I am not aware of any work done by private water companies in Africa."—[Official Report, 25 June 1997; Vol. 296, c. 835.]
    I am pleased that she is now meeting the water companies.
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    Is the Minister aware that, in the past year alone, privatised water companies helped 600,000 people in Africa, and provided more than £2 million? Is he aware of the valuable work that they did in assisting womenfolk in Africa, who have the burden of work in having to take water one, two and sometimes three miles to their homes from insanitary water holes?
    Mr. Foulkes: The hon. Gentleman should not get too excited. Of the £9 million spent annually by Water Aid, £1 million comes from the water companies, which spend less than 0.01 per cent. of their profits on Water Aid. They could do a great deal more.

  The Prime Minister was asked—
  PRIME MINISTER

    Engagements
    Mr. Geoffrey Clifton-Brown: If he will list his official engagements for Wednesday 14 July.
    The Prime Minister (Mr. Tony Blair): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.
    Mr. Clifton-Brown: Does the Prime Minister think that it is right that this country should be selling off its precious gold reserves in order that it can instead invest in depreciating euros?
    The Prime Minister: The monomania of the Conservative party on Europe is astonishing. The gold price has actually been falling for two years, so if it carried on falling and we did not sell, we would lose money. I should have thought that even today's Conservative party could make that sum work out.
    Mr. Lawrence Cunliffe: Does my right hon. Friend agree that people throughout the United Kingdom and the Irish Republic are resting their hopes today for peace on the actions of the Northern Ireland politicians? Does he further agree that the people will not forgive, forget or understand if their politicians fail to seize the best chance for peace for a generation?
    The Prime Minister: I hope that all the politicians in Northern Ireland make their very best efforts to secure this chance for a lasting peace and settlement in Northern Ireland. To that end, we shall table amendments today in line with the Good Friday agreement, but amendments that will reflect, I think, many of the comments that were made on both sides of the House in yesterday's debate.
    In particular, those amendments will focus upon ensuring that decommissioning happens, in accordance with the timetable that has been laid down by de Chastelain, in the Bill; making it clear that any breach of that timetable will lead to the automatic suspension of the institutions; and ensuring that we can clearly and formally identify the parties that default either in decommissioning or in devolution.

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    We have listened very carefully to the comments made in the House yesterday. We shall therefore table further amendments in an effort to provide a basis upon which all people can agree this last step in the Good Friday agreement process. If they can, Northern Ireland faces the prospect, for the first time in a generation, of a secure, stable and peaceful future.
    Mr. William Hague: The Prime Minister has obviously made an important announcement about the Northern Ireland legislation, and we welcome the fact that the Government are now ready to amend the Bill. Obviously, the Opposition hope that this means that the Government are responding to the genuine concerns, expressed in the debates last night, about the lack of failsafes in the legislation, and we anxiously await the details.
    On other matters, I know that the Prime Minister will be aware of the case of Heather Begbie, whose parents took the Government to court for breaking their promises on the assisted places scheme. Will he now honour the pledge made to that 11-year-old girl and hundreds like her, that he would allow children on that scheme to receive support until the end of their education—or does he, like the lawyer representing the Secretary of State at the hearing, claim that pre-election promises are irrelevant?
    The Prime Minister: We have not broken any pre-election promises. On the contrary, let me read what we actually said before the election.
    "If a child has a place at a school which runs to age 13, then that place will be honoured through to 13."
    It was a manifesto commitment that we phase out assisted places, and we did so to provide smaller classes for the five, six and seven year-olds in this country. Far from breaking a promise, we have kept the promise.
    Mr. Hague: How can the Prime Minister talk about reducing class sizes when class sizes have now gone up in secondary schools, primary schools and nursery schools? He has not even kept that promise. Before the election, he wrote to parents:
    "Any children already on the scheme will continue to receive support until the end of their education."
    Which of those words is he going to try to get out of? Is not this a saga of misrepresentation and broken promises? If he had any sense of shame, would he not now redeem his promise? Will he do so?
    The Prime Minister: First, let me correct the right hon. Gentleman on the facts. For the first time in 10 years, class sizes are falling, not rising. From this September, an extra 160,000 five, six and seven-year-olds will be in class sizes of under 30 because we have phased out the assisted places scheme. As for breaking promises, let me read, for example, a quote from The Daily Telegraph, weeks before the election. It reported:
    "David Blunkett, the Labour education spokesman, said…Pupils with assisted places who are in primary education will have them honoured to the end of the primary stage.'"
    That was made absolutely clear throughout, which is one reason why we won the court case and did not lose it.
    Mr. Hague: Here are the Government's figures for the average class sizes of maintained primary schools: 1997,
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    28.1; 1998, 28.3; 1999, 28.4—an increase in every year so far. The Prime Minister says that he has not broken his promise. Here are the words of the judge in this case—Mr. Justice Kay, Queen's Bench division—when he handed down his judgment:
    "It is a sorry state of affairs when a Secretary of State has to explain away his own letters as mistaken…and a statement of the Prime Minister as an incorrect representation of policy".
    The Prime Minister made a commitment to these children and he broke his promise—just like the promises on waiting lists, on class sizes, on taxes, on tuition fees, on grammar schools and on junior doctors. When it comes to broken promises, he is now for the many and not the few.
    The Prime Minister: First, the words that he has quoted were written after the election, not before it. Secondly, we made it clear in the manifesto that we would phase out the assisted places scheme. That was one of the five pledges that we made. Thirdly, we have passed legislation which makes it clear that we will see children through to the end of their primary school stage—but we were not going to use taxpayers' money to fund them afterwards.
    The right hon. Gentleman talked about the many, not the few. First, he is wrong—we have brought down class sizes in primary schools. [Interruption.] He is wrong, and I will set out the figures for him. Secondly, he said that we have been for the few, not the many. Class sizes this year will fall for five, six and seven-year-olds—[Interruption.]
    Madam Speaker: Order. That is enough.
    The Prime Minister: Class sizes will fall for 160,000 five, six and seven-year-olds. That will mean that, over the two years of this Government, 280,000 fewer children will be in class sizes of more than 30. As the right hon. Gentleman is now saying that he would keep the assisted places scheme, he would be spending £50 million on 1,600 pupils. We say that that £50 million should be spent on smaller class sizes for 160,000. That is what I mean by saying that we are for the many, not the few,
    Mr. Andy King: Did my right hon. Friend notice that the Leader of the Opposition, wisely in my view, avoided any question on the economy? [Interruption.] Could that be because last year he said
    Hon. Members: Order.
    Madam Speaker: Order. Let us cool it. It is not bucket and spade time yet. Will the hon. Gentleman now put his question very succinctly, bearing in mind that the Prime Minister is responsible only for Government policies and not for those of the Opposition?
    Mr. King: Does my right hon. Friend agree that, despite the fact that the Leader of the Opposition spoke—[Interruption] He spoke of a downturn caused by Downing street, but unemployment has fallen by 80,000 this year. [Interruption.] Will my right hon. Friend release some Government officials to assist Conservative Members with their forecasting?
    The Prime Minister: I can see why the Conservatives wanted to shout the question down. Fortunately, I am

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    responsible for Government policy, not Opposition policy. Let me tell the House what Government policy has delivered. Unemployment is down, and employment up 400,000, at record levels. We have record levels of inward investment. Does my hon. Friend remember the Conservatives saying that it would all dry up if Labour came to power and that if we introduced a minimum wage 2 million jobs would go? Employment up, interest rates down, inward investment up: that is new Labour working.
    Mr. Paddy Ashdown rose—
    Hon. Members: Oh no!
    Mr. Ashdown: Do not worry; it is almost the last one. [HoN. MEMBERS: "Hooray!"] That is the best cheer that I have ever had.
    As the Good Friday agreement hangs by a thread, may I warmly welcome the important statement that the Prime Minister made? I and many millions of others hope that it will finally provide the reassurance to enable the process to go forward. I suspect that there is not much more that we can say to assist the process, so I shall turn to another subject.
    As the Prime Minister considers his reshuffle in the near future—[HoN. MEMBERS: "Not you."] It is far too late for me. I ask the Prime Minister to reflect on the fact that we now have twice as many Ministers as when we governed half the world. The previous Government increased the number of Ministers even as they sold off all the public, nationalised industries and hived off three quarters of the civil servants to arm's-length agencies, and the current Government have shown reluctance to reduce the number, despite the fact that we have devolved large amounts of power to Scotland and Wales. For how much longer can we justify Governments of the day asking everybody else to do more with less while they do less with more?
    The Prime Minister: It is a bit unfair, if the right hon. Gentleman is not taking a ministerial job, to wish away everyone else's. Ministers are amply busy with the tasks that they do. He says that Ministers do not have the same responsibilities as before, but often they have more. Considering the economy, education, today's crime figures or the lifting of the beef ban, Ministers are doing a rather good job.
    Mr. Ashdown: If the Prime Minister simply looks at the most recent Scottish and Welsh Question Times, he will see that that is not the case. We have devolved power to Scotland and Wales, but there are still seven Ministers in the Scottish and Welsh Offices. Of the nine questions asked at a recent Scottish Question Time, only three were relevant. He has a real opportunity to set a standard for the rest of the Government and show that now that we have devolved power he can work with a smaller Government, and he might start with the Scottish and Welsh Offices.
    The Prime Minister: We have already said that devolution makes a difference, but, in relation to the overall duties that Government Ministers carry out, the position is as I have said. I shall await with interest the question from the right hon. Gentleman at the next Question Time.
    Mr. Alan Simpson: I am glad that we have been reminded that the reshuffle
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    is in the air, and I hope that the Prime Minister will not presume that I am grovelling for preferment if I bowl him a soft one. Does he agree that, at a time when Britain still has deep concentrations of those who are food poor, it is scandalous that the European Union spends £600,000 a day paying farmers to plough back food that has been produced, instead of distributing it? It also pays farmers £27 million a week to grow nothing.
    Will the Prime Minister join me in calling for a revision of those policies so that we distribute the food that has been produced freely to the poor and look to a shift in subsidy priorities away from non-production to organic production, conveniently thereby parking the GM wagon at the wayside, with about the same promotion prospects as I suspect I have?
    The Prime Minister: My hon. Friend should not be so modest. It was such a good question that he should keep his pager with him at all times. [Laughter.] That is not a promise. His point about agricultural production is right, but there will be more pressure on the European Union than it yet realises as a result of the World Trade Organisation negotiations. We would have liked bigger cuts in agricultural production subsidies at the Berlin summit, but a lot of progress was made and it will benefit British consumers to the tune of about £1 billion a year. A lot more can still be done, and the WTO negotiations will provide us with an ample chance of pushing through free trade measures around the world. That would benefit many of the poorest and most developing countries.
    Mr. Peter Viggers: If the accident and emergency unit at the Royal hospital, Haslar, in my constituency were to be closed, there is no doubt that lives would be lost in ambulances on the congested roads to the remaining hospitals. What will the Government's message be to the bereaved?
    The Prime Minister: When I was in Portsmouth, I made it clear to people that although the Haslar hospital is a Ministry of Defence hospital, not an NHS hospital, we have to ensure that the services that are available at that hospital are available elsewhere. The hon. Gentleman will know that one of the reasons why we granted one of the new hospital projects to Portsmouth was precisely because we understood the difficulties any closure might cause.
    Mr. Steve McCabe: Has my right hon. Friend seen the Opposition's astonishing attack on traffic-calming measures? When I was responsible for those matters on Birmingham city council, we were overwhelmed by the level of public demand. I seek his assurance that this Government will not abandon safety schemes that we know dramatically reduce injuries and save thousands of lives, especially children's lives.
    The Prime Minister: The evidence is that those road-calming schemes have cut accidents and deaths by some two thirds in the areas affected. That is a considerable record, and it would be disastrous to abandon them. I am also still waiting to hear from the Opposition how they can abandon the fuel duty escalator—which, after all, they introduced—for this and subsequent years, which would leave a £10 billion hole in the public

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    finances. When we were in opposition, we used to be asked occasionally where the money would come from; it is about time they were asked that.
    Mr. William Hague: Now that the Scottish Parliament is up and running, English and Welsh Members do not vote on purely Scottish matters. Why does the Prime Minister think that Scottish Members should vote on matters concerning only England and Wales?
    The Prime Minister: Because they are all United Kingdom Members of Parliament and we should have one class of United Kingdom Member of Parliament.
    Mr. Hague: The Prime Minister has already created two classes of Members of Parliament—those who vote on matters in their own constituencies and those who vote only on matters in other people's constituencies. Does he agree with the hon. Member for Linlithgow (Mr. Dalyell) who has said that he simply does not have the brass neck to vote on purely English business? In his previous answer, was the Prime Minister ruling out, for this Government, decisions on England and Wales being made by English and Welsh Members of Parliament?
    The Prime Minister: The position is the same as it was when Stormont was in existence, for example. In those circumstances, that would be the position again if devolution happens in Northern Ireland. There is one class of UK MP in this Parliament. That is the way it should stay.
    Mr. Hague: There is no longer one class of MP. Is not it clear from the Prime Minister's answer that he does not want to face up to this question, that he has not thought through the consequences of what has happened in Scotland and Wales, that he has not understood that making a success of devolution requires the fair representation of the voters of England, and that, if he refuses to make such changes, he will have weakened the United Kingdom and gerrymandered the British constitution?
    The Prime Minister: No, I do not agree with that, for a number of reasons. First, the right hon. Gentleman forgets to point out that all Members of the House vote on overall expenditure in Scotland and Wales. Secondly, he says that it is wrong for Scottish MPs to vote on purely English matters, but he was quite happy for English MPs to vote on nursery vouchers in Scotland and on the removal of responsibility for water services. Most of all, he was quite happy for them to vote to impose the poll tax on Scotland.
    I believe that the settlement that we have is sensible. The choice that should not face people in Scotland, Wales or Northern Ireland is between the old system, which had failed—that is why there was so much pressure to change it—and the break-up of the United Kingdom. The real supporters of the Union are those who are able to modernise it and wish to do so.
    Dr. George Turner: The House will want to welcome today's good news on the lifting of the beef ban. My rural constituents will certainly breathe a sigh of relief. Step by step, this
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    Government are putting right what the previous Government got wrong. For the next step, will my right hon. Friend assure me that the rural White Paper to be published this autumn will pay particular attention to planning and transport in rural communities, to redress the damage done by 18 years of Tory neglect?
    The Prime Minister: On BSE, we are delighted with the decision to lift the beef ban, although recovering the lost export markets will not be easy. [Interruption.] Conservative Members can shout and bawl about that, but when we came into office there was not a prayer of getting the beef ban lifted. That has come about because of the hard work of Ministers here, and also because the Government have a constructive rather than destructive attitude to Europe. That is why we got the beef ban lifted, and it is another example of new Labour working.
    As for the rural and countryside issues, I am sure that the White Paper will address them, and that it will make particular mention of the fact that this Government have put extra resources into rural transport.
    Mr. James Clappison: But does the Prime Minister think it right that Scottish MPs should be able to vote for a ban on hunting in England, when English MPs have no right to vote on the same subject in Scotland?
    The Prime Minister: As I said, that is precisely the situation that applied under Stormont. These arguments went on in the 1960s, and it was felt right to carry on with the system that we have. I believe that to be the best option, especially as all MPs, including English MPs, vote on the total budgets for Scotland and Wales.
    Mr. Barry Sheerman: May I ask my right hon. Friend to guess which Administration, at their mid term, presided over inflation rates of nearly 12 per cent. and unemployment at 2.8 million? Will he compare those figures with those achieved by his own Administration at their mid term, when inflation is at 2.3 per cent., interest rates at 5 per cent. rather than 12 per cent., and unemployment is down to just over 1.25 million? With record numbers of companies wanting to come and invest in Britain, what is the secret of our success? Is it that we are keeping to the principles and policies on which we ran for election?
    The Prime Minister: Everyone remembers the recessions of the early 1980s and 1990s under the Conservatives when interest rates were at 10 per cent. for four years or more. When we came into office, the national debt had doubled and borrowing was at record levels. We sorted out the public finances, got interest rates down to the lowest level for more than 30 years, achieved record levels of employment and saw unemployment down to its lowest level in more than 25 years. The Government have laid the foundations for economic success after years of—it is time to repeat this phrase—Tory boom and bust.
    Mr. John Townend: When the Government decided to sell gold, did they anticipate that the price would fall by 33 cents to $2.55 an ounce? Did the Prime Minister realise that that would adversely affect the economies of third-world countries, particularly

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    South Africa, and put black miners' jobs at risk? Is it not nonsense to spend more money on overseas aid to South Africa while undermining that country's major industry by putting pressure on prices? Will the Prime Minister undertake to meet the delegation from South Africa and to say that there will be no further gold sales?
    The Prime Minister: It would be rich to take lessons about South Africa from the Conservative party, which supported apartheid for many years. Let me deal with the latest Tory obsession—gold sales. We sold gold on the technical advice of the Bank of England, and lots of other countries have also sold gold. As I have said, the price of gold has fallen over the past couple of years. It is entirely sensible to have our reserves in a broader portfolio, and that is what we have done. Other countries have done it, too.
    The Conservative party's utter obsession with Europe leads hon. Members to link gold sales to the euro in some bizarre way. Argentina and Switzerland are also selling gold, and what that has to do with the euro I do not know. It is only Tory obsession that makes them raise this matter. We acted on technical advice, and sales were carried through perfectly sensibly. We got the best deal for the country.
    Mr. David Kidney: Does not today's Public Accounts Committee report on the flotation of Railtrack prove beyond doubt that the privatisation of the railways was a gigantic rip-off? Will my right hon. Friend assure us that the Government will make greater demands on Railtrack to rejuvenate the rail network, including the west coast main line which serves Stafford?
    The Prime Minister: Of course, it—[Interruption.] Well, the Tories should apologise for having sold the railway system for the price that they received. They do not like to hear the facts. The railways were sold for £1.9 billion and are now worth £7.8 billion. Even a Tory can work out that that is not a good deal for the taxpayer. The prospect of increased investment in the railways by the Labour Government, and the introduction of the Strategic Rail Authority that will return some co-ordination to the fragmentation of privatisation, will make sure that people receive a better service.
    Mr. Richard Allan: The Prime Minister will be aware that plans for objective 1 funding for disadvantaged areas such as South Yorkshire are being finalised. He may also be aware that experience from other areas such as Merseyside revealed difficulties with matched funding. Will he do all that he can to ensure that Government funding in objective 1 areas can be used as matched funding so that we may maximise European Union-funded regeneration opportunities?
    The Prime Minister: Of course, as I have said before, we will get the very best deal we possibly can. The hon.
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    Gentleman must accept, however, that this issue arises only because we achieved at the Berlin summit the best deal on structural funds that the UK has ever had. We must make the best use of that money, a principle to which we are as dedicated as the hon. Gentleman. I make no point against the hon. Gentleman's party by saying again that it was only because of our constructive, sensible and engaged attitude towards Europe that we managed to get a decent deal for Britain.
    Mr. David Winnick: Is it intended that Foreign Office documents relating to Michael Ashcroft should be put into the public domain as they are certainly in the public interest? Do the Government intend to refer all matters relating to Michael Ashcroft to the Committee on Standards in Public Life? Are not such actions necessary in view of Mr. Ashcroft's role in political life in Britain and in funding the Conservative party?
    The Prime Minister: Of course, the Neill Committee is there and available for such matters to be dealt with and I am sure that they will be.

    Elections (Scotland and Wales)
    Dr. Julian Lewis: What assessment he has made of the operation of the systems for electing members of the Scottish Parliament and Welsh Assembly.
    e Prime Minister: I believe that the Scottish and Welsh elections, which were carried out for the first time in the United Kingdom under the additional member system, operated effectively, and I pay tribute to all those officials and others who helped to ensure that that was the case. Of course, we shall look into how the detailed arrangements worked in practice.
    Dr. Lewis: Is it not blindingly obvious, even to the Prime Minister, that what proportional representation did in Scotland and in Wales was, as usual, to deprive the winning party of a working majority and force it into coalition with a party that came not even second or third, but fourth—namely, the Liberal party? Will he now assure the House once and for all that that distorting and undemocratic system of proportional representation will never be used for Westminster parliamentary elections?
    The Prime Minister: I really do not understand the Tories at all. If we had used the old system, there would have been no Tories in the Scottish Parliament and only one in the Welsh Assembly. The hon. Gentleman should be thanking me for my unprecedented generosity.

Beef Exports
3.31 pm
The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): With permission, Madam Speaker, I should like to make a statement about beef exports.
I am very pleased to inform the House that, this morning, the European Commission adopted a decision that has the effect of lifting the beef ban for the whole of the United Kingdom. Its decision is that the date-based export scheme, on which we have been formally negotiating since October 1997, should start to operate from 1 August this year. From that date, it will be possible to export to other European Union countries boneless beef from cattle born after 1 August 1996 in any part of the UK.
Other conditions will have to be met. To deal with the risk of maternal transmission, no animal will be eligible for export unless its dam can be proved to have lived for at least six months after its birth without developing BSE. The date of birth and the identity of the animal must be established beyond doubt.
I negotiated one significant change with the Commission, however. Although the slaughterhouses must deal exclusively in cattle that meet the requirements for export, they can also deal in other species. That is a commercially important point for operators.
My Department and the other Agriculture Departments have worked in close consultation with all parts of the industry to ensure that they are geared up to make the best possible use of the scheme. The next steps will involve a final inspection and approval by my Department of exporting plants, after which exports can start. Everything is in place for that to happen from 1 August.
One company is poised to start exporting as soon as possible after the 1 August start date and others will follow. The Government will do all that they can to ensure that the scheme delivers benefits to our beef producers and traders and that it helps to build confidence within the agriculture industry at home and to rebuild confidence in British beef among our European Union partners.
The decision is an important breakthrough for the industry after the bleak time since March 1996 during which our beef industry has been afflicted by the export ban. My objective, however, is to get the UK market back on the same terms of trade as our competitors.
Today's decision is the result of a negotiation that has lasted for nearly two years. I pay tribute to the hard work that has been put in along the way by Ministers and officials in a number of Departments. It is an excellent example of well-organised, inter-departmental collaboration across Government in successful pursuit of a significant, national objective. The outcome also shows clearly the benefits of the Government's new approach to doing business in Europe. In stark contrast with the ludicrous Tory beef war, which produced nothing except our own isolation from Europe, Labour leadership in Europe and our constructive approach towards our European partners has clearly been shown to succeed.
Mr. Tim Yeo: The Opposition warmly welcome the news that beef exports will restart on 1 August. That is an important step forward, but the Minister will know that it is not only about today's
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headlines; it is the start of a long process of winning back markets that are crucial to the survival of British beef farmers.
Several questions arise. The Minister made some uncharacteristically political comments at the end of his statement—no doubt inserted with the forthcoming reshuffle in mind. In view of those comments, is he aware that many beef farmers are bitterly disappointed that eight months have passed since he last made a statement to the House that the beef ban was to be lifted? During those eight months not a single ounce of beef was exported from the British mainland. The Minister told the House:
"I can say that it is my objective to have the date-based export scheme up and running and past its Commission inspection by next spring."—[Official Report, 25 November 1998: Vol. 321, c. 191–92.]
It will now be well into August before that objective is achieved. Spring has been a long time coming this year for beef farmers.
Will the Minister confirm that, after his statement of 25 November, more than four months passed before the European Commission inspectors were even invited to Britain to examine the facilities through which beef exports would be channelled? Is that what Labour mean by "well-organised, inter-departmental collaboration"? As it has taken Labour two years and three months to get the ban lifted, and as today's statement confirms that the lifting is very partial, does the Minister really believe that beef farmers will see that as a triumph for the Government's new approach to doing business in Europe? Alternatively, was the verdict of beef farmers the one that was delivered on 10 June?
Will the Minister confirm whether the lifting of the ban applies only to European Union countries, or also to those outside the EU? Will he say which slaughterhouse has been approved for export? How soon are others likely to be approved, and how many are likely to take part in the scheme in the foreseeable future?
What help will the Government now give to exporters to rebuild their markets? For example, will the Government help with the running costs of the scheme for slaughterhouses during the initial period when exports build up? Has money been set aside for that purpose? Does the Minister agree that the experience in Northern Ireland shows that help is indeed needed?
How soon will British service men abroad be able to eat British beef? Does the Minister agree that Labour could boost confidence in British beef if they lifted their absurd ban on beef on the bone? Does he agree that Labour could boost confidence in British beef if 42 Labour local authorities ended their ban on beef on school menus? Will he confirm that his statement means that a slaughterhouse, which deals with cattle that meet the export requirements, can sell into either export or home markets?
As the Minister states that cattle born after 1 August 1996—for example, cattle which are now 35 months old—can be exported, does that mean that the over 30 months scheme is now being phased out? What will the final inspection of exporting plants by MAFF involve? Is he aware that the ending of the calf processing aid scheme on 31 July this year will have immediate and adverse consequences? Is he worried about the possible animal welfare problems that may result? Has the Ministry sent out a leaflet advising farmers how to slaughter calves on their own farms?

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The Minister stated that Labour's objective is to get the UK market back on the same terms as that of our competitors. However, this agreement fails to do so. Does he agree with those farmers who say that the potential for beef exports remains limited while the existing restrictions are in force? Will he give top priority to the removal of the remaining restrictions? Will he fight inside Europe for the export of beef on the bone and of live cattle to be resumed as soon as possible?
If the right hon. Gentleman is to avoid the charge of having done too little, too late, much greater urgency is needed to secure the removal of the remaining restrictions than was demonstrated in the months following his previous statement on this subject to the House last November.
The Minister has our congratulations on what he has achieved so far, but he will earn our support and, indeed, the thanks of beef farmers if he recognises that it is the first step along a long road and that the Government still need to make strenuous efforts to reach the goal of a thriving beef export market.
Mr. Brown: I thank the Opposition spokesman for his congratulations. I have to say that I hate to think what he would have said to me if he had turned against me. What a whingeing, grudging welcome he gave to what is, after all, an important announcement for one of our key agriculture industries. Before dealing with the points of detail, I observe that among all the issues that the hon. Gentleman raised, there was no mention of what caused the ban to be imposed in the first place or an acceptance that perhaps the previous Government had something to do with that ban being imposed and the failure even to make a start on getting it lifted. Those grudging remarks come ill from a member of the party that got us into this mess in the first place.
Let me try to respond to the barrage of rather small points that were put to me. The calf processing aid scheme comes to an end on 31 July. I said that in the debate last week, and I have not changed my mind since then. We also discussed the OTMS in last week's debate. The matter is under review, and I am waiting for advice from the relevant scientific committee. The hon. Gentleman referred to local authorities. I am writing to them—
Mr. James Paice: The right hon. Gentleman mentioned that last week.
Mr. Brown: Well, that does not make it wrong this week. The position remains the same, and I know that most Members of the House will not be surprised by that.
The position on beef on the bone has not changed. I want to lift the ban as soon as I can, but that will be in response to the professional advice of the Government's medical advisers.
The hon. Member for South Suffolk (Mr. Yeo) referred to the start date of 1 August and said that beef will start to be exported again well into August, but 1 August is the start of August. How can that possibly be grudgingly desrcibed as "well into August"?
The hon. Gentleman asked whether people are ready to go ahead with exports. I said in my statement that they are, at St. Merryn's in Cornwall. They believe that they
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already have markets lined up and are ready to start exporting immediately after 1 August. [HoN. MEMBERS: "Which markets?"] Hon. Members may shout, "Which markets?", but that is a commercial matter for the exporters. The Government's role is to make sure that trade can be facilitated. The Opposition ask what we are doing to help to win back the markets. Surely the first thing to do is to make it legal to export beef to those markets, which is exactly what I have done.
The hon. Member for South Suffolk went on to say that I should provide illegal state aids to assist British beef to get back into the export markets. What view does he think the Commission would take of that? What message would that send to our European partners, who, without any selfish interest in this matter, have stood by us when we have been able to work constructively with them to prove our case? Surely our case has been proved by the strength of our arguments.
The hon. Gentleman asked about third countries. The ban on British exports was worldwide and it will be lifted from 1 August, so, subject to the rules of the domestic Governments, which we shall address on a case-by-case basis, it will be possible to sell directly to the European Union and third countries.
The hon. Gentleman referred to the timing and asked why the ban was not lifted in the spring rather than in the summer. When I met members of the National Farmers Union at their conference in the spring, I told them candidly that the date for lifting the ban might be later than they hoped, but I would rather get it right than do it early, and the farmers cheered because they knew that that was in the national interest.
Mr. Dale Campbell-Savours: May I warmly congratulate my hon. Friend and his predecessor, my right hon. Friend the Member for Copeland (Dr. Cunningham), on the excellent way in which they have handled the issue since the general election? The key decision in lifting the ban was that taken by Labour Ministers after the general election to establish the cattle traceability centre in my constituency. That reassured people throughout the European Union. May I express the hope that when the BSE inquiry is finally published it exposes why the Tory Government refused to take that critical decision, because, had it been taken earlier, it would have led to the beef ban being lifted earlier?
Mr. Brown: My hon. Friend is on to a very good point. Cattle traceability is crucial to the date-based export scheme and I pay tribute to his hard-working constituents in the British cattle movement service. I also pay tribute to my predecessor, my right hon. Friend the Member for Copeland (Dr. Cunningham), for having done so much to smooth our way in the European Union and to get the important negotiations off to a good start.
Mr. Charles Kennedy: I warmly welcome today's news. Does the Minister agree that this afternoon it is probably worth us all maintaining a sense of perspective and patriotism about this development? It is rather disappointing that, perhaps for understandable reasons, the Conservative spokesman seems unable to exhibit either. Is not the true perspective that an industry that was worth in excess of half a billion pounds to this country in 1995 was effectively closed down? In addition to the terrible deaths

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and human tragedies, in the past two to three years there has been an alarming rise in the number of suicides in farming as a result of the extreme pressure that this issue and many others have created on the British agricultural sector. Therefore, in welcoming today's news, we can learn the lessons of the past.
Does the Minister agree that a lesson from the recent past is that when the ban was lifted in Northern Ireland, welcome though that was, it was a very long haul indeed to re-establishing credibility in the European markets and achieving market penetration? Will the Minister work with the Meat and Livestock Commission and the British agricultural sector on a wholesale marketing campaign across the continent, bringing correspondents, food writers and agriculturists from there to here as well as publicising our domestic market over there to ensure that we get back on track sooner rather than later? Finally, does he agree that it would help the re-establishment of credibility to lift the ban on beef on the bone? In the longer term, let us hope that such a dreadful tragedy for all concerned can be prevented from ever recurring, not least by the establishment in due course of a properly funded and independent Food Standards Agency.
Mr. Brown: I agree with much of what the hon. Gentleman said, in particular his welcome for the Food Standards Agency, which is an important step forward. He will be pleased to learn that I am meeting Don Curry of the MLC at 5 o'clock today to discuss what the Government can do to help.
The hon. Gentleman is right to say that BSE has been a national tragedy for our country. So far, 43 lives have been lost to new variant Creutzfeldt-Jakob disease and some £4 billion of public money has been spent, mostly on public protection measures, some of which have acted as pretty powerful market interventions. The figure that he quotes for the industry losses in 1995 are right, although, as part of the tragedy, the shutters came down on exports when they were running at an all-time high, so the industry has been hit hard.
My objective has been to make sure that the public can have absolute certainty in the beef on the United Kingdom market as that is the only market available to the domestic industry and to make sure that we could get back into exports in an orderly way and command the confidence of overseas consumers. That is exactly what we have done.
Mr. Martyn Jones: May I assure my right hon. Friend that farmers in my constituency will be wholeheartedly delighted with today's news? It is probably the best thing that has happened in my area for some time. I am sure that they will contrast the hypocrisy from the Conservatives with my right hon. Friend's statement.
May I add my comments to those of the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy)? My farmers think that the MLC has not done as much as it could have done to promote British beef. Will my right hon. Friend stress that once again to Don Curry of the MLC, whom I am glad to hear that he is meeting later today?
Mr. Brown: I take my hon. Friend's point and thank him for his welcome for the announcement. The opportunities to support British beef overseas have been
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limited because we have been able to export only through the Northern Ireland certified herd scheme. A date-based export scheme, which I expect will be the successor scheme in Northern Ireland, will broaden the pool of animals that is available to exporters. The scheme should provide much more in the way of opportunities, and it is that which I want to explore with the MLC.
On the domestic beef market, such is the effort that has been made by the MLC and the Government in emphasising the tough-minded nature of public protection measures that beef consumption is now higher in the UK than it was at pre-BSE crisis levels.
Mr. Douglas Hogg: The decision of the European Union to lift the beef ban is obviously good news. I am the first to acknowledge the hard work that the right hon. Gentleman, his Front-Bench colleagues and officials have done. I think that they deserve the congratulations of the House.
That said, would I be right in saying that most of the steps that the right hon. Gentleman has taken to get the ban lifted were based on the policies and plans that the previous Conservative Government put in place before the last general election, which laid the foundation for the lifting of the ban? Has not the lifting of the ban exposed the illogicality of adhering to the domestic-based 30 month rule as from now? Is it not right to say that, from August 1996, we can be certain about the quality and integrity of the cattle feed being fed to animals? Having regard to that fact, and also to the fact that a cull was carried out to eliminate the risk of maternal transmission, we could now properly lift the 30 month rule in respect of cattle born after August 1996.
Mr. Brown: I accept that the right hon. and learned Gentleman is on to a strong point on the OTMS. I am awaiting scientific advice on precisely the point that he has raised. I thank him for what he said about the work of officials. Officials in my Department have made heroic efforts with their counterparts in the European Union to explain what we are doing and how we are meeting the technical requirements of the scheme. In that, we have been assisted by officials in the Foreign Office and in other Government Departments as well as by other Agriculture Departments.
The right hon. and learned Gentleman is right to say that the guidelines on the technical implementation of the scheme were set down under the previous Government. My criticism relates to the way in which that Government went about trying to achieve those guidelines. The beef war on Europe was a ludicrous policy and ended crumbling in the British Government's hands. There was no country on our side and 14 which were pushed into positions against us. The present Government have repaired that damaging approach. Our approach has enabled an outcome to bear fruit for an important domestic industry.
Mr. David Drew: I add my congratulations to my right hon. Friend. Contrary to what the Opposition spokesman said, this was never going to be a one-off event. There had to be a great deal of hard work behind the scenes to get the markets reopened.
Alongside the work of the MLC, does my right hon. Friend accept that we can learn from Europe inasmuch as the role of producer co-operatives there is often key to

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production and marketing strategies? Will he talk to all the farming organisations with a view to increasing collaboration so that we can make a sustained effort to export our beef?
Mr. Brown: My hon. Friend is absolutely right. I made a similar point in my speech at the royal show last week. The point is relevant to the beef sector and, dare I say it, to the dairy sector as well.
Mr. Christopher Gill: Will the right hon. Gentleman take this opportunity to confirm that there is no proven scientific evidence that CJD in humans is linked to BSE in cattle? I remind the right hon. Gentleman that his Government have been asked repeatedly to use their best offices to persuade local authorities and health authorities to source their supplies of meat in this country. Why has that still not been done?
Mr. Brown: Of course it has been done at inter-departmental level. I gave the House an assurance in the previous debate that I would personally write to each procurement authority, although, as the hon. Gentleman knows, normal links between Government and competent local authorities and health authorities are maintained through the relevant Ministries, not through direct contact with mine. As for the first statement that the hon. Gentleman invites me to give the House, I hope that he will understand if I decline.
Mr. Huw Edwards: May I assure my right hon. Friend that his announcement will be warmly welcomed by the farming community in Wales, which will meet at the royal Welsh show in Builth Wells next week? It will be particularly welcome to the farmers from my constituency whom my right hon. Friend met recently as representatives of small family farms, and who were tremendously appreciative of the assurances that he gave. The announcement will help the campaign in my constituency for a new, up-to-date livestock market, which will be a great boost to the farming community in Monmouthshire and the whole of south-east Wales.
Mr. Brown: I am grateful to my hon. Friend for his remarks. I look forward to my visit to the royal Welsh show next week, Agriculture Council permitting. It is my policy to discuss my Department's approach not just with the representatives of farm unions, but with individual farmers. I learn a lot from that.
Mr. Peter Luff: I am sorry, Madam Speaker, that my robust enthusiasm for the truth got me into some difficulty with you during Prime Minister's Question Time. I know that you and the Minister share that enthusiasm for the truth.
May I ask the Minister what proportion of pre-ban export levels has been set in the business plan of his Department for the recovery of beef exports? Will he reconsider the recommendation in the Select Committee on Agriculture's report on the beef industry that the Government should give extra assistance to the beef industry to help it to recover lost beef export markets?
Mr. Brown: I take the point that the hon. Gentleman makes, but I think that I could do more harm than good
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if I did anything that even approached introducing state aids, which would be regarded by our colleagues in the European Union as unlawful. As I am one of the key complainants when others do that, it would not be a good idea for me to start doing it, particularly in the beef sector.
I do not have a business plan for the industry. It is a private sector matter. My determination is to work with the private sector to do everything that the British Government properly can do to help. That is quite a lot, but it does not run to direct extra state aids.
Mr. Alan W. Williams: I congratulate my right hon. Friend on his announcement, which is the best news that farmers in my constituency have had for many years. I pay tribute to the work done by his predecessor, my right hon. Friend the Member for Copeland (Dr. Cunningham). As far as I know, the only abattoir that will be available for beef for export is in Cornwall. Does my right hon. Friend have any advice to offer farmers in Wales, 200 miles away from that abattoir?
Mr. Brown: I accept the point that my hon. Friend makes about transport issues, and I hope that the devolved authority may be able to help with local market conditions. I am still looking hard at the overall costs on the abattoir sector, and hope to have something to say about that shortly. My hon. Friend should take the delay in making an announcement as good news, rather than bad. I am still fighting the sector's corner in Government.
Mr. Patrick McLoughlin: I welcome the Minister's announcement today. Will he take the opportunity of condemning local authorities that refuse to put beef on their menus?
Mr. Brown: It is not my habit to go about condemning anyone. I want a constructive dialogue with everyone, particularly with those from whom I am looking for help.
Mr. Elfyn Llwyd: I welcome the news and congratulate the right hon. Gentleman and his team on their achievement. I have two brief comments. First, will he please redouble his efforts to ensure the adequacy of dedicated abattoirs? Secondly, when he meets the MLC later today, will he make the point that local branding will probably be of great assistance in marketing on the European mainland?
Mr. Brown: The local marketing initiative is primarily a matter for the MLC, but I take a close interest in it and see the advantages that could be offered. I expect to explore these matters with Mr. Curry and his team when I meet them at 5 pm.
On dedicated abattoirs, the hon. Gentleman is on to a good point. I was conscious of the impact of that on the market in the negotiations with the Commission, which is why I negotiated a slight change, which means that the abattoirs can handle other livestock products, although not cattle intended for the domestic market as well as for the export market. I know that the change has been welcomed by the industry.
Miss Anne McIntosh: I ungrudgingly congratulate the Minister on delivering the deal, but may

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I add a note of caution on the timetable? If the Commission is to be involved, my understanding is that the new Commission will not take control until September because there are a series of European parliamentary hearings and we have to wait for the new European Parliament to come into being.
Secondly, will the right hon. Gentleman investigate the continued importing of sub-standard pigmeat into Britain from other EU countries, which is a source of growing concern?
Mr. Brown: I have no evidence that pigmeat that does not meet our hygiene requirements is entering Britain for human consumption, but I am always willing to consider specific cases, and, if the hon. Lady wants to put a specific case before me, I shall have it examined by Department officials straight away.
There is no doubt that the Commission has competence. Today's announcement is the Commission's final step in getting the date-based export scheme up and running. My Department's inspections remain, but I am satisfied that that will not be a problem.
Mrs. Ann Winterton: On behalf of Cheshire farmers, I congratulate the Minister on his achievements and warmly welcome the lifting of the export ban on de-boned beef. However, may I impress upon the right hon. Gentleman the importance of lifting as soon as possible the ban on beef on the bone, and of the Government throwing their weight behind marketing initiatives in the future so that we can regain our position in European and world markets?
Mr. Brown: May I say to the hon. Lady without doing her any harm with her party leadership that I do not disagree with anything that she has said and intend to take all those matters forward inasmuch as it is lawful for me to do so?
Sir Robert Smith: I welcome the Minister's statement, but does he recognise that the farmers in my constituency will obviously feel even more restored when they see the beef leaving Britain for EU markets? To that end, will he reassure them that he does not regard this as the end of the crisis for them, and will attempt, where possible, to keep to the minimum the costs and burdens that they face, which competition on mainland Europe does not face?
Mr. Brown: I am very conscious of the hon. Gentleman's last point, but I am afraid that, because of the nature of the scheme, it is inevitable that costs are involved in it that will not be faced by competitors, even within the EU. It is my objective that the UK market should operate on exactly the same basis as the rest of the EU market as soon as possible. I accept that we are not there yet, but this is an important step on the journey.
As for seeing the meat off, I understand that my hon. Friend the Minister of State will almost certainly be present to wave the beef out of Britain when it leaves at the beginning of August, and perhaps this is an appropriate moment for me to pay tribute to my hon. Friend for all the work that he has put in to get the scheme up and running.
Mr. Richard Livsey: I warmly congratulate the Minister, as will the farmers in
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my constituency, which is the premier beef-producing area of Wales. The point made by Welsh Members about a dedicated abattoir is especially important now that an all-Wales co-operative has been formed for the meat industry. When the right hon. Gentleman visits my constituency to attend the royal Welsh show, will he pay particular attention to that point, because it is important that we are able to export Welsh beef direct from Wales?
Will the Minister also take note that, with the expiry of the calf scheme, cull cow values will still be immensely depressed and that the dairy industry is still being badly hit by that circumstance?
Mr. Brown: The points about the dairy industry have all been made to me and I am conscious of them, but I do not want to offer any false hope that somehow the calf processing aid scheme will be extended further. I obtained two extensions and can do no more. It comes to an end on 31 July.
The hon. Gentleman's point about a dedicated abattoir for the industry in Wales is a good one, and officials of my Department stand ready to work with the industry to help bring about that outcome if there is a will in the private sector to dedicate an abattoir to de-boned beef exports and, if it is deemed necessary, other animal processing for the domestic market.
Mr. Paul Keetch: As the representative of England's premier beef industry, may I say that the Minister's decision today will be welcomed by Herefordshire beef farmers and the wider Herefordshire rural community? Does the right hon. Gentleman recall his visit to my constituency some months ago when he and I met Mr. Peter Symonds, whose family have been breeding Hereford cattle now for well over 300 years? Does he recall hearing Mr. Symonds express the fear that some of the imported meat on our shelves does not conform to the high standards that we now have in the United Kingdom—not just for beef, but for pigmeat, poultry and other meat? Will he review food labelling again, to ensure that we can be certain that the food that we buy conforms to UK standards, which are now clearly the highest in the world?
Mr. Brown: I remember the visit very well. I thank the hon. Gentleman for the souvenir photographs that he sent me afterwards, showing three magnificent creatures, one of very high value!
Of course I accept what the hon. Gentleman says, and I shall bear it in mind.
Mr. Paul Marsden: I congratulate my right hon. Friend and his predecessor, his ministerial team and his officials on all their hard work. I think that they deserve far more credit than has been forthcoming from Opposition Members.
Will my right hon. Friend investigate the possibility of increasing the transmission of Government information directly to farmers, through the MLC, so that they know how to go about re-entering the critical beef export market which, before the ban, was worth about 30 per cent. of production?
Mr. Brown: I thank my hon. Friend for his opening remarks. He makes a good point about the need to ensure that the quite complex mechanisms through which the scheme operates are explained properly, so that individual farmers can decide whether to take part. Although the date-based export scheme is slaughterhouse-led, I hope that, as it grows, the methods of operating it will become commonplace in the livestock industry, and will facilitate a steady increase in exports from the United Kingdom. I shall certainly discuss these matters with the MLC at 5 pm today.
Mr. John Maples: On a point of order, Madam Speaker. I gave notice of it to you, and to the Foreign Office.
This morning, the Foreign Secretary held a press conference on the Falkland Islands, and published an agreement that is vital to the islands' future dealing with access for Argentine citizens and the resumption of flights from Chile—flights that were only ever cancelled as a result of the Government's incompetent handling of General Pinochet's arrest. The Foreign Secretary has not done the House the courtesy of making a statement here, either before holding the press conference or at all. This is the third occasion this week on which the Foreign Secretary has failed to come to the House. We have become used to the fact that he does not expect to have to apologise, but it seems that now he does not expect to have to explain either.
I know how much you, Madam Speaker, deplore the practice of Government announcements being made to the press before they are made to the House. I hope that you will be able to prevail on the Foreign Secretary to make a statement tomorrow.
Madam Speaker: I think that the Foreign Secretary is wise enough to know when it is right to come to the House when there is new policy or a change of
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policy. I have not been informed by any Foreign Office Ministers that they seek to make a statement on the issue to which the hon. Gentleman refers.
Mr. Paul Flynn: On a point of order, Madam Speaker. You will recall that on Monday you made a clear ruling that all Members have the "privilege and the responsibility" of taking part in all the business of the House. It appears from Prime Minister's questions today that your ruling has not reached every Member. A number of questions suggested that some Members representing Scotland and Wales were "half' Members of Parliament, and should not take part in discussions and decisions on certain matters. Do you agree, Madam Speaker, that that could come about only as a result of the establishment of an English Parliament? Will you consider the matter further, and decide whether we need a clear written ruling to establish that all Members of this House are full Members of the United Kingdom Parliament?
Madam Speaker: I have no intention of being tedious and repetitive. What I said on Monday, or whenever it was, stands.
Mr. Michael Connarty: On a point of order, Madam Speaker. As the convener of the much-maligned Scottish group of Members of Parliament, I am, in fact, raising a different point of order. Have you had any indication that the Secretary of State for Scotland will come and bring the House up to date on the Kvaerner negotiations? We learn from today's newspapers that the Kvaerner shipyard on Clydeside has been saved, but further negotiations are needed to reverse the 241 redundancy notices that were given yesterday. Is there any way in which the matter can be brought before the House? That would enable me to commend the work of the Secretary of State for Scotland in saving the yard.
Madam Speaker: I have not been informed that any statement is to be made today. All Members who raise points of order about statements would be wise to look at the annunciator. It is always printed there by about noon, so that we are all aware of what is happening in the House.

Children's Rights Commissioner
4.10 pm
Mr. Hilton Dawson: I beg to move,
That leave be given to bring in a Bill to provide for the establishment of a children's rights commissioner to promote the rights and interests of children in England; to make provision for the powers and duties of the commissioner; and for related purposes.
The Government can be a great Government for children. We have commitments to end child poverty; we have the establishment of a national voice for children in care—a new national organisation for young people in care; and regional children's rights officers have been proposed for children who live away from home.
We have commitments on raising educational standards; we have commitments on the integration of children with disabilities; we have new measures to stop paedophiles from working with children; we have new overseas adoption laws; and we have new protection for children who give evidence in criminal proceedings on physical and sexual abuse. Quality protects, new deal and sure start—details were published yesterday—bridge the gap for 16 to 18-year-olds and are powerful evidence of the Government's commitment.
I could spend the next nine minutes listing the commitments, but they will be great developments only when they really seem to work, and they will really work only when we recognise the fundamental issue at the heart of all policy relating to children: the powerlessness of all children.
After all, children have no vote. They have hardly any voice. There are many worthy initiatives, but a voice depends on the good work and good will of thousands of people in different situations. Often, those people are officials working in the most obscure parts of the land—and often they are overworked—in situations where standards can differ. They are employed by authorities that can change, whose priorities can shift and whose good intentions can be dissipated under the weight of events. I know that because I have been there and worked in those situations. All hon. Members know that powerless people are often overlooked. Even in a well-developed democracy—even in the best-developed democracy—powerless people are easily ignored, unless they have a strong, independent, statutory voice at the heart of Government.
A children's rights commissioner is needed to promote consistently the rights and interests of all children everywhere in the land, ensuring the implementation of the fundamental human rights that are embodied in the United Nations convention on the rights of the child. Such a commissioner is needed to enable the voices of all children to be heard in government, in local authorities, in statutory voluntary agencies and in private bodies.
When roads, public transport schemes, leisure facilities and all the mundane realities of development are proposed, more and more adults are, thankfully, involved in consultation. Surely, at this stage in our national life, we should consider whether children might have a unique perspective and something important to say about the issues that affect their lives so dramatically.
A children's rights commissioner is needed to ensure that children are aware of their rights and that they are able to complain. We protect children when we give them
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real opportunities to complain. "Children's rights commissioner" is a grand title for a very simple concept. All I am urging is that the Government should take a clear, hard and honest view of a fundamental problem, and take a common-sense approach to dealing with it.
Let us have an identified person who could draw attention to the impact on children of new Government policy—someone who could raise important issues in an annual report; assist with development of structures enabling children to participate ever more in the life of the community and in decision making; ensure that current complaint systems work well for everyone; and be the identified and identifiable person of last resort when a child knows that things are going wrong. That person should be the humane, sensible and knowledgeable person who could absolutely raise the roof when it matters. He or she should be someone steeped in sound principles, who listens to children and is fearless in standing up with and for children and young people.
A good Government can do so many things, but a great Government will heed the voices of children, and hear the sound advice of more than 100 child care organisations. It would take far too long to list all those organisations, but they include the National Society for the Prevention of Cruelty to Children, UNICEF, Save the Children, Barnardos and the Royal College of Paediatrics.
A great Government would also implement the recommendations of the all-party Select Committee on Health, and learn from the success of similar posts—in Norway, Sweden, Austria and New Zealand. A great Government would recognise the strength of feeling on the issue among hon. Members on both sides of the House, including our valiant Independent Member.
The proposal is the epitome of concern for human rights and joined-up government. It is the key to ensuring that worthy intentions in respect of children really deliver the goods. The issue will not go away from the House. Whatever happens to the Bill, the issue will remain, and it will resonate in the Welsh Assembly, the Scottish Parliament and, I very much hope, in the Northern Ireland Assembly, too.
A children's rights commissioner could transform the way in which we understand children and childhood. A commissioner could transform our democracy for the citizens of the future. The creation of such a post is profoundly important and would be profoundly good. I challenge a really great Government to accept the concept, and to implement it now.
Question put and agreed to.
Bill ordered to be brought in by Mr. Hilton Dawson, Mr. Martin Bell, Rev. Martin Smyth, Mr. David Hinchliffe, Mrs. Llin Golding, Mrs. Joan Humble, Mr. Andrew Rowe, Mr. Elfyn Llwyd, Mr. Bob Russell, Mr. Donald Gorrie, Ms Julie Morgan and Mr. Jonathan Shaw.

Children's Rights Commissioner
  CHILDREN'S RIGHTS COMMISSIONER
  Mr. Hilton Dawson accordingly presented a Bill to provide for the establishment of a children's rights commissioner to promote the rights and interests of children in England; to make provision for the powers and duties of the commissioner; and for related purposes: And the same was read the First time; and ordered to be read a Second time on Friday 23 July, and to be printed [Bill 139].
Orders of the Day
  Pollution Prevention and Control Bill [Lords]
  As amended in the Standing Committee, considered.
  Pollution Prevention and Control Bill [Lords]
    New Clause 1

      TIME-LIMITED DISPOSAL OR WASTE MANAGEMENT LICENCES
      '.—(1) Where

      (a) a disposal licence under section 5 of the 1974 Act became a site licence by virtue of section 77(2) of the 1990 Act (conversion, on the appointed day, of existing disposal licence under section 5 of the 1974 Act into a site licence),

      (b) the licence has expired at a time ("the time of expiry") falling before the day on which this Act is passed but not earlier than the appointed day,

      (c) the licence authorised the carrying on of activities in or on land in England or Wales, and

      (d) relevant activities have taken place at a time falling not more than one year before the day on which this Act is passed,

      the licence shall (subject to subsection (7)) for all purposes be deemed not to have expired but to have become, at the time of expiry, a site licence continuing in force in accordance with section 35(11) of the 1990 Act.
      (2) Subsection (3) applies where

      (a) a disposal licence under section 5 of the 1974 Act expired at a time ("the time of expiry") falling before the appointed day (so that it was not converted into a site licence by section 77(2) of the 1990 Act),

      (b) the licence authorised the carrying on of activities in or on land in England or Wales, and

      (c) relevant activities have taken place at a time falling not more than one year before the day on which this Act is passed.

      (3) The licence shall (subject to subsection (7)) for all purposes be deemed—

      not to have expired, and

      to have been subsisting on the appointed day and (accordingly) to have become on that day a site licence by virtue of section 77(2) of the 1990 Act,

      and the site licence which the licence is deemed to have become on that day shall for all purposes be deemed to have been one that continues in force in accordance with section 35(11) of the 1990 Act.
      (4) Where—

      (a) a site licence in force immediately before the day on which this Act is passed—

      (i) became a site licence by virtue of section 77(2) of the 1990 Act, and

      (ii) will expire on or after the day on which this Act is passed (if it has not previously been revoked entirely, or had its surrender accepted, under Part II of the 1990 Act), and

      (b) relevant activities have taken place at a time falling not more than one year before that day,

      the licence shall for all purposes be deemed to have become at the beginning of that day a site licence continuing in force in accordance with section 35(11) of the 1990 Act.
      (5) Where subsection (1), (3) or (4) has effect in relation to a licence, the terms and conditions of the licence as continued in force by that subsection shall, except so far as providing for the expiry of the licence and subject to subsection (6)(b) and (c), be such as were
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      in force immediately before the relevant time (unless and until varied under Part II of the 1990 Act); and "the relevant time" means—

      (a) where subsection (1) or (3) has effect in relation to a licence, the time of expiry;

      (b) where subsection (4) has effect in relation to a lcence, the beginning of the day on which this Act is passed.

      (6) Where subsection (1) or (3) has effect in relation to a license (but without prejudice to the generality of that subsection)

      (a) activities carried out during the interim period which (by virtue of subsection (1) or (3)) become authorised by the licence shall be treated as authorised at the time they were carried out (even though at that time their being carried out amounted to a contravention of section 33(1)(a) or (b) of the 1990 Act or section 3(1) of the 1974 Act);

      (b) anything done in relation to the licence before the time of expiry but purporting to take effect after that time (such as the serving of a notice under section 37(4) or 38(12) of the 1990 Act, or in pursuance of section 7 of the 1974 Act, specifying a time falling during or after the interim period) shall be treated as having had (or having) effect as if the licence had not in fact expired;

      (c) anything which during the interim period purported to be done in relation to the licence (such as a modification of the licence or the revocation, suspension, transfer or acceptance of the surrender of the licence or the carrying out of consultation, exercise of functions under section 9 of the 1974 Act or section 42 of the 1990 Act, imposition of requirements during a suspension or bringing or determination of an appeal) shall be treated as having had effect as if the licence had then been in force;

      (d) any fees which (by virtue of subsection (1) or (3)) are treated as having become payable before the passing of this Act shall be taken to have become payable at the time they would have become payable had the licence not in fact expired; and

      (e) the holder of the licence shall be treated as having been, during the interim period, an authorised person for the purposes of section 34(1)(c) of the 1990 Act.

      (7) Where subsection (1) or (3) has effect in relation to a licence, a person shall not be guilty of an offence under section 33(6) or 38(10) or (11) of the 1990 Act as a result of anything done or omitted to be done during the interim period becoming (by virtue of subsection (1) or (3)) a contravention of any condition of the licence or (as the case may be) a failure to comply with any requirement imposed under section 38(9) of the 1990 Act.
      (8) Nothing in this section affects any criminal proceedings which have been concluded before the passing of this Act.
      (9) The waste regulation authority (within the meaning given by section 30(1) of the 1990 Act) shall notify the holder of a licence affected by this section of the fact that the licence is so affected and of how it is so affected.
      (10) For the purposes of this section "relevant activities", in relation to a licence, are—

      (a) any activities authorised by the licence or, in the case of an expired licence, any which would have been authorised by it had it not expired, and

      any precautions or works required by the licence to be taken or carried out in connection with or in consequence of those activities or, in the case of an expired licence, any which would have been so required had the licence not expired.

      (11) In this section—
      "the 1974 Act" means the Control of Pollution Act 1974;
      "the 1990 Act" means the Environmental Protection Act 1990;

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      "the appointed day", in relation to a licence, means the day which in relation to that licence is (or would have been if the licence had not previously expired) the relevant appointed day for licences (within the meaning of section 77 of the 1990 Act);
      "the interim period", in connection with a licence in relation to which subsection (1) or (3) has effect, means the period beginning with the time of expiry and ending immediately before the day on which this Act is passed;
      "site licence" has the same meaning as it has in Part II of the 1990 Act by virtue of section 35(12) of that Act.'.—[Mr. Meale.]
      Brought up, and read the First time.
      4.19 pm
      The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Alan Meale): I beg to move, That the clause be read a Second time.
      Madam Speaker: With this we may discuss Government amendments Nos. 3 to 5.
      Mr. Meale: First, I want to explain that one of the deficiencies of the waste licensing scheme originally introduced under the Control of Pollution Act 1974 was that those who held licences for waste operations, such as landfill sites, could simply hand in their licences and walk away from their responsibilities. In line with the polluter pays principle, that was rectified in the revised licensing scheme introduced under part II of the Environmental Protection Act 1990.
      As the House is aware, the 1990 Act provides that a site licence remains in force until a surrender application is made to the environment agencies. What is more, it precludes the agencies from accepting surrender applications unless they are satisfied that environmental pollution or harm to human health is unlikely to occur. The issue that the new clause and the amendments address, therefore, is time-limited licences that were originally granted under the 1974 Act.
      The transitional provision in section 77(2) of the 1990 Act contains two statements on those time-limited licences. One is that they are to be treated as 1990 Act licences until they expire. The other is that they may be surrendered only in accordance with the 1990 Act. We are removing that. It is obviously anomalous to require a licence holder to apply to the environment agencies to surrender his or her licence while the time limit remains in force, but to allow him or her to walk away from his or her responsibilities when the time limit expires.
      By way of a further example showing the need for these changes, I can inform the House that a review carried out by the Environment Agency has revealed that many licences originally granted under the 1974 Act, and inherited from the former waste regulation authorities in April 1996, are subject to time limits and that, in some cases, the licences have expired without either the agency or the operator being aware of it. In some cases where the licence has expired, the sites are continuing to be operated, and of course to be supervised by the agency, as though they had valid licences. As the House is aware, it is a criminal offence to operate those sites without a licence. Therefore, the current situation is clearly unacceptable.
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      The amendments therefore have two main purposes. The first is to validate what has happened since the expiry of those licences that have already expired. The second is to ensure that all licences—those that have expired and those that are subject to time limits that will expire in future—are subject to the surrender provisions of the 1990 Act. In simple terms, that means removing the time limits in licences that have not yet expired.
      As I said, the main considerations are the application of the polluter pays principle and the need to ensure that the environment and human health are properly protected. Those objectives could not be achieved if, on the basis of time limits originally set under the 1974 Act, the operators of landfill sites and toxic waste treatment plants could now walk away from their responsibilities. In the Government's view, the balance falls in favour of removing those time limits and ensuring that the environment and human health are properly protected.
      Mr. Damian Green: It is unusual for such a substantial new clause to be introduced at this late stage of a Bill's passage, so I am grateful to the Minister for kindly explaining privately, in advance of the debate, the purpose of both it and the amendments. However, I have several questions about the need for the new clause and the regulations to which it gives rise. I should be grateful if he would address those when he winds up the debate.
      As the Minister explained, the new clause was tabled because it had been discovered that the Environment Agency and many operators of sites did not know that they were operating illegally and had been doing so for some years. I should be grateful if the hon. Gentleman would tell the House when that fact came to light. Why did it take the Environment Agency so long to discover that illegal operation?
      What procedures does the agency have to check the validity of licences? Clearly, the House will want to know that this problem will not happen again. Can we be reassured that every existing licence will be covered, and that the operator and the agency have a clear idea of the timetable under which the licence will be operational? Have they set in train some kind of warning system to enable site operators to know when their licences may be about to run out?
      Does the Environment Agency have the resources to implement the new system that the new clause and the consequential amendments will produce? Clearly, there has been a failure in the system, but it is more important today for the House to consider how we avoid a similar failure in the future. One of the things that will have to happen if the Environment Agency is not to go down the same route again is to ensure that it has adequate resources to cope.
      Mr. James Gray: Is my hon. Friend concerned that, under the new regime, the number of sites to be licensed will increase from 2,000 to 6,000, and that many of the 4,000 new sites will be small businesses, farmers and others who may not be all that sophisticated in administrative terms? Is he concerned that they might also fall through the net?
      Mr. Green: My hon. Friend makes a good point. The agency must be up to the mark in its existing activity in this area—which it has not been up to now. It will have

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      an extra load put upon it by the extra number of sites that will be included. As my hon. Friend rightly says, many of those will be small businesses or farmers who may not be particularly sophisticated in dealing with paperwork. It is all the more important that the Environment Agency knows that it has the system and the resources to cope with the new burden that we will put on it.
      Of the 202 licences which have expired, are there any instances where the site operator has, not unreasonably, walked away and shut up shop? He may have thought that the licence had expired and, therefore, that nothing else could happen legally. Are there instances of anyone walking away, leaving a hole to be filled?
      The Minister has said that one of the reasons for the new clause and the amendments is to validate past activities. I am not clear from the clause, or from the Minister's helpful letter, whether they also validate the past inactivity of people who may not have fulfilled all their obligations in closing down a site—quite inadvertently. Will those people be liable for prosecution?
      My underlying point is the extreme delicacy of introducing retrospective legislation. Clearly, this clause is well intentioned and I accept the Minister's good faith. But however we wrap it up, it is retrospective legislation, and we should tread extremely warily when we go down that route. Will anyone be liable to any fees, penalties or other obligations under the new clause which they would not be subject to were the clause and amendments not to pass? If so, the House should pause at that point.
      As a matter of principle, we should be reluctant to endorse retrospective legislation which imposes any new obligations, particularly if, as my hon. Friend the Member for North Wiltshire (Mr. Gray) has pointed out, some of the recipients are small businesses. It is clear from what the Minister said that anyone who has got caught up in this is likely to have been so inadvertently and cannot be blamed.
      The new clause makes it clear that it will not affect any criminal proceedings that have been concluded before the Act comes into force. Are there any on-going proceedings that would be affected? Have there been prosecutions for non-compliance with a licence that the Environment Agency and the person operating it wrongly thought to be in force? Has the Minister considered the legal complications involved if someone had apparently not complied with the terms of a licence that had in fact already expired? The Environment Agency would be vulnerable to judicial review.
      4.30 pm
      Perhaps most importantly, what changes will be made in the Environment Agency to ensure that such a mistake does not happen again? It is clearly embarrassing for all involved that the loophole has emerged. It is serendipitous that the House is proceeding with a Bill that allows that loophole to be closed relatively easily. The Bill and the new clause give extra powers to regulators such as the Environment Agency, and I am sure that the House will want to know that the agency's processes have been improved to ensure that no more loopholes appear.
      Mr. Tom Brake: I, too, thank the Minister for writing to me in advance explaining
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      the reasons for the new clause. It is obvious that the loophole must be closed, so my party will support the new clause. Waste operators must not be allowed to walk away from their responsibilities because of a drafting error.
      I am surprised that the loophole was missed. It may be an unfair question to ask the Minister, because he was not responsible, but why were 12 per cent. of the licences simply forgotten about? Did something happen back in 1990 to cause that? As the hon. Member for Ashford (Mr. Green) said, why has it taken so long to identify the problem?
      I look forward to the Minister's response to the question about prosecution for inadvertent noncompliance. That is an interesting point. I understand from his office that there have been no cases, but I would like him to confirm that.
      Mr. Meale: I am grateful to the hon. Members for Ashford (Mr. Green) and for Carshalton and Wallington (Mr. Brake) for their questions, which clearly need answers before we proceed.
      For the benefit of those who do not know the full facts about the number of licences around, the latest figures are that there are 7,353 licences in England and Wales, 202 of which, as the hon. Member for Ashford rightly said, have expired but are being treated as though they were still in force, and 677 of which will expire in the future. That means that 879 licences—12 per cent. of the total, as the hon. Member for Carshalton and Wallington said—will be subject to the effects of the new clause and the amendments. There is no problem with expired licences in Scotland, but there may be some licences—estimated to be fewer than 100—with time limits that may expire in the future.
      I was asked about retrospection and whether the new clause would be unfair on businesses. I repeat that it is a criminal offence to dispose of waste without a waste management licence. In cases in which a business has been disposing of waste after the expiry of its licence, the new clause will validate those activities and remove the threat of criminal liability to both the licence holder and to third parties who have transferred waste in good faith.
      I was also asked why the loophole has come to light now. It did so because we now have a national body, the Environment Agency, which can identify national issues such as this. Before the establishment of the Environment Agency in April 1996, there were 83 separate waste regulation authorities in England and Wales. As soon as the issue came to light in one of its areas, the agency carried out an urgent review to establish the national scale of the problem. The chairman of the agency informed the Department of the results of that review on 19 May. We considered carefully the implications, and our conclusion was that there was a serious problem that needed to be resolved during the passage of the Bill.
      The hon. Member for Ashford also asked about site operators and whether the new clause would mean that they would be able to abandon their sites and walk away from their responsibilities. On the contrary, the purpose of the new clause is to apply the polluter pays principle and, by doing so, to ensure that all licences are subject to provisions under the Environmental Protection Act 1990. Under section 39 of that Act, licence holders must apply to the Environment Agency to surrender their licences.

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      The agency is precluded from accepting that surrender unless it is satisfied that environmental pollution or harm to human health is unlikely to occur.
      I was asked whether the problem was the Environment Agency's fault. While the Government recognise the difficulties faced by the agency in the past three years, it is a matter of concern to us that the situation arose. We have made those concerns known to the chairman of the agency and it is also our intention to require the agency to review all the affected licences within the next 12 months to ensure that they are all fully up to srcatch.
      The question was raised of reimbursement of the charges that were levied. We do not agree that that will be necessary, and legal advice obtained from the Environment Agency is that a right to repayment of charges may arise if we do not enact the new clause. I repeat that even though the licences were not in place, the inspection formula was, and all the sites were being examined during the whole period.
      I was also asked about prosecutions by the agency in connection with expired licences. We have no uncompleted criminal proceedings and no completed proceedings.
      Mr. Harry Barnes: I apologise for having missed my hon. Friend's initial speech, but I was in Committee. I understand the point that there have been no prosecutions of people for not having site licences in the past. Have there been any prosecutions for assumed violations of site licences that were not in place? Is it possible for the House, perhaps through the Library, to obtain information about the 202 sites involved?
      Mr. Meale: So far, the agency's review has revealed no prosecutions on the basis of expired licences, nor any penalties levied. The new clause is retrospective and would apply in such cases.
      The hon. Member for North Wiltshire (Mr. Gray) asked about the burden that the new clause would place on businesses. The necessary legislation was already in place and the agency carried out inspections thoroughly throughout the period. The amendments will ensure that those inspections are validated and that the process is continued.
      Finally, I can tell the hon. Member for Ashford that the Government are confident that the Environment Agency provides a system that can deal with these matters fairly and justly and ensure that the public are protected.
      Question put and agreed to.
      Clause read a Second Time, and added to the Bill.

    Schedule 1

      PARTICULAR PURPOSES FOR WHICH PROVISION MAY BE MADE UNDER SECTION 2
      Mr. Meale: I beg to move amendment No. 1, in page 7, line 41, after 'information', insert '—
      (i)'.
      Mr. Deputy Speaker (Mr. Michael J. Martin): With this, it will be convenient to discuss Government amendment No. 2.
      Mr. Meale: During the Committee proceedings on the Bill, we had an excellent debate about the public's right
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      to full information about the pollution in their midst. That was in response to amendments tabled by my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) and by the hon. Member for Carshalton and Wallington (Mr. Brake).
      Pollution is an intrusion. For the moment, it is impossible and unrealistic to eliminate it altogether, but the least that people can expect is to be fully informed about exactly what the factory down the road is putting into their community, street and homes.
      In May, we launched the Environment Agency's new pollution inventory. People now have access to up-to-date information about emissions from the installations that the agency regulates under the integrated pollution control regime. It is proving extremely popular: the inventory website is receiving an average of 700 to 800 visits a week.
      It is our ambition that it should be even more informative. I know from our debate in Committee and from the correspondence that the Department has received that there is a great deal of support among Labour and Liberal Democrat Members for expanding the inventory.
      The Environment Agency will shortly be consulting on extending the inventory to cover the landfill sites and sewage works that it regulates. I am pleased to announce that my Department will be consulting on the possibility of including information on emissions from the 13,000 or so installations that local authorities regulate under the local air pollution control system.
      Mr. Green: The Minister says that information will be gathered from the 13,000 sites regulated by local authorities. That will add another burden on those authorities, so do the Government propose to give them any money to meet the extra costs involved?
      Mr. Meale: The hon. Gentleman and I know that Ministers, regardless of how lowly or powerful they are, cannot give such cost commitments. However, we are confident that the mechanism that is in place will allow local authorities to regulate under the local air pollution control system, and to generate the information that we require so that people can access it centrally.
      4.45 pm
      We shall not prejudge the consultation's outcome, but shall listen carefully to what industry says about costs or any other implications. The Bill contains the power to cover additional installations, but does not permit information to be gathered on energy use and the destination of waste from installations. Those matters are the subjects of amendments Nos. 1 and 2, which are enabling provisions.
      Energy use is an area already crowded with policy initiatives, and we hesitate to add more without careful thought. A great deal of information will be produced because of the energy efficiency requirements of the new integrated pollution prevention and control regime. There are negotiated agreements on energy use and it is possible that carbon trading regimes may be established. It is by no means certain whether further measures for information gathering will be necessary, but it would be sensible to take the opportunity that the Bill provides to enable such information to be gathered in future.
      Mr. Green: Is the Minister saying that the amendments are being inserted in the Bill at this late stage even though

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      the Government think that they may not be necessary? Are the Government tacking an enabling power on to the Bill without having any intention of implementing it? I may have misunderstood the Minister, but that is what he seemed to say.
      Mr. Meale: No. The amendments are enabling amendments. It is better to include any expansion in the scope of the inventory in the Bill so that we can achieve it if possible. Expansion would be considered only after thorough consideration of the costs and benefits and after full consultation. Our key concern will be to place the minimum burden on those providing information. We would not expect businesses to have to track the journey of their waste through its multifarious stages.
      We are keen to promote continued development of the pollution inventory, but at a sensible pace and after proper dialogue. Our first priority is to consult on broadening the scope to cover landfill sites, sewage works and local authority-regulated installations. We may later consider including energy and waste information. The Government are committed to modernising Britain by involving people more closely in decisions that affect their lives and by changing the culture of secrecy that has prevailed until now. Access to information about pollution is vital to a fair, modern and open society. In the United States, it has become a powerful force for environmental improvement, and the same will be true in the UK when the Bill becomes law.
      Mr. Green: The Minister's introduction has left me more alarmed than I was when I read the amendments. It is a shame that the hon. Member for Stoke-on-Trent, North (Ms Walley) is not here because the amendments seem to be a partial victory for her. In Committee, she tabled a more detailed amendment proposing a long list of new obligations on firms to provide information. The Minister for the Environment instructed his troops to vote against that amendment, but said that he would consider it sympathetically. I had looked forward to hearing whether the hon. Lady would be satisfied by the Government's partial move in her direction. Perhaps the hon. Member for Carshalton and Wallington (Mr. Brake) will tell us whether he is satisfied.
      The Minister introduced a new and disturbing point in his remarks. The Government appear to be including in the Bill powers that may or may not be worth while and may or may not place onerous responsibilities on business. That flatly contradicts what the Minister for the Environment said repeatedly in Committee, which was that trying to define matters too closely on the face of a Bill such as this was bad practice and would lead to inflexibility.
      The Opposition tabled various sensible amendments to tone down the powers of the Secretary of State. We were constantly told that putting such provisions on the face of the Bill would lead to inflexibility and clog up parliamentary proceedings. Having insisted on that, it is not good enough for the Government to table amendments that would do precisely the same and add new and possibly onerous burdens on business without any particular intent, or certainly any explanation of why those are urgently needed now when they were not needed during any of the previous lengthy stages in the passage of this Bill.
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      During the passage of the Bill, we discussed the necessary balance for the provision of information to enable an intelligent debate about environmental issues. The idea that the more information was provided the more likely we were to avoid some of the more hysterical debates that sometimes arise on environmental matters was certainly non-controversial on both sides of the Committee. Ministers agreed that one needed a balance and there was not simply a right to completely free information. Indeed, the Government introduced a clause to allow commercial confidentiality to be used as a reason for not providing information in certain circumstances.
      When the Minister replies, I want him to consider the costs that will be put on business and, possibly, agricultural and other operators by gathering the information that is required under the amendments. Amendment No. 2 would gather information
      "on energy consumption and on the efficiency with which energy is used".
      Those will be interesting statistics and, in the long run, they will no doubt be useful. However, are we expecting everyone who runs a pig farm to gather that sort of information? While that will not be an onerous burden for big and sophisticated businesses, it could be extremely onerous for smaller businesses. It is not clear from what the Minister said that he has done any sensible cost-benefit analysis of what those provisions would involve and of the full extent of the obligations. The efficiency with which energy is used can cover a multitude of measurements. It is not clear from the Bill how much detail will need to be provided.
      Similarly, the Government will be entitled to information
      "on waste within the meaning of the regulations and on the destinations of such waste".
      Does that mean the immediate, the ultimate or all the intermediate destinations?
      Since one of our objections to the Bill throughout has been that it would give Ministers powers that are too sweeping, the amendment is a step in the wrong direction. This is the Bill at its worst. Presumably, to give some sort of sop to the hon. Member for Stoke-on-Trent, North as I said, the Government have decided to add a little more information. They have not thought through what that will mean in practice; still less are they defining the practical effects.
      The Minister has said that these are simply enabling provisions, but enabling provisions that do not appear to be based in anything concrete and do not have any particularly urgent purpose can be dangerous. It is deeply regrettable that he has introduced such an amendment at this late stage.
      Mr. Brake: I speak in favour of the amendments that the hon. Member for Stoke-on-Trent, North (Ms Walley) and I drafted. Obviously, I am disappointed that, in response to the question posed by the hon. Member for Ashford (Mr. Green), the Minister has not accepted the full-blown amendment, but I consider it a partial victory that the Government have taken on board some elements of that amendment. That will widen the scope of the available information about emissions, to include, as the amendment suggests, "energy consumption" and "efficiency". At a time when we are discussing climate change and the reduction of carbon dioxide, it is most important that we know those figures.

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      The amendment will help to identify waste and its destination. The Government are—or should be—pushing hard to reduce the amount of waste that is generated, and to reuse or recycle waste where possible. The information will be helpful in that respect. The information is needed and it will be used. I hoped that the amendment would receive the support of Members on both sides of the House, but that appears not to be the case. I shall support the amendment.
      Mr. Gray: I share the concern expressed by my hon. Friend the Member for Ashford (Mr. Green) about some of the implications of the amendments. They fulfil some of the primary requirements of all new Labour measures—to be centralising, to collect information and to be bureaucratic. They go a long way towards providing information that statisticians and the Office for National Statistics may find useful in some future analysis. However, they will not do much to help reduce pollution in the United Kingdom, which is, presumably, the main purpose of the Bill.
      There is no upside, but the amendments seem to have some potential downsides. We are talking about quite small businesses, as I pointed out in my earlier intervention, which may be relatively unsophisticated. Some of the pig farmers and chicken farmers in my constituency will be affected by the Bill; they will face significant bureaucratic problems in making available to the Government every piece of information relating to what they have done with the products of their farms. I will not give a graphic account of those products on this occasion. As a result of the Bill, farmers, who may be on their uppers, will already be faced with some bureaucratic interference. The amendments will mean that they have to undertake more paperwork for no particular reason.
      We have just debated new clause 1, which tries to put right the anomaly that 12 per cent. of all sites that should have been licensed have not been licensed. The point was made that the measure will affect relatively unsophisticated businesses, which—through no fault of their own—have apparently failed to license their site, or have failed to renew their licence. We are now discussing the establishment of a new, bureaucratic and centralised regime that will require those same businesses to produce complicated information for no purpose, apart from satisfying the curiosity of the Office for National Statistics.
      There is no upside, but potentially a large downside to the amendments. In that context, I am concerned about the possible costs. Accountants and bureaucrats of all sorts will be involved. People will have to be employed—perhaps lawyers. There will be costs involved in the production of the information. More important, it is worrying that if businesses fail to provide—through some slip, or through overwork, or lack of sophistication—the information that is demanded of them, there might be penalties. What will those penalties be? In years to come, my constituents may find that, if they fail—through no fault of their own—to comply with the requirements of the Bill, they will be taken to court and penalised. That may cost them significant amounts. Unless the Minister can explain the measures more clearly than he did in his introductory remarks—which I found rather difficult to follow—it seems that they will result in considerable costs for my constituents.
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      The amendments will achieve very little. I hope that the Minister will be able to advise the House of the purpose of the amendments and of the safeguards for small businesses—especially the chicken and pig farmers in my constituency who may be affected.
      5 pm
      Mr. Meale: I shall respond to hon. Members' queries, the first of which came from the hon. Member for Ashford (Mr. Green), who is leading the debate for the Opposition. He asked why we are introducing a detailed amendment at this late stage. The Bill has always allowed for the extension of the pollution inventory. The amendments respond to specific points made by hon. Members in Committee and cover information about energy and waste.
      The hon. Gentleman implied that the pollution inventory simply piles extra burdens on businesses. We are discussing cases in which owners of businesses say to their neighbours, "In the interests of my business, I shall have to put this substance into your home." I accept that, to a certain extent, we tolerate that practice as the price of living and working together as a community. However, it is clearly unacceptable for the same business owners to say that it is too much of an effort for them to be courteous enough even to explain what the substance is. The pollution inventory is a fair and proper initiative which should be introduced.
      Mr. John Gummer: I am striving to understand the Minister. I agree with him in principle, so I am not being antagonistic, but if the pollution inventory is so important, why did not the Government originally include it in the Bill? I have come late to the debate, and I apologise to the House for that. [HON. MEMBERS: "Oh."] Well, when the Government table such an amendment this late in the proceedings, many hon. Members who are concerned that they should understand it have to go to a great deal of trouble to be present. Will the Minister explain why the pollution inventory is being included in the Bill so late in the proceedings if it is as important as he says?
      Mr. Meale: It is very simple. We have responded to hon. Members from both sides of the House who urged us, in Committee, to take that action. We listened, we learned and we adopted that proposal.
      I turn now to the accusation that the benefits do not justify the costs. Information about energy use could be of great benefit. For example, it could bring best practice to the fore and promote the spread of energy efficiency measures, which would cut costs for businesses and reduce greenhouse gas emissions. Similarly, more information about quantities and patterns of waste disposal can only help our efforts to minimise waste, thereby saving money and improving our environment.
      Any proposal to use the powers would proceed only in the light of a comprehensive cost-benefit analysis and full consultation with industry and, of course, other interested groups. As I said earlier, we shall proceed with the expansion of the inventory at a sensible pace.
      Mr. Green: With the leave of the House, Mr. Deputy Speaker, I shall speak again. I am impelled to do so by the Minister's non-explanation for the amendments. He

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      said simultaneously that they are tremendously important and will help to cut greenhouse gas emissions and have various other effects, which Conservative Members think desirable, and that a cost-benefit analysis will happen at some unspecified time in the future.
      It is not appropriate for Ministers to come to the House with legislation and say vaguely that it will be helpful to business, increase the provision of information and benefit the environment, and then to say casually, "At some time in the future, we shall try to gather the facts that may or may not back up the assertions that we have just made."
      Ministers are doing things in completely the wrong order. Not only are the amendments being introduced at a peculiarly late stage in our considerations of the Bill, but Ministers have had several weeks since the Committee proceedings to respond to the suggestions made to them, and they appear not to have gone to the trouble of gathering any facts to back up the sop that they giving to the Liberal Democrats and Labour Back Benchers.
      The explanation for the amendments is inadequate, and I invite the House to vote against them.
      Question put, That the amendment be made:—
      The House divided: Ayes 335, Noes 132.

      Division No. 239]

      [5.4 pm

      AYES

      Adams, Mrs Irene (Paisley N)

      Burgon, Colin

      Ainger, Nick

      Burnett, John

      Ainsworth, Robert (Cov'try NE)

      Butler, Mrs Christine

      Alexander, Douglas

      Campbell, Alan (Tynemouth)

      Allan, Richard

      Campbell, Mrs Anne (C'bridge)

      Allen, Graham

      Campbell, Rt Hon Menzies (NE Fife)

      Anderson, Donald (Swansea E)

      Ashdown, Rt Hon Paddy

      Campbell-Savours, Dale

      Ashton, Joe

      Atherton, Ms Candy

      Cann, Jamie

      Austin, John

      Caplin, Ivor

      Ballard, Jackie

      Casale, Roger

      Banks, Tony

      Caton, Martin

      Barnes, Harry

      Cawsey, Ian

      Barron, Kevin

      Chapman, Ben (Wirral S)

      Bayley, Hugh

      Chaytor, David

      Beard, Nigel

      Chidgey, David

      Beith, Rt Hon A J

      Clapham, Michael

      Bell, Martin (Tatton)

      Clark, Rt Hon Dr David (S Shields)

      Bell, Stuart (Middlesbrough)

      Clark, Dr Lynda (Edinburgh Pentlands)

      Benn, Rt Hon Tony (Chesterfield)

      Bennett, Andrew F

      Benton, Joe

      Clark, Paul (Gillingham)

      Bermingham, Gerald

      Clarke, Charles (Norwich S)

      Berry, Roger

      Clarke, Rt Hon Tom (Coatbridge)

      Best, Harold

      Clarke, Tony (Northampton S)

      Betts, Clive

      Clelland, David

      Blackman, Liz

      Coaker, Vernon

      Blunkett, Rt Hon David

      Coffey, Ms Ann

      Bradley, Keith (Withington)

      Cohen, Harry

      Bradley, Peter (The Wrekin)

      Coleman, Iain

      Brake, Tom

      Colman, Tony

      Brand, Dr Peter

      Connarty, Michael

      Breed, Colin

      Cook, Frank (Stockton N)

      Brinton, Mrs Helen

      Brown, Rt Hon Gordon(Dunfermline E)

      Corbett, Robin

      Cotter, Brian

      Brown, Rt Hon Nick (Newcastle E)

      Cousins, Jim

      Brown, Russell (Dumfries)

      Cox, Tom

      Browne, Desmond

      Crausby, David

      Buck, Ms Karen

      Cryer, Mrs Ann (Keighley)

      Burden, Richard

      Cryer, John (Hornchurch)

      432

      Cummings, John

      Hughes, Ms Beverley (Stretford)

      Cunliffe, Lawrence

      Hughes, Kevin (Doncaster N)

      Cunningham, Rt Hon Dr Jack(Copeland)

      Humble, Mrs Joan

      Hurst, Alan

      Cunningham, Jim (Cov'try S)

      Hutton, John

      Darling, Rt Hon Alistair

      Illsley, Eric

      Darvill, Keith

      Jackson, Helen (Hillsborough)

      Davey, Valerie (Bristol W)

      Jamieson, David

      Davidson, Ian

      Jenkins, Brian

      Davies, Rt Hon Denzil (Llanelli)

      Johnson, Alan (Hull W & Hessle)

      Davis, Terry (B'ham Hodge H)

      Johnson, Miss Melanie(Welwyn Hatfield)

      Dawson, Hilton

      Dean, Mrs Janet

      Jones, Rt Hon Barry (Alyn)

      Dismore, Andrew

      Jones, Mrs Fiona (Newark)

      Dobbin, Jim

      Donohoe, Brian H

      Jones, Helen (Warrington N)

      Doran, Frank

      Jones, Ms Jenny (Wolverh'ton SW)

      Dowd, Jim

      Drew, David

      Jones, Jon Owen (Cardiff C)

      Drown, Ms Julia

      Jones, Dr Lynne (Selly Oak)

      Dunwoody, Mrs Gwyneth

      Jones, Martyn (Clwyd S)

      Eagle, Maria (L'pool Garston)

      Jones, Nigel (Cheltenham)

      Edwards, Huw

      Kaufman, Rt Hon Gerald

      Efford, Clive

      Keeble, Ms Sally

      Ellman, Mrs Louise

      Keen, Alan (Feltham & Heston)

      Ennis, Jeff

      Keen, Ann (Brentford & Isleworth)

      Etherington, Bill

      Keetch, Paul

      Fearn, Ronnie

      Kelly, Ms Ruth

      Field, Rt Hon Frank

      Kemp, Fraser

      Fisher, Mark

      Khabra, Piara S

      Fitzpatrick, Jim

      Kidney, David

      Fitzsimons, Lorna

      King, Andy (Rugby & Kenilworth)

      Flint, Caroline

      King, Ms Oona (Bethnal Green)

      Flynn, Paul

      Kumar, Dr Ashok

      Follett, Barbara

      Ladyman, Dr Stephen

      Foster, Rt Hon Derek

      Lawrence, Ms Jackie

      Foster, Don (Bath)

      Laxton, Bob

      Foster, Michael Jabez (Hastings)

      Lepper, David

      Foster, Michael J (Worcester)

      Leslie, Christopher

      Foulkes, George

      Levitt, Tom

      Fyfe, Maria

      Lewis, Ivan (Bury S)

      Galloway, George

      Liddell, Rt Hon Mrs Helen

      Gapes, Mike

      Linton, Martin

      Gardiner, Barry

      Livingstone, Ken

      George, Andrew (St Ives)

      Livsey, Richard

      George, Bruce (Walsall S)

      Lloyd, Tony (Manchester C)

      Gibson, Dr Ian

      Llwyd, Elfyn

      Gilroy, Mrs Linda

      Love, Andrew

      Godman, Dr Norman A

      McAvoy, Thomas

      Godsiff, Roger

      McCabe, Steve

      Goggins, Paul

      McCafferty, Ms Chris

      Gordon, Mrs Eileen

      McDonagh, Siobhain

      Gorrie, Donald

      McDonnell, John

      Griffiths, Jane (Reading E)

      McIsaac, Shona

      Griffiths, Nigel (Edinburgh S)

      McKenna, Mrs Rosemary

      Griffiths, Win (Bridgend)

      Grogan, John

      McNamara, Kevin

      Gunnell, John

      McNulty, Tony

      Hain, Peter

      MacShane, Denis

      Hall, Patrick (Bedford)

      McWilliam, John

      Hancock, Mike

      Mahon, Mrs Alice

      Hanson, David

      Mallaber, Judy

      Harris, Dr Evan

      Mandelson, Rt Hon Peter

      Healey, John

      Marsden, Gordon (Blackpool S)

      Heath, David (Somerton & Frome)

      Marsden, Paul (Shrewsbury)

      Hepburn, Stephen

      Marshall, David (Shettleston)

      Heppell, John

      Marshall, Jim (Leicester S)

      Hesford, Stephen

      Martlew, Eric

      Hewitt, Ms Patricia

      Maxton, John

      Hill, Keith

      Meale, Alan

      Hodge, Ms Margaret

      Merron, Gillian

      Hood, Jimmy

      Michie, Bill (Shef'ld Heeley)

      Hopkins, Kelvin

      Michie, Mrs Ray (Argyll & Bute)

      Howarth, George (Knowsley N)

      Milburn, Rt Hon Alan

      Howells, Dr Kim

      Mitchell, Austin

      Hoyle, Lindsay

      Moffatt, Laura

      433

      Moonie, Dr Lewis

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Moran, Ms Margaret

      Morgan, Alasdair (Galloway)

      Smith, Jacqui (Redditch)

      Morgan, Ms Julie (Cardiff N)

      Smith, John (Glamorgan)

      Murphy, Denis (Wansbeck)

      Smith, Llew (Blaenau Gwent)

      Murphy, Jim (Eastwood)

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

      Naysmith, Dr Doug

      Snape, Peter

      Norris, Dan

      Southworth, Ms Helen

      Oaten, Mark

      Spellar, John

      O'Hara, Eddie

      Squire, Ms Rachel

      Olner, Bill

      Starkey, Dr Phyllis

      O'Neill, Martin

      Steinberg, Gerry

      Öpik, Lembit

      Stevenson, George

      Osborne, Ms Sandra

      Stewart, David (Inverness E)

      Palmer, Dr Nick

      Stewart, Ian (Eccles)

      Pearson, Ian

      Stoate, Dr Howard

      Pendry, Tom

      Strang, Rt Hon Dr Gavin

      Perham, Ms Linda

      Stringer, Graham

      Pickthall, Colin

      Stuart, Ms Gisela

      Pike, Peter L

      Stunell, Andrew

      Plaskitt, James

      Sutcliffe, Gerry

      Pollard, Kerry

      Taylor, Ms Dari (Stockton S)

      Pond, Chris

      Taylor, David (NW Leics)

      Pope, Greg

      Thomas, Gareth (Clwyd W)

      Pound, Stephen

      Thomas, Gareth R (Harrow W)

      Powell, Sir Raymond

      Timms, Stephen

      Prentice, Ms Bridget (Lewisham E)

      Tipping, Paddy

      Prentice, Gordon (Pendle)

      Todd, Mark

      Prescott, Rt Hon John

      Tonge, Dr Jenny

      Primarolo, Dawn

      Touhig, Don

      Prosser, Gwyn

      Trickett, Jon

      Purchase, Ken

      Turner, Dennis (Wolverh'ton SE)

      Quinn, Lawrie

      Turner, Dr Desmond (Kemptown)

      Radice, Rt Hon Giles

      Turner, Dr George (NW Norfolk)

      Rammell, Bill

      Twigg, Derek (Halton)

      Rapson, Syd

      Twigg, Stephen (Enfield)

      Reed, Andrew (Loughborough)

      Tyler, Paul

      Reid, Rt Hon Dr John (Hamilton N)

      Vis, Dr Rudi

      Roche, Mrs Barbara

      Wallace, James

      Rooker, Jeff

      Watts, David

      Rooney, Terry

      Webb, Steve

      Rowlands, Ted

      Welsh, Andrew

      Ruane, Chris

      White, Brian

      Ruddock, Joan

      Wicks, Malcolm

      Salter, Martin

      Williams, Rt Hon Alan (Swansea W)

      Sanders, Adrian

      Sarwar, Mohammad

      Williams, Alan W (E Carmarthen)

      Sawford, Phil

      Williams, Mrs Betty (Conwy)

      Sedgemore, Brian

      Wilson, Brian

      Shaw, Jonathan

      Winnick, David

      Sheerman, Barry

      Wise, Audrey

      Sheldon, Rt Hon Robert

      Wood, Mike

      Shipley, Ms Debra

      Wright, Dr Tony (Cannock)

      Short, Rt Hon Clare

      Wyatt, Derek

      Simpson, Alan (Nottingham S)

      Singh, Marsha

      Tellers for the Ayes:

      Skinner, Dennis

      Mr. Mike Hall and

      Smith, Angela (Basildon)

      Jane Kennedy

      NOES

      Ainsworth, Peter (E Surrey)

      Butterfill, John

      Amess, David

      Cash, William

      Ancram, Rt Hon Michael

      Chapman, Sir Sydney

      Arbuthnot, Rt Hon James

      (Chipping Barnet)

      Baldry, Tony

      Chope, Christopher

      Beresford, Sir Paul

      Clappison, James

      Body, Sir Richard

      Collins, Tim

      Boswell, Tim

      Colvin, Michael

      Bottomley, Peter (Worthing W)

      Cormack, Sir Patrick

      Bottomley, Rt Hon Mrs Virginia

      Davies, Quentin (Grantham)

      Brady, Graham

      Davis, Rt Hon David (Haltemprice)

      Brazier, Julian

      Day, Stephen

      Brooke, Rt Hon Peter

      Dorrell, Rt Hon Stephen

      Browning, Mrs Angela

      Duncan, Alan

      Bruce, Ian (S Dorset)

      Emery, Rt Hon Sir Peter

      Burns, Simon

      Evans, Nigel

      434

      Fabricant, Michael

      May, Mrs Theresa

      Fallon, Michael

      Moss, Malcolm

      Forth, Rt Hon Eric

      Nicholls, Patrick

      Fowler, Rt Hon Sir Norman

      Norman, Archie

      Fox, Dr Liam

      Ottaway, Richard

      Fraser, Christopher

      Page, Richard

      Gale, Roger

      Paice, James

      Garnier, Edward

      Pickles, Eric

      Gibb, Nick

      Prior, David

      Gill, Christopher

      Randall, John

      Gillan, Mrs Cheryl

      Redwood, Rt Hon John

      Gorman, Mrs Teresa

      Robathan, Andrew

      Gray, James

      Robertson, Laurence (Tewk'b'ry)

      Green, Damian

      Roe, Mrs Marion (Broxbourne)

      Greenway, John

      Ruffley, David

      Grieve, Dominic

      Sayeed, Jonathan

      Gummer, Rt Hon John

      Shephard, Rt Hon Mrs Gillian

      Hague, Rt Hon William

      Shepherd, Richard

      Hamilton, Rt Hon Sir Archie

      Simpson, Keith (Mid-Noriolk)

      Hammond, Philip

      Soames, Nicholas

      Hawkins, Nick

      Spelman, Mrs Caroline

      Heathcoat-Amory, Rt Hon David

      Spicer, Sir Michael

      Hogg, Rt Hon Douglas

      Spring, Richard

      Howard, Rt Hon Michael

      Steen, Anthony

      Howarth, Gerald (Aldershot)

      Streeter, Gary

      Jack, Rt Hon Michael

      Swayne, Desmond

      Jackson, Robert (Wantage)

      Syms, Robert

      Jenkin, Bernard

      Tapsell, Sir Peter

      Johnson Smith, Rt Hon Sir Geoffrey

      Taylor, Ian (Esher & Walton)

      Taylor, John M (Solihull)

      Taylor, Sir Teddy

      Key, Robert

      Tredinnick, David

      King, Rt Hon Tom (Bridgwater)

      Trend, Michael

      Kirkbride, Miss Julie

      Tyrie, Andrew

      Laing, Mrs Eleanor

      Viggers, Peter

      Lansley, Andrew

      Walter, Robert

      Letwin, Oliver

      Wardle, Charles

      Lewis, Dr Julian (New Forest E)

      Waterson, Nigel

      Lidington, David

      Wells, Bowen

      Lloyd, Rt Hon Sir Peter (Fareham)

      Whitney, Sir Raymond

      Loughton, Tim

      Whittingdale, John

      Luff, Peter

      Widdecombe, Rt Hon Miss Ann

      Lyell, Rt Hon Sir Nicholas

      Wilkinson, John

      MacGregor, Rt Hon John

      Willetts, David

      McIntosh, Miss Anne

      Wilshire, David

      MacKay, Rt Hon Andrew

      Winterton, Mrs Ann (Congleton)

      Maclean, Rt Hon David

      Winterton, Nicholas (Macclesfield)

      McLoughlin, Patrick

      Woodward, Shaun

      Madel, Sir David

      Yeo, Tim

      Major, Rt Hon John

      Young, Rt Hon Sir George

      Malins, Humfrey

      Maples, John

      Tellers for the Noes:

      Mates, Michael

      Mrs. Jacqui Lait and

      Maude, Rt Hon Francis

      Mr. Geoffrey Clifton-Brown.

      Question accordingly agreed to.
      Amendment made: No. 2, in page 7, line 41, at end insert—
      '(ii) on energy consumption and on the efficiency with which energy is used;
      (iii) on waste within the meaning of the regulations and on the destinations of such waste;'.—[Mr. Kevin Hughes.]

    Schedule 2

      CONSEQUENTIAL AMENDMENTS
      Amendments made: No. 3, in page 10, line 37, at end insert—
      ' In section 77(2) (waste disposal licences: transition from Part I of the Control of Pollution Act 1974), at the beginning insert "Subject to section (Time-limited disposal or waste management licences) of the Pollution Prevention and Control Act 1999,".'.
      No. 4, in page 10, line 39, after first 'I', insert 'of the Act'.—[Mr. Kevin Hughes.]

      Title
      Amendment made: No. 5, in title, line 2, after 'pollution;', insert
      'to make provision about certain expired or expiring disposal or waste management licences;'.—[Mr. Kevin Hughes.]
      Order for Third Reading read.—[Queen's consent, on behalf of the Crown, signified.]
      5.19 pm
      Mr. Meale: I beg to move, That the Bill be now read the Third time.
      We believe that the Bill will bring significant improvements to the system of environmental regulation. When it is approved, we shall have a more comprehensive, coherent and flexible set of regimes, and with the integrated pollution prevention and control directive it will be part of a level European playing field for all our industries and communities.
      5.19 pm
      Mr. Green: As the Bill reaches its final phase, it is a shame that the Minister could not give a more substantive account of its various phases. It is worth noting how rocky its passage has been. The Government's first attempt to introduce the Bill in another place had to be withdrawn after the Select Committee on Delegated Powers and Deregulation said that it was a skeleton Bill and inappropriate for the delegation of secondary powers. Their Lordships took the Bill radically to task.
      It would be churlish not to admit that, since then, the Bill has improved as it has gone through its various stages. It is worth the House acknowledging that, in large part, that is a tribute to the existence of an independent second Chamber, which provides a range of expertise, knowledge and experience, not least from former Members of this House, who improved the Bill as it went through the other place. We tried to improve it in Committee, but of course the Government used their majority to reject our efforts. As we have just seen, they have continued to use their majority, in some cases to make the Bill marginally worse.
      Mr. Gummer: Did my hon. Friend notice that the Government's majority was two down on what it might have been, because two senior Ministers in the Department of the Environment, Transport and the Regions were not present for the Division? Might that be because they, too, did not understand the Minister's explanation of his amendment, which was as opaque as any explanation that I have ever heard?
      Mr. Deputy Speaker: Order. We are on Third Reading, and we would not want to dwell on amendments that have already been disposed of.
      Mr. Green: I shall not dwell, Mr. Deputy Speaker. I shall merely ponder why Ministers in the Department could not turn up to vote for their own Bill.
      Mr. Meale: I feel obliged to comment on that. One of the reasons that Ministers were not present for the vote
      436
      was that they would have had to travel from Eland house in Victoria. I understand that the right hon. Member for Suffolk, Coastal (Mr. Gummer) was partly responsible for the Department moving there.
      Mr. Green: I greatly regret that London's traffic jams have become so bad under this Government that Ministers cannot get from their Department to the House to take part in an unexpected vote. That did not happen when my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) was running the Department, because traffic was running better in London then than it is now. I am grateful to the Minister for pointing that out. It is the first honest admission about transport that we have had from those on the Government Front Bench for some time—they have admitted that it has got worse under them.
      At no stage have we opposed the principle of the Bill. It was a Conservative Government who signed up to the European directive on which its good parts are based. We recognise that much pollution, particularly air-borne and water-borne pollution, can be tackled only on a supranational level. We were happy to sign up to the directive and supported the Government's intention to put it into effect at national level.
      At every stage we have sought to improve the Bill and although we have succeeded to some extent, thanks to their Lordships, we have not done enough for our own satisfaction or, more important, for those who will be most affected by it, including many of the new businesses, particularly farmers, that will be brought under its provisions.
      It is appropriate on Third Reading for me to go through our main reservations about the Bill. Perhaps the most fundamental is a constitutional objection. The Bill gives far too much disrcetionary power to the Secretary of State. Under clause 1, he can regulate
      "emissions capable of causing any…pollution."
      That is an absurdly wide power to give to a Secretary of State.
      Of course, we know that most Secretaries of State would not interpret that as widely as the Bill would allow, but it is not a principle of good legislation to write into the Bill such a wide power for a Minister. For example, naturally occurring chemicals such as radon or some dioxins are pollutants. They occur naturally in the atmosphere, but they would fall under the powers given to the Secretary of State. Is he to play God and regulate the natural world? I know that the Deputy Prime Minister has some delusions of grandeur, but I do not believe that even he would go that far. As the Bill is drafted, breathing out could be regulated by the Secretary of State as a polluting activity. I invite the Minister to consider whether this is good legislation.
      A secondary point is that too much is left to regulation, and not enough is written into the Bill. Perhaps most dangerous is the fact that, under the Bill, new criminal offences can be created through secondary legislation. That is an extremely dubious constitutional practice.
      Most people have a concept of Parliament making law and the citizens obeying the law. They believe that we in Parliament are here to discuss the details of laws and to pass laws. There is a set of law enforcement agencies that enforce them. To allow Parliament to be bypassed in the

      437
      creation of criminal offences could have serious consequences, which I hope the Government do not live to regret.
      My reservations have been strengthened by the paean to regulation offered by the Minister for the Environment on Second Reading, when he spoke lovingly of
      "a flexible, interactive form of regulation"—[Official Report, 8 June 1999: Vol. 332, c. 502.]
      He became almost lyrical about the type of regulation that the Bill would introduce.
      I believe that the right hon. Gentleman is sincerely and passionately devoted to regulating business. I shall quote his exact words, as there was some controversy between us about what he had said. He stated:
      "We do not, in principle, favour deregulation as such."—[Official Report, Standing Committee A, 17 June 1999; c. 24.]
      That is what he said and I am sure that that is what he meant. That statement clearly has wider implications, but it has particular implications for the Bill.
      We all want an integrated pollution control system, but to gain wide acceptance throughout the community such a system must be respected by those being regulated. If they think that it is unfair or arbitrary, they will object and try to get around the rules. People think that laws are fair partly because they think that the laws have been passed properly by Parliament, after discussion. The Bill allows Parliament, and this Chamber in particular, to be bypassed in the discussion of laws. In the long run, that will not contribute to a good system of integrated pollution control.
      Our second main objection is the fact that the Bill gold-plates the European directive to an alarming degree. I have already said that we signed the directive and have no objection to its being put into national law. However, we object to the fact that the Government have taken the opportunity to add wide powers to be taken by the Secretary of State through secondary legislation and in other administrative ways. We do not need such wide powers in order to implement the directive. Clause 1(1)(b) and (c) refer specifically to activities other than those listed in the directive. That is straightforward gold-plating, giving the Secretary of State wide disrcetionary powers.
      We have not yet had a convincing explanation why clause 1 is drafted so widely. This is the last chance that we shall have, so we should let the Minister explain to us why the Bill does not do what it purports to do—implement the directive—but goes much further. I should be fascinated to know why the Government think that the Bill needs to be drawn so much more widely than the directive requires.
      Many businesses have a reasonable fear that the ground of regulation is shifting in ways that will become increasingly arbitrary. For newcomers to the Bill, that is the great BATNEEC versus BAT debate—the best available technology not entailing excessive costs versus the best available techniques. There is a clear difference. We have had many fairly theological debates about whether there is a difference. Ministers have claimed at various stages that there is no difference, that there is minimal difference, that there is no practical difference, or that there is only a small difference. But the language itself is different.
      Not entailing excessive costs is a clear limit on the regulation which business can understand. BAT involves many more weasel words—that the best available
      438
      techniques should be used bearing in mind the likely costs and benefits of a measure and the principles of precaution and prevention. I should be delighted if the two meant the same thing but, as they stand, they do not. I should be pleased if the Minister took advantage of his last chance to give a detailed explanation of the practical difference between BATNEEC and BAT. It may sound rarefied, but jokes are already emerging about what that will mean.
      A parody of BATNEEC has already appeared called CATNIP—the cheapest available technology not involving prosecution. We all hope that businesses will not go down that route. There is a danger that if people do not think that a regulation is fair, they will try to evade it or bend the rules, and that would not benefit anyone. It would not benefit the law nor the environment. We want people to think that the regulations are fair so that they will obey them implicitly, both in the spirit and the letter. My real worry about the Bill is that people will think that the regulation is unfair and, therefore, seek to evade it rather than to apply it enthusiastically.
      We welcome the principles behind the Bill and acknowledge that it has been improved on its rather tortuous route through both Houses, but we still have reservations about how it will work in practice. I assure the Minister that we shall monitor its effects with great care to ensure that businesses are not over-regulated and that it achieves its underlying purpose of improving pollution prevention and control. We want to see the Bill work. We hope that it will, but we are not sure that the Government have given it the best chance of doing so.
      5.33 pm
      Mr. Gray: It is a pleasure to participate in the Third Reading debate of this flimsy little Bill. I followed its progress from its introduction in the other place to its Second Reading here but, sadly, I was unable to serve on its Standing Committee because of commitments elsewhere. However, I have watched its progress with some interest.
      It is extremely disappointing that, two and half years into this green Government's hold on power, this is the first environmental Bill that they have introduced—and what a flimsy little thing it is. The Government could have done something about air pollution in a much bigger way, or about water pollution. Their tiny Bill on water charging did not mention water purity. They have introduced no other environmental legislation. That stands in stark contrast to their claims before the general election that they would be the greenest Government ever. I think that the expression was that every piece of legislation would have a green tinge. They said that they would be greener than green, but we have seen only this flimsy little Bill, which merely enacts something which my hon. Friend the Member for Ashford (Mr. Green) rightly points out was initiated by the previous Conservative Government.
      The Conservative Government signed up to the European legislation which requires this Bill. My right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), who is in the Chamber this afternoon, was then Secretary of State for the Environment and I was one of his two special advisers. It should not be inferred from that that we necessarily agreed on the measure. I seem to recall that I advised my right hon. Friend that I thought that his proposed action would not be sensible, to which he said, "That is precisely why I intend to do it."

      439
      But, as my hon. Friend the Member for Ashford rightly said, it was the Conservative Government's idea, and this little Bill merely puts that into effect. However, it does so with some significant downsides.
      The Bill has not been thought through properly. The original Bill was badly flawed, as was pointed out in a number of procedural ways in the other place, largely by my noble Friends. Some significant amendments were made to the Bill there, so that when it came to be debated on Second Reading in this House it was marginally better. However, having gone through a lengthy and turbulent process in both Houses, the Bill still has some significant flaws, which is a real worry.
      First, my hon. Friend the Member for Ashford correctly highlighted the centralising power in the Bill. It gives the Secretary of State extraordinary powers that he has not had before. It is not exactly a Henry VIII Bill, but it is along those lines. It says, "I, the Secretary of State, know what is good for the country and for air and water pollution. I do not need to put it in the Bill and spell out what we intend with regard to regulation. I need only sit in my room and decide what will be regulated and how that will be done." Some of the centralising powers that the Secretary of State accrued to himself were watered down in the other place, which I welcome, but, none the less, the powers given by the Bill to the Secretary of State are typical of new Labour, which says, "We know best. We are the nanny state. We are the bosses. We understand what the world needs. We don't intend to discuss it with the world. We don't intend to go out to consultation. We don't intend to put details in a Bill which can be read and whose processes can be followed in Parliament."
      Ministers in their eyrie, high in the Department of the Environment, Transport and the Regions, will decide what is best and lay it down by regulation. Admittedly, on this occasion, they will do so by affirmative rather than negative resolution, but it still has the stamp of the control freak so typical of new Labour.
      In particular, the Opposition are concerned about a number of detailed effects that the Bill will have on businesses, both large, small and agricultural. Large businesses already largely comply with the Bill. I would be surprised if many did not already do so, although some may not, in which case they will doubtless welcome the strength of the Bill to remind them what they have to do. However, the number of sites to be regulated has been increased from 1,000 to 6,000, and the 4,000 extra sites are largely small businesses. They are the very businesses least able to understand the Bill and to conform with it.
      During the Bill's passage through the other place, the Federation of Small Businesses raised its severe concerns about the Bill with the Government but, far from taking note of that and inviting the representatives of the federation in to discuss the Bill's implications for small businesses, the Government failed to acknowledge the federation's letter and it has attacked the Government fundamentally for that.
      On Second Reading, I invited the Government to say what they intended to do to ensure that the Bill did not bear down particularly heavily on small businesses. I invite the Minister again today to tell us what he has done during the month or two since Second Reading to consult the Federation of Small Businesses and others.
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      I would be interested to know if they have had a meeting. It would be useful if they had. I hope that he has invited its representatives in and, if so, I welcome the fact that he listened to the Opposition's recommendation. I should like to know what he said to them and what they said to him, and what, in particular, he intends to do when the Bill becomes law to ensure that it does not bear down particularly heavily on small businesses.
      My hon. Friend the Member for Ashford raised the issue of the difference between BATNEEC, or best available technology not entailing excessive costs, and BAT, or best available techniques. I certainly feel that nothing could be more sensible than to provide the best available techniques without excessive expenditure. It must be sensible to say, "Let us work out the cost-benefit analysis. We are not going to gold-plate our environmental provisions. We want the country to be as clean as it can be, we want the air to be as clean as it can be, and we want the water to be as clean as it can be. However, we will be cautious in implementing that. We will consider how much this will cost business, and how much the economy will be damaged by the achievement of demonstrably worthwhile environmental ends."
      I enjoyed my hon. Friend's reference to CATNIP, an acronym that I shall use in the future. I do not think that the Government are considering the damaging effect on business; they are merely paying lip service to environmental benefit. Cost-benefit analysis should be involved in all environmental legislation, but I suspect that the Bill tends towards gold-plating.
      I am concerned about the effects of the Bill on certain businesses. The small businesses on which it will bear down are not belching fumes into the air. We are talking about, for instance, small landfill sites and small farmers. On Second Reading, the Minister suggested that the chicken and pig farmers that the Bill would affect were large farmers. By no means are they large farmers; they are very much towards the small end of the spectrum. The average chicken farm and the average pig farm will be affected.
      What consultations has the Minister had with bodies other than the Federation of Small Businesses—the National Farmers Union, and the Country Landowners Association—to discuss the effect on our hard-pressed farming industry? Thanks to what the Government have done to them, these people are on their knees in any event; this may be the straw that breaks their backs. It is easy to knock the landfill operators, but many are struggling to provide a worthwhile service, and the Bill will bring extra pressures to bear on them.
      The effect of the Bill on farmers involves a curious conundrum. The Labour party is in favour of outdoor farrowing, because it thinks that it is green and more organic. It would also like more free-range hens, because that system sounds better and suits it better. I am not sure that the party understands the implications of either system. The truth is, however, that if pigs are outdoors, it is almost impossible to control what happens to their dung. The only way to control a pig's dung is to keep the pig indoors, standing on slats. The dung falls through the slats on to the concrete floor below and is easily removed.
      The same applies to chickens. If chickens are out of doors or in barns, it is almost impossible to separate their dung from the earth, or from the soil at the bottom of the barn. The conditions laid down by the Bill are therefore

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      difficult to apply. The fact is that the less animal-friendly farms are, the easier it will be to comply with the conditions and terms of the Bill. We must think carefully about this. What effect will the Bill have on the pig farmers and chicken farmers in my constituency? Are we, perhaps, driving them towards the establishment of conditions on their farms that, by many other standards, would be considered non-animal friendly?
      We must also consider the conditions that we are imposing on our farmers—in the Bill and elsewhere—to which overseas countries do not conform. It is hardly known that most of the chicken that we eat here is bred in Thailand.
      Mr. Deputy Speaker: Order. The hon. Gentleman is straying from the subject of the debate.
      Mr. Gray: I accept your admonition, Mr. Deputy Speaker. My point was that, if we bear down heavily on chicken farmers in this country without bearing down equally heavily on chicken farmers in Thailand and France who are competing with ours, we are doing our chicken farmers a disservice.
      Mr. Deputy Speaker: Order. That is what I was trying to explain to the hon. Gentleman. What he is saying is wide of the Third Reading debate.
      Mr. Gray: I understand your admonition, Mr. Deputy Speaker. I am simply saying that, if we are considering allowing the Bill to become law, and if it affects pig and chicken farmers in my constituency and elsewhere in England—I am certain that it will, because of the constraints involving the clearing up of dung—we should surely consider whether the same provisions will apply to the overseas farmers with whom we are competing.
      Mr. Deputy Speaker: Order. I am trying to explain to the hon. Gentleman that this is the final stage of the Bill's passage. If he was concerned about these matters, he could have raised them in amendments or on Second Reading. What he cannot do is go wide of the Third Reading debate.
      Mr. Gray: I happily accept your admonitions, Mr. Deputy Speaker, not least because I assume that my colleagues will take part in our next debate on the subject. [Interruption.] Of course, they may well take part in this debate in the meantime.
      Conservative Members have no difficulty with the broad principle of the Bill: indeed, we wholeheartedly support it. After all, it was our idea in the first place. None the less, we feel that it has a number of flaws that prevent it from achieving the high standards that we would normally expect of legislation produced by my erstwhile colleagues in the Department. They desrcibe this as a tiny little Bill, tidying up a few loose ends, but I believe that it will have significant consequences for small businesses, for landfill sites and for both chicken and pig farmers.
      This is a gold-plated Bill. It is, as it were, a gold-plated bath, and we are in danger of throwing a number of babies out, along with the gold-plated bath water. Doubtless it will be passed, as will all other Bills in this place; but it is worth recording at this stage that Conservative Members have significant reservations about the way in which it will affect our constituencies.
      5.47 pm
      Mr. Brake: The Liberal Democrats welcome the Bill, which will be of major assistance in pollution prevention and control. It has been much improved during its passage through the other place and this House. I am disappointed that the Opposition have not felt able to be more supportive, although I am not entirely surprised. The hon. Member for North Wiltshire (Mr. Gray) does not believe in climate change, and the shadow Secretary of State does not believe in traffic calming because it constitutes an impediment.
      I should like the Minister to consider two points. First, I remind him that I am expecting a letter explaining to me whether the arrangements for offshore installations will cover the storage of nuclear waste at sea. That has been discussed in the past. Secondly, I feel that the Bill has missed the opportunity to deal with flawed legislation in the Environment Act 1995, which introduced a new section 2A into the Environmental Protection Act 1990 to deal with contaminated land.
      Unfortunately, the 1995 Act also introduced an anomaly, whereby certain types of environmental harm that are currently the subject of statutory legislation fall outside the scope of existing or new controls. In practice, that applies to circumstances in which significant harm is caused. The new definition will exclude many types of nuisance that are currently controlled, and which do the most harm to the environment and to ecosystems. The Chartered Institute of Environmental Health and my local authority, the London borough of Sutton, believe that simple amendments to the Bill could have dealt with the problem. I hope that the Minister will be able to respond, although I realise that an amendment is no longer possible. I wish that I had received the information on Second Reading, because the Minister has been receptive to amendments. It was identified as early as 1996 by the Environment Select Committee. I hope that the Minister will pick up that point, or perhaps provide some information on it in the near future.
      I am pleased that the Bill has made swift progress. I look forward to its receiving Royal Assent.
      5.50 pm
      Mr. Gummer: I will not detain the House long, although I am surprised that no Labour Member has bothered to detain the House at all on Third Reading.
      The Bill is important. I congratulate the Government on introducing it. It is largely sensible and intelligent now that it has gone through both Houses. I commend in particular the work in the other House to make the Bill sensible.
      It is important to recognise that pollution is no respecter of national boundaries. There is no possibility of having a national environment policy that could work; we have to work on a larger basis. We contribute half the air pollution that we produce to the rest of Europe, and half the pollution here comes from the rest of Europe, so policy has to be based on the European directive, to which I agreed and which was moulded by the United Kingdom in our role as leader in the environmental world. I am pleased that the Minister has introduced the Bill.
      I found the Minister's explanations of some things incomprehensible; they were rather difficult to follow. I suspect that the Bill has been cobbled together as we

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      have gone along. What saddens me is that it could have been much clearer. I say in a spirit of support, rather than opposition: if the legislation is not well founded, we will do great harm to the environmental cause.
      If people are frightened by broad powers that are ill defined, they will not believe, as I want them to believe, in the importance of the environment, but will view it as a heavy burden on them. I therefore beg the Minister and his colleagues to try to be clearer about such Bills, so that people can feel that they want to work with them rather than that the provisions are filled with hidden dangers and hidden fears.
      Some of the concerns of my hon. Friend the Member for North Wiltshire (Mr. Gray) are not as worrying as he may believe them to be, but he is right to raise them. Those are precisely the concerns that arise from so weak a Bill that is so poorly drafted.
      None of us could take much from the comments of the Liberal Democrat spokesman on climate change. As someone who has been fighting for recognition of climate change ever since I have been in politics—I have done so ever since we started to see it—
      Mr. Brake: Will the right hon. Gentleman give way?
      Mr. Gummer: I should like to finish the point first.
      I take it ill that the hon. Gentleman's party refused to support proper efforts to reduce domestic consumption and wastage of energy when that is responsible for 38 per cent. of the energy that is used in this country. The one party that can say nothing about climate change is his party, which has constantly taken the populist view and never done anything that might damage it electorally. That has been not only my view but that of all environmentalists. [Interruption.] I understand very well, so we do not want to hear lectures from the Liberal Democrats.
      All we are saying to the Government is that it is the right Bill to introduce. It is a sensible policy. It is based on a European approach that is exactly right, but can they get away from legislation that frightens people unnecessarily, so that the legislation clearly defines what people's responsibilities are and does not give Governments powers that could be used—not, I am sure, by the Minister—in far too draconian a manner?
      It is not a big thing to ask, but anyone reading the debate, particularly the Minister's answers both in Committee and now, would have to say that ease of understanding is not notable. Indeed, some people have been unkind enough to wonder whether he understood his answer to the House. I would be the last person to say that, but I have read many of the debates and I find it pretty hard to believe that he actually understood the point that he was trying to explain because no one reading the explanation could possibly understand it.
      I ask him very carefully about that simply because, out there, many people want to support the Minister's environmental policy, but can do so only if they feel that he understands their problems, doubts and difficulties and is prepared to reach out to them with an explanation that is comprehensible. In that spirit, I support Third Reading, but I hope that he will try better in future.
      5.55 pm
      Mr. Meale: I shall try to answer the range of queries that were raised. I apologise to the hon. Member for Carshalton and Wallington (Mr. Brake). He was promised a letter on nuclear storage in the sea. I will ensure that that is followed up as quickly as possible. I assure him that the United Kingdom is under an international obligation not to dump nuclear waste at sea. We are consulting on other matters, but I will reply as soon as possible.
      In relation to the hon. Gentleman's query on contaminated lands, I knew nothing about the amendments. I am surprised that they were not tabled. Nevertheless, I understand the point about the lateness of the day. I will take the matter up and write to him on the matter.
      I do not want to disillusion the hon. Member for Ashford (Mr. Green). He said that, shortly, breathing would have to be regulated. That could already be done under the Environmental Protection Act 1990, which was introduced by a Conservative Government.
      I found absolutely amazing the comment of the hon. Member for North Wiltshire (Mr. Gray) that the Government had done very little on the environment; I hope that the right hon. Member for Suffolk, Coastal (Mr. Gummer) would agree with my analysis. Days after coming into office, the Deputy Prime Minister called a water summit and, from that, laid down a plan of action, which has built on the successes of the previous Government in achieving high-quality water standards. It has enabled the water industry to plan a multi-billion pound investment programme, which will proceed over the next few years.
      Mr. Gray: May I clarify that point? I was not saying that the Government were not green. I wholeheartedly support a number of the things that the Government have done: for example, some of their policies following the Kyoto negotiations. The point that I made was specific: it is the first and only environmental legislation. I was criticising not what the Government have done, but the amount of legislation that they have introduced.
      Mr. Meale: If the hon. Gentleman looks at some of the joined-up government that has been undertaken, and some of the decisions that have been made, he will see that environment policy is having an effect across the board. I remind him—the right hon. Member for Suffolk, Coastal will agree because he attended some of the conferences—that the Prime Minister and Deputy Prime Minister, with others from all parties, supported all the efforts at the world conferences in Rio and Kyoto, where we reached a level of agreement, and Buenos Aires.
      Mr. Gummer: I agree with the hon. Gentleman that the Deputy Prime Minister has been commendable in his fight on climate change, particularly in Kyoto and Buenos Aires. The thing that my hon. Friend the Member for North Wiltshire (Mr. Gray) was pointing out was that many of us have been waiting for legislation to implement the necessary actions that the conferences recommended. We keep asking for that; it has been two and a half years. I hope that the Minister will be able to find time for such

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      legislation. It is not his fault; it is the Chancellor's fault—we know whose fault it is. The Minister is very green. It is just that the Chancellor is not.
      Mr. Meale: All I can say is that we are gaining some momentum in trying to achieve our policies. We are a little quicker in our resolve in relation to the environment than the previous Government, who were in power for 18 years.
      The hon. Member for Ashford said that more small business would be controlled under the Bill. That is because of the coverage of the integrated pollution prevention and control directive, which the previous Government accepted.
      The hon. Member for North Wiltshire asked various questions, the first of which was on the National Farmers Union. The Ministry of Agriculture, Fisheries and Food has held extensive discussions with the NFU and raised the issue that the hon. Gentleman raised today—on outdoor pigs, and the Bill's effects on that type of farming. Outdoor pigs will not be controlled under the Bill's provisions.
      The hon. Gentleman also asked about the Small Business Federation and the Country Landowners Association. The Small Business Federation was consulted on the Bill on three occasions, on each of which it was very constructive. I am not quite sure how many times similar contact has been made with the CLA, but departmental officials regularly contact that organisation. However, I shall write to the hon. Gentleman and provide some details on the matter.
      I tell the hon. Member for Ashford that the Bill was not withdrawn, but recommitted because of some fairly substantial Government amendments to it, which we tabled to meet the points made by the House of Lords Delegated Powers and Deregulation Committee. I should also tell him that the previous Government, in the Environment Act 1995, conferred powers on the Secretary of State to create criminal offences by regulation. I am sure that the right hon. Member for Suffolk, Coastal will remember that Act.
      As for claims that the Bill will confer too much power on the Government, we have ensured that proper parliamentary control will be retained. The regulations
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      will be subject to affirmative procedure when they are first made, and thereafter for certain important amendments. The Delegated Powers and Deregulation Committee thought that such provision would be adequate when it considered the Bill. We have also given an undertaking that any future amendments to the regulations that change their provisions and that were previously included in the Environmental Protection Act 1990 will be brought before Parliament for consideration under the affirmative procedure.
      There are, moreover, instances in which it is right to replace primary legislation with regulations, as a set of regulations is a much more flexible instrument than primary legislation. It is also clearly in the interests of those being regulated that any problems can be resolved.
      As for claims that the directive is being gold-plated, the Government think that the situation is quite the opposite. We have repeatedly made it clear that the Bill's purpose is to allow coherent implementation of the IPPC directive. Industry would clearly suffer extra costs if it had to continue with two separate pollution-control systems.
      Claims have also been made in the debate that business is worried about additional VAT costs. Labour Members believe that it is a complete myth—it is scaremongering to say—that the directive's use of the term "best available techniques" entails less regard for cost-effectiveness. The United Kingdom's use of the term "best available techniques" includes "not entailing excessive costs". Hon. Members who served in the previous Government, who negotiated that particular directive, should know that.
      The directive clearly states that "available techniques" should mean those developed on a scale allowing implementation in the relevant industrial sector under economically and technically viable conditions, taking into consideration costs and, of course, advantages. Moreover—as the right hon. Member for Suffolk, Coastal will be aware—if we do not implement the directive, in legally identical terms, we would be subject to infraction proceedings.
      Question put and agreed to.
      Bill accordingly read the Third time, and passed, with amendments.

  Commonwealth Development Corporation Bill [Lords]
  As amended in the Standing Committee, considered.
  Commonwealth Development Corporation Bill [Lords]
    New Clause 1

      INVESTMENT POLICY
      '.—(1) The Corporation shall at the end of each complete financial year after registration make a report to the Secretary of State on its investments during that twelve month period and on its policy on future investments.
      (2) The Secretary of State shall as soon as practicable lay a report under subsection (1) before Parliament.'.—[Mr. Streeter.]
      Brought up, and read the First time.
      6.4 pm
      Mr. Gary Streeter: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Mr. Michael J. Martin): With this, it will be convenient to discuss amendment No. 1, in clause 18, page 8, line 23, leave out from 'association' to 'unless' in line 24 and insert
      ', investment policy and statement of business principles'.
      Mr. Streeter: Conservative Members wish the Commonwealth Development Corporation to succeed. We believe in the CDC and, for most of the past 50 years, the CDC has flourished under Conservative leadership. Our concern—which is reflected in the new clause—is that, after the Bill is passed by the House and the CDC becomes a partially privatised company, gradually, it will move away from its developmental objectives. We expressed that concern in Committee; it is our greatest concern about the Bill; and we now return to it.
      It has been established that, after the company is privatised, it will have to increase its return on capital invested from the current 7 to 8 per cent. to about 18 per cent. per annum, so that investors will receive a return on their investment. The company will be under pressure to deliver after the Bill has been passed. Indeed, managers are already making changes—on the ground, in the field, in sub-Saharan Africa—looking for different types of investment to make.
      We also know that the Secretary of State is keen for a switch from loan to equity-based investment—but that is not the only change; the type of company in which the CDC is investing is changing. The CDC is increasingly looking for more high-yielding, profitable companies, regardless of whether those companies employ large numbers of people in the developing world or particularly benefit local economies in sub-Saharan Africa or Asia. The CDC is looking for yield and return to shareholders.
      Although that is a terrific incentive, which we support for companies around the world, the CDC is a different type of company. For 50 years, the CDC has received taxpayers' investment. The company was established to invest in pre-emerging markets—to go where no other investor would go. We simply do not want that important niche activity to be blown away by the Bill.
      Therefore, the question that we ask—which is dealt with in the amendments—is whether the Government have adequately protected and safeguarded the new CDC's developmental objectives. New clause 1, and other
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      suggestions that I shall make later in my speech, are intended simply to build another line of defence to ensure that such important safeguarding is provided.
      It would be sacrilege if all the careful foundations laid over the years by the many people who have worked for that excellent company were destroyed. It would be more than tragic if, in future, the CDC's high reputation for helping thousands of people in the developing world were to be wasted as the company moves away from its developmental objectives and all that it has held dear as shareholders apply pressure on the board of directors to increase returns.
      I should make it clear that I am not talking about this Secretary of State, the current board of directors, or the board of directors that will be appointed after the Bill is passed—no one in their right mind would think that any of those people would deflect the CDC from its developmental objectives—but about a CDC that, at some point, after shareholder pressure builds and a board of directors accedes to it, goes in a direction that everyone concerned with the Bill does not want.
      We want to ensure that the entrenchment about which the Secretary of State boasts so loudly is watertight.
      In Committee, the Minister made some interesting comments on that matter, putting in a nutshell what the Government feel that they have done to safeguard and entrench the company's developmental objectives. He said:
      "It is important to have not just a belt and braces approach"—
      looking at him, I suspect that that applies to his personal life, too—
      "but other safeguards."
      My remark was unkind, and I withdraw it instantly. He went on to say:
      "We have the golden share, the 25 per cent. shareholding, the two directors, the statement of investment policy, the statement of business principles and the memorandum and articles of association. We therefore have six elements tying the CDC."—[Official Report, Standing Committee D,, 17 June 1999; c. 23.]
      The Minister has—fair enough—identified six safeguards; that could not be clearer. I should like briefly to examine each of them in turn, to ensure that the Government have done enough.
      We have been told that the first safeguard of the CDC's developmental objectives is the 25 per cent. shareholding. However, it is worthless as a safeguard. It does not prevent 75 per cent. of the shareholders passing the special resolution that is needed to change the memorandum and articles of association. It cannot prevent a change in the investment policy. The fact that the Government will retain 25 per cent. of the company is utterly worthless as a safeguard; that one did not come up to the mark.
      Secondly, we were told that two of the directors would be appointed by the Department for International Development. However, at another time in Committee, we were told that the board would probably consist of 11 people, two of whom would be appointed by the DIFD. Of course, some of the investors would want their own representatives on the board, and those representatives will be the most susceptible to succumbing to pressure to shift the company away from its developmental objectives.

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      In the Secretary of State's terminology, two out of 11 may be a majority. I can imagine meetings in the Department for International Development. Ten or 11 people might be present, and all might oppose the motion except the Secretary of State, but the motion would be carried. I can understand that that might happen in the Department for International Development, but she must realise that two directors can easily be outvoted in a board of 11. Those two placed directors cannot protect or safeguard the developmental objectives on their own. Therefore, I am afraid that, as a safeguard, the presence of two such directors is utterly worthless.
      Thirdly, we come to the statement of business principles, which we embrace and support. I quoted it extensively at Second Reading; I do not intend to do so again. It is a very worthy document. Who could disagree with the principles set forth in relation to business integrity, the environment, health and safety and social issues? However, that statement of business principles does not differ significantly from the business principles that any major multinational corporation would adopt. I have looked at business principles adopted by BP, Shell and Marks and Spencer, and they are all rather similar. There is nothing in those business principles that would cause the company to adhere to its investment policy or to its developmental objectives. That was the third safeguard that the Minister set out, and it also is a damp squib.
      Fourthly, the Minister said that the memorandum and articles of association were part of the safeguard; but there is no general protection in the memorandum and articles as a whole. I assume that the Minister was referring to article 51, which relates to investment policy. I believe that it is worth reading. Article 51(A) says:
      "CDC will have an investment policy to cover the conduct of CDC's investment business. The policy must be designed to achieve CDC's objective of maximising the creation and long-term growth of viable businesses in developing countries and achieving attractive returns for shareholders."
      Those words are more or less now contained in the mission statement. However, that paragraph merely points us towards the investment policy.
      Article 51(B) says:
      "The policy must include a particular focus in the conduct of CDC's investment business on benefiting poorer countries. especially those in sub-Saharan Africa and South Asia."
      Who could disagree with that? However, it simply points us towards the investment policy; it does not add to it or buttress it.
      Article 51(C) says:
      "The directors will conduct the investment business of CDC in line with the investment policy. They will establish procedures which enable them to see whether the investment policy is being complied with by CDC and, to the extent relevant, its subsidiary undertakings."
      We already know that the company is to be run, according to this piece of paper, in line with the investment policy; but, as I shall show, that investment policy is not watertight. That policy, the only safeguard in relation to the conduct of the company, does not contain the necessary safeguards.
      Finally, article 51(D) says:
      "The directors will report each year in CDC's annual report on CDC's compliance with the investment policy. This report will contain sufficient information to allow a reader to make an informed assessment of the investment business of CDC and its subsidiary undertakings as against the requirements of the investment policy."
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      That is a very welcome statement. No doubt, the company's annual report will contain information about the investment policy and whether the directors are complying with it. We welcome all that, but it merely points us towards the investment policy, which I shall consider in a moment.
      The report referred to in article 51(D) is simply a report by the directors, not to Members of Parliament or to some compliance committee, but to the shareholders—the very people who, in future, might put the directors under pressure not to comply with the investment policy.
      Therefore, the memorandum and articles of association—the fourth safeguard—are not in themselves a safeguard. They simply point to the investment policy.
      The fifth safeguard that we were assured of was the golden share. Article 51 says that there shall be no change in the investment policy without the consent of the special shareholder—that is the Secretary of State, the holder from time to time of the golden share. That is welcome. It means that the investment policy cannot be reduced or diluted without the Secretary of State's specific approval. We welcome that; we support that part of the memorandum and articles of association. However, it tells us nothing about the existing investment policy. It adds nothing to the safeguard, or otherwise, constituted by the existing investment policy, and, if the existing investment policy is flawed—as I say that it is—the fact that the Secretary of State must give her consent to any change to it does not help us at all.
      We come to the sixth and final safeguard that the Minister told us about in Committee. The other five do not satisfy Opposition Members.
      5 pm
      Mr. Tam Dalyell: On the golden share, what additional powers is the hon. Gentleman seeking? What is he saying ought to be there that is not? The golden share operation is very complicated and can be subject to all sorts of interpretations—as we know from experience over the years—but what exactly is the hon. Gentleman asking for?
      Mr. Streeter: That is a very fair question; the answer is this. I am asking, first, that we get the investment policy right in the first place, because that is the thing that is being entrenched; and secondly, that we incorporate into the Bill new clause 1, which at least will place on the company an obligation to report to the House, so that, annually, we who have superintended this company for 50 years might see the extent to which the investment policy is being complied with. Who knows, the Minister may spring to his feet in a second and agree.
      We say that the first five safeguards are utterly irrelevant and worthless and have no value in themselves, so we turn to the investment policy. The question that we ask is, does that policy prevent a future CDC moving away from its developmental objectives? I accept that the Secretary of State and the Minister genuinely believe that they have entrenched the developmental objectives in this way, but I do not think that they have succeeded. I remind them that I am talking about a future CDC, under pressure to perform—to move from an 8 to an 18 per cent. return—whose shareholders put pressure on the board to invest in high-yielding, high-performance companies. That is the context in which such a change might happen.

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      I said in Committee that the investment policy, the text of which I now hold in my hand, would allow a future CDC to agree to invest in listed companies only—perhaps one, two or three of the top listed companies in one, two or three places, such as India, Zimbabwe, Kenya or sub-Saharan Africa. If the CDC invested in only one or two companies in one or two of those places—I accept that sub-Saharan Africa must feature—it would be complying with the wording of the investment policy.
      The Secretary of State did not disagree with that proposition. She said that Zimbabwe, India and Kenya have problems. We know that, but in each of those countries there are blue-chip companiescopper-bottomed companies. Would the letter of the investment policy prevent a future CDC board investing in one or two listed companies in South Africa only, where some of the world's most successful and wealth-creating companies are based? It certainly would not. I stand to be corrected by the Minister or the Secretary of State, but I can see nothing in the investment policy that would prevent a new CDC from investing on the South African stock exchange only.
      Nothing in the investment policy says how many companies the CDC must invest in, or what type of company it can invest in. Two or three minor provisions prohibit it from investing in certain types of company, but it can invest in any type of high-performance, high-yield company that it wishes, irrespective of the fact that it is not a spread or a mix or a portfolio mix that contains job-creating companies and is benefiting the local economy. We know that 70 per cent. of investment must be in the list of countries attached to the investment policy, but the list includes almost all the world. The list includes many poor countries, but it includes also many countries in which there are thriving businesses and stock exchanges.
      There is also a provision that 50 per cent. of the investment must be in sub-Saharan Africa. As I say, South Africa, Zimbabwe and Kenya all have copper-bottomed companies that the CDC could invest in. I do not think that the investment policy is watertight. It does not do what the Secretary of State told us it would do, which is to entrench the developmental objectives. I do not take great pleasure in saying that—I just think that we could drive a coach and horses through the policy. The test is not the likelihood of a future board investing in the way in which I have suggested, but whether it has the legal ability to do so. It is clear to me that it does.
      It is no good me bleating about this unless I make a specific suggestion as to what to do. The new clause suggests that the company should report to the Secretary of State on its investments and policy each year, and that that report should be tabled in the House of Commons. That does not close the loophole. It would be after the event, but it would at least give the House an opportunity, at an early stage, to debate such a breach of the investment policy and to do something about it.
      In Committee, the Secretary of State referred to an obligation to produce an annual report, and the Department produces an annual report. However, the report is not debated as a matter of course in the House of Commons. The annual report deals with everything that the Department is doing in that year. How much space
      452
      will there be to analyse in detail the investment policy of the new CDC? We want a specific report, dealing with the extent to which the new CDC has complied with its investment policy. Let the House decide whether the 50 years of investment by the British taxpayer is being honoured and safeguarded by the new CDC.
      In Committee, the Secretary of State said that the Select Committee could look into the matter from time to time. The distinguished Chairman of the Select Committee, my hon. Friend the Member for Hertford and Stortford (Mr. Wells), is here this evening. I wonder whether the Committee would have the right to investigate decisions made by a company in the private sector—a company with 75 per cent. of its shareholding owned by private investors. Would the Select Committee have the right to call for the directors to attend the Committee? Would it have the right to investigate as it needs to?
      I do not think that the safeguards are adequate, and the Minister and the Secretary of State should consider agreeing to the new clause, saving us all the bother of a division. If they accept it, an annual report will be presented to Parliament, so that we can srcutinise what the company is up to. We must be in a position to monitor the company and to act quickly.
      My second helpful suggestion is to change the investment strategy now, before the Bill goes through. We have five paragraphs on the first two pages of the investment policy which deal with general principles and provisions. However, the investment policy lacks a catch-all provision that is designed to express the spirit that lies behind the past 50 years of the CDC, as well as the future, in terms of the mixed portfolio and its investment in companies which generate jobs and benefit the local economy.
      When those expressions are found in the policy statement, there is a caveat about the opinion of the directors or the profitability of the company. Let us have a clear statement in the investment policy, setting out the spirit of the developmental objectives pursued by the CDC prior to this Bill becoming law.
      In future, the measure would give an aggrieved shareholder the right to go to law to claim that the company was breaching its investment policy. At the moment, we can drive a coach and horses through the policy. However, a paragraph setting out the spirit of the CDC past and future would give an ethical investor—who may be worried that the company is moving away from its developmental objectives—a chance to go to law and seek redress. There would be something for a court to hang an order on. At the moment, that is not there.
      Mr. Dalyell: The imputation is that the CDC has invested, if not improperly, at least in grey areas. Is there any evidence of investment that is unsatisfactory? The hon. Gentleman ought to produce it if he is saying that.
      Mr. Streeter: The hon. Gentleman—whom I deeply respect—has missed the point. Previously, the CDC has not been under pressure to produce a financial return. Once the Bill goes through—when the hon. Gentleman will be voting for privatisation—the CDC will move from a return on capital invested of about 7 per cent. to one of 18 per cent.
      My argument is that there will be shareholder pressure on the board of directors to deliver a new level of profit. Increasingly, the board will move away from investing in

      453
      the beneficial, long-term, job-creating local economies of which the company has been so proud in the past towards high-yield, fast-return, high-tech companies. There is nothing wrong with such companies, but the CDC was designed to open a new niche in development overseas, on behalf of the British taxpayer, in pre-emerging markets and countries. Our fear, that the CDC will move away from that special niche, caused us to table the new clause.
      There are concerns that the Government are trying to do something that they cannot do—find a third way for the CDC. Of course, there is a case for the sale of the CDC, and we all want private sector investment. There is a case for fully privatising the company to attract a large sum of money which we can invest in the developing world. There is a case also for retaining the CDC in the public sector and for finding other ways of opening the windows and attracting private sector investment while the company remains publicly accountable and under public control.
      Is there a case for burdening the company with regulations—and expecting it to fly in the private sector—so that the price on sale would be reduced, while setting up a creature that cannot live up the expectations of private investors and will be tugged, year after year, away from its developmental objectives?
      The new clause reflects our belief that the Government are trying to find a third way for the CDC which simply does not exist. We very much hope that the Government will listen to our arguments, make sure that the developmental objectives are safeguarded and accept the amendment.
      Mr. Dalyell: It behoves those of us who were not on the Committee to be brief, and I simply wish to ask two questions.
      First, the history of golden shares is rather unsatisfactory. I wonder whether my hon. Friend the Minister has any comment on the operation, or lack thereof, of the golden share. It is always given as a failsafe but, in fact, is seldom used. If there is a crisis or difficulty, the golden share is not quite a satisfactory fall-back, as is often made out.
      Secondly, thanks to my hon. Friend the Minister's position with the Inter-Parliamentary Union, I had the good fortune three years ago to be a member of the IPU delegation to Nepal. It is in the context of Nepal that I ask whether the CDC's attitude to risk has been all that it might be. I have just come from a little ceremony at the Nepalese embassy. I was able to talk about those matters, knowing that this business was coming up.
      Is risk sufficiently taken into account in the operations of the CDC when it comes to investment in countries the figures for which suggest that they are very poor? Nepal may seem very poor from the figures, but it is run in such a way that there is very little child malnutrition or illness; it is impressively run in many ways.
      6.30 pm
      The Secretary of State for International Development (Clare Short): Nepal's gross domestic product per head is $200 and almost all the women are anaemic. There is great poverty and high infant mortality. The country is very
      454
      romantic and attractive, but the people's poverty is very great. We must work more effectively with Nepal on children's education and development.
      Mr. Dalyell: I am glad that my right hon. Friend, whose visit to Nepal was extremely successful, takes the attitude that something must be done.
      Dr. Jenny Tonge: I am speaking in support of amendment No. 1, but I urge Ministers to consider the new clause seriously. There is little difference in it from what is already in page 25 of the articles of association. It requires more detail and would have to be presented formally, but it would not substantially alter the spirit of the Bill and would give more information and make everyone a lot happier.
      Amendment No. 1 is not designed to slow down the Bill. The Liberal Democrats support getting more money into development and changing the way in which the Commonwealth Development Corporation is run, but we are concerned about the conflict between development and getting a good return for the shareholders, which the hon. Member for South-West Devon (Mr. Streeter) eloquently set out. As the Select Committee heard, the problem is trying to serve both God and mammon.
      We want to strengthen the Bill and make it less ambiguous.
      Clare Short: This is an enormously important matter. Both opposition parties, in their misunderstanding, paint a depressing future for developing countries. If those countries cannot attract private sector investment that will get a reasonable rate of return, their prospects for economic development are disastrous. Both the hon. Member for South-West Devon (Mr. Streeter) and the hon. Lady are suggesting that sustained economic development in developing countries through the private sector is impossible. That is clearly not the case.
      Dr. Tonge: I entirely agree that developing countries need investment and we all want them to have it, but to attract that investment they often have to cut corners on sustainable development and the good of their people and environment.
      As the Bill is currently drafted, the Government will hold a golden share that gives the Secretary of State special rights under the articles of association. Clause 18(3) requires any alteration of those articles that require the Secretary of State's approval before they can be altered to be approved by both Houses of Parliament. That is worrying, as it implies that there is a choice as to which articles require the Secretary of State' s approval before they can be altered.
      Under article 51(F) of the articles of association, any alteration to the investment policy would require the approval of 50 per cent. of shareholders and the special shareholder. Under article 52(E) any alteration to the statement of principles and policies may be made by the CDC board by a majority vote, including at least three members of the business principles committee.
      The articles of association, the investment policy and the business principles appear to be in descending order of importance as to how far away from the Government and the Secretary of State they can be before any change is made, but the Bill's aims will be met only by adherence

      455
      to business principles and to the investment policy, which sets specific targets for the percentage of new investments made for the benefit of poorer countries: at least 70 per cent. of investment by the CDC, or improved investment vehicles, over any five consecutive periods, has to be, in the opinion of the directors, for the immediate or prospective benefit of poorer countries.
      In the old CDC, an additionality test was applied. That will no longer happen and, according to the Library research paper, any investigation of potential investments will have to include an assessment of compatibility with the CDC's ethical values or business principles. That is clearly set out in the technical box in the research paper, and the potential mismatch between commercial viability and development value is also clearly summarised.
      Under the previous legislation, the CDC was charged with the task of assisting overseas countries in the development of their economies. The term "development" is significantly missing from the Bill and there is only limited mention of it in the accompanying documentation. Instead, the CDC argues that its business principles will support and reinforce the development focus.
      As the hon. Member for South-West Devon said, codes of conduct and business principles are wonderful things and come in very glossy brochures, but they are not always adhered to in practice. If we want proper development to occur through sustainable and ethical investment, the real control that the Secretary of State and the Government need is of the business principles. They are the key, because they direct the investment policy—a change for the CDC—that is controlled by the articles of association. Why then can the business principles be changed with only the lightest touch from Parliament via the Secretary of State's nominees on the business principles committee, with no direct reference to the Secretary of State or Parliament?
      I beg the Secretary of State to accept our proposals and ensure that the business principles, and thus the investment policy, cannot be changed without the agreement of Parliament.
      Mr. Edward Leigh: I wonder why Ministers are opposed to the concept of an annual report. It may be because they are rather schizophrenic about what exactly the new company will be. They are trying to persuade the House that it can have all the virtues of a private company but meet the objectives of a publicly owned company. Article 51(A), which was referred to by the hon. Member for Richmond Park (Dr. Tonge), clearly states:
      "CDC will have an investment policy to cover the conduct of CDC's investment business. The policy must be designed to achieve CDC's objective of maximising the creation and long-term growth of viable businesses in developing countries and achieving attractive returns for shareholders."
      Paragraph (B) states:
      "The policy must include a particular focus on the conduct of CDC's investment business on benefiting poorer countries, especially those in sub-Saharan Africa and South Asia."
      The Government will refer to that article in defence and say that it will ensure that CDC will help the poorer countries, but as my hon. Friend the Member for South-West Devon (Mr. Streeter) pointed out, there are
      456
      many successful large companies in those poorer countries which will inevitably have to attract the investment of the new CDC if it is to meet its obligations to its shareholders. If I know anything about company law, it will be required by law to act in the best interests of their shareholders.
      The Government have tried to convince the House that we will be able to meet the objectives because of the articles of association, but if one reads them one comes to the inevitable conclusion that the defensive mechanisms against preventing the company from becoming like any other investment company in the private sector are not as strong as they should be. Given that there is some doubt on the subject, surely it is not too much to ask for an annual report to Parliament so that we can be convinced that the company is meeting the objectives that we all share.
      The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): I can understand why the hon. Member for Gainsborough (Mr. Leigh) is concerned and I shall deal with his point later. He has not been involved in the Second Reading and Committee stage, so I understand why he may not fully appreciate the safeguards contained in the Bill. However, I despair of the Opposition Front Benchers. They sat through Second Reading and Committee and heard the Secretary of State's clear explanations—and mine—but they seem incapable of understanding, or they are unwilling to understand.
      I do not know whether the problem is my inadequacy, but I shall try again—
      Mr. Menzies Campbell: It will be a waste of time.
      Mr. Foulkes: Well, as the right hon. and learned Gentleman knows, I am a helpful cove so I will try again. I must tell the hon. Member for Richmond Park (Dr. Tonge) that there was ample opportunity to table amendments in Committee. Indeed, she will recall that we did not use one of the sittings that we were allocated. We were willing to hold another sitting to deal with any amendments, but no one took up the opportunity. I assure her that all her concerns, which we share and understand, are adequately covered in the Bill. I hope that she will accept that assurance and not press her point.
      An amendment containing provision for an annual report was tabled in Committee and my right hon. Friend Secretary of State dealt with it extremely well. She explained that the CDC will be required by the Bill to make an annual report to the Secretary of State, who is required to make an annual report to Parliament. That can, if the Opposition wish, be debated in Opposition time or the Government can make time to debate it. The hon. Member for South-West Devon said that it would not be debated as a matter of course, but there is no guarantee either that a CDC annual report would be debated as a matter of course because provision for that is not included in the amendment.
      The Select Committee also has powers. It has an effective Chairman and its members know what they are talking about. The Committee can, if it wishes, call the Secretary of State, or myself, or officials before it to ask questions about the CDC and its investment policies.
      6.45 pm
      Mr. Bowen Wells: I thank the Minister for his kind remarks. Can he confirm that as the Government will always hold the golden share unless Parliament decides otherwise, the Select Committee will always have the power to call Ministers and officials in front of it to explain the policy that the CDC is adopting?
      Mr. Foulkes: The hon. Gentleman has, as usual, gone straight to the point and grasped it. The Select Committee will be able to do that.
      The hon. Member for South-West Devon again gave the hypothetical example he gave in Committee that the CDC might invest only in the top three listed companies in Kenya, India and Zimbabwe. That is not likely, not only for developmental reasons but for good investment reasons. Any organisation in its right mind would not have such a portfolio and that is a totally unlikely scenario.
      The Government have carefully considered what the CDC's development role should be and how it should be complementary to the role of others. The CDC's aim is to maximise the creation and long-term growth of viable businesses in developing countries, especially the poorest countries, to achieve attractive returns for shareholders and to implement ethical best practices. Practical measures to implement those are entrenched in the CDC constitution.
      The hon. Member for South-West Devon referred to my contribution in Committee in which I desrcibed the relevant six elements. Then he took one and said that it was not enough. He took another and said that that one was not enough. He went through all six, but he failed to understand that it is the combination of all of them that will work. For example, the golden share will give the necessary rights over changes that a share of 25 per cent. might not be able to block. We are protected by the golden share, the investment policy and the business principles.
      The hon. Member for South-West Devon also raised the question of whether the sectors in which the CDC invested would change over time. They are already changing to take account of the CDC's present obligations. For example, in India, the CDC has invested in the first private sector internet access provider. That will help business access information and generate new business opportunities related to the internet. In Africa, the CDC has invested in the expansion of cellular telecoms, which have a significant effect on business efficiency.
      The CDC is investing in new areas, helping development and getting a good return, but it is not ignoring traditional sectors. For example, in Belize—a country that the Opposition know well, for reasons I will not go into—CDC Industries is in the process of completing a $40 million investment in the citrus industry. In Bolivia, the CDC has invested £3.8 million in Banco Sol, a micro-finance institution which finances 85,000 micro-enterprises in Bolivia. The CDC is helping development and getting a good return.
      The hon. Member for South-West Devon also raised the question of the two directors and said, in a glib and superficial way, that two would not form a majority over 11. Even I can work that out. However, he did not say that the business principles committee will have four members and the Secretary of State's two nominees must be on it. The board of directors cannot change business
      458
      principles unless a majority of the business principles committee—at least three—agree. If the Secretary of State's nominees do not agree, a majority of three cannot be achieved. Even the hon. Gentleman can work that out.
      I can tell my hon. Friend the Member for Linlithgow (Mr. Dalyell) that we do not envisage changing the role of the golden share or abandoning it. It gives power to stop change. The occasions that he mentioned happened under a Conservative Government. We are determined to use the golden share if the necessity arises, but we do not think that it will, because the CDC board that we envisage will want to operate on the investment and business principles that we have agreed with it.
      Finally, on amendment No. 1, we can understand why it has been tabled, but it is not necessary. The mechanisms that we have set out will provide the proper protection. Parliament has a role. Unless Parliament agrees otherwise, the CDC is required to have an investment policy designed to achieve the objective of maximising both the creation of and the long-term growth of viable businesses in developing countries and of achieving attractive returns for shareholders. We have that power at the moment.
      No change can be made to the investment policy, for example, without the approval of the majority of ordinary shareholders and the consent of the special shareholder, the Secretary of State. The investment policy therefore cannot be changed without her approval.
      The method for changing the business principles is different, because the issues raised are different. Change to the business principles and policies can be made only by a majority of the board which, as I said earlier, is to include at least three of the four members of the business principles committee. The hon. Member for South-West Devon talked about belt and braces, and rather unkindly said that I am the sort of person who needs them. The Bill provides for two sets of both—or even three, given what I said to my hon. Friend the Member for Linlithgow. The matters that have been raised are adequately covered.
      Dr. Tonge: I am still worried that the CDC's—and the Minister's—trousers will fall down. The business principles are key to the success of the whole operation, yet they are less controlled than the investment policy. My earlier point was that it should be the other way around.
      Mr. Foulkes: I should certainly be acutely embarrassed if my trousers fell down. The CDC would be embarrassed if anything went wrong with the links between its investment policy and business principles. However, I urge the hon. Lady to consider the matter again. The investment policy is far more important, in the context about which she is worried, than the business principles.
      Dr. Tonge: The Bill states clearly that the investment policy is determined by the business principles, whereas the old CDC adopted a process of additionality.
      Mr. Foulkes: The matter has been explained, in Committee and again today. Of course all the elements are important in different ways, but they are deeply entrenched. We expect CDC's investments in all sectors to make a contribution to development and to achieve attractive returns. That will give us the best of both worlds, and I urge

      459
      the hon. Member for South-West Devon, in the light of my third—and I hope lucid—explanation to him, to withdraw the unnecessary new clause.
      Mr. Streeter: The Minister is being uncharacteristically complacent. His belts do not fit and his braces are slack. The Bill contains a real risk that the developmental objectives of the company will be lost. The 50 years of careful and patient investment by the CDC and this country's taxpayers are being placed at risk by the Bill. The Minister is too complacent to accept that, and I urge the House to vote for the new clause.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 165, Noes 309.

      Division No. 240]

      [6.54 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Foster, Don (Bath)

      Allan, Richard

      Fowler, Rt Hon Sir Norman

      Amess, David

      Fox, Dr Liam

      Arbuthnot, Rt Hon James

      Fraser, Christopher

      Ashdown, Rt Hon Paddy

      Gale, Roger

      Atkinson, David (Bour'mth E)

      Garnier, Edward

      Atkinson, Peter (Hexham)

      George, Andrew (St Ives)

      Baldry, Tony

      Gibb, Nick

      Beith, Rt Hon A J

      Gillan, Mrs Cheryl

      Beresford, Sir Paul

      Gorman, Mrs Teresa

      Blunt, Crispin

      Gorrie, Donald

      Body, Sir Richard

      Gray, James

      Boswell, Tim

      Green, Damian

      Bottomley, Peter (Worthing W)

      Greenway, John

      Bottomley, Rt Hon Mrs Virginia

      Grieve, Dominic

      Brady, Graham

      Hamilton, Rt Hon Sir Archie

      Brake, Tom

      Hammond, Philip

      Brazier, Julian

      Hancock, Mike

      Breed, Colin

      Harvey, Nick

      Brooke, Rt Hon Peter

      Hawkins, Nick

      Browning, Mrs Angela

      Heath, David (Somerton & Frome)

      Bruce, Ian (S Dorset)

      Heathcoat-Amory, Rt Hon David

      Burnett, John

      Hogg, Rt Hon Douglas

      Burns, Simon

      Howard, Rt Hon Michael

      Burstow, Paul

      Howarth, Gerald (Aldershot)

      Butterfill, John

      Hughes, Simon (Southwark N)

      Campbell, Rt Hon Menzies (NE Fife)

      Jack, Rt Hon Michael

      Jackson, Robert (Wantage)

      Cash, William

      Jenkin, Bernard

      Chapman, Sir Sydney (Chipping Barnet)

      Johnson Smith,

      Rt Hon Sir Geoffrey

      Chidgey, David

      Jones, Nigel (Cheltenham)

      Chope, Christopher

      Keetch, Paul

      Clappison, James

      King, Rt Hon Tom (Bridgwater)

      Clifton-Brown, Geoffrey

      Kirkbride, Miss Julie

      Collins, Tim

      Kirkwood, Archy

      Colvin, Michael

      Lait, Mrs Jacqui

      Cormack, Sir Patrick

      Lansley, Andrew

      Cotter, Brian

      Leigh, Edward

      Davey, Edward (Kingston)

      Letwin, Oliver

      Davies, Quentin (Grantham)

      Lewis, Dr Julian (New Forest E)

      Davis, Rt Hon David (Haltemprice)

      Lidington, David

      Day, Stephen

      Lilley, Rt Hon Peter

      Dorrell, Rt Hon Stephen

      Livsey, Richard

      Duncan, Alan

      Loughton, Tim

      Duncan Smith, Iain

      Luff, Peter

      Emery, Rt Hon Sir Peter

      Lyell, Rt Hon Sir Nicholas

      Evans, Nigel

      MacGregor, Rt Hon John

      Fabricant, Michael

      McIntosh, Miss Anne

      Fallon, Michael

      MacKay, Rt Hon Andrew

      Fearn, Ronnie

      Maclean, Rt Hon David

      Flight, Howard

      McLoughlin, Patrick

      Forth, Rt Hon Eric

      Madel, Sir David

      460

      Malins, Humfrey

      Stunell, Andrew

      Maples, John

      Swayne, Desmond/

      Mates, Michael

      Syms, Robert

      Maude, Rt Hon Francis

      Tapsell, Sir Peter

      May, Mrs Theresa

      Taylor, Ian (Esher & Walton)

      Michie, Mrs Ray (Argyll & Bute)

      Taylor, John M (Solihull)

      Moore, Michael

      Taylor, Matthew (Truro)

      Nicholls, Patrick

      Taylor, Sir Teddy

      Norman, Archie

      Tonge, Dr Jenny

      Oaten, Mark

      Tredinnick, David

      Öpik, Lembit

      Trend, Michael

      Ottaway, Richard

      Tyler, Paul

      Page, Richard

      Tyrie, Andrew

      Paice, James

      Viggers, Peter

      Pickles, Eric

      Wallace, James

      Prior, David

      Walter, Robert

      Randall, John

      Wardle, Charles

      Redwood, Rt Hon John

      Waterson, Nigel

      Robathan, Andrew

      Webb, Steve

      Robertson, Laurence (Tewk'b'ry)

      Wells, Bowen

      Roe, Mrs Marion (Broxbourne)

      Whitney, Sir Raymond

      Ruffley, David

      Whittingdale, John

      St Aubyn, Nick

      Widdecombe, Rt Hon Miss Ann

      Sanders, Adrian

      Wilkinson, John

      Sayeed, Jonathan

      Willetts, David

      Shephard, Rt Hon Mrs Gillian

      Willis, Phil

      Shepherd, Richard

      Wilshire, David

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

      Woodward, Shaun

      Spelman, Mrs Caroline

      Yeo, Tim

      Spicer, Sir Michael

      Spring, Richard

      Tellers for the Ayes:

      Stanley, Rt Hon Sir John

      Mr. Keith Simpson and

      Streeter, Gary

      Mrs. Eleanor Iaing.

      NOES

      Adams, Mrs Irene (Paisley N)

      Caton, Martin

      Ainger, Nick

      Cawsey, Ian

      Alexander, Douglas

      Chapman, Ben (Wirral S)

      Allen, Graham

      Chaytor, David

      Anderson, Donald (Swansea E)

      Clapham, Michael

      Ashton, Joe

      Clark, Rt Hon Dr David (S Shields)

      Atherton, Ms Candy

      Clark, Dr Lynda (Edinburgh Pentlands)

      Atkins, Charlotte

      Austin, John

      Banks, Tony

      Clark, Paul (Gillingham)

      Barnes, Harry

      Clarke, Charles (Norwich S)

      Barron, Kevin

      Clarke, Tony (Northampton S)

      Bayley, Hugh

      Clelland, David

      Beard, Nigel

      Clwyd, Ann

      Beckett, Rt Hon Mrs Margaret

      Coaker, Vernon

      Begg, Miss Anne

      Coffey, Ms Ann

      Bell, Martin (Tatton)

      Cohen, Harry

      Bell, Stuart (Middlesbrough)

      Coleman, Iain

      Benn, Rt Hon Tony (Chesterfield)

      Benton, Joe

      Colman, Tony

      Bermingham, Gerald

      Connarty, Michael

      Berry, Roger

      Cook, Frank (Stockton N)

      Best, Harold

      Corbett, Robin

      Blackman, Liz

      Corston, Ms Jean

      Boateng, Paul

      Cousins, Jim

      Bradley, Keith (Withington)

      Cox, Tom

      Bradley, Peter (The Wrekin)

      Crausby, David

      Brinton, Mrs Helen

      Cryer, Mrs Ann (Keighley)

      Brown, Russell (Dumfries)

      Cryer, John (Hornchurch)

      Browne, Desmond

      Cummings, John

      Buck, Ms Karen

      Cunliffe, Lawrence

      Burden, Richard

      Cunningham, Jim (Cov'try S)

      Burgon, Colin

      Butler, Mrs Christine

      Dalyell, Tam

      Caborn, Rt Hon Richard

      Darling, Rt Hon Alistair

      Campbell, Alan (Tynernouth)

      Darvill, Keith

      Campbell, Mrs Anne (C'bridge)

      Davey, Valerie (Bristol W)

      Campbell-Savours, Dale

      Davidson, Ian

      Cann, Jamie

      Davies, Rt Hon Denzil (Llanelli)

      Caplin, Ivor

      Davis, Terry (B'ham Hodge H)

      Casale, Roger

      Dean, Mrs Janet

      461

      Dewar, Rt Hon Donald

      Illsley, Eric

      Dismore, Andrew

      Ingram, Rt Hon Adam

      Dobbin, Jim

      Jackson, Ms Glenda (Hampstead)

      Dobson, Rt Hon Frank

      Jackson, Helen (Hillsborough)

      Donohoe, Brian H

      Jamieson, David

      Doran, Frank

      Jenkins, Brian

      Dowd, Jim

      Johnson, Miss Melanie (Welwyn Hatfield)

      Drew, David

      Drown, Ms Julia

      Jones, Rt Hon Barry (Alyn)

      Eagle, Maria (L'pool Garston)

      Jones, Mrs Fiona (Newark)

      Edwards, Huw

      Jones, Helen (Warrington N)

      Efford, Clive

      Jones, Ms Jenny (Wolverh'ton SW)

      Ennis, Jeff

      Etherington, Bill

      Jones, Dr Lynne (Selly Oak)

      Field, Rt Hon Frank

      Jones, Martyn (Clwyd S)

      Fisher, Mark

      Kaufman, Rt Hon Gerald

      Fitzpatrick, Jim

      Keeble, Ms Sally

      Fitzsimons, Lorna

      Keen, Alan (Feltham & Heston)

      Flint, Caroline

      Keen, Ann (Brentford & Isleworth)

      Flynn, Paul

      Kelly, Ms Ruth

      Follett, Barbara

      Kemp, Fraser

      Foster, Rt Hon Derek

      Kennedy, Jane (Wavertree)

      Foster, Michael Jabez (Hastings)

      Khabra, Piara S

      Foster, Michael J (Worcester)

      Kidney, David

      Foulkes, George

      Kilfoyle, Peter

      Fyfe, Maria

      King, Andy (Rugby & Kenilworth)

      Gapes, Mike

      Kumar, Dr Ashok

      George, Bruce (Walsall S)

      Ladyman, Dr Stephen

      Gibson, Dr Ian

      Lawrence, Ms Jackie

      Gilroy, Mrs Linda

      Laxton, Bob

      Godman, Dr Norman A

      Lepper, David

      Godsiff, Roger

      Leslie, Christopher

      Goggins, Paul

      Levitt, Tom

      Gordon, Mrs Eileen

      Liddell, Rt Hon Mrs Helen

      Griffiths, Jane (Reading E)

      Linton, Martin

      Griffiths, Nigel (Edinburgh S)

      Livingstone, Ken

      Griffiths, Win (Bridgend)

      Lloyd, Tony (Manchester C)

      Grocott, Bruce

      Lock, David

      Grogan, John

      Love, Andrew

      Gunnell, John

      McAvoy, Thomas

      Hain, Peter

      McCabe, Steve

      Hall, Mike (Weaver Vale)

      McCafferty, Ms Chris

      Hall, Patrick (Bedford)

      McDonagh, Siobhain

      Hamilton, Fabian (Leeds NE)

      Macdonald, Calum

      Hanson, David

      McDonnell, John

      Heal, Mrs Sylvia

      McFall, John

      Healey, John

      McIsaac, Shona

      Hepburn, Stephen

      McKenna, Mrs Rosemary

      Heppell, John

      Mackinlay, Andrew

      Hesford, Stephen

      Mactaggart, Fiona

      Hewitt, Ms Patricia

      Mahon, Mrs Alice

      Hill, Keith

      Mallaber, Judy

      Hodge, Ms Margaret

      Mandelson, Rt Hon Peter

      Hoey, Kate

      Marsden, Gordon (Blackpool S)

      Hood, Jimmy

      Marsden, Paul (Shrewsbury)

      Hopkins, Kelvin

      Marshall, David (Shettleston)

      Howarth, Alan (Newport E)

      Marshall, Jim (Leicester S)

      Howarth, George (Knowsley N)

      Marshall-Andrews, Robert

      Hoyle, Lindsay

      Martlew, Eric

      Hughes, Ms Beverley (Stretford)

      Meale, Alan

      Humble, Mrs Joan

      Merron, Gillian

      Hurst, Alan

      Michie, Bill (Shef'ld Heeley)

      Hutton, John

      Milburn, Rt Hon Alan

      Iddon, Dr Brian

      Mitchell, Austin

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      Moffatt, Laura

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Moonie, Dr Lewis

      Moran, Ms Margaret

      Smith, Jacqui (Redditch)

      Morgan, Ms Julie (Cardiff N)

      Smith, John (Glamorgan)

      Mullin, Chris

      Smith, Llew (Blaenau Gwent)

      Murphy, Denis (Wansbeck)

      Snape, Peter

      Murphy, Jim (Eastwood)

      Soley, Clive

      Murphy, Rt Hon Paul (Torfaen)

      Southworth, Ms Helen

      Naysmith, Dr Doug

      Squire, Ms Rachel

      Norris, Dan

      Starkey, Dr Phyllis

      O'Brien, Bill (Normanton)

      Steinberg, Gerry

      O'Hara, Eddie

      Stevenson, George

      Olner, Bill

      Stewart, David (Inverness E)

      Osborne, Ms Sandra

      Stewart, Ian (Eccles)

      Palmer, Dr Nick

      Stoate, Dr Howard

      Pearson, Ian

      Stott, Roger

      Pendry, Tom

      Stringer, Graham

      Perham, Ms Linda

      Stuart, Ms Gisela

      Pickthall, Colin

      Sutcliffe, Gerry

      Pike, Peter L

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Plaskitt, James

      Pollard, Kerry

      Taylor, Ms Dari (Stockton S)

      Pond, Chris

      Taylor, David (NW Leics)

      Pope, Greg

      Thomas, Gareth (Clwyd W)

      Powell, Sir Raymond

      Thomas, Gareth R (Harrow W)

      Prentice, Ms Bridget (Lewisham E)

      Timms, Stephen

      Prentice, Gordon (Pendle)

      Tipping, Paddy

      Prescott, Rt Hon John

      Todd, Mark

      Prosser, Gwyn

      Touhig, Don

      Purchase, Ken

      Trickett, Jon

      Quinn, Lawrie

      Turner, Dennis (Wolverh'ton SE)

      Rammell, Bill

      Turner, Dr Desmond (Kemptown)

      Rapson, Syd

      Turner, Dr George (NW Norfolk)

      Raynsford, Nick

      Twigg, Derek (Halton)

      Reed, Andrew (Loughborough)

      Vaz, Keith

      Reid, Rt Hon Dr John (Hamilton N)

      Vis, Dr Rudi

      Roche, Mrs Barbara

      Walley, Ms Joan

      Rooker, Jeff

      Wareing, Robert N

      Rooney, Terry

      Watts, David

      Rowlands, Ted

      White, Brian

      Roy, Frank

      Wicks, Malcolm

      Ruane, Chris

      Williams, Rt Hon Alan (Swansea W)

      Ruddock, Joan

      Salter, Martin

      Williams, Alan W (E Carmarthen)

      Sarwar, Mohammad

      Williams, Mrs Betty (Conwy)

      Savidge, Malcolm

      Wilson, Brian

      Sawford, Phil

      Winnick, David

      Sedgemore, Brian

      Wise, Audrey

      Shaw, Jonathan

      Wood, Mike

      Sheerman, Barry

      Worthington, Tony

      Sheldon, Rt Hon Robert

      Wright, Dr Tony (Cannock)

      Short, Rt Hon Clare

      Wyatt, Derek

      Simpson, Alan (Nottingham S)

      Singh, Marsha

      Tellers for the Noes:

      Skinner, Dennis

      Mr. Clive Betts and

      Smith, Angela (Basildon)

      Mr. Kevin Hughes.

      Question accordingly negatived.
      It being after Seven o'clock, and there being private business set down by direction of THE CHAIRMAN OF WAYS AND MEANS under Standing Order No. 20 (Time for taking private business), further proceedings stood postponed.

    City of London (Ward Elections) Bill
    As amended in Committee, considered.
    7.8 pm
    Mr. John McDonnell: On a point of order, Mr. Deputy Speaker. I gave notice to Madam Speaker that I would raise this point of order, which relates to the point that I made on Second Reading. You will recall that I asked whether the Bill was compatible with section 19 of the Human Rights Act 1998, and whether legal advice had been sought and published.
    We have debated the Northern Ireland Bill this week—it contains a clear statement by my right hon. Friend the Secretary of State for Northern Ireland that it complies with the Human Rights Act 1998. I believe that a similar statement should be attached to all future legislation. Section 19 of the 1998 Act requires that the Minister
    "in charge of a Bill in either House of Parliament must, before Second Reading of the Bill"
    make a statement about the compatibility of the Bill with the convention rights defined in section 1 of the Act. The Northern Ireland Bill states that the Secretary of State for Northern Ireland has made the following statement:
    "In my view the provisions of the Northern Ireland Bill are compatible with the Convention rights."
    That seems to be the procedure for legislation as regards human rights. On Second Reading, Mr. Deputy Speaker, you suggested that this was a matter for the courts. I can appreciate that, but clearly individual Ministers or promoters of Bills must now ensure that they comply with the Human Rights Act.
    The issue to which I am referring is specifically in relation to the convention on the protection of human rights and fundamental freedoms as amended by protocol 11. Article 3 of that protocol, which is headed, "The Right to free elections", states:
    "The High Contracting Parties"—
    that is, the individual countries that have signed the convention—
    "undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature."
    It does not refer to businesses.
    We are now operating in a supra-national political and legal environment. Of course, we are governed by Parliament, which is sovereign, but it is no longer totally so in relation to that legislation. Therefore, I asked earlier at the Private Bill Office whether that legal advice was sought, whether the Lord Chancellor had given his opinion, and if so, what it was—should it be published or at least laid in the Vote Office or the Library?
    In my view, if the House knowingly and wilfully proceeds to introduce legislation that is contrary to the convention, that is one thing. That is a decision of the House, individual Members promoting the Bill and Ministers who may support it. However, if hon. Members blunder into legislating contrary to the convention, without advice, it is a dereliction of duty on behalf of the Lord Chancellor or the Officers of the House in not affording us such advice. I would welcome your views, Mr. Deputy Speaker.
    Mr. Deputy Speaker (Sir Alan haselhurst): Order. I am grateful to the hon. Gentleman for giving notice of
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    his point of order. I hope that I can resolve the matter in fairly simple terms. In the case of a private Bill, the issue that the hon. Gentleman raises is a matter for debate and not for the Chair. The House will be aware that section 19 of the Human Rights Act 1998, as the hon. Gentleman reminded us, obliges a Minister in charge of a Government Bill to make a statement of compatibility before Second Reading. No similar provision occurs in the case of either private Member's or private Bills.
    Mr. McDonnell: Further to that point of order, Mr. Deputy Speaker. Can I clarify the matter? Is any hon. Member who seeks to promote legislation in debate in the House liable, therefore, to digress against the convention on human rights, which we have incorporated in legislation? If we enact this legislation—I hope that we do not because it contravenes everything that we stand for both in terms of human rights and party policies—does that mean that the City corporation, if it instigates some form of election under the legislation, is open to legal challenge? I would be grateful if, at some stage, in addition to the advice that you have provided, the Lord Chancellor could be consulted and we could have some advice on that matter, too.
    Mr. Robert Jackson: Further to that point of order, Mr. Deputy Speaker. It might be relevant to report to the House that, as Chairman of the Select Committee that considered the Bill—we spent several days on it and heard petitioners—I can confirm that that issue was not raised by any of the petitioners and did not come before the Committee at any stage.
    Mr. Deputy Speaker: Order. The hon. Member for Hayes and Harlington (Mr. McDonnell) does not do himself a service because he has illustrated that that is a matter for debate; it is not a matter on which the Chair can rule.
    Mr. McDonnell: Further to that point of order, Mr. Deputy Speaker. Previously, I raised a point of order about declaration of interests. Under the heading, "Declaration of Members' Interests" in the code of conduct, the principle is clearly established that Members
    "shall fulfil conscientiously the requirements of the House in respect of the registration of interests in the Register of Members' Interests".
    Paragraph 5 of the code of conduct states clearly:
    "The main purpose of declaration of interest is to ensure that fellow Members of the House and public are made aware, at the appropriate time when a Member is making a speech in the House or in Committee or participating in any other proceedings of the House, of any past, present or expected future pecuniary interest".
    It also mentions miscellaneous interests.
    We are debating legislation that would give companies and banks within the City of London the right to a vote and, therefore, the right to an interest within the City corporation. I do not believe that any hon. Member has so far declared any interest in relation to this matter. However, I cannot believe that there is no hon. Member or member of the Committee who does not hold some form of bank account or have some interest in a body that is located within the City of London.
    I have a Co-operative bank account—there is not an awful lot in it, but I still have it. That bank is located within the City. That is an interest, because that company will now have a vote in the City corporation elections if the Bill is enacted.
    Mr. Deputy Speaker: Order. The position is clear. Any hon. Member who believes that he has in interest

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    relevant to any matter that comes before the House should declare it. If any hon. Member feels that there has been a failure to disclose, there is a procedure for reporting and investigating that.

    Clause 2

      INTERPRETATION
      7.15 pm
      Mr. McDonnell: I beg to move amendment No. 7, in page 2, line 19, at end insert—
      "'relevant employee" means a person whose principal or only place of work on the qualifying date is ordinarily the hereditament in respect of which the entitlement to appoint a voter arises and who works for that qualifying body.'.
      Mr. Deputy Speaker: With this, it will be convenient to take the following amendments: No. 13, in clause 3, page 2, line 42, leave out '£200' and insert '£1,000,000'.
      No. 16, in clause 3, page 3, line 12, leave out from 'greater' to end of line and insert—
      'number of employees of the qualifying body.'.
      No. 17, in clause 3, page 3, line 20, after 'values:, insert
      'the number of relevant employees'.
      No. 19, in clause 4, page 3, line 28, leave out from 'shall' to end of line 30 and insert—
      'conduct a ballot of all relevant employees to elect its voter or voters.'.
      No. 30, in clause 8, page 5, line 4, leave out 'appoint' and insert 'elect'.
      No. 31, in clause 8, page 5, line 7, leave out 'appointed' and insert 'elected'.
      No. 33, in schedule 1, page 6, line 7, leave out from 'scale:' to end of line 24 and insert—

      Number of Relevant Employees

      Maximum Number of Persons whom that Body may Elect

      Up to 1,000

      1.

      For every 1,000 over the first 1,000

      1 for every thousand relevant employees

      No. 35, in schedule 1, page 6, line 28, leave out'rateable value' insert 'number of relevant employees'
      Mr. McDonnell: On Second Reading, there was considerable dissatisfaction with the Bill. The Committee was established and petitioners petitioned against the Bill. There have been some minor amendments, but they are insignificant.
      The statement from the Committee draws attention to the fact that the Bill remains flawed—extremely flawed. A number of proposals are recommended in that statement to make further improvements. As it is a matter of debate, the Committee did not consider human rights, or the contravention of the Human Rights Act 1998, even though that matter was raised on Second Reading. It was a dereliction of the duty of the Committee not to discuss that matter in Committee or to seek legal advice. However, the Committee set out a number of detailed recommendations—
      Mr. Robert Jackson: The hon. Gentleman accuses the Committee of dereliction of duty, but we were confined
      466
      to the requests that were put before us by petitioners. It was our duty to consider those. Human rights were not raised by any of the petitioners.
      Mr. McDonnell: I should have thought that any Committee should take into account the Second Reading debate and the matters raised in it, if only for the background and the environment in which it considers the legislation. I am happy to give way to the hon. Gentleman if he wants to explain why the Committee did not take cognisance of the Second Reading debate. The human rights convention was a critical issue in that debate, yet the Committee blatantly ignored it. Members of the Committee pursued its practices and considered the matter, possibly thereby incurring some liability in the future.
      Mr. Deputy Speaker: Order. The hon. Gentleman cannot pursue a Second Reading matter. He must deal with the amendment that he is moving.
      Mr. McDonnell: In mitigation, Mr. Deputy Speaker, I think that I was provoked to enter into debate on that matter because of the intervention, but I will not test your patience any further.
      The special report lays out a number of interesting suggestions for the City corporation and, in that respect, I congratulate the Committee for at least identifying the fact that the Bill is flawed and stating that it should be part of a wider reform process. In other words, it is the first step on a long path to establish some form of democratic government within the City corporation to protect the rights of the residents. It is in that context that I tabled my amendments.
      The need for reform is beyond doubt. The City of London corporation accepts the need for reform, although it does not implement reforms. Indeed, in an almost jocular way, it ignored most of the recommendations that have been made so far. The statement agrees that reform is needed, but the tragedy is that none of the recommendations can be contained in the Bill. That most significant point was made by the Chairman and other members of the Committee. The Bill will do little to achieve a process whereby we can have confidence that the corporation will reflect the interests of its residents or even of its business community.
      The statement includes a range of recommendations for the promotion of reform. However, most of them rely on the good will of the corporation—that is why I tabled my amendments. It has taken 600 years to rely on the good will of the corporation.
      Mr. Gareth R. Thomas: Will my hon. Friend give way?
      Mr. McDonnell: I will give way if my hon. Friend wants to correct the number of years.
      Mr. Thomas: A thousand years.
      Mr. McDonnell: That is a millennium achievement for the corporation.
      The amendments attempt to redress the balance, because the Bill fails to tackle the problems of the democratic deficit of the corporation. Most of the

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      recommendations in the special report of the Committee rely on the corporation to review boundaries, to examine internal or external boundaries, or to obtain legal advice on its powers. The corporation does not seem to have enacted even that recommendation—or, if it has, none of us is aware of it. If the corporation has obtained legal advice and hon. Members have seen it, I should be happy to read a copy of it. In relation to the recommendations on boundary review, why can not the corporation use the boundary commission like any other local government body? We have received no commitment in writing from the corporation that it has approached the boundary commission.
      In the statement, there is an admission that the right of veto on the common council of the City of London still exists. Before I tabled my amendments, I hoped that there would be one letter from the corporation stating that it would withdraw the veto. We can all remember cases of individuals who were vetoed, even after their election. The classic example is Mr. Malcolm Matson. I understand that he communicated with several hon. Members before Second Reading.
      The amendments attempt to move the measure forward within its own constraints. I tabled other amendments, which were not selected. They would have ensured that the residents had a controlling vote. It may have been rather ambitious to attempt to abolish the business franchise through my amendments.
      The corporation is the last vestige of undemocratic privilege within our system of government that is formally constituted in legislation. It is the last hurdle—the last hedge that we must go over.
      Mr. Deputy Speaker: Order. I detect Second Reading general arguments in what the hon. Gentleman has said so far. He must now turn to the specific and narrow terms of the amendments if he wants to persuade the House that they should be accepted.
      Mr. McDonnell: I accept your ruling, Mr. Deputy Speaker, but there is a background to the amendments that needs explanation. It is the undemocratic nature of the existing system. We must explore that to ensure that the amendments tackle the problems that are part of the undemocratic privilege exercised by the City of London corporation.
      Mr. Michael Connarty: I commend my hon. Friend for filling in those details for some of us who did not follow closely the Second Reading debate. I hope that the Chair will not interrupt so much in future.
      Mr. Deputy Speaker: Order. I must ask the hon. Gentleman to withdraw that comment. It was quite disgraceful.
      Mr. Connarty: I apologise if the Chair is offended. However, Back Benchers should be defended by the Chair. I hope you, Mr. Deputy Speaker, will defend our right to hear someone who is clearly knowledgeable, so that we can fill in the background. I apologise if you were offended by the way that I put it.
      Mr. Deputy Speaker: Order. The role of the Chair is to ensure that the debate, whatever its content, is
      468
      conducted within the rules of order. We cannot have Second Reading debates taking place in the middle of a debate on specific amendments. Second Reading has taken place and the text is available to all hon. Members. If an hon. Member does not know what was said, that is no reason for it to be repeated. I have given the hon. Member for Hayes and Harlington (Mr. McDonnell) considerable leeway so that he can refer to the background to his amendments. However, it is my duty to tell him and the House that when we are discussing amendments, it is the amendments themselves that must be discussed.
      Mr. McDonnell: Thank you, Mr. Deputy Speaker.
      Dr. Norman A. Godman: May I ask a question about amendment No. 13? I understand that that amendment would give relevant employees the right to stand for election as a voter. If the amendment were passed, would every employee in a City establishment—within the square mile—have the right to stand as a voter representing that company? I have more than a passing interest in the matter; I am a council house tenant of the City of London corporation and a peripatetic constituent of the right hon. Member for Cities of London and Westminster (Mr. Brooke), who is one of the supporters of the Bill.
      Mr. McDonnell: I am not sure whether there are any amendments on peripatetic voting, but 1 advise my hon. Friend not to suggest that to the corporation. Even if we cannot achieve full, universal, adult suffrage for the corporation—as there is in the rest of the country and in America and in most European and other states—at least, given the argument that it is a business district, the employees who make the wealth of that area should be able to vote. That is the purpose of my amendments. [Interruption.] I do not know whether that was an intervention or a sedentary comment.
      Initially, I wanted to establish universal suffrage, but that was rejected by the corporation. In Committee, representatives of the City of London Labour party—I apologise for not being able to consult them directly, because I should have welcomed the opportunity to discuss the amendments with them—proposed that votes should relate to the number of staff employed by bodies within the City. They referred to that system as the payroll vote. That is what my amendments suggest.
      Under the existing system, the vote is cast by the business itself, rather than by a person who is either a local resident or an employee who daily earns his or her living in the City. Even under the proposals in the Bill, the vote will be owned by the business. The amendments would ensure that there is at least some link between those who reside or work in the City and the exercise of power by the corporation. On Second Reading, we did not discuss the existing system.
      I apologise, Mr. Deputy Speaker, if you think that my remarks go beyond the amendment, but it is important to recognise how the system operates at the moment and the way in which we want to reform it.
      7.30 pm
      As hon. Members know, the court of common council is one element within the corporation. It comprises 25 aldermen, including the lord mayor and about

      469
      130 common council men. I appreciate that the corporation has offered to reduce that number as part of its reforms. In effect, that body becomes the government of the City because it operates the functions of local government. It is therefore the key body that we want to influence. We want to ensure that it has some connection to those who live in the City and, more importantly in this debate and what is permissible within the context of the Bill, those who work there. Other elements of the corporation include the court of aldermen, which has 25 members, and the common hall.
      In our discussions to date, the main concerns that we have expressed relate to abuses of the system and out-of-date facets such as the way in which it is dominated by individual companies. The corporation can be fixed by those companies, the residents' vote can be overridden and the businesses that have begun to flourish in the City over recent years have no role and no say. The Bill is an attempt at least to give those businesses an input into the operation of the City.
      On what basis, however, should those businesses have any input whatsoever? Surely, that input must be based on the interests of their employees. They are the people who earn the wealth for the company, who reside in the City for much of their time in employment, who are directly affected by the corporation's decisions and who therefore have the right to have a say in those decisions.
      Mr. Robert Jackson: I hope that before the hon. Gentleman concludes his speech, he will give his answer to the question that was in the minds of members of the Select Committee about the practicalities of compiling a register for all the employees who work in the City, so that they can participate in the exercise that he desrcibes.
      Mr. McDonnell: That is a good point, which I intended to address later in my remarks, but I shall deal with it now. That issue was raised in response to the corporation's proposals, and concerns were expressed about how one would conduct an assessment of the number of employees within a particular business. However, national insurance numbers, payrolls and taxation by the Treasury give us the necessary information.
      That information will be compiled and used under the Employment Relations Bill, which has passed through both Houses of Parliament. Under that legislation, ballots will be held among work forces to determine trade union membership and recognition. I do not, therefore, see any outstanding impediment to identifying the number of employees in a company and on a particular site.
      Mr. Tony Colman: I understand that the City of London Labour party did not press that particular amendment when the matter was considered in the Committee. Will my hon. Friend explain why the amendment was not pressed?
      Mr. McDonnell: I cannot speak for the City of London Labour party, but I shall try. From my discussion with party members at the end of the Committee proceedings—I apologise to Kate Green and her friends if I have got this wrong—I understood that the corporation was not willing to accept the amendment. I can therefore understand the petitioners' approach. They were keen to ensure that the maximum number of their recommendations for improvement were accepted.
      470
      In my last conversation with Kate Green, who is the secretary of the City of London Labour party, I accepted that the party would have to compromise on several issues, but I thought that we should try to press the matter further. That is the role of individual Members of this House when petitioners come up against a brick wall. In this case, the corporation was that brick wall because it refused to budge and to accept any further compromise. In such cases, it is the right and the job of Members of Parliament to protect individuals and organisations.
      If there had been a chink of light in the corporation's position or any sign of compromise, we could have allowed the Committee to meet again to examine the reforms in more detail. I should have welcomed that. However, members of the City of London Labour party—and, perhaps, the members of the Committee, but they can comment for themselves—may have thought that the corporation would not budge any further so it was not worth them making any more effort.
      Mr. Jackson: May I suggest an alternative interpretation of the attitude of the City of London Labour party, which is that it came to the conclusion, as we did in the Committee, that the approach that the hon. Gentleman suggested was not practical? The sources to which he referred may well enable a census to be taken of the number of employees, but if we are talking about giving a franchise to individual employees, we must consider the problem of establishing a valid electoral register when hundreds of thousands of people work in the City and there is a tremendously rapid turnover.
      Mr. McDonnell: I understand the practical problems, but I do not think that any of them are insuperable. The most recent estimate of the number of people working with the corporation's boundary was about 250,000 employees. There is a turnover in most constituency electorates. In London constituencies, that turnover can be anywhere between 20 and 30 per cent. of the electorate, and in some instances it is even higher. However, I do not believe that mechanisms cannot be found to overcome those problems.
      There is an incentive for employees to come forward and register and, if necessary, to supply verification of their status if they want to vote. The incentive of providing a vote to individual employees would encourage people to come forward, register with the town clerk and provide sufficient information such as a wage slip or a letter from the employer. That would overcome the problems envisaged by the Committee and others. Perhaps we should adjourn the House now and invite the City of London Labour party to provide us with evidence on how to proceed.
      Dr. Godman: The hon. Member for Wantage (Mr. Jackson) raises a difficult but legitimate question about eligibility. However, I offer my hon. Friend the analogy of employees in companies that have works councils. In all such companies of which I am aware, every employee, no matter how new, has the right to vote for representatives on the works council. In those circumstances, we do not apply the same criteria as we do in elections for local government, the Westminster

      471
      Parliament or, dare I say it, the Scottish Parliament. The analogy of the works council might be helpful in dealing with an admittedly difficult question.
      Mr. McDonnell rose—
      Mr. Andrew Mackinlay: Will my hon. Friend give way?
      Mr. McDonnell: Will my hon. Friend first let me respond to the previous intervention?
      A useful comparison can be made with works councils, but forms of industrial democracy will develop from the Employment Relations Bill. For example, we shall have the opportunity to ensure that there are accurate registers of people who are employed by a particular company when there are ballots on trade union recognition. We already have the trade union rights commissioner, who can investigate individual claims and disputes about trade union membership within a particular company.
      I do not think that the problems will be insuperable, because there is such expertise within the corporation. I pay tribute to the high quality of its staff and officers. Their ingenuity could overcome problems through co-operation employers' bodies.
      Mr. Mackinlay: I thank my hon. Friend for giving way, and 1 apologise to you, Mr. Deputy Speaker, for not being able to contain myself when I tried to intervene earlier. However, I thought that my hon. Friends the Members for Hayes and Harlington (Mr. McDonnell) and for Greenock and Inverclyde (Dr. Godman) were far too generous to the hon. Member for Wantage (Mr. Jackson). I find it breathtaking that he can trot out the nonsense that it will be difficult to compile a register. Our registers are a snapshot in time in terms of our territorial rights to be elected. I cannot see how anyone can suggest with any credibility whatsoever that one cannot have a snapshot in time in respect of who is on the payroll of companies in the City of London on a particular date. It is breathtaking in the extreme that anyone could advance such nonsense in the House.
      Mr. McDonnell: I am a man of temperate language and moderation, a man of the middle of the road if not the middle way.
      Let me return to the point that I was making about the practicalities. The hon. Member for Wantage (Mr. Jackson), who chaired the Select Committee, may not recall the final statement by the City of London Labour party. It accepted that to amend the Bill to incorporate the principle of payroll votes would be a fundamental change. At that stage, it was anxious that such a proposal might be ruled out of order, but as a result of my amendments, that was not the case. It stated that such a change
      "would require substantial redrafting and may not be possible without substantially altering the Bill to such an extent that it would not be before this Committee, but would be re-presented."
      If we agree tonight that the Bill should be amended in that way, the City of London corporation will be saved the time, money and expensive lawyers involved in having the Bill re-presented.
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      Mr. Haines, who was representing the City of London Labour party continued:
      "We take the view that the first steps towards City reform outlined in the Bill will not be the last."
      That was certainly the burden of our discussions with the City corporation. By all accounts, they were constructive meetings that were conducted in good humour. The City of London Labour party representative continued:
      "We will monitor this new franchise and how it works in practice. We are pleased to have the opportunity to put the case for payroll votes now on the record for future consideration if required."
      That statement gave us the incentive to move our amendments tonight. The City of London Labour party was clearly constrained by the fact that it thought that such a proposal went beyond the Bill. That is clearly not the case, therefore we can discuss it tonight.
      The amendments seek to empower people who work in the City. I find it fascinating that my amendments would return the City corporation to its original roots and objectives and to its original method of representation. I am a traditionalist in that I seek to return the City corporation to its worker traditions.
      In the middle ages, the City comprised workers, business people and tradespeople who set up an organisation to represent their interests. It was a protosoviet—an embryonic workers' council. Although it was bourgeois, Trotsky would have appreciated it. In my opinion, the City corporation has the same line of ancestry as the Petrograd soviet. It was a group of workers coming together to seek representation. The amendments return to the tradition of employees and workers demanding some say about their working environment where they spend eight to 12 hours a day, or longer.
      I have gone through the history of the City of London. The idea of freemen of the City of London goes back to Roman times. It involved business men who were engaged in various trades and who had specific rights. The system continued into the middle ages without charter or incorporation. In its statement on the origins of its constitutional functions, the City corporation desrcibed itself as a commune. Its ancestry is clear. It is Marxist history—E. P. Thompson all over again. After the royal sanction, the City corporation established its rights on behalf of the workers—the freemen who worked in the City—through the guilds. It is fascinating that the rights of individual employees pervades the history of the City of London.
      7.45 pm
      Some of us come from a guild-socialist background through the trade union movement. The operation of guilds within the City corporation embedded the vote on the basis of work and the production of wealth. A PhD on class analysis may well evolve out of that.
      Mr. Robert Jackson: I am grateful to the hon. Gentleman who is being extremely patient. His historical analysis is most interesting. If the City owes its origins to power having been seized from below and not to an act of concession from the Crown or indeed from Parliament, is it altogether appropriate to talk in terms of Parliament imposing legislation on it?
      Mr. McDonnell: That is a valid point. The hon. Gentleman seems to be proposing that Parliament should

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      not act, but there should be a revolution. A Conservative Member appears to have made a revolutionary statement. If we pursue that analogy, workers in individual companies should demand the right to vote. Perhaps we should encourage them to do that.
      The privileges that were bestowed on individual freemen were limited. The history of the City corporation is quite useful in terms of how registration evolved from the original right of individual workers and guild members to vote. Restrictions came about later. The hon. Member for Wantage is right to refer to interventions from above, as wealth and power eventually undermined the rights of individual workers to have a say in respect of their working environment and the present contorted, distorted, abused system developed.
      It is important to distinguish between those who create wealth and those who gorge on it. There is often confusion between the City and the City corporation. The City corporation is not the City. A good analogy was drawn in the Select Committee: it is as if Stratford on Avon was claiming to be the Royal Shakespeare Company. The City is a different element from the City corporation. The City corporation is simply a local government body that has engaged in profligate abuse of the financial resources for individual gain or personal enjoyment—the best free lunch in the country. Those who work and create wealth in the City have no relationship with the corporation because of the historical restriction of individual rights to vote.
      The Bill is an attempt at least to allow businesses some say, but it does not involve the creators of the wealth. It gives a vote to the owners of businesses, but not to the individual workers. That is why over the years the Labour party pledged to abolish the City corporation. It was frustrated by its refusal to reform. Successive manifestos on which we fought elections in London included the abolition of the City corporation.
      Mr. Mackinlay: Hon. Members may be aware that I am not a member of the London Labour party although my constituency is close to London. Will my hon. Friend tell the House when the Labour party altered the policy to which he has referred as—
      Mr. Deputy Speaker: Order. That is quite outside the scope of the amendment.
      Mr. McDonnell: I shall try to draw my hon. Friend's intervention into the scope of the amendment. There was a debate throughout the 1970s and 1980s within the Labour party on industrial democracy, and bizarrely the issue of the City corporation arose. There was a discussion about whether a range of reforms would include a stepping stone towards democratic reform within the corporation. The discussion involved an extension of the number of businesses that would be able to vote. There was even a discussion at that early stage about empowering individual employees or workers to have some say with regard to the corporation.
      To my concern, shortly before the 1997 general election the Labour party's proposal to abolish the corporation on coming into government was dropped. I do not think that the issue was debated in any great detail within the London Labour party. If it had been, we would have had the opportunity of having a similar debate to the one in
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      which we are now participating. We would have been able to discuss a range of reforms. At that stage there would have been an opportunity on a continuum between abolition to status quo to insert into the debate some democratic discussions involving the work force within the City.
      One of the issues that arose on Second Reading was the special nature of the City as a business district, which was raised by my hon. Friend the Member for Dudley, South (Mr. Pearson). If a Member wants a business district in his constituency, let him have it and not intrude on London. That reflected the debate that took place during the 1970s and 1980s, which focused on who in business, if the City was a business district, should have a say. It was considered that that say should not be confined to the owners of businesses or to boards of directors, who are largely absentee landlords. It was thought that those engaged in the creation of wealth for a company should have a say.
      Unfortunately, the Labour party dropped the abolition proposal and there was not a semblance of a debate. There was then consultation within the—
      Mr. Deputy Speaker: Order. I have allowed the hon. Gentleman enough of the history. He must now return to his amendment.
      Mr. McDonnell: The reason for drawing on the history, Mr. Deputy Speaker, was to explain how we have arrived at the present situation. However, I understand your point.
      In response to the demand for reform, the City corporation proposed introducing periodic re-election for aldermen, ending the procedure of allowing the court of aldermen to veto an individual—that has yet to be enacted or introduced—and streamlining clarification of the main procedures whereby an alderman progresses to become sheriff and subsequently Lord Mayor. It made a commitment on a steady reduction in the size of the court of common council from 330 members plus 25 aldermen to 100 members plus 25 aldermen. However, there was no discussion at that stage of employees having the right to vote.
      In "CityView" in March 1998 the corporation became very confident. The article states:
      "The Corporation's proposals, the principles of which have been accepted by the Government, set out to improve the existing system and then extend the franchise to embrace a wide range of City businesses and organisations."
      There was no discussion about the organisation of the business vote or about the consultations that businesses would have to undertake with their employees or others about the exercise of that vote. Having drawn this to the attention of the Front-Bench spokesman at that time, a letter winged its way to the City corporation saying that its phrase,
      "the principles of which have been accepted by the Government"
      namely its proposals—was not true at that stage. There had been no acceptance by the Government and consultation was still taking place.
      I think that the corporation's minor reforms were set out under duress, and that is the point of the amendment. Every reform that the corporation has suggested has been like drawing teeth. They have all been forced under duress. That is why the debate is taking place.

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      The proposals for reform set out by the corporation undermine the influence of residents. In addition, they take no account of the corporation's work force. Clause 4 refers to "workforce". It is a breakthrough. It is the light at the end of the tunnel. The corporation recognises that there are more people in the corporation than those who own businesses. These are the people who earn the money. Clause 4 states:
      "A qualifying body which is entitled to appoint more than one voter pursuant to section 3(1)(c) above shall ensure that the appointments"—
      not elections—
      "which it makes reflect, so far as is reasonably practicable, the composition of the workforce."
      This is the first time that there has been a reference to workers in any legislation involving the City corporation since the middle ages. It recognises for the first time that there is a work force within the City boundaries. We should be cheered that there is an opportunity to amend the Bill in a practical way that could be welcomed by the corporation, although it might feel under duress initially.
      I accept one of the arguments against the extension of the vote to employees, which is that it will contradict to some extent arguments raised on Second Reading and arguments discussed in Committee and elsewhere about the need for the strengthening of the residents' vote and the acceptance of universal adult suffrage to elect the City corporation. Those of us who believe in universal adult suffrage must accept that if employees have the right to vote, that will contradict residential rights. However, I accept that because it is a compromise.
      I have examined other legislation that has come before us this year in our process of democratic renewal of the United Kingdom to ascertain whether there were references that we could embody in the City corporation that would ensure universal adult suffrage and some involvement of employees, workers and businesses within the decision-making processes. In Scotland, the franchise is straightforward. It is based upon that of local government. The position is exactly the same in Wales, as it is in Northern Ireland. It is interesting that in Northern Ireland we are now establishing a civic forum of some sort. That involves civil society, which includes employers and employees' representatives, for example. There is some movement in the discussion that is taking place about the representations of individual employees.
      However, in the democratic renewal of London that we set out in our Green Paper, "A Mayor and an Assembly for London", and in the context of London government, I shall argue why it is so important that residents and employees, rather than businesses, have a vote.
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      In the Deputy Prime Minister's foreword to "A Mayor and an Assembly for London", he stated:
      "When this government was elected less than a year ago, we embarked on a programme of democratic renewal in Britain. An essential part of this is modernising government in London".
      At that stage we were campaigning for the Greater London Authority and the structure of the assembly.
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      The City corporation is part of that structure, and the Deputy Prime Minister made it clear that we were proposing
      "new arrangements tailor-made for London with a powerful directly elected Mayor with hands-on responsibility for transport, economic development, strategic planning and the environment."
      The directly elected mayor will have significant powers and huge resources, which are to be exercised through consultation in the construction of strategies in each of those areas.
      The Deputy Prime Minister refers in his foreword to Londonwide solutions to
      "congestion, pollution, poverty and social exclusion—all of which reduce the quality of life for Londoners",
      which under the subsequent legislation must be exercised in consultation with the London boroughs and with the common council, which is counted as a London borough.
      What is significant in the new structure of government in London is that the mayor will be elected and the assembly will be elected, but, in the development of those strategies, the mayor will have to consult every London borough and the common council of the City corporation. Under the Bill before us, the common council will receive its mandate from 5,000 residents, but that mandate will be swamped by the business vote which will be determined not by the people who create the wealth of those businesses, but by those who own them. In some cases, those people do not even have to attend their business in the City.
      If the mayor and the assembly are to determine the important strategies for London overall and for my constituency in particular, I want the vote of the City corporation, which will determine its input into the consultations, to be determined by residents, or at least by residents and workers in the City corporation area. That is the significance of the amendments.
      Under the Greater London Authority Bill, the court of common council of the City corporation will be consulted on the mayor's development of the transport strategy, the London development agency strategy, the London biodiversity action plan, the municipal waste management strategy, the London air quality strategy and the London ambient noise strategy. I shall give an example relating to my constituency.
      The London ambient noise strategy is critical in my area, and in west London generally, because of Heathrow airport. My hon. Friend the Member for Putney (Mr. Colman) has led some important debates in the House on the impact of air traffic noise on residents in west London. In the development of the noise strategy for London, the mayor will consult my borough, of course, but will consult on an equal basis with the common council of the City corporation. At present the decisions of that City corporation will largely be dominated not by the residents or the people who work in the area, but by the businesses.
      That means that the noise strategy for my area will be influenced not on any democratic mandate, not by people who are interested in living and working in London, but by people whose sole interest, in many cases, is to make money out of London. People who live or work in London know what the noise is like, they know about the problems of congestion and waste, and they have a view on those matters. Of course businesses have a transport interest, but for them, profit will always override environmental concerns.

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      I want my environment protected by the new strategic authority for London, the London mayor and the assembly, but I want it protected in consultation with democratic institutions—people who are aware of the experiences of Londoners, and of what it is like to live and to work in London. If the City corporation has a role in all those policy areas without the democratic mandate of the residents or the people who work in its area, that will undermine the credibility of the new structures of governance of London.
      Mr. Shaun Woodward: I am grateful to the hon. Gentleman for giving way. Can he explain to the House the difference, if there is any, between his position and that of the City of London Labour party, which stated recently:
      "We accept that the common council will be better able to serve the financial City if the electors to which those representatives are accountable include those financial institutions."
      Can the hon. Gentleman explain his policy and the difference between that and the policy of the City of London Labour party, and whether he subsrcibes to the policies of those on his Front Bench?
      Mr. McDonnell: I cannot speak for the City of London Labour party, although from discussions I believe that its views are very similar to mine. It is trying to get the best possible deal for local people. I can understand that. The best deal at present is to try to amend the Bill in such a way as to enhance the democratic rights of local residents, so that they are not swamped by businesses. The City of London Labour party has had to accept a series of compromises in its proposals to the Committee. If the hon. Gentleman wishes, I will provide him with a copy of the minutes of the Committee.
      The City of London Labour party accepted that the extension of the democratic franchise to employees was a subject for another day, as it could not be included in the Bill. I am at one with the thrust of the argument. I shall give way if other members of the Committee want to come in, but that is the thrust of the discussion that took place in Committee.
      The City of London Labour party is trying to get the best that it can from the legislation. I shall explain to the hon. Gentleman on another occasion the concept of transitional demand, which he may not have come across in the Conservative tradition. The City of London Labour party is trying to ensure that at least some minor improvements are made, even if we cannot go the whole way.
      I am trying to explain my position on the amendments, and at a later date I shall be happy to explain my overall position, but I could sum it up in one word: abolition. I accept, as do the City of London Labour party and the other petitioner, Mr. Malcolm Matson and others, that we must take what we can. Even if we cannot get universal adult suffrage, which exists throughout the rest of the country and which we fought so hard to achieve, at least let us get a recognition of the fact that businesses exist only as a result of their workers, and that we should give the vote to the employees.
      I hope that that answers the hon. Gentleman. I shall be happy to explain to him in further detail the overall policy to be pursued through abolition of the City corporation and its division into the individual boroughs or transfer to
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      the auspices of the new mayor and assembly. It would be a wonderful financial base for the new strategic authority for London, but I am afraid that we have missed that opportunity. I tried to move an amendment to that effect on the Greater London Authority Bill, but we never reached it.
      I return to the import of the City of London corporation's role and the need to ensure that it will be representative of residents and employees. Within the new structure of London government, it will have a say equal to that of those other authorities which have a direct democratic mandate. Therefore, my amendments seek to ensure that, if we cannot go to the full extent of the democratic mandate, we at least move towards a halfway house. That recognises that there may well be a special area with large numbers of people working within it who should have their own say.
      There are opportunities within the legislation to ensure a modernising approach which will gear up the new structure of the City corporation, which will come out of the Bill, to meet more effectively the challenges of the new structure of governance for London overall.
      If the new City corporation reflects its residents and those who work within it rather than just businesses, there will be a significant voice to be heard on issues such as traffic congestion. The workers within the City corporation endure a daily life of traffic congestion from one end of the square mile to the other. There have been some improvements, but we need to hear from those who work in that area what it is like there, what are their concerns and what can be done to improve traffic congestion but—because no traffic problem in London can be solved within the square mile—within the strategic approach that the new strategic authority for London will undertake. That is why it is critical to engage those people in this debate. It is not just a matter of consulting them, but of ensuring that they participate democratically in the debate. That can come only if they have the right to vote.
      Other aspects that I have identified within the new strategic authority are ambient noise, waste management, biodiversity and the London development agency. I do not want to stray too far from the Bill, but I hope that the London development agency will be the engine for economic growth within London. We need to take on board the voice of business, and that is contained within the composition of the London development partnership, which it is hoped will become part of the new London development agency. We also need to ensure that, within London's economic development programme, we take into account the voice of those with a hands-on approach to working within the City—in other words, the employees, the workers. I want them to have a say in the development of London's economy.
      In the new structure of governance for London, such people will be consulted. Clause 33 of the Greater London Authority Bill obliges the mayor to consult on all the strategies of the Assembly, the functional bodies, the London local boroughs and the common council. What better than to have feeding into the views of the City corporation the views of those who create the wealth within the City on issues such as our city's economic development. I would welcome their views to nourish the discussion.
      The amendments make the City corporation accountable to real-life people. I hope that they protect the residents' vote as best they can. In addition,

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      they introduce into the system not businesses, but workers: people who provide us with the economic base for Britain's future stability.
      8.15 pm
      Amendment No. 7 defines a relevant employee. I have lifted part of that definition from the clause that I mentioned earlier relating to the work force. The amendment seeks to define a relevant employee as someone
      "whose principal or only place of work on the qualifying date"—
      the date of registration—
      "is ordinarily the hereditament in respect of which the entitlement to appoint a voter arises and who works for that qualifying body."
      Clause 3 contains three classifications of those entitled to vote. The first is those who are
      "ordinarily in occupation for relevant purposes as owner or tenant of a hereditament—having a rateable value of not less than £200".
      The second is a "resident in that ward". The third
      "is a person appointed"—
      not elected—
      "as a voter in writing by a qualifying body".
      A qualifying body is defined previously in the Bill. Therefore, amendment No. 7 identifies a relevant employee as someone who works in a hereditament.
      In amendments that have not been selected, I attempted to ensure that only residents could vote. The clause goes on to say that a qualifying body would be able to appoint, not elect, a person as a voter only if it undertook a ballot of its employees. We have discussed the logistics of undertaking a ballot of employees.
      The proposal envisages a qualifying body registering itself with the City corporation, as would be necessary anyway because of the rateable value commitments, identifying to the town clerks, or the chief executive as he now is, the number of employees located within that hereditament, having that verified by the chief executive, and then, if necessary—in the event of an appeal, contest or whatever—the City corporation itself funding an independent commissioner to enable an assessment to be made in any disputes. Such disputes could arise from an individual employee contesting a matter, or his or her trade union representative.
      I thought hard about whether to build some concept of trade unions into the amendment, but I did not want to frighten the horses. To the City corporation it would be like a red rag to a bull. Nevertheless, there would be an opportunity for individual representatives to contest the calculation of the number of employees and the registration. If necessary, that could be part of any future report to Parliament about the operation of the system, which is contained elsewhere in the Bill.
      Amendment No. 13 may be the crux of the debate. Rather than have the appointment of a voter by whim, the onus must be on the qualifying body to go through some process in order to verify that the voter is acting in the interests not just of the individual company, but of those who work in that company, and those who can take a broader view in terms of the City corporation, the City area and its role in the governance of Greater London
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      through the Greater London Authority and the advice that it provides, along with other London boroughs, to the mayor of London.
      The current legislation proposes that, when there is a dispute about an hereditament that straddles more than one ward, a determination should be based on the rateable value. I suggest, in amendment No. 16, that the determination should be based, for electoral purposes, on where the greatest number of employees are. If a building or company was located across two wards, the vote would be cast in the ward where the most people were employed. The people involved could then participate in discussion.
      Amendment No. 17 provides for the appointment of voters to relate not just to rateable values, but to the number of employees. All the amendments are intended to reflect the concept of voters as individuals—living human beings—rather than buildings, as it were, or owners of businesses.
      Amendment No. 30 is, to an extent, an attempt to challenge the concept of the Bill. It proposes the replacement of the word "appoint" with "elect". If a ballot were introduced among employees, someone voting on behalf of the business concerned would not be appointed, but elected. The amendment may seem trivial, but every reference to democratic processes that we can introduce in the Bill will send a message. It will send a message to the corporation of London that the days of appointments are over and that the days of rotten boroughs are over. We now demand elections. We demand democracy; our cry is "Democracy".
      I actually consider amendment No. 33 to be quite weak. I apologise for it. Schedule 1 establishes a principle relating to rateable value. The original proposal was amended in Committee; I welcome that amendment, which resulted from pressure exerted by petitioners. Originally, the relevant rateable value of an hereditament occupied by a qualifying body was £200 up to £10,000; that has now been amended to £200 up to £20,000. In the case of rateable value of more than £20,000 but not over £1 million, the maximum number of persons who can be appointed will be
      "1 for every complete £20,000 of that rateable value, plus 1 for any further amount thereof less than £20,000".
      On Second Reading, we were anxious about that purchasing of votes. I admit that the amendment may not be as well worded as it might be. I have suggested that there should be one vote for every 1,000 employees. I now understand the problem that that entails. It is not a practical problem; the problem is that rather than being rateable value, the currency is now employees. A body can now purchase a vote according to how many employees it has. Perhaps we should suggest to other Ministers that that arrangement could be part of the new deal. It could provide an employment creation scheme in the City. I jest, Mr. Deputy Speaker.
      Amendment No. 33 suggests one person for every 1,000 employees. That is a crude calculation. I have heard that there are about 250,000 employees in the square mile, although there may be more. The problem with the amendment is that, if a firm is broken down into a number of individual units, the one vote is there for up to 1,000 employees. That confronts us with the same issue with which we were confronted by the employment rights legislation: how do we define a particular unit?
      Perhaps we shall be able to solve that problem later. Perhaps we shall be able to amend the amendment in another place. The Minister shakes his head, but one never

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      knows: there could be a revolution in the Upper House at some point in the near future. Perhaps their Lordships will recognise that this could provide them with a bargaining gambit for their future survival.
      Anyway, I want to ensure that the trade is not in individual employees, and that we do not reach a point at which companies break themselves down in order to gain the required number of votes, rather than being honest. Of course, instead of requiring one for every 1,000, we could have specified one up to 1,000, and then one for every 10,000 thereafter. That would have provided an incentive, and it was my original intention; but, again, I should like to return to the matter at a later stage.
      Amendment No. 33 is consistent with the principle that we have established. We are, in effect, throwing out the words "rateable value". This is not about rateable value: it is not about how much land someone purchases, how much he owns and what his wealth is. It is about real people: it is about thousands of workers and what they bring to our city overall—not just the City of London, but the city of London according to the old Greater London council boundaries.
      Amendment No. 35 is similar to amendment No. 16. It, too, deals with circumstances where there is more than one hereditament in the same ward. Again, we reject the idea that there should be an aggregate of rateable value, but suggest an aggregate of relevant employees. We want to be fair to individual companies and to enable them to exercise their right to vote, although they may not be based on a particular unit or may have split their operations between different areas in a particular ward.
      The overall process that I envisage is a dialogue with the corporation about the practical implementation of the amendments. I welcome the corporation's views on the concept of the definition of a relevant employee. I understand some of the difficulties that have been experienced with that definition, and I understand the point made in Committee—I think that it was the only valid point in this regard—about the change that has taken place in the operation of City companies. Employees used to be located in the City itself, operating on a day-to-day basis; nowadays, they hot-desk. An employee of a company may visit the site only once every three or six months. We need to construct a definition of a relevant employee that takes account of modern industrial and commercial practices in the City.
      Other people may be employed in the City and therefore count as relevant employees according to this definition, but may share a contract with a number of companies. Where will their ballot take place? It may be carried out on the basis of proportionality, or they may opt for a specific company.
      I would welcome the corporation's views because I think that it could advise us on a number of issues. I would also welcome a discussion with the London Chamber of Commerce and Industry, the south-west branch of the Trades Union Congress and the south-west branch of the Confederation of British Industry. As we know, working practices in the City change day by day, and that is bound to affect definitions in the legislation.
      The argument that the City has put forward in promoting the Bill is that one of the things that does not change is ownership of property. That is not true either. There is as much change of property and difficulty of definition of property as there is change of employee and difficulty of definition of employee.
      Mr. Mackinlay: I bet the British Oxygen Company has an office there.
      Mr. McDonnell: If that was an intervention, I would welcome it.
      Mr. Deputy Speaker: Order. Let me make it absolutely clear: we are not going to have sedentary comments interrupting speeches.
      Mr. McDonnell rose—
      Mr. Mackinlay: Will my hon. Friend give way?
      Mr. McDonnell: Certainly.
      Mr. Mackinlay: Does the BOC, for example, have an office there? If so, that is a classic example of where those things could be sold like chattels; indeed, the employees could be sold like chattels.
      8.30 pm
      Mr. McDonnell: I would not want to get into a dispute about the BOC, as it is located in my constituency as well. I suppose that the following point is a declaration of interest: I hope that it will sponsor the Hayes horticultural show, which I have just re-established.
      Mr. Jeremy Corbyn: My hon. Friend has made a point about what he called hot-desking in the City. People there can rent a desk for a short time and move on. I am unclear about something in relation to the Bill; I would be grateful if he could explain what his amendment means in this respect.
      If votes are to be distributed for a particular building, does the owner of the leasehold who sublets those desk places decide who has the vote, or does an amalgamation of the people who are the tenants of the leaseholder of the building decide how the vote will be allocated for that particular place? As part of a wholly extraordinary system of voting, that seems to be the most bizarre aspect imaginable.
      Mr. McDonnell: We can approach the matter through a definition of the business that is located within the boundaries of the City corporation. The corporation is right: we can base it on some concept of rateable value to a certain extent. Having identified that that company operates in the area, the company is invited—the Bill does it, anyway—to acquire a vote.
      If the company so wishes to acquire that vote—it can do so under the Bill as it now stands, anyway—it will be just a small step on to say, "If you wish to acquire that vote, you must ballot your employees in the exercise of that vote. To do that, we need to verify the number of employees that you have. The number will determine how many votes you gain."
      Therefore, we seek to establish a self-reinforcing, self-interested system. In many respects, it could be a model for concepts of industrial democracy elsewhere.
      Mr. Corbyn: I want to press my hon. Friend a little. In trade union recognition legislation, there are problems about who is to decide what is a work force and what is not, but, clearly, where the building has the vote,

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      if you like, and where a number of people there are self-employed—indeed, they might be self-employed for short periods—how do we decide which group of people has some say, or otherwise, in the selection of those who will be eligible to vote under the legislation?
      Mr. McDonnell: It is a problem. We need to establish a mechanism, as we do in other areas, under which there is an incentive for the company to register—it will want to influence the City corporation. Having done that, the mechanism needs to incentivise the company to engage its work force, and to incentivise the work force itself to ensure that it works with the company to define where it is located, how it wants to be involved and how it will become engaged in the democratic process in the area.
      It is not that different from the early processes that this country went through in establishing a democratic process overall. In some of the debates in the Chamber about the Great Reform Bills that were passed, all the arguments were advanced; people said, "How can you identify where people are? There will be problems of corruption in terms of multiple voting." It is not beyond the wit of man to devise a system whereby we can engage workers themselves, so that they have a role and a say within not just their firm, but their locality. There is a ready mechanism.
      There is a classic example in my constituency. It was referred to in Committee by Mr. Malcolm Matson. There is almost a mini-city in my constituency. It has virtually 60,000 inhabitants. They do not live there; they work there. It is called Heathrow airport. However, those people have no say whatever—there is no democratic engagement—in the processes that govern that working area; that is what it is.
      There is one road left within the boundaries of Heathrow; it just comes within it. The houses there are largely bought up now. We used to canvass them years ago. Again, the proposals in the amendments are a model for the workers within Heathrow to have a say not over the wider area in my constituency, but within that defined area of Heathrow. The aim is to give them a say in what some of the companies are undertaking.
      In that instance, the company that controls the whole area is the British Airports Authority. Since its denationalisation, it has retained its planning powers—for example, it still has the power of compulsory purchase.
      The Minister and I had a discussion about the matter on another occasion. The statements that were made at that stage had to be corrected because, within that area, the BAA exercises a role almost like that of the City corporation. The model for the City corporation gives opportunities for engagement in those sectors of the working locality where employees have a right to have some say. That is what the amendments propose.
      I refer to the proposals of the City of London Labour party during its discussions in Committee. It recognised that the principle of the payroll needed to be examined further. It accepted that there were some problems, but did not accept—the hon. Member for Wantage, who chaired the Committee, has now left the Chamber—that they were practical problems involving the operation of the system; it said that they were to do with the drafting of the Bill.
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      I can understand that, because the City corporation was determined to ensure that there was no movement on the original Bill. However, I have been at other situations where sponsors of Bills have been willing to discuss and to amend their Bill before presentation to Committee. That did not happen in this case.
      Mr. Mackinlay: As I understand it—perhaps my hon. Friend will clarify the matter for me—although the intention behind his amendment is to extend the franchise to employees, the arguments that he is advancing to support it are the same as those that were used by the right hon. Member for Cities of London and Westminster (Mr. Brooke) and his parliamentary colleagues when they amended the law to grant the right, elsewhere in England and Wales, to stand in local authority elections on the basis of "principal place of work". The arguments that they used were that people identify with their work, and that, although some people may not sleep in a certain area, they identify with their place of work because they live, sleep and breathe work.
      The previous Conservative Government—on the basis that people identified with, shared in, and were proud of, where they worked—advanced the argument that the law should be amended to extend the right to stand for election to municipal office. The Official Report will show that such arguments were advanced by, among others, this Bill's principal advocate, the right hon. Member for Cities of London and Westminster. I should think and hope that he might reflect on the fact that those were powerful arguments not only then, but now in our consideration of the Bill.
      Mr. McDonnell: My hon. Friend is right—there is undoubtedly an irony in all of this. If Labour Members stand for anything, we stand for people's right to exercise their democratic wishes to achieve their ambitions and objectives—which we would identify as socialism. The irony is that, here we are, almost at one with the right hon. Member for Cities of London and Westminster (Mr. Brooke) in arguing for some form of recognition that elements within industry or commerce should have a role to play in the City of London corporation and should exercise a vote. Ironically, that runs counter to much of what we stand for. For that reason, I have been arguing that my amendments are transitional onescompromises—and an attempt to ameliorate the Bill's provisions, so that the work force might have a vote.
      Mr. Phil Sawford: I served on the Committee, and I sought clarification on the matter of declarations of interest, as I knew that the Labour party was one of the petitioners. At no time did anyone advise or suggest to me that I had an interest in the City of London simply because I had a bank account. However, as the issue has arisen, I shall declare such an interest: I have a bank account, which is usually in deficit.
      Throughout the Committee stage, I felt that we were restrained by the Bill's scope in the type of amendment that we could table. However, I settled for a type of

      485
      uneasy compromise that I felt made some moves in the right direction. The special report that accompanied the Bill stated:
      "the Committee is, however, of the view that neither the Bill nor the additional assurances"—
      Mr. Deputy Speaker (Mr. Michael Lord): Order. I am sorry to interrupt the hon. Gentleman, but interventions are increasingly stretching into mini-speeches. Could he make his point now, quite briefly?
      8.45 pm
      Mr. Sawford: It finished:
      "can entirely remedy the problems in the governance of the City."
      I simply draw the attention of my hon. Friend to that fact.
      Even at the end of the Bill's Committee stage, the Committee members, with the restraints that we were under, still felt that much more needed to be done.
      Mr. McDonnell: I accept that point. Although I had some anxieties about it, I think that the Committee, within certain bounds, did a reasonable job. Earlier in the debate, I expressed my anxiety that the Committee would not be able to take proper cognisance of some of the issues raised in Second Reading, and therefore would not be able to give the advice that was required of it.
      When, for example, the City of London Labour party suggested enfranchising the work force, in a payroll vote, the Committee should have sought advice on whether it should seek such an amendment from the City of London corporation. I think that, at that stage, the Committee could have been sufficiently forceful to ensure that the corporation accepted the amendment being promoted by the City of London Labour party. I believe that moral pressure could have been employed to ensure that the amendment was accepted. I regret that advice on the matter was not taken by the Committee at that point, so that such an amendment could have been tabled. It was a valid issue in the Bill.
      When I drafted amendments to enable that to happen—again I apologise to the City of London Labour party for not consulting it on my amendments' detail, which is most probably why they are not particularly eloquent ones—and sought the Private Bill Office's advice, I was told that the Private Bill Office would check whether it would be in order to amend the Bill in such a manner. My amendments were in order, and they were selected.
      If Committee members and the City of London Labour party petitioners had been made aware of that fact, the point on the amendment could have been made more forcefully. The City of London corporation could have compromised on that issue, as it has on so many other, relatively minor ones—except for the right to veto, which is an important one. If that had happened, we would today have been debating a fundamentally different Bill. We may not necessarily have been happy with such a Bill, but we would have been closer to being able to say, "Some form of democracy is being practised in the City of London corporation."
      Mr. Colman: My hon. Friend has spoken about compromise. We have all received a letter from the City of London Labour party, which supports the Bill in its current state. Does he agree that the worst possible
      486
      situation would be for the Bill to fall, because, if it fell, the status quo would persist and we would not make the advance that, I believe, everyone accepts that the Bill represents?
      Mr. McDonnell: That is a valid point to raise when we are discussing an amendment, because the amendment seeks to amend the Bill, not to defeat it. If it were a wrecking amendment, it would not have been called. Therefore I take my hon. Friend back to the point that I made—I shall not delay the House—in relation to the earlier intervention.
      When representatives of the City of London Labour party appeared before the Committee, they said:
      "We have commended to the corporation an alternative proposal that votes should relate to the number of staff employed by bodies within the City—a system we refer to as a payroll vote."
      I shall not waste the time of the House by reading out more of the detail of the minutes, but they show that the representatives were obviously of the view that such an amendment could not be made to the Bill. I commend them for it.
      I had a conversation with Kate Green, secretary of the constituency party—one of the best advocates for the Labour party that the party could have. In a considered way, working with her colleagues, she drafted amendments, discussed the matter in detail with the Corporation of the City of London, sought compromises and achieved some. Nevertheless, I believe that, if members of the constituency party had been aware that it was possible to amend the Bill in this way, they would have pressed further, and I believe that, in that case, the Corporation of the City of London would have provided us with something tonight that we could have debated, thus maintaining some semblance of a feeling that we were reforming.
      I would willingly give way to my hon. Friend the Member for Kettering (Mr. Sawford), who served on the Committee, to allow him to say whether that is his impression, because I believe that there is a real opportunity here.
      Dr. Godman: In relation to amendment No. 13 and the view of the City of London Labour party on the Bill, might I remind my hon. Friend that the promoters of the Bill have promised, inter alia, that
      "the number of members returned by residential wards will be reviewed to protect their proportion on the Court of Common Council"?
      Does my hon. Friend know who will conduct that review?
      Mr. McDonnell: It relates partly to a later amendment on the report of the Secretary of State, which I should like to discuss at some stage. However, I shall answer that question because it partly relates to the point that my hon. Friend the Member for Putney raised, which is that the review of the wards is a significant amelioration of the current system. Who won that amelioration? The City of London Labour party campaigners and Malcolm Matson and other petitioners. That is excellent, but, even in that regard, a compromise h as been accepted, because who conducts the boundary review? The Corporation of the City of London itself, because it does not come under the auspices of the boundary commission. In fact, one of the proposals that was advanced in the statement was that

      487
      the boundary commission should be involved in the redrawing of ward boundaries. I would welcome—it does not have to be written in blood—a statement from the City of London corporation, confirming that it will involve the boundary commission in that process.
      Mr. Corbyn rose—
      Mr. McDonnell: I shall press on, if I may.
      That situation is very similar to that regarding the City cash; this does relate specifically to my amendment. One of the reasons to empower employees in the system is to enable them to have the power to have some oversight of the corporation and its finances. Some say that £1.6 billion is sitting in the City cash—money which is not audited by the district auditor or by the Audit Commission. It is a separate account, hidden from view.
      Mr. Corbyn: If the boundary commission is not involved—and if the court of common council is, in effect, the boundary commission—is my hon. Friend aware whether any of its decisions, were they to be perverse, could be challenged by judicial review on the grounds of fairness towards those who live and work in the City of London?
      Mr. McDonnell: I am not a lawyer, although I have some historical experience of libel law which I wish to put behind me. I would suggest that anybody, including the City corporation, is open to judicial review on the basis of the Wednesbury principles of reasonable behaviour. In any decision, the City corporation—as a local government body—would come under those Wednesbury principles which, as you know, require any body or individual, alderman, councillor or whatever—
      Mr. Deputy Speaker: Order. First, may I remind the hon. Gentleman to use the correct parliamentary language? Secondly, he is getting away from the amendments. I would be grateful if he would return to them.
      Mr. McDonnell: I apologise for the language, Mr. Deputy Speaker. It requires one to take a decision, having taken into account all the relevant factors and dismissed all the irrelevant factors. That is a definition of the Wednesbury principles.
      The issue of the City cash is critical and relates to the boundary issue. The Committee observed that there would be the benefit of increased transparency if the corporation were to seek the opinion and experience of the boundary commission for England in conducting a boundary review. That is a request, and I urge the City corporation to accede to it.
      My hon. Friend the Member for Putney asked why the amendments that I tabled were not previously pressed by the petitioners in Committee, and why the Bill does not contain them. We will have received correspondence from the two petitioners. One, from Malcolm Matson, sets out the basic arguments against the Bill and asks us to vote against it. On the amendments, however, the City of London Labour party wrote to a number of hon. Members, explaining their acceptance of what I consider to be
      488
      considerable victories for the party in its petitioning of the Bill. However, the party accepts that there has to be a further process.
      The local Labour party was grateful to those hon. Members who supported and endorsed the proposed amendments by contacting the corporation. However, I am not sure how many pressed the issue of empowering the payroll vote, as is set out in the amendment. The Committee members and the petitioners were of a view that that was beyond the remit of the Bill, when clearly it was not. That is why we are debating the matter tonight.
      The Committee was minded to go further, and the City of London Labour party was able to strengthen the amendments, to the extent that the Committee produced a Bill which was substantially different and essentially more democratic. The Labour party's letter lists those reforms. However, it was unable to list any proposal or amendment similar to my amendment on empowering employees because, like others, those concerned thought that it was beyond the power of the Bill.
      My hon. Friend the Member for Putney prayed in aid the City of London Labour party, and said that we should accept what we have. If this does not happen, he suggested, there will be catastrophe—the status quo will continue for another millennium and we will never get the chance to make the body in some way accountable and democratic.
      The letter says:
      "The City of London Labour Party agrees that the amended Bill delivers less than the ideal reform to bring the City into line with democratic local government practice. Further reform will not be easy but is necessary. The Committee itself made certain suggestions. The challenge will be to find ways to advance them."
      The amendments take up that challenge.
      It was clear that those petitioners were frustrated in their proposals because of a view that was taken of the amendability of the Bill.
      Mr. Colman: Clause 7 clearly states that there will be a full review after not more than five years, and that gives us the chance to make progress.
      Mr. McDonnell: That part of the Bill is important. I have tabled a further amendment reducing that time from five years to two. I sought to embody the call for further reforms in amendments, so that the report to the Secretary of State would have to contain reference to progress on all those matters; but I was told that that was out of order and such amendments could not be tabled. It does not help to pray in aid clause 7, because it is so weak and ill defined and does not force the corporation to implement the recommendations in the statement. I understand why my hon. Friend the Member for Putney is clutching at straws. I am, too. I am trying to achieve the best possible amendment of a poor piece of legislation.
      Mr. Connarty: I have some interest in the correspondence and petitions on behalf of one particular organisation. I hope that my hon. Friend will take it into account that the idea of giving the widest possible franchise is of interest to democrats regardless of whether they live in the City or in the adjacent area. Will he use more force in arguing on behalf of the democrats that if the provision that he seeks is in order it is justifiable to insert it in the Bill?
      Mr. McDonnell: I accept that point and my hon. Friend's remonstration. There is an argument that we are

      489
      setting a precedent in this Bill for a widening of the franchise in particular areas. That has some advantages and some dangers and—
      Mr. Deputy Speaker: Order. The hon. Gentleman's remarks are getting increasingly general. He is to some extent going over ground that he has already trodden. The House will be well aware that he has dealt in some detail with all the amendments in the group. Perhaps he should now move on to new ground or think of concluding his remarks.
      Mr. McDonnell: Can I take your advice on that matter, Mr. Deputy Speaker? Do you mean new ground in terms of arguments on this group of amendments, or moving on to new amendments?
      Mr. Deputy Speaker: Provided that the hon. Gentleman's remarks are specific to the amendments, I will allow him to carry on, but they are becoming increasingly general and unrelated to the amendments and, as I have already said, he has covered each amendment in great detail.
      Mr. McDonnell: Thank you, Mr. Deputy Speaker.
      Mr. Paul Burstow: The hon. Gentleman acknowledged that amendment No. 33 might be inadequate or slightly defective in its drafting.
      What discussions has he sought to have or has he had with the corporation about the amendments, their effectiveness and workability?
      9 pm
      Mr. McDonnell: That is a good point, and I apologise to the City of London corporation for not having fully involved it in the discussions around the amendments. My only excuse—it is a reason as much as an excuse—is that the time scale did not permit it. The initial view that the payroll issue would not be contained in the Bill was thought by us all to be appropriate. Having tested that point late in the day because I thought it was ultra vires, I was able to draft the amendments only in the past 48 hours.
      Discussion of the amendments tonight gives us the opportunity of consultation with the City corporation before the Bill goes to the other place and then comes back to us. The mind frame on the Bill was set early on by the non-advice to the Committee or it failing to seek advice on the remit of the Bill.
      Mr. Deputy Speaker: Order. The hon. Gentleman clearly did not understand what I said earlier. His remarks are again general in nature and he must, if he is going to continue, confine himself to the amendments.
      Mr. McDonnell: Thank you, Mr. Deputy Speaker. I was responding to an intervention. If that was inappropriate, fair enough. I will want to engage in as much consultation on the amendments as possible after they have been approved, as I hope, this evening. There is an opportunity, for example, to consult the City corporation on the detailed implementation of the amendments.
      490
      Amendment No. 33 is not adequate, but I moved it tonight to provoke debate. The issue contained in the amendment is whether the figure of £1,000 is correct. As I suggested earlier, perhaps it should be up to £1,000 for the first vote and £10,000 after that. One approach would be to make a proper analysis of the working population within the City corporation boundaries and then to work back from that, through the definition of relevant employees within individual companies, to calculate the distribution of votes in such a way that we would not introduce a system that would swamp the residential vote by employee or payroll votes. That is one way of tackling the individual problem highlighted in amendment No. 33. It would be a simple mathematical calculation and would be obtainable fairly easily from the information that we have. That is another issue for consultation with the City corporation and others. We need to engage in that calculation in discussions with the business representatives. I mentioned the LCCI and the CBI earlier and I have welcomed their involvement throughout, as well as trade union representation.
      The amendments would improve the Bill in an unexpected way and the City corporation will welcome them. It would welcome the voice of employees in its deliberations. I would certainly welcome the voice of employees in the Londonwide deliberations. There are arguments about the democratic nature of the City corporation being based solely on a business franchise.
      Mr. Corbyn: I am interested in what my hon. Friend has said about employees and residence. The City of London has many unique features, but an interesting feature that is not entirely unique is that most of its housing stock owned by local authorities is without the purview of the City of London. For example, there is a large City of London housing estate in my constituency. It is well run and I have no complaints about that, but do any of the amendments envisage a role for City of London tenants to have a say about how housing policy is managed?
      Mr. Deputy Speaker: Order. That again is wide of the amendments before the House. The hon. Member for Hayes and Harlington (Mr. McDonnell) ought not to respond to it.
      Mr. McDonnell: I shall therefore refer my hon. Friend to amendments that were not selected for debate.
      The thrust of my arguments has been to challenge the anti-democratic nature of the Bill, and to ensure that democracy is heard in the debate. On Second Reading and elsewhere, democracy has been very narrowly defined, based on voting either by residents or by businesses. We have introduced a wider definition which, if accepted, could introduce for the first time a concept of industrial democracy. That would be based not on the power of a particular firm, but on employees having a role in their firm and in their firm's locality.
      Some hon. Members will have engaged in the debate in the 1960s and 1970s, during the Bullock inquiry into industrial democracy. That debate was based on matters such as working practices, the work environment, health and safety and adequate representation. At no stage in that debate—
      Mr. Peter Brooke rose in his place and claimed to move, That the Question be now proposed.
      Question put, That the Question be now proposed:—
      The House divided: Ayes 199, Noes 62.

      Division No. 241]

      [9.8 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Gill, Christopher

      Amess, David

      Gillan, Mrs Cheryl

      Anderson, Janet (Rossendale)

      Gilroy, Mrs Linda

      Arbuthnot, Rt Hon James

      Gorman, Mrs Teresa

      Atherton, Ms Candy

      Gorrie, Donald

      Atkinson, David (Bour'mth E)

      Gray, James

      Atkinson, Peter (Hexham)

      Green, Damian

      Bayley, Hugh

      Greenway, John

      Beard, Nigel

      Grieve, Dominic

      Beresford, Sir Paul

      Grocott, Bruce

      Bermingham, Gerald

      Gunnell, John

      Betts, Clive

      Hague, Rt Hon William

      Blunt, Crispin

      Hain, Peter

      Body, Sir Richard

      Hamilton, Rt Hon Sir Archie

      Boswell, Tim

      Hammond, Philip

      Bottomley, Peter (Worthing W)

      Hancock, Mike

      Bottomley, Rt Hon Mrs Virginia

      Hanson, David

      Bradshaw, Ben

      Harris, Dr Evan

      Brady, Graham

      Heathcoat-Amory, Rt Hon David

      Brazier, Julian

      Hepburn, Stephen

      Brooke, Rt Hon Peter

      Heppell, John

      Browne, Desmond

      Heseltine, Rt Hon Michael

      Bruce, Ian (S Dorset)

      Hill, Keith

      Burns, Simon

      Hodge, Ms Margaret

      Caborn, Rt Hon Richard

      Hogg, Rt Hon Douglas

      Campbell, Alan (Tynemouth)

      Howarth, George (Knowsley N)

      Campbell-Savours, Dale

      Howarth, Gerald (Aldershot)

      Casale, Roger

      Howells, Dr Kim

      Chapman, Ben (Wirral S)

      Hughes, Kevin (Doncaster N)

      Chapman, Sir Sydney (Chipping Barnet)

      Hunter, Andrew

      Hutton, John

      Chidgey, David

      Jack, Rt Hon Michael

      Chope, Christopher

      Jackson, Robert (Wantage)

      Clarke, Charles (Norwich S)

      Jamieson, David

      Clarke, Rt Hon Tom (Coatbridge)

      Jenkin, Bernard

      Clifton-Brown, Geoffrey

      Jenkins, Brian

      Coaker, Vernon.

      Johnson, Miss Melanie (Welwyn Hatfield)

      Coffey, Ms Ann

      Collins, Tim

      Jones, Rt Hon Barry (Alyn)

      Colman, Tony

      Jones, Mrs Fiona (Newark)

      Corbett, Robin

      Jones, Helen (Warrington N)

      Cormack, Sir Patrick

      Jones, Jon Owen (Cardiff C)

      Corston, Ms Jean

      Kaufman, Rt Hon Gerald

      Cox, Tom

      Khabra, Piara S

      Cunningham, Jim (Cov'try S)

      King, Andy (Rugby & Kenilworth)

      Darling, Rt Hon Alistair

      King, Rt Hon Tom (Bridgwater)

      Davey, Valerie (Bristol W)

      Laing, Mrs Eleanor

      Davidson, Ian

      Lait, Mrs Jacqui

      Davies, Quentin (Grantham)

      Lansley, Andrew

      Day, Stephen

      Lawrence, Ms Jackie

      Dewar, Rt Hon Donald

      Laxton, Bob

      Donohoe, Brian H

      Letwin, Oliver

      Dorrell, Rt Hon Stephen

      Lewis, Dr Julian (New Forest E)

      Dowd, Jim

      Lidington, David

      Drown, Ms Julia

      Lilley, Rt Hon Peter

      Ellman, Mrs Louise

      Lloyd, Rt Hon Sir Peter (Fareham)

      Fabricant, Michael

      Loughton, Tim

      Fallon, Michael

      Lyell, Rt Hon Sir Nicholas

      Fitzpatrick, Jim

      McIntosh, Miss Anne

      Flight, Howard

      Maclean, Rt Hon David

      Forth, Rt Hon Eric

      McLoughlin, Patrick

      Fox, Dr Liam

      McNulty, Tony

      Fraser, Christopher

      Maples, John

      Gale, Roger

      Mates, Michael

      Garnier, Edward

      Maude, Rt Hon Francis

      George, Bruce (Walsall S)

      May, Mrs Theresa

      492

      Meacher, Rt Hon Michael

      Spelman, Mrs Caroline

      Meale, Alan

      Squire, Ms Rachel

      Michael, Rt Hon Alun

      Stanley, Rt Hon Sir John

      Milburn, Rt Hon Alan

      Starkey, Dr Phyllis

      Moonie, Dr Lewis

      Stoate, Dr Howard

      Moss, Malcolm

      Streeter, Gary

      Murphy, Jim (Eastwood)

      Sutcliffe, Gerry

      Nicholls, Patrick

      Swayne, Desmond

      Norman, Archie

      Syms, Robert

      O'Hara, Eddie

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Olner, Bill

      Osborne, Ms Sandra

      Taylor, Ms Dari (Stockton S)

      Ottaway, Richard

      Taylor, Ian (Esher & Walton)

      Page, Richard

      Taylor, John M (Solihull)

      Paice, James

      Taylor, Sir Teddy

      Pickles, Eric

      Thomas, Gareth R (Harrow W)

      Pickthall, Colin

      Timms, Stephen

      Pond, Chris

      Trickett, Jon

      Pope, Greg

      Turner, Dr George (NW Norfolk)

      Prentice, Ms Bridget (Lewisham E)

      Vaz, Keith

      Vis, Dr Rudi

      Prior, David

      Wardle, Charles

      Randall, John

      Waterson, Nigel

      Raynsford, Nick

      Wells, Bowen

      Reid, Rt Hon Dr John (Hamilton N)

      Whittingdale, John

      Robathan, Andrew

      Widdecombe, Rt Hon Miss Ann

      Robertson, Rt Hon George (Hamilton S)

      Wilkinson, John

      Williams, Rt Hon Alan (Swansea W)

      Robertson, Laurence (Tewk'b'ry)

      Rooney, Terry

      Williams, Alan W (E Carmarthen)

      Roy, Frank

      Wilshire, David

      Ruffley, David

      Wilson, Brian

      St Aubyn, Nick

      Winterton, Nicholas (Macclesfield)

      Sarwar, Mohammad

      Woodward, Shaun

      Simpson, Keith (Mid-Norfolk)

      Wyatt, Derek

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Tellers for the Ayes:

      Southworth, Ms Helen

      Mr. Robert Walter and

      Spellar, John

      Mr. Nick Hawkins.

      NOES

      Adams, Mrs Irene (Paisley N)

      Iddon, Dr Brian

      Ashton, Joe

      Jones, Ms Jenny (Wolverh'ton SW)

      Atkins, Charlotte

      Barnes, Harry

      Keetch, Paul

      Bell, Martin (Tatton)

      Kidney, David

      Benn, Rt Hon Tony (Chesterfield)

      King, Andy (Rugby & Kenilworth)

      Burstow, Paul

      Livsey, Richard

      Butler, Mrs Christine

      McDonnell, John

      Campbell, Rt Hon Menzies (NE Fife)

      Marsden, Gordon (Blackpool S)

      Michie, Bill (Shef'ld Heeley)

      Cann, Jamie

      Palmer, Dr Nick

      Chaytor, David

      Perham, Ms Linda

      Clarke, Tony (Northampton S)

      Pike, Peter L

      Coleman, Iain

      Prentice, Gordon (Pendle)

      Corbyn, Jeremy

      Rapson, Syd

      Cousins, Jim

      Sanders, Adrian

      Cryer, John (Hornchurch)

      Sawford, Phil

      Dalyell, Tam

      Shaw, Jonathan

      Davis, Terry (B'ham Hodge H)

      Simpson, Alan (Nottingham S)

      Dawson, Hilton

      Skinner, Dennis

      Dismore, Andrew

      Smith, Angela (Basildon)

      Etherington, Bill

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

      Fearn, Ronnie

      Steinberg, Gerry

      George, Andrew (St Ives)

      Stinchcombe, Paul

      Gerrard, Neil

      Stunell, Andrew

      Gibson, Dr Ian

      Taylor, Matthew (Truro)

      Godman, Dr Norman A

      Tonge, Dr Jenny

      Gordon, Mrs Eileen

      Wise, Audrey

      Heath, David (Somerton & Frome)

      Wood, Mike

      Henderson, Ivan (Harwich)

      Wright, Anthony D (Gt Yarmouth)

      Hinchliffe, David

      Hood, Jimmy

      Tellers for the Noes:

      Hopkins, Kelvin

      Mr. Andrew Mackinlay and

      Hurst, Alan

      Mr. Michael Connarty.

      Question accordingly agreed to.
      Mr. Brooke: On Second Reading, I took advice on the declaration of an interest in the Bill. I was told that I had no interest to declare, but, in order to make it clear beyond peradventure, I am content to refer the House to my entry in the Register of Members' Interests, and am happy to stand by anything that appears in that entry.
      The Second Reading debate was excellent, good-humoured and germane. I mean no disrespect to the hon. Member for Hayes and Harlington (Mr. McDonnell) when I say that so far this evening, we have heard a bit of a monologue.
      Mr. McDonnell: Will the right hon. Gentleman give way?
      Mr. Brooke: As my speech will be shorter than the one made by the hon. Gentleman, I shall wait a moment before giving way, although that is uncharacteristic of me.
      Under some compulsion from the House, the hon. Gentleman's amendments were put, and I shall speak briefly in rebuttal of them. The most enjoyable moment in his speech was when he got to amendment No. 33 and, in a manner worthy of the former Member for Burnley—who, on one memorable occasion, said, "I intervene upon myself, Mr. Deputy Speaker"—
      Mr. Nicholas Winterton: Was that Dan Jones?
      Mr. Brooke: As my hon. Friend says, it was indeed Mr. Dan Jones. However, I should rather not take interventions unless they are absolutely necessary.
      The substance of the remarks of the hon. Member for Hayes and Harlington in moving the amendments was contained in his observations on amendment No. 13, which he desrcibed as the key amendment. He looked forward to amendment No. 33, which amended the schedule; that amendment also dwelt on the process. The majority of the other amendments were either paving or consequential amendments, so I shall run through them quickly; I shall concentrate on amendments No. 13 and 33.
      I think that the hon. Gentleman would agree that amendment No. 7 was a paving amendment. He took the view that amendment No. 13 was the key amendment. It would make an insertion in clause 3 so as to require the conduct of a ballot of relevant employees to decide who is to be appointed as a voter. No details are given about how such a ballot would take place, or about how the selection of candidates would be made. In any case, the amendment is inappropriate, because it harks forward to a proposed amendment to the schedule—amendment No. 33—which links the entitlement to appoint voters to numbers employed rather than to rateable values. As will be apparent under the substantive amendment to the schedule, that system is not workable for reasons to which I shall come.
      The hon. Gentleman spoke to amendment No. 16, to which I shall return because it is a little different from the
      494
      others. Amendment No. 17 appears to be consequential, as does amendment No. 19. Amendments Nos. 30 and 31 are also consequential.
      Amendment No. 33 represents the heart of the hon. Gentleman's argument that, instead of an election system based on rateable value, we should have an election system based on payroll. The amendment replaces the existing scale of appointments in paragraph 1 of the schedule by a scale related to the numbers of employees. Qualifying bodies having up to 1,000 employees would receive one appointment, with one each for each subsequent 1,000. The possibility of using employees as an index was given detailed consideration before the promotion of the Bill. In the event, it became apparent that such a scheme would not be administratively workable.
      Mr. McDonnell: The right hon. Gentleman suggests that there was detailed consideration of the proposal before the Bill was promoted. Who was consulted in that detailed consideration? It was certainly not London Members of Parliament, London local authorities or many of those who were involved in the petition against the Bill. That consultation does not seem to have taken place.
      Mr. Brooke: The hon. Gentleman knows well that the Government made it clear that, if the corporation was not to be abolished, it had to reform its franchise. As it was to be reformed through the business vote, the consultations and discussions, not unreasonably, took place with business interests.
      In the event, it became apparent that a scheme such as that to which the hon. Gentleman addressed his speech would not be administratively workable. Such an approach would also mark a departure from the current principle of business voting in the City, and would therefore set a precedent for commuter voting.
      Rateable value has been chosen as the basis of the system for reasons of administrative convenience. By contrast, the allocation of votes by reference to the size of a company's work force would represent a considerable burden on business. The House should be aware that in developing the proposals for reform, the corporation gave full consideration to allocating votes on the basis of the number of employees. They found that asking companies to furnish the town clerk with their employment details is not as straightforward a task as it may seem.
      Many firms hold their payrolls centrally in regional centres. That may include information on all employees, whether or not they work in the City, and extracting the information on employees working in the City may not be especially easy. At the same time, there is considerable volatility in the City work force, with a staff turnover of up to 26 per cent. per annum. That would mean that the number of people employed within a company—
      Mr. Andrew Dismore: Will the right hon. Gentleman give way?
      Mr. Brooke: I would be grateful if the hon. Gentleman would let me finish my point.
      That would mean that the number of people employed within a company over a year will be highly variable. Adopting employment as a measure of entitlement to voting rights would therefore cause business greater

      495
      expense to comply with voter registration than is the case with rateable values. I shall now give way to the hon. Gentleman.
      Mr. Dismore: Will the right hon. Gentleman explain the difference between compiling a register of employees on a given day of the year, such as 10 October, and compiling an ordinary electoral register, as every local authority has to do—which is a much more complex job—on exactly the same date? Certainly in London boroughs the turnover of electors is greater than that of staff in businesses in the City.
      Mr. Brooke: The hon. Gentleman has been involved in the City of Westminster, and he knows the rate of turnover there. I very much doubt if there is the same degree of turnover in his constituency. At any rate, an annual staff turnover of 26 per cent. is massive.
      It was also felt that if voting rates were allocated on the basis of employment, the scheme would become much more than just a modernisation of the existing business vote system. Allocating voting rights on the basis of employees rather than property would mean the introduction of a whole new principle into the British electoral system and might, as I said, provide a precedent for the introduction of the commuter vote.
      The rateable value of a property occupied by a qualifying body will, in any event, have some relation to the number of staff that it employs and thus the size of the payroll. Within each ward, therefore, the properties with the largest rateable values also have the most employees. Recognising that there might be some properties that carry high rateable values, but have few employees, the Committee amended the Bill to provide that a company or qualifying body cannot receive a greater number of votes than it has employees. That will prevent the potential abuse identified by the hon. Members for Tatton (Mr. Bell) and for Southwark, North and Bermondsey (Mr. Hughes) on Second Reading, whereby a qualifying body could sell voting rights to the highest bidder.
      The hon. Member for Hayes and Harlington will, as a result of the debate so far, be amply aware that the City of London Labour party is also of the view that the entitlement to vote ought to be related to the number of employees rather than rateable value. On day three of the Committee stage, Christopher Haines, chairman of the local Labour party, told the Committee:
      "We have commended to the Corporation an alternate proposal, that votes should relate to the number of staff employed by bodies within the City, a system we refer to as the payroll vote—However we recognise that to amend this Bill to incorporate the principle of payroll votes would be a fundamental change".
      The City of London Labour party chose not to press the amendment in Committee and I hope that the hon. Member for Hayes and Harlington will withdraw his amendments tonight.
      9.30 pm
      Mr. McDonnell: I shall not repeat what was said in a lengthy debate earlier, but I thought that I had made it clear to the right hon. Gentleman that the City of London Labour party, members of the Select Committee and other
      496
      petitioners were constrained in that way not because of any refusal to support the principle of a payroll vote, but because of advice that it could not be included in the Bill. Now that we have discovered that it can, I am sure that they would support the amendment.
      Mr. Brooke: I remind the hon. Gentleman that neither of us can rewrite history. The Select Committee sat in a quasi-judicial manner and made the determination that it did. The City of London Labour party chose not to press that particular element of its petition.
      I now turn to amendment No. 16 which I said was a little different. It seeks to amend clause 3(5) to provide that where a hereditament is in more than one ward it should be taken as situated wholly within the ward in which the larger number of employees are located. That is a wholly unworkable suggestion, as employees move around the premises rather in the same way as cattle move across the Irish border. It is unreal to attempt to make an assessment by reference to such a fluctuating quantity. The present arrangement is decided by reference to the greater part of the hereditament which is a physical entity, not a fluctuating quantity. For that reason I urge the House to reject amendment No. 16 as well.
      The Minister for London and Construction (Mr. Nick Raynsford): We had a full debate on Second Reading on the merits of the Bill and I do not propose to reiterate that tonight. It is not a Government Bill, but it is the product of the Government's desire to see the City of London reform and modernise its electoral arrangements.
      The City is a unique and ancient institution. Its customs and practices are held dear by many people, but it is clear that some of those customs and practices are archaic and do not contribute to good effective and accountable local government. The corporation has recognised this and the current Bill is part of its response.
      The Government welcome the fact that the City is beginning to face up to the need to put its governance on a more modern footing. We believe that the proposals in the Bill are a step in the right direction. They recognise the special and unique nature of the square mile and the need for an inclusive form of local government that reflects the needs of all those who have an interest. That must include the companies and institutions established in the City, the workers employed by them and the people who live there.
      Mr. John Cryer: Is my hon. Friend arguing that basing voting power on wealth or rateable value represents a modernisation of the franchise?
      Mr. Raynsford: If my hon. Friend will bear with me, I shall make the point clearly. We propose changing the current franchise from one that is limited to sole traders and certain people with property interests and excludes the vast majority of firms that operate in the City. It is not essentially a business franchise. The change extends the franchise to businesses in general within the City and that is a step in the right direction.
      The Select Committee considered the Bill carefully and found that the measures within it were justified and that the Bill should proceed. It considered the detail of the Bill

      497
      and took evidence from its promoters and from petitioners against. As a result, the Committee asked for a number of amendments to be made to the Bill.
      Dr. Godman: I live in the City for some six months of the year. As is well known to my fair-minded adversaries, I am a council tenant of the City of London corporation. Is my hon. Friend satisfied that these developments will not in any way diminish the interests of the residents of the City who number some 5,000 compared with 250,000 people who come into the City every day? Some of my neighbours in Willoughby house in the Barbican are deeply concerned about the measures.
      Mr. Raynsford: I can give my hon. Friend the assurance that he seeks. The matter was debated extensively on Second Reading. It has been established that while there has been an overall increase in the franchise because of the proposed extension of the business vote, the interests of residents are fully protected because the number of wards with a predominance of residents remains the same. Therefore, the number of councillors who are elected—[Interruption.]
      Mr. Deputy Speaker: Order. I say to the hon. Member for Harwich (Mr. Henderson) before he leaves the Chamber, and to the House in general, that electrical devices of the sort that have interrupted our proceedings should be switched off or left outside the Chamber. Madam Speaker takes an extremely strong line on this.
      Mr. Raynsford: I was explaining, Mr. Deputy Speaker, that the make-up of the electoral pattern in the City is such that the wards that are predominantly—
      Mr. Ivan Henderson: On a point of order, Mr. Deputy Speaker. I apologise for interrupting the proceedings of the House. I shall make sure that it does not happen again.
      Mr. Deputy Speaker: I am grateful for that apology.
      Mr. Raynsford: I was in the process of explaining to my hon. Friend the Member for Greenock and Inverclyde (Dr. Godman) that the number of representatives who represent residents in the City of London will not reduce. Indeed, against the background in which there will be an overall reduction in the total number of councillors, the interests of residents will not be adversely affected. I know that the matter was considered carefully by a number of people who were particularly interested in the issue.
      Mr. Gareth R. Thomas rose—
      Mr. Raynsford: I want to make some progress but I shall give way to my hon. Friend, who was a member of the Committee.
      Mr. Thomas: I wonder whether my hon. Friend is aware that one of the reasons why those of us who sat on the Committee agreed to allow the Bill to proceed was the evidence that we received that there are so few voters in some of the wards that there is the potential for abuse, manipulation and a packed vote. Is my hon. Friend aware also that there is a strongly held view, at least by me,
      498
      that the City corporation's leadership must respond to the challenges laid down for it within the special report and bring forward reforms and suggestions on how the reforms outlined in the special report can be brought forward?
      Mr. Raynsford: My hon. Friend makes two extremely valid points. The process of reform is necessary because the current arrangements, as I have already said, are archaic and not conducive to proper and accountable systems of government. Secondly, as the Committee rightly stressed, a step has been taken in the right direction, but there is a need to go further. I have made that point personally to representatives of the City corporation on several occasions and I know that they take seriously my views and, above all, the views of the Committee. I believe that they intend to carry forward a further process of reform. They have given an undertaking that they will report on that within five years as part of the process. That undertaking was also given, I think, to the Committee.
      Mr. Sawford rose—
      Mr. Raynsford: I give way to my hon. Friend, who was also a member of the Committee.
      Mr. Sawford: My hon. Friend was in the Chamber when I said that the Committee felt constrained by the type of Bill that was before us. We felt that we were restricted in the sort of amendments that we could make to it. I drew attention to the special report, which clearly states that view.
      I learned a great a deal when considering the Bill. I learned of wards where there were no electors and of wards where there have been no elections for 25 years. I learned also of a veto system that prevented democratically elected people taking their place on the court of common council.
      At the outset of my consideration of the Bill I was reminded of a story about a chap who walked into a bank with a £18 note. When told that it was not legal currency and could not be accepted, the member of the bank's staff said, " We can change it for you. Do you want three £6 or two £9?" At the end of the Bill's—
      Mr. Deputy Speaker: Order. Order. The hon. Gentleman must take his seat when I am on my feet. That intervention was far too long.
      Mr. Raynsford: My hon. Friend makes better than anyone else could the case for reform. The status quo is untenable and the Bill is moving us forward in the right direction. I accept entirely, as I have already made clear, that there is a need to take the reform process further.
      The Committee asked for a number of amendments to be made to the Bill, covering a number of important issues raised by hon. Members on Second Reading. They include a test of "connection" with the City, which people nominated as corporate voters must satisfy; an inflation-proofing mechanism for the rateable value bands

      499
      and thresholds, to ensure that the size of the new business electorate does not increase just because property values rise; and a provision—
      Mr. McDonnell: On a point of order, Mr. Deputy Speaker. Can you advise us whether the Minister is speaking to the amendment, the Bill, or Third Reading? What is he speaking on?
      Mr. Deputy Speaker: If the Minister were not in order, I would have stopped him.
      Mr. Raynsford: Thank you, Mr. Deputy Speaker. I am slightly surprised that my hon. Friend, who spoke for two hours, questions whether I am in order.
      The Committee proposed amendments to ensure that the size of the new business electorate does not increase just because property values rise, and a provision to ensure that, in appointing voters, companies have regard to the composition of the work force—a point which my hon. Friend the Member for Hayes and Harlington recognised in his speech as a significant forward move. I believe that all those represent sensible improvements to the proposals for the new franchise.
      The Committee stated in its special report that it does not feel that the measures in the Bill go far enough. I do not dissent from that view. We have welcomed the proposals, but have always regarded them as a first stage in the process of reform. There is clearly much more that the City could do to improve the accountability and transparency of the way in which it is governed, and to streamline its decision taking. The Committee's report provides a useful indication of the priorities for the next phase of reforms.
      If this Bill is prevented from proceeding in its current form, the City franchise will remain unchanged, and the drive for reform from within the corporation will be stifled. I do not think that anyone who cares about reform wants that outcome. Significantly, the City of London Labour party—one of the two original objectors to the Bill—is now prepared to accept the proposals as a first stage in the process of reform, and has written to express that view to hon. Members, as we have heard from several hon. Members tonight.
      By allowing the Bill to proceed, the House will be giving further encouragement—
      Mr. Connarty: My hon. Friend spoke about the principles that the Government were applying and the fact that certain groups would be aided by amendments to the Bill. One group that he mentioned was workers, but he did not—
      Mr. James Gray: On a point of order, Mr. Deputy Speaker. What possible interest can the Member of Parliament for Grangemouth have in the City of London (Ward Elections) Bill?
      Mr. Deputy Speaker: The hon. Gentleman should know full well that hon. Members' constituencies do not prevent them in any way from taking part in our proceedings.
      Mr. Connarty: I am grateful for that, Mr. Deputy Speaker, and hope to see it underlined again and again.
      500
      I am keen to hear from my hon. Friend the Minister how that throw-away phrase, "the enfranchisement of the workers", is linked to the logic whereby a company or body will appoint one or two people, according to its rateable value, and how that gives the workers anything. Is that a new departure—the third way—in industrial democracy?
      Mr. Raynsford: As I said earlier in my speech, and as was pointed out earlier in the debate, clause 4 specifically requires a qualifying body to
      "ensure that the appointments which it makes reflect, in so far as is reasonably practicable, the composition of the workforce."
      My hon. Friend the Member for Hayes and Harlington recognised that that was an important shift, compared with the Bill as previously presented. I believe that that is a significant step forward.
      By allowing the Bill to proceed, the House will be giving further encouragement to the City to continue the process of reform. The new electorate that the Bill will create, covering the full range of businesses operating in the City in place of the much more restrictive business franchise that previously existed, will become an added incentive.
      However, the amendments would fundamentally alter the way in which the Bill works. They have not been fully considered. Practical issues were raised by the Chairman of the Select Committee and by the right hon. Member for Cities of London and Westminster (Mr. Brooke), who is sponsoring the Bill, about the difficulty of implementing the proposals contained in the amendment. Nor have the amendments been the subject of local consultation, as the City of London Labour party had to point out to my hon. Friend the Member for Hayes and Harlington.
      Mr. Dennis Skinner: How many votes will the Worshipful Company of Skinners get?
      Mr. Raynsford: I would require notice of that question. However, I undertake to look into it and to write to my hon. Friend.
      As my hon. Friend the Member for Hayes and Harlington admitted, amendment No. 33, the crux of the amendments, is a weak one. It would be inappropriate at this stage to insert the amendments in the Bill. The Government cannot, therefore, support them, and I hope that the House will not do so either.
      9.45 pm
      Mr. Winterton: I fully support the measured remarks of my right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke)—and, if I may say so without ruining his career, the constructive, positive and reasoned response to the debate by the Minister. He understands the City.
      I declare an interest in response to the intervention of the hon. Member for Bolsover (Mr. Skinner), with whom I have a great deal in common and whom I happen to admire immensely as a considerable parliamentarian, although he is out of place sitting where he is. The role played by the City provides a substantial advantage to the people of that area and considerable advantages to those who live within the City of London. I speak as an immediate past upper bailiff of the Worshipful Company

      501
      of Weavers—the oldest, but in no way the most senior company in the City of London. We trace our foundation back to 1130.
      Mr. Deputy Speaker: Order. I remind the hon. Gentleman that we are discussing a group of amendments. Perhaps he could come directly to them.
      Mr. Winterton: As one of my hon. Friends says, I am weaving a particular line in the case that I seek to make.
      The Minister, in responding to the amendments—
      Mr. Clive Efford rose—
      Mr. Winterton: I am happy to give way to the hon. Gentleman, who happens to be an articulate and positive member of the Procedure Committee.
      Mr. Efford: I used to do quite a bit of weaving in the City myself, but no one has ever given me a vote.
      Mr. Winterton: Democracy is an interesting animal. In itself, it does not necessarily provide the quality of service which the people of London expect and which all the residents of the City of London receive from the City corporation.
      My brief contribution to the debate is to support my right hon. Friend the Member for Cities of London and Westminster in the constructive remarks that he has made. If the hon. Member for Falkirk, East (Mr. Connarty), who represents a Scottish constituency with great distinction, and the hon. Member for Greenock and Inverclyde (Dr. Godman), another distinguished and experienced Member of the House, can participate, I hope that the Member for Macclesfield, which is in the north-west of England, can also contribute, bearing in mind my intimate knowledge of the City of London. Although, as the hon. Member for Bolsover will know, I do not support many of the things that the City does in an economic context, I believe that it plays a major, positive and very beneficial role in local government.
      Mr. Skinner rose—
      Mr. Winterton: I give way to the hon. Gentleman with immense pleasure.
      Mr. Skinner: All I can say is that the hon. Gentleman is now in favour of the block vote, and has deserted "one person, one vote".
      Mr. Winterton: I have immense respect for the hon. Gentleman, and I like the point that he has made. I am highly principled: I believe in one man, one vote—or one man/one woman, one vote. We are dealing, however, with the City of London, a uniquely successful entity.
      Mr. Corbyn: Will the hon. Gentleman give way?
      Hon. Members: Go on.
      Mr. Winterton: I give way.
      Mr. Corbyn: A moment ago, the hon. Gentleman spoke of the City's good works and administration of
      502
      local government. He will have heard my hon. Friend the Member for Hayes and Harlington (Mr. McDonnell) say that the City has reserves amounting to £1.6 billion in its coffers. I represent a borough that borders on the City. We have 10,000 families on housing waiting lists. Does the hon. Gentleman think that some of that money could be better spent in Hackney, Islington—
      Mr. Deputy Speaker: Order. The hon. Gentleman's intervention does not relate in any way to the amendment, and I ask the hon. Member for Macclesfield (Mr. Winterton) not to respond to it.
      Mr. Winterton: Of course I accept your ruling, Mr. Deputy Speaker. I have a full answer to the question put to me by the hon. Member for Islington, North (Mr. Corbyn), but, owing to my deep respect for the Chair, I will not give it.
      I merely say that I agree with the Minister that the Bill represents a considerable advance on what has preceded it, and I think that, for that reason alone, it would be inappropriate for it to be voted down. Bearing in mind the City corporation's assurance that it will continue to consider reform of what goes on in the City, I believe that the House should oppose the amendments, and support the Bill as it stands.
      Mr. Sawford: My speech will be short, as I intervened a couple of times earlier.
      I found serving on the Committee an enlightening experience. The Committee sat for several days, during which we listened to a good deal of evidence on behalf of the promoter and the petitioners. I learned a great deal about the inner workings of the City in that time, which led me to believe that it must be the most undemocratic, unrepresentative, unaccountable system left in this country. I felt, however, that it was making a genuine commitment to reform its methods of operation, and to increase its democratic accountability.
      The Bill proposes to extend the franchise by, in effect, giving votes to buildings. Votes would accumulate on the basis of the value of those buildings.
      Mr. Corbyn: My hon. Friend has examined the Bill. What evidence was there, in the response of the City of London corporation, of consultation with either individual businesses in the City or employees of those companies?
      Mr. Sawford: We were presented with a considerable amount of evidence that there had been consultation through the City of London corporation. There had also been residents meetings. There had been much consultation. The one group of people which probably had not been consulted in particular were employees. Residents and businesses had had consultation, but that brings us back to the amendments. My hon. Friend the Member for Hayes and Harlington (Mr. McDonnell) is trying to include employees within the process.
      Although extending the franchise on the basis of property values is one way to give a broader franchise to people who are involved and who make their living in the City, it is very much on a corporate basis. The amendments would extend it to people who have a working interest, who make their living and earn their livelihood there. It is still less than full democracy.
      Mr. McDonnell: The Minister raised the issue of consultation with those employees. My hon. Friend has

      503
      alluded to that. In the previous debate, we proposed that, although there has been difficulty over consultation until now—the House has been constrained with regard to the Bill—if the amendment were passed, there would be a real opportunity for consultation. We could consult the City corporation, take the Bill to the other place and refer it back here, so that we could get the practicalities right.
      Mr. Sawford: As, I think, the only member of the Committee who has sat through the whole debate, it is not being disloyal to the Committee to say that the amendments were not considered. I am sure that others on the Committee were not aware that such amendments were acceptable within the terms of the Bill. Having looked at the amendments and considered their implications, I believe that there is a serious democratic deficit within the workings of the City of London corporation. No hon. Member can deny that. No democrat elected to the House can deny that.
      Mr. Dismore: I am sure that my hon. Friend has heard of the homes for votes scandal in the neighbouring Westminster city council, which gerrymandered elections. Is not what is proposed in the Bill—votes for business—an even greater affront to democracy?
      Mr. Sawford: I thank my hon. Friend. I make no comment on the Westminster situation. I would rather concentrate on the issue that is before us this evening. My hon. Friend is right—it is capitalism gone mad. We now give votes to buildings. The bigger the building, the higher its rateable value, the more votes are obtained.
      Mr. Brooke rose in his place and claimed to move, That the Question be now put.
      Question put, That the Question be now put:—
      The House divided: Ayes 218, Noes 101.

      Division No. 242]

      [9.58 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Bradley, Keith (Withington)

      Alexander, Douglas

      Brady, Graham

      Allen, Graham

      Brazier, Julian

      Amess, David

      Brinton, Mrs Helen

      Anderson, Janet (Rossendale)

      Brooke, Rt Hon Peter

      Arbuthnot, Rt Hon James

      Bruce, Ian (S Dorset)

      Atherton, Ms Candy

      Burgon, Colin

      Atkins, Charlotte

      Caborn, Rt Hon Richard

      Atkinson, David (Bour'mth E)

      Campbell–Savours, Dale

      Atkinson, Peter (Hexham)

      Casale, Roger

      Banks, Tony

      Chapman, Ben (Wirral S)

      Battle, John

      Chapman, Sir Sydney (Chipping Barnet)

      Bayley, Hugh

      Beard, Nigel

      Chope, Christopher

      Beckett, Rt Hon Mrs Margaret

      Clappison, James

      Berth, Rt Hon A J

      Clark, Dr Lynda (Edinburgh Pentlands)

      Beresford, Sir Paul

      Betts, Clive

      Clarke, Charles (Norwich S)

      Blunt, Crispin

      Clifton-Brown, Geoffrey

      Body, Sir Richard

      Coaker, Vernon

      Boswell, Tim

      Coffey, Ms Ann

      Bottomley, Peter (Worthing W)

      Collins, Tim

      Bottomley, Rt Hon Mrs Virginia

      Colman, Tony

      504

      Cormack, Sir Patrick

      Kelly, Ms Ruth

      Corston, Ms Jean

      Khabra, Piara S

      Cox, Tom

      King, Andy (Rugby & Kenilworth)

      Crausby, David

      King, Rt Hon Tom (Bridgwater)

      Cunningham, Jim (Cov'try S)

      Iaing, Mrs Eleanor

      Darling, Rt Hon Alistair

      Lait, Mrs Jacqui

      Davey, Valerie (Bristol W)

      Lansley, Andrew

      Davies, Quentin (Grantham)

      Leigh, Edward

      Davis, Rt Hon David (Haltemprice)

      Letwin, Oliver

      Day, Stephen

      Lewis, Dr Julian (New Forest E)

      Donohoe, Brian H

      Lidington, David

      Dorrell, Rt Hon Stephen

      Lilley, Rt Hon Peter

      Dowd, Jim

      Lloyd, Rt Hon Sir Peter (Fareham)

      Drown, Ms Julia

      Lloyd, Tony (Manchester C)

      Ellman, Mrs Louise

      Loughton, Tim

      Ennis, Jeff

      Lyell, Rt Hon Sir Nicholas

      Faber, David

      McAvoy, Thomas

      Fabricant, Michael

      McCafferty, Ms Chris

      Fallon, Michael

      McIntosh, Miss Anne

      Fitzpatrick, Jim

      McKenna, Mrs Rosemary

      Flight, Howard

      Maclean, Rt Hon David

      Fraser, Christopher

      McLoughlin, Patrick

      Gale, Roger

      McNulty, Tony

      Gapes, Mike

      Mates, Michael

      Gardiner, Barry

      Maude, Rt Hon Francis

      Garnier, Edward

      May, Mrs Theresa

      George, Bruce (Walsall S)

      Meale, Alan

      Gill, Christopher

      Merron, Gillian

      Gillan, Mrs Cheryl

      Michael, Rt Hon Alun

      Gilroy, Mrs Linda

      Milburn, Rt Hon Alan

      Gorman, Mrs Teresa

      Moffatt, Laura

      Gray, James

      Moonie, Dr Lewis

      Green, Damian

      Moran, Ms Margaret

      Greenway, John

      Mortey, Elliot

      Grieve, Dominic

      Murphy, Jim (Eastwood)

      Griffiths, Win (Bridgend)

      Nicholls, Patrick

      Hague, Rt Hon William

      Norman, Archie

      Hain, Peter

      O'Brien, Bill (Normanton)

      Hall, Mike (Weaver Vale)

      Olner, Bill

      Hamilton, Rt Hon Sir Archie

      Osborne, Ms Sandra

      Hammond, Philip

      Ottaway, Richard

      Hanson, David

      Page, Richard

      Heal, Mrs Sylvia

      Paice, James

      Healey, John

      Pickles, Eric

      Heathcoat-Amory, Rt Hon David

      Pollard, Kerry

      Henderson, Doug (Newcastle N)

      Pond, Chris

      Heppell, John

      Pope, Greg

      Heseltine, Rt Hon Michael

      Prentice, Ms Bridget (Lewisham E)

      Hill, Keith

      Primarolo, Dawn

      Hodge, Ms Margaret

      Prior, David

      Hogg, Rt Hon Douglas

      Quinn, Lawrie

      Howard, Rt Hon Michael

      Randall, John

      Howarth, Gerald (Aldershot)

      Raynsford, Nick

      Howells, Dr Kim

      Reid, Rt Hon Dr John (Hamilton N)

      Hoyle, Lindsay

      Robathan, Andrew

      Hughes, Kevin (Doncaster N)

      Robertson, Laurence (Tewk'b'ry)

      Humble, Mrs Joan

      Roche, Mrs Barbara

      Hunter, Andrew

      Roy, Frank

      Hutton, John

      Ruane, Chris

      Jack, Rt Hon Michael

      Ruddock, Joan

      Jackson, Ms Glenda (Hampstead)

      Ruffley, David

      Jackson, Robert (Wantage)

      St Aubyn, Nick

      Jamieson, David

      Simpson, Keith (Mid-Norfolk)

      Jenkin, Bernard

      Singh, Marsha

      Jenkins, Brian

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Johnson, Alan (Hull W & Hessle)

      Johnson, Miss Melanie (Welwyn Hatfield)

      Spellar, John

      Spelman, Mrs Caroline

      Jones, Rt Hon Barry (Alyn)

      Spicer, Sir Michael

      Jones, Helen (Warrington N)

      Squire, Ms Rachel

      Jones, Jon Owen (Cardiff C)

      Stanley, Rt Hon Sir John

      Jones, Martyn (Clwyd S)

      Stoate, Dr Howard

      Jowell, Rt Hon Ms Tessa

      Streeter, Gary

      Kaufman, Rt Hon Gerald

      Stuart, Ms Gisela

      Keeble, Ms Sally

      Sutcliffe, Gerry

      Keen, Ann (Brentford & Isleworth)

      Swayne, Desmond

      505

      Syms, Robert

      Waterson, Nigel

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Wells, Bowen

      White, Brian

      Taylor, Ms Dari (Stockton S)

      Whittingdale, John

      Taylor, Ian (Esher & Walton)

      Wicks, Malcolm

      Taylor, John M (Solihull)

      Widdecombe, Rt Hon Miss Ann

      Thomas, Gareth R (Harrow W)

      Wilkinson, John

      Wilshire, David

      Timms, Stephen

      Wilson, Brian

      Touhig, Don

      Winterton, Nicholas (Macclesfield)

      Trickett, Jon

      Woodward, Shaun

      Turner, Dr George (NW Norfolk)

      Twigg, Derek (Halton)

      Tellers for the Ayes:

      Vaz, Keith

      Mr. Robert Walter and

      Walley, Ms Joan

      Mr. Nick Hawkins.

      NOES

      Adams, Mrs Irene (Paisley N)

      Jowell, Rt Hon Ms Tessa

      Ashton, Joe

      Keen, Alan (Feltham & Heston)

      Barnes, Harry

      Keetch, Paul

      Bell, Martin (Tatton)

      Laxton, Bob

      Benn, Rt Hon Tony (Chesterfield)

      Lepper, David

      Bermingham, Gerald

      Llwyd, Elfyn

      Best, Harold

      McDonnell, John

      Bradley, Keith (Withington)

      Marsden, Paul (Shrewsbury)

      Brown, Russell (Dumfries)

      Michie, Bill (Shef'ld Heeley)

      Burstow, Paul

      Morgan, Alasdair (Galloway)

      Butler, Mrs Christine

      Naysmith, Dr Doug

      Campbell, Rt Hon Menzies (NE Fife)

      O'Hara, Eddie

      Palmer, Dr Nick

      Cann, Jamie

      Perham, Ms Linda

      Cawsey, Ian

      Pike, Peter L

      Chaytor, David

      Prentice, Gordon (Pendle)

      Clarke, Rt Hon Tom (Coatbridge)

      Prosser, Gwyn

      Clarke, Tony (Northampton S)

      Rammell, Bill

      Cohen, Harry

      Rapson, Syd

      Coleman, Iain

      Rooney, Terry

      Cook, Frank (Stockton N)

      Salter, Martin

      Corbyn, Jeremy

      Sanders, Adrian

      Cotter, Brian

      Sarwar, Mohammad

      Cousins, Jim

      Savidge, Malcolm

      Cryer, Mrs Ann (Keighley)

      Sawford, Phil

      Cryer, John (Hornchurch)

      Shaw, Jonathan

      Dalyell, Tam

      Simpson, Alan (Nottingham S)

      Davidson, Ian

      Skinner, Dennis

      Davies, Rt Hon Denzil (Llanelli)

      Smith, Angela (Basildon)

      Davis, Terry (B'ham Hodge H)

      Smith, Llew (Blaenau Gwent)

      Dawson, Hilton

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

      Dismore, Andrew

      Steinberg, Gerry

      Efford, Clive

      Stinchcombe, Paul

      Etherington, Bill

      Stringer, Graham

      Fearn, Ronnie

      Stunell, Andrew

      Flynn, Paul

      Taylor, Matthew (Truro)

      Forth, Rt Hon Eric

      Taylor, Sir Teddy

      Fyfe, Maria

      Tonge, Dr Jenny

      Gerrard, Neil

      Turner, Dennis (Wolverh'ton SE)

      Gibson, Dr Ian

      Turner, Dr Desmond (Kemptown)

      Godman, Dr Norman A

      Vis, Dr Rudi

      Gordon, Mrs Eileen

      Watts, David

      Gorrie, Donald

      Williams, Alan W (E Carmarthen)

      Heath, David (Somerton & Frome)

      Williams, Mrs Betty (Conwy)

      Henderson, Ivan (Harwich)

      Wise, Audrey

      Hinchliffe, David

      Wood, Mike

      Hood, Jimmy

      Worthington, Tony

      Hopkins, Kelvin

      Wright, Anthony D (Gt Yarmouth)

      Hughes, Simon (Southwark N)

      Wyatt, Derek

      Hurst, Alan

      Iddon, Dr Brian

      Tellers for the Noes:

      Jones, Ms Jenny (Wolverh'ton SW)

      Mr. Andrew Mackinlay and

      Mr. Michael Connarty.

      Question accordingly agreed to.
      Question put accordingly, That the amendment be made:—
      The House divided: Ayes 102, Noes 209.

      Division No. 243]

      [10.11 pm

      AYES

      Adams, Mrs Irene (Paisley N)

      Laxton, Bob

      Ashton, Joe

      Lepper, David

      Atherton, Ms Candy

      McCafferty, Ms Chris

      Barnes, Harry

      McDonnell, John

      Beith, Rt Hon A J

      Michie, Bill (Shef'ld Heeley)

      Bell, Martin (Tatton)

      Moffatt, Laura

      Benn, Rt Hon Tony (Chesterfield)

      Naysmith, Dr Doug

      Bermingham, Gerald

      O'Hara, Eddie

      Best, Harold

      Olner, Bill

      Brown, Russell (Dumfries)

      Palmer, Dr Nick

      Burgon, Colin

      Perham, Ms Linda

      Burstow, Paul

      Pickthall, Colin

      Butler, Mrs Christine

      Pike, Peter L

      Campbell, Rt Hon Menzies (NE Fife)

      Pollard, Kerry

      Prentice, Gordon (Pendle)

      Cawsey, Ian

      Prosser, Gwyn

      Clark, Rt Hon Dr David (S Shields)

      Rammell, Bill

      Clarke, Tony (Northampton S)

      Rapson, Syd

      Cohen, Harry

      Rendel, David

      Coleman, Iain

      Russell, Bob (Colchester)

      Cook, Frank (Stockton N)

      Salter, Martin

      Corbyn, Jeremy

      Sanders, Adrian

      Cotter, Brian

      Sarwar, Mohammad

      Cousins, Jim

      Sawford, Phil

      Cryer, Mrs Ann (Keighley)

      Shaw, Jonathan

      Cryer, John (Hornchurch)

      Simpson, Alan (Nottingham S)

      Dalyell, Tam

      Singh, Marsha

      Davey, Edward (Kingston)

      Skinner, Dennis

      Davey, Valerie (Bristol W)

      Smith, Angela (Basildon)

      Smith, Llew (Blaenau Gwent)

      Davidson, Ian

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

      Davis, Terry (B'ham Hodge H)

      Steinberg, Gerry

      Dawson, Hilton

      Stevenson, George

      Dismore, Andrew

      Stinchcombe, Paul

      Efford, Clive

      Stringer, Graham

      Etherington, Bill

      Stunell, Andrew

      Fearn, Ronnie

      Taylor, Ms Dari (Stockton S)

      Flynn, Paul

      Taylor, Matthew (Truro)

      Fyfe, Maria

      Taylor, Sir Teddy

      Gibson, Dr Ian

      Tonge, Dr Jenny

      Godman, Dr Norman A

      Trickett, Jon

      Gordon, Mrs Eileen

      Vis, Dr Rudi

      Gorrie, Donald

      Watts, David

      Heath, David (Somerton & Frome)

      Williams, Rt Hon Alan (Swansea W)

      Henderson, Ivan (Harwich)

      Hinchliffe, David

      Williams, Alan W (E Carmarthen)

      Hood, Jimmy

      Williams, Mrs Betty (Conwy)

      Hopkins, Kelvin

      Wise, Audrey

      Hughes, Simon (Southwark N)

      Wood, Mike

      Hurst, Alan

      Wright, Anthony D (Gt Yarmouth)

      Iddon, Dr Brian

      Wyatt, Derek

      Jones, Ms Jenny (Wolverh'ton SW)

      Tellers for the Ayes:

      Keen, Alan (Feltham & Heston)

      Mr. Andrew Mackinlay and

      Keetch, Paul

      Mr. Michael Connarty.

      NOES

      Ainsworth, Peter (E Surrey)

      Blunt, Crispin

      Alexander, Douglas

      Body, Sir Richard

      Allen, Graham

      Boswell, Tim

      Amess, David

      Bottomley, Peter (Worthing W)

      Anderson, Donald (Swansea E)

      Bottomley, Rt Hon Mrs Virginia

      Anderson, Janet (Rossendale)

      Bradley, Keith (Withington)

      Arbuthnot, Rt Hon James

      Brady, Graham

      Atkins, Charlotte

      Brazier, Julian

      Atkinson, David (Bour'mth E)

      Brinton, Mrs Helen

      Atkinson, Peter (Hexham)

      Brooke, Rt Hon Peter

      Battle, John

      Browne, Desmond

      Bayley, Hugh

      Bruce, Ian (S Dorset)

      Beard, Nigel

      Campbell, Mrs Anne (C'bridge)

      Beckett, Rt Hon Mrs Margaret

      Campbell-Savours, Dale

      Beresford, Sir Paul

      Cann, Jamie

      Betts, Clive

      Caplin, Ivor

      507

      Casale, Roger

      Hanson, David

      Chapman, Ben (Wirral S)

      Heal, Mrs Sylvia

      Chapman, Sir Sydney (Chipping Barnet)

      Heathcoat-Amory, Rt Hon David

      Henderson, Doug (Newcastle N)

      Chope, Christopher

      Hill, Keith

      Clappison, James

      Hodge, Ms Margaret

      Clark, Dr Lynda (Edinburgh Pentlands)

      Hogg, Rt Hon Douglas

      Howarth, George (Knowsley N)

      Clarke, Charles (Norwich S)

      Howarth, Gerald (Aldershot)

      Clarke, Rt Hon Tom (Coatbridge)

      Howells, Dr Kim

      Clifton-Brown, Geoffrey

      Hoyle, Lindsay

      Coaker, Vernon

      Hughes, Ms Beverley (Stretford)

      Coffey, Ms Ann

      Hughes, Kevin (Doncaster N)

      Collins, Tim

      Humble, Mrs Joan

      Colman, Tony

      Hunter, Andrew

      Cormack, Sir Patrick

      Hutton, John

      Cox, Tom

      Jack, Rt Hon Michael

      Crausby, David

      Jackson, Ms Glenda (Hampstead)

      Cunningham, Jim (Cov'try S)

      Jackson, Robert (Wantage)

      Darling, Rt Hon Alistair

      Jamieson, David

      Danvill, Keith

      Jenkin, Bernard

      Davies, Quentin (Grantham)

      Jenkins, Brian

      Day, Stephen

      Johnson, Miss Melanie (Welwyn Hatfield)

      Dobson, Rt Hon Frank

      Donohoe, Brian H

      Jones, Rt Hon Barry (Alyn)

      Dorrell, Rt Hon Stephen

      Jones, Helen (Warrington N)

      Dowd, Jim

      Jones, Martyn (Clwyd S)

      Ellman, Mrs Louise

      Jowell, Rt Hon Ms Tessa

      Ennis, Jeff

      Kaufman, Rt Hon Gerald

      Faber, David

      Keen, Ann (Brentford & Isleworth)

      Fabricant, Michael

      Kelly, Ms Ruth

      Fallon, Michael

      Khabra, Piara S

      Field, Rt Hon Frank

      King, Andy (Rugby & Kenilworth)

      Fitzpatrick, Jim

      King, Rt Hon Tom (Bridgwater)

      Flight, Howard

      Iaing, Mrs Eleanor

      Foster, Michael Jabez (Hastings)

      Lait, Mrs Jacqui

      Foulkes, George

      Lansley, Andrew

      Fraser, Christopher

      Leigh, Edward

      Gale, Roger

      Letwin, Oliver

      Gapes, Mike

      Levitt, Tom

      Gardiner, Barry

      Lewis, Dr Julian (New Forest E)

      Garnier, Edward

      Lidington, David

      George, Bruce (Walsall S)

      Lilley, Rt Hon Peter

      Gillan, Mrs Cheryl

      Lloyd, Rt Hon Sir Peter (Fareham)

      Gilroy, Mrs Linda

      Lloyd, Tony (Manchester C)

      Gorman, Mrs Teresa

      Loughton, Tim

      Gray, James

      Lyell, Rt Hon Sir Nicholas

      Green, Damian

      McAvoy, Thomas

      Greenway, John

      Macdonald, Calum

      Grieve, Dominic

      McIntosh, Miss Anne

      Griffiths, Win (Bridgend)

      McKenna, Mrs Rosemary

      Hall, Mike (Weaver Vale)

      Maclean, Rt Hon David

      Hamilton, Rt Hon Sir Archie

      McLoughlin, Patrick

      Hammond, Philip

      McNulty, Tony

      508

      Marsden, Paul (Shrewsbury)

      Soley, Clive

      Maude, Rt Hon Francis

      Southworth, Ms Helen

      May, Mrs Theresa

      Spellar, John

      Meacher, Rt Hon Michael

      Spelman, Mrs Caroline

      Meale, Alan

      Squire, Ms Rachel

      Merron, Gillian

      Stanley, Rt Hon Sir John

      Milburn, Rt Hon Alan

      Stewart, David (Inverness E)

      Moran, Ms Margaret

      Stoate, Dr Howard

      Morley, Elliot

      Streeter, Gary

      Murphy, Jim (Eastwood)

      Stuart, Ms Gisela

      Norman, Archie

      Sutcliffe, Gerry

      O'Brien, Bill (Normanton)

      Swayne, Desmond

      Osborne, Ms Sandra

      Syms, Robert

      Ottaway, Richard

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Page, Richard

      Paice, James

      Taylor, Ian (Esher & Walton)

      Pendry, Tom

      Taylor, John M (Solihull)

      Pickles, Eric

      Thomas, Gareth R (Harrow W)

      Pond, Chris

      Timms, Stephen

      Pope, Greg

      Touhig, Don

      Prentice, Ms Bridget (Lewisham E)

      Turner, Dennis (Wolverh'ton SE)

      Primarolo, Dawn

      Turner, Dr Desmond (Kemptown)

      Quinn, Lawrie

      Turner, Dr George (NW Norfolk)

      Randall, John

      Twigg, Derek (Halton)

      Raynsford, Nick

      Vaz, Keith

      Reid, Rt Hon Dr John (Hamilton N)

      Walley, Ms Joan

      Robertson, Laurence (Tewk'b'ry)

      Wells, Bowen

      Roche, Mrs Barbara

      White, Brian

      Roy, Frank

      Whittingdale, John

      Ruane, Chris

      Widdecombe, Rt Hon Miss Ann

      Ruffley, David

      Wilkinson, John

      St Aubyn, Nick

      Wilshire, David

      Savidge, Malcolm

      Winterton, Nicholas (Macclesfield)

      Short, Rt Hon Clare

      Woodward, Shaun

      Simpson, Keith (Mid-Norfolk)

      Worthington, Tony

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Tellers for the Noes:

      Smith, John (Glamorgan)

      Mr. Robert Walter and

      Snape, Peter

      Mr. Nick Hawkins.

      Question accordingly negatived.
      Debate to be resumed on Tuesday 20 July.

      BUSINESS OF THE HOUSE
      Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
      That, at this day's sitting, the Commonwealth Development Corporation Bill [Lords] and Trustee Delegation Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Allen.]
      Question agreed to.

  Commonwealth Development Corporation Bill
  Postponed proceedings resumed.
  Commonwealth Development Corporation Bill
    New Clause 3

      SALE OF SHARES OR OTHER SECURITIES
      '. It shall be the duty of the Secretary of State—

      (a) in disposing of shares or other securities held by him; or

      (b) in directing a person to dispose of shares or other
      securities held on the Secretary of State's behalf

      to ensure that the price obtained for those shares or other securities is in the best commercial interests of the Corporation.'.—[Mrs. Galan.]
      Brought up, and read the First time.
      10.23 pm
      Mrs. Cheryl Gillan: I beg to move, That the clause be read a Second time.
      At this late hour, it is fitting that we return to consideration of the Bill and I am pleased to see the Secretary of State in her place. I understand that she will reply to the debate on the new clause. During the stages of the Bill, the Opposition have been greatly concerned about the way in which the shares and securities in the new Commonwealth Development Corporation will be disposed of and, in particular, the price that will be achieved. None of the replies given during our proceedings on the Bill so far has reassured me that the best possible price will be obtained for the sale of the Commonwealth Development Corporation.
      The new clause reflects those concerns, because we need to ensure that the price obtained is the best possible, and that the CDC is not sold off cheaply at a knock-down price.
      Clare Short: Unlike your performance.
      Mr. Deputy Speaker (Mr. Michael Lord): Order. Perhaps we might begin as we plan to continue, without sedentary interventions from the Front Benches or even the Back Benches.
      Mrs. Gillan: The right hon. Lady intervened from a sedentary position to cast aspersions on the privatisation programme of the previous Conservative Government. In the light of the report that came out today, I hope that she will undertake not to do for the CDC what she did for the Railtrack privatisation. That would make Conservative Members a lot happier.
      Clare Short: The hon. Lady should apologise.
      Mrs. Gillan: At least we are not talking down the price of the CDC. We are trying to ensure that appropriate safeguards are included in this privatisation process. In any case, methinks the lady doth protest too much. She has been telling us that this is not a privatisation process.
      Mr. Douglas Hogg: Does my hon. Friend agree that, given the Chancellor's disposal of the country's gold reserves, a statutory obligation of this kind is justified?
      Mrs. Gillan: My right hon. and learned Friend is right. I shall come to the question of the Chancellor's gold
      510
      sales later, as it will have a direct effect on the price achieved on the CDC privatisation. We must make no mistake: Labour Members, when they vote to support the Bill, will be voting for a privatisation.
      First, I shall look at some factors that could affect the price. I shall refer to the CDC's annual report for 1998, which contains some interesting facts and figures. The CDC's investments are listed in the final pages—a rather large population of relatively small investments. The number and variety of those investments mean that they are inherently difficult to manage. Also, realising the value of such a large and diverse portfolio will pose problems.
      The management problems need to be examined, as at no stage in our proceedings have we explored them properly. They would also, of course, affect the price. I hope that the Secretary of State will comment on the portfolio, and undertake to give the House an analysis of the business itemised between pages 65 and 73 of the report in terms of cost, estimated current values and the income stream produced. That is an essential element in setting out this privatisation so that potential investors can see what is on offer.
      I hope also that the Secretary of State will say what percentage of the portfolio produces an income stream. In how many cases is the income stream column blank? In other words, I hope that she will give an idea of the value of all the businesses, as any interested buyer will have to understand that it will be difficult or impossible to realise their value in practical terms. Unless information is readily available to investors, it may be impossible to establish whether we obtain the best price for privatisation.
      10.30 pm
      Mr. Leigh: My hon. Friend's remarks on price are directly relevant to our earlier debate on new clause 1. The more someone is required to pay for the CDC, the less willing he or she will be to do the corporation's traditional work in difficult markets and with difficult customers. The Government cannot have it both ways.
      Mrs. Gillan: My hon. Friend goes to the heart of the matter. The nature of the CDC will be fundamentally changed by its privatisation.
      The Secretary of State must tell us what effect the sale of gold has had on the CDC's three gold-mining investments—the Abosso and Satellite gold fields in Ghana and the East Africa gold mines in Tanzania. Has any of those operations been directly affected by the Chancellor's actions? We have heard alarming stories about redundancies and a crisis in South Africa. [Interruption.] The Secretary of State is laughing; she is plainly amused by the thought of a crisis in South Africa. No doubt, like the Under-Secretary, she will blame the crisis on other countries selling their gold. However, has the status of those three investments been affected? If they can be damaged even by the actions of the UK Government, the risk involved in the CDC will be clear, and the portfolio will be even less interesting to investors.
      The Secretary of State must consider what buyers might be looking for. The price obtained for the CDC could be badly affected by the amount of Government management control of which the Under-Secretary boasted during our previous debate. The Under-Secretary must appreciate

      511
      that a full transfer of ownership and management—implying an ability to act commercially—would maximise the value of CDC shares. [Interruption.] The Minister says that I should be referring to the Secretary of State, but it was he who dealt with the previous group of new clauses and amendments, and he who trumpeted the control that he would retain over the CDC.
      The golden share and the ability to block CDC actions will also reduce the price. Rather than protecting the CDC, the Government will diminish its value. The Secretary of State must let us know why the vehicle she is using to maintain the CDC's character may work against our obtaining a fair price for it.
      The hour is late, and I do not wish to delay the House. The Under-Secretary earlier filled some of the gaps that he had left at the Committee stage. He also sent me a letter—it arrived only yesterday—on some points raised in Committee, particularly concerning the CDC's operating costs. [Interruption.] The Minister laughs and asks what is wrong with that. A considerable time has elapsed since the Committee stage, and the Minister could have made an effort to send the replies a little earlier than the day before the debate. That is how the Department has handled the Bill. The taxation provisions for the CDC were tabled at the eleventh hour. The whole passage of the Bill has been punctuated by the late arrival of information.
      To give the Minister his due, the letter did arrive, and I thank him for giving us the information. However, once again there are unanswered questions. I raised with the Minister the issue of the large rise in staff costs and operating charges. The staff costs rose between 1997 and 1998 from £13.2 million to £16.3 million, and the other operating charges rose from £11.6 million to £17.6 million in a 12-month period. I asked for a breakdown of the CDC's operating costs.
      Will the Secretary of State explain item five in the Minister's letter, which deals with the business change management costs and costs related to the preparation of the PPP, which stand at £1.8 million for the 1998 accounting period? How much does she expect those costs to be in the 1999 accounting period? Will they be similar, or will they be larger? That is an astronomical cost, and I presume that it will not be repeated. However, there must be some carry over into the 1999 financial year, and I hope that she will be able to tell us what those charges are to date.
      There is also an item on the increase in general administration costs, which is a round figure of £1 million. That requires further and better explanation. Even at this late stage on Report, the Department and the Secretary of State should give us a breakdown of that £1 million figure, which is a large increase in general administration costs on a relatively small budget. A financial director of any company would look at that item on the accounts and ask those questions. To reassure potential investors that this set of accounts is not profligate, to say the least, we should know to what that £1 million increase in general administration costs is attributed.
      The Minister's letter also refers to training costs. He says:
      "Training costs and costs directly related to preparation of the public private partnership are exceptional costs, but are expected to continue over the next few years."
      512
      Surely exceptional costs are one-off costs, but if they are expected to continue over the next few years they must have an implication for the privatisation of this company and the price that will be paid. At this stage, the Secretary of State should let us know exactly what those costs will be and why they will continue over the next few years. They are exceptional if they are continuing annually. Light needs to be shed on that.
      I have taken up enough of the House's time at this time of night. I am letting the Secretary of State off lightly, because so many questions need to be asked. I reiterate what my hon. Friend the Member for South-West Devon (Mr. Streeter) said at the beginning of the last group of amendments. We want the privatisation of the Commonwealth Development Corporation to succeed. We are not content that this matter has been thought through, and we are certainly not content that a fair and good price will be obtained for this investment unless the Secretary of State and her Minister answers these detailed questions. I believe that, long before we get to the market, the Department will be forced to answer even more detailed questions. It is our duty to examine what the Department is doing, and to ensure that it gets it right. After all, the Secretary of State does not have much of a track record on privatisation, other than in talking down the prices of privatisations
      Mr. David Heath: It is a shame that we could not consider this new clause with new clause 2, which was not moved; it would be interesting to judge the effects of incorporation in sub-Saharan Africa on the price of assets on sale.
      In the latter part of her speech, the hon. Member for Chesham and Amersham (Mrs. Gillan) addressed some interesting questions about the present functioning of the CDC and its finances. However, the early part of her speech and the main thrust of the new clause deals with the pricing of assets on their disposal. I cannot help but hear the resounding noise of stable doors being firmly closed, several years after some choice horses bolted from the public sector. The structures already exist—through the National Audit Office and the Public Accounts Committee—to provide checks and balances in these matters. Furthermore, I believe that the Secretary of State does have the best interests of that partial flotation in mind, so that it can produce the assets that we hope will enable the corporation to do its job.
      The narrowness of the new clause causes me some concern. It proposes that the sole criterion to be used by the Secretary of State is
      "the best commercial interests of the Corporation."
      It is important that we receive the maximum return compatible with the other objectives set by the House and the Government for the change of status of the CDC.
      However, there are conflicting pressures; I hope that the Secretary of State will bear them in mind when the sale of the assets takes place. Those pressures will also bear on the board, which will have a duty under the Companies Acts to maintain the best commercial interest, but that will be qualified by the structures to be established under the Bill in respect of business principles and investment policy. The interests will not be purely commercial; there will be a commercial interest tempered by the need to produce effective development in those parts of the world where it would otherwise not occur.

      513
      If the sole criterion were to be the best commercial interests of the corporation, a different picture would emerge. There would be a different distribution of assets within the corporation before flotation; there would undoubtedly be an increasing asset base at the expense of effective investment in many parts of the world. The sole shareholder—the Government with the Secretary of State as their embodiment—should have a range of other interests in mind: development, which we have already discussed; other policies of the British Government, which may or may not be in conflict with the commercial interest; and the diversity of the eventual share holdings, because a diverse ownership of the company will produce that vitality in investment that we want.
      The potential buyers of the business will want to consider other factors, such as the exceptional tax status that has been invoked as the main thrust of the Bill. I still have some residual concerns as to that tax status, although I am willing to suspend some of my disbelief in order to see the measure through. However, I am worried about the way in which profits and dividend will be apportioned between the tax-exempt parts of the company and those that are not exempt. I am concerned about the potential for windfall earnings during that seven years of grace, if the golden share is disposed of. Although 1 pay tribute to the Minister's willingness to provide lucid answers to those points, he did not entirely convince me in Committee. Some matters remain opaque.
      All those factors must be borne in mind. That is why I must reject the new clause; it puts too close a straitjacket on the Secretary of State, by asking her to consider only the commercial interests of the corporation in finding a price.
      As I said, of course we want to see the maximum return on the investment that the Government and the British people have put into the company over the years, but we also want a successful flotation and continuing interest to ensure that there is investment in developing countries in the future. A basket of criteria is involved, and the amendment will not provide the Secretary of State with the freedom of choice that will allow her to do her duty by the House and the Government.
      10.45 pm
      Mr. Hogg: I listened carefully to the hon. Member for Somerton and Frome (Mr. Heath). He is wrong because he has failed to focus on the purpose of the new clause. His remarks would have some force if we were discussing the general investment policy of the Commonwealth Development Corporation. There is a distinction to be drawn between the CDC's general investment policy and the price at which one subsequently seeks to dispose of shares. They are not the same. Clearly, the disposal of shares reflects in part the pre-existing investment policy, but the two considerations are different, and it is fair-minded of the hon. Gentleman to acquiesce on that point.
      I support the remarks of my hon. Friend the Member for Chesham and Amersham (Mrs. Gillan), who spoke from the Front Bench. Reading the new clause, it seems to me that we are doing little more than asserting in the Bill the obligations that are already those of directors under the Companies Act 1989. I find it difficult to
      514
      understand why Ministers should resist the incorporation of a general statutory obligation into the Bill, unless they have a private agenda.
      Mr. Heath: Does not the right hon. and learned Gentleman accept that there is a difference between the obligation on directors and the obligation on the shareholder, who is the Secretary of State? The Secretary of State has other interests that she must consider in determining what is the appropriate disposal price.
      Mr. Hogg: I am grateful to the hon. Gentleman for making that point because he reinforces my concern. We must remember that when the CDC has been privatised, there will be many private investors who will hold up to 75 per cent. of the equity. They have a right to expect that their equity price will be protected against the depredations of a Secretary of State who may be minded to dispose of equity for a price other than a commercial one. That is the point that the hon. Gentleman is making.
      Mr. Foulkes indicated dissent.
      Mr. Hogg: The Under-Secretary shakes his head, but he is a little premature because he has not yet heard my argument. If he wants to intervene, I will of course give way. If not, perhaps he would be well advised not to interrupt.
      The point is that we are discussing the equity in the CDC, in which there will be many private investors. If we are to encourage private investment in the CDC, it is essential that prospective investors feel confident that their investment will be treated in a proper commercial way. The new clause would do no more than assert that in the Bill. Prospective investors will be entitled to be concerned about the security of their investment if there is no statutory protection.
      The hon. Member for Somerton and Frome observed that there might be other, proper considerations that the Secretary of State could take into account. If I were an investor, I would not want the value of my shares to be determined at the disrcetion of the Secretary of State, however well intentioned she might be. I should want the value of my shares to be determined by straightforward commercial criteria.
      Mr. Foulkes: Well, we know that.
      Mr. Hogg: Of course I should want that. If the hon. Gentleman wants to get investment into the CDC, he would be well advised to ensure that the investment is safe. [Interruption.] The hon. Member for Hove (Mr. Caplin) is right to gesture to the Under-Secretary that if he wants to keep the debate short, he should keep quiet. I praise the hon. Member for Hove. After the 19 or so years in which the Under-Secretary has been a Member of the House, I should have thought that silence would have been commended to him by experience and practice.
      Mr. Crispin Blunt: He is a well-known control freak.
      Mr. Hogg: The Labour party is full of control freaks.

      515
      I may be enjoying myself, but there is a serious point to be made about the protection of investors.
      Mr. Heath: I am listening carefully to the right hon. and learned Gentleman's argument which might have some force if it were envisaged that the sale of shares should take place in a series of tranches—a sequential sale—so that the Secretary of State would be affecting the price of shares that were already held by members of the public. However, that would not and could not apply if the shares were sold in a single block.
      Mr. Hogg: I am grateful to the hon. Gentleman for coming some way towards my position. He should come the whole way, however, as giving the Secretary of State the ability to crystallise the value of an equity holding—as that is what happens when there is a disposal for value—also determines the value of the residual equity. Giving the Secretary of State the right to dispose of shares other than at their commercial value also crystallises the value of shares held by the other equity holders. The price might be less than the commercial value so that would be wrong.
      This is not idle speculation. Anyone who is aware of the Government's policy on realising the gold reserve will recognise that they are not to be trusted with the realisation of assets. Not only have they managed to sell the gold reserve at a low value, but they have had a permanently diminishing effect on the gold reserve held by others; and, incidentally, they have diminished the employment in South African and other gold mines for which the Secretary of State for International Development and the Commonwealth Development Corporation have some responsibility. So we are absolutely justified in being very cautious.
      Moreover, new clause 3 has another great benefit. When one sets out a duty, as new clause 3 does, one also presrcibes a remedy. If the Bill states that the Secretary of State has a duty to realise at commercial value and it then appears that the Secretary of State is not doing that and there is some private agenda or other motive such as the hon. Member for Somerton and Frome alluded to, it is possible for a private investor to go to the court, first for an injunction—I hope that we are all in favour of the rights of the citizen—and, secondly, alleging loss arising from misfeasance on the part of the Secretary of State.
      The proposal set out by my hon. Friend the Member for Chesham and Amersham is very desirable. It crystallises within the Commonwealth Development Corporation an obligation which is extraordinarily similar to that imposed on a board of directors. It provides a protection to prospective investors that means that there will be more prospective investors and it provides them with a remedy. The House should seek to assert and protect all those measures—[Interruption.] I am awfully glad to see that on this matter I have the support of the Deputy Chief Whip.
      Mr. Leigh: As I said on Second Reading and in respect of new clause 1, many of us who take an interest in the future of the corporation are concerned about whether the unique work that it has carried out over the years can continue. Opposition Members are also concerned about
      516
      whether the articles of association that the Government tell us are adequate and the golden share are sufficient to ensure that.
      As the articles of association make clear—it will be inevitable in what will be a privatised company—the corporation will have to put the shareholders' interests first. We receive assurances from the Government that by retaining the golden share the Government will be able to ensure that the corporation continues the valuable work that it has undertaken in the past, not only in difficult markets in countries where other investment institutions may be less than willing to take an interest but in helping smaller, struggling companies in those difficult markets.
      We live in the real world and we all know that if the new clause is voted on in a few minutes from now, the Government will vote it down. However, I hope that it will crystallise some of the arguments. When the Secretary of State responds, we must try to get out of her more information about how the sale will be financed to ensure that the traditional work of the corporation is maintained and protected.
      This privatisation is quite different from many others with which we were involved with in the past, which were fiercely opposed by the Labour party. They were often difficult privatisations. There was considerable public interest. We were concerned with British Gas and British Telecom, for example. They were difficult but at least we were dealing with companies that were fundamentally commercial. They were engaged in what would become, once they were privatised, very profitable work.
      We are now undertaking a different sort of privatisation and not one that the previous Conservative Government were prepared to undertake because of the unique difficulties that would be faced. When we were dealing with large monopolies in the highly successful market that appertains in this country, it was easy to obtain a good price. There was argument about whether the best price was obtained, but let us not go back over all that.
      Mr. Deputy Speaker (Sir Alan haselhurst): Order. Indeed, let us not go back on all that, nor on the hon. Gentleman's speech during an earlier part of the proceedings on the Bill. I must ask him to direct his remarks specifically to the duty of the Secretary of State to obtain the best price in the commercial interests of the corporation. That is the point that is under consideration.
      Mr. Leigh: That is the point, Mr. Deputy Speaker. It would be easy for the Secretary of State to obtain a very good price if it became generally known that the Government were watering down their commitment to maintain the traditional work of the corporation. I do not think that we have received adequate reassurances so far that the Government are prepared to sell the corporation for rather less than they might otherwise hope because they are determined to maintain the traditional work of the corporation.
      It would be easy for the Government to obtain an extremely good price for the corporation. Will they do that, or are they prepared in the marketplace to remind people in the most forceful terms possible of the articles of association, of the existence of the golden share and of their determination to maintain the corporation's work in very difficult markets? If they do all that, the price that they obtain may be very different from what it would be in the open marketplace.

      517
      The Government cannot have it both ways. They must be honest with the House and with others who take an interest in these matters. They must make clear their aim. If it is to maintain the corporation in its present form following a pseudo-privatisation and to maintain its ethos—[Interruption.] The Under-Secretary is shaking his head. If the Government adopt that approach, they will not get a very good price. They will find that investors fight shy. I suspect that investors will see through what the Government are saying. They will see through the sham reassurances that have been given. They will realise that the golden share and the articles of association mean very little. Previous privatisations have always started with a golden share—
      Mr. Deputy Speaker: Order. The hon. Gentleman is repeating himself, in territory where I suggested that he should not be treading.
      Mr. Leigh: I am coming to the end of my remarks, Mr. Deputy Speaker.
      On the issue of price, we are entitled to obtain a reassurance from the Government that they will not undersell the traditional work of the corporation
      11 pm
      Clare Short: This is a rather depressing set of events. We all agree that it is an important principle of democracy, and the tradition of the House, that it is the duty of the Opposition to oppose, but that does not mean that it is the duty of the Opposition not to understand anything that is discussed on Second Reading or in Committee. There is either a complete incapacity on their part to understand, or a necessity continually to repeat mantras, which means that none of our proceedings have created any understanding on the part of those on the Opposition Front Bench. That is regrettable and disappointing.
      All parties claim—I believe that it is the position of the Liberal party—that the Commonwealth Development Corporation is a precious asset, and that the creation of a public-private partnership would enable its development interests to be entrenched. That could not be achieved by a privatisation, but through the change that we are making, we can get more private sector involvement into very poor countries which are not attracting much private sector investment, thereby enhancing their economic growth and demonstrating that a good rate of return can be gained by the private sector in those countries. Everyone agrees that that would be a success, and that it is a shared objective, but much of the discussion proceeds as though we had not previously agreed on that principle.
      The hon. Member for Somerton and Frome (Mr. Heath) made clear the purpose of the new clause. The official Opposition are trying to impose on the Secretary of State a duty, when disposing of shares,
      "to ensure that the price obtained for those shares or other securities is in the best commercial interests of the corporation."
      However, on new clause 1, the official Opposition stated that they were anxious to retain the development objectives of the corporation, and therefore that commercial objectives must not be primary.
      Two absolutely contradictory new clauses have been moved tonight, but it is the duty of the Opposition to oppose and not to be coherent or intelligent or to
      518
      understand the purpose of the Bill. They have argued for two entirely contradictory sets of objectives. That is interesting and notable.
      Mrs. Gillan: The hour is late.
      Clare Short: That partly explains it.
      We agree with the Opposition that the CDC needs a strong balance sheet that will equip it for the challenges under the new structure. Both the Government and the CDC have a strong interest in the partnership leading to the CDC's long-term success. We agree that that should be achieved through financial restructuring, and that that should not be dependent on the proceeds from the sale. Those proceeds are important, but they are no substitute for the effectiveness of the financial restructuring and the track record created by it.
      Restructuring is likely to involve the conversion of existing Government debt into equity or commercial debt with an appropriate repayment profile. We need a track record so that any private-sector interest considering investing in the new partnership CDC can see the likely rate of return. The purpose of the restructuring is to give the CDC a capital structure that balances the needs of the business, the capacity for future growth and financial prudence.
      Opposition Members are game-playing for purely ideological reasons and pretending that this is a privatisation, and that they are against the outcome of a privatisation. As we said repeatedly in Committee, a straightforward privatisation would mean that, within a short time, the CDC would move out of the poorest countries and into investment in countries with a safer rate of return. It would cease to be a development instrument. Conservative Members claim to be opposed to that, but the new clause requires that—the biggest and fastest rate of commercial return on the sale, although that is not the objective of the exercise.
      Mr. Hogg: Will the right hon. Lady give way?
      Clare Short: I will, but I shall come to what the right hon. and learned Gentleman had to say. He is quite clever, and thinks that he is enormously clever, but what he said today showed that he had not attended to the Bill's detail and the arrangements that are being made for the partnership, or to previous proceedings, so what he said did not make sense.
      Mr. Hogg: The right hon. Lady does not advance her case by insulting her opponents. I suggest that she addresses new clause 3, which deals with the realisation of the equity. That is different in kind from the fashioning of the investment policy. She may well be right to say that, in the structuring of the investment policy, there is a case for having regard to the broad developmental considerations, to which she has referred, but, in realising the equity, does she not understand that she has the same kind of duty that the board of directors has to ordinary equity holders?
      Clare Short: If the right hon. and learned Gentleman listens for a little while, he might understand better the whole structure of the arrangements that we are making,

      519
      and then he would see that his arguments do not hold up and that the point that he made just now is not of much value to the House.
      The hon. Member for Chesham and Amersham (Mrs. Gillan) said—
      Mrs. Gillan: Will the right hon. Lady give way?
      Clare Short: No. I would like to proceed.
      Mrs. Gillan: Will the right hon. Lady give way?
      Clare Short: No, I am sorry.
      Mrs. Gillan: Will the right hon. Lady give way?
      Clare Short: No. That is the third time. Is that clear?
      The hon. Lady claimed that she was greatly concerned about the way in which the shares were to be disposed of and the price that they were likely to obtain, then she made a series of points that were not connected with that. For example, she talked about the disposal of Railtrack. As you allowed that, Mr. Deputy Speaker, I presume that an answer to that is in order.
      The way in which Railtrack was privatised, the increase in the subsidy from the public sector and the factoring of the railways, astonished the markets and meant that the price obtained was low in terms of the assets being privatised. The hon. Lady might have read the press today, but I bet that she has not read the prospectus for the sale. Had she done so, she would have seen that the policy commitments that I put in there on behalf of the Labour party said that we would use the regulatory regime, in the way in which the new regulator now says that he will use the regulatory regime, to ensure that the railways operate efficiently in the interests of the—
      Mr. Deputy Speaker: Order. I think that honour is satisfied on that point now. May we return to the Bill?
      Clare Short: I am sorry, Mr. Deputy Speaker, but surely an ill-informed insult cannot be made and the short answer not be provided. That is surely not the usual practice of the House.
      Mr. Deputy Speaker: Order.
      Clare Short rose—
      Mr. Deputy Speaker: Order. When I am on my feet, the right hon. Lady will sit down. I decided that enough had been said and that honour had been satisfied. We must now return to the subject matter of the debate.
      Clare Short: As the hon. Member for Chesham and Amersham said, Railtrack was sold—
      Mr. Leigh: Mr. Deputy Speaker has told you to stop talking about that.
      Mr. Deputy Speaker: Order. I am sorry to interrupt the right hon. Lady. The hon. Gentleman would do well to leave me to judge these matters. I do not need his advice.
      Clare Short: Railtrack was sold cheaply because the commercial sector was astonished by the privatisation.
      520
      Proper regulation will ensure that it acts in the interest of the public. That means that the rate of return will be lower, and that is relevant to the question of a public-private partnership, how one secures a public interest, and whether one obtains a high price at the point of sale. That is relevant to the CDC.
      Mrs. Gillan rose—
      Clare Short: No, I shall not give way.
      The hon. Lady went on to say that the Opposition were not talking down the likely interest in the CDC's partial flotation. It may come in tranches or in one block. That is yet to be determined. It does not have to be sold at one time.
      Either the official Opposition do not understand the structure, or they are trying to talk it down by saying that it will not work. They cannot have it both ways, and, because I want to be charitable, I shall conclude that they do not understand. That is probably the reality.
      As for the question of gold sales—I am not sure that this is in order or relevant, Mr. Deputy Speaker—
      Mr. Leigh: Try it.
      Clare Short: Remarks have been allowed. Can they be answered? May I invite you to make a ruling, Mr. Deputy Speaker?
      Mr. Deputy Speaker: The right hon. Lady is stretching things to the limit. The raising of matters as comparative examples in debate does not provide a platform for discussion. All that I seek is a sense of proportion. I am not saying that the right hon. Lady cannot refer to such matters, but I believe that she went on far too long—even beyond the extent of my ruling—on the previous matter.
      Clare Short: We shall all look at Hansard tomorrow, and see how much time was devoted to the subject of gold sales in the earlier speech. I accept your ruling that the point cannot be responded to, Mr. Deputy Speaker, but I feel that there is a slight imbalance.
      Mrs. Gillan: Will the Secretary of State give way?
      Clare Short: No.
      If it were the duty of the Government to secure the maximum commercial return when the shares were sold, either as one block or in tranches, it would be impossible to entrench the development interests about which Opposition Members claim to be so concerned. The whole structure of the partnership—the requirement that there should be an ethical investment strategy, and an entrenched requirement to invest in the poorest countries—is there not to maximise the return when the shares are sold, but to develop a public-private partnership, and to ensure that the private sector invests more in the poorest countries. If Opposition Members pushed the new clause to a vote, they would be trying to secure the highest possible short-term price for the shares, and trying to diminish the strength of the new Commonwealth Development Corporation.
      Let me say to the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg)—is that right? It is an unusual-sounding constituency—that the structure

      521
      of the public-private partnership does not depend on the fickle intervention of a Secretary of State. As the right hon. and learned Gentleman suggested, that would cause unpredictability for the markets, and would be likely to affect the price. This does not depend on political intervention. Those who buy into the new arrangements will know that they are buying into a development organisation, seeking a return that is reasonable for the private sector, but not the maximum commercial rate. Those who seek the maximum rate should invest in a different organisation.
      It is difficult to discuss these matters thoroughly and rationally at such a late hour, but we are talking about a public-private partnership that seeks to build on the best of what the CDC has achieved in the past. We consider it to be a complete misapprehension on the Opposition's part that there can be only highly labour-intensive investments with a low rate of return in developing countries. It is perfectly possible for the CDC to move to equity investment, to secure a reasonable rate of return, to persuade the private sector to hold some shares in it, to increase private-sector investment in the poorest countries, to increase their rate of economic growth, and to increase private-sector investment generally.
      That is the purpose of the organisation. The new clause would destroy that objective, and we ask the House to reject it.
      11.15 pm
      Mrs. Gillan: I used to have respect for the Secretary of State, but, after that performance, I will have to revise my opinion of her. I made the points on the new clause in good faith. She overreacted. She has not answered a single point that was made by Conservative Members. Observers of her performance will be bitterly disappointed because she has let down both herself and the Commonwealth Development Corporation.
      Observers will find it difficult to understand why the Secretary of State did not accept the new clause. In particular, she has signalled to the market that she is willing to sell the CDC off cheap to her friends—at a low price. That is a betrayal of what the CDC has stood for during its 50-year existence. [Interruption.] The Under-Secretary says from a sedentary position that I am making cheap political points. I will give way to him if he wishes to intervene. He is saying that I am talking the CDC down. I have not talked it down, but the Secretary of State has. She is going to sell it cheap.
      I asked the Secretary of State, reasonably, to provide us with an analysis of the portfolio of all the businesses in the annual report. She did not reply. She has not addressed the management issues that we raised, on which the price will turn.
      The more control that is exercised by Government as the golden shareholder, the more the opportunity to make commercial returns diminishes. To spell it out for the Minister and the Secretary of State, if there is 75 per cent, ownership and 45 per cent, management control, that will be poor for value and poor for the price at which the CDC can be sold. The reverse, of course, would be good for the price at which the CDC could be sold.
      A crippling influence on the price flows from Government and the proposals on control. The Secretary of State has let the House and all potential investors know
      522
      that she is willing to sell the CDC cheap. I and other Conservative Members have been appalled by her performance.
      Mr. Foulkes: Will the hon. Lady confirm that, in Committee, when we discussed the matter in detail, she and her colleagues did not divide the Committee on one occasion? We provided four days for the Committee. That time was not taken up. She could have asked all those questions in Committee. She is making cheap party political points, undermining the whole basis of the CDC. It is a disgrace to her and to the House.
      Mrs. Gillan: It is good to see that the age of chivalry is not dead and that at least some men on the Labour Benches rush to the defence of the ladies in their party. However, the Minister's reaction only goes to make my point.
      We were not going to divide the House on the matter, but this evening's performance has led Conservative Members to believe that the Secretary of State does not know what she is doing and that the CDC will suffer. Therefore, I will press the new clause to a vote.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 21, Noes 293.

      Division No. 244]

      [11.18 pm

      AYES

      Blunt, Crispin

      Iaing, Mrs Eleanor

      Boswell, Tim

      Lewis, Dr Julian (New Forest E)

      Brady, Graham

      Lidington, David

      Brooke, Rt Hon Peter

      McIntosh, Miss Anne

      Fabricant, Michael

      Stanley, Rt Hon David

      Garnier, Edward

      Streeter, Gary

      Gillan, Mrs Cheryl

      Tredinnick, David

      Hammond, Philip

      Young, Rt Hon Sir George

      Hawkins, Nick

      Hogg, Rt Hon Douglas

      Tellers for the Ayes:

      Howarth, Gerald (Aldershot)

      Mr. Eric Forth and

      Jackson, Robert (Wantage)

      Mr. Edward Leigh.

      NOES

      Adams, Mrs Irene (Paisley N)

      Buck, Ms Karen

      Ainger, Nick

      Burgon, Colin

      Alexander, Douglas

      Burnett, John

      Allen, Graham

      Butler, Mrs Christine

      Anderson, Janet (Rossendale)

      Caborn, Rt Hon Richard

      Atherton, Ms Candy

      Campbell, Alan (Tynemouth)

      Atkins, Charlotte

      Campbell, Mrs Anne (C'bridge)

      Austin, John

      Campbell, Rt Hon Menzies (NE Fife)

      Barnes, Harry

      Barron, Kevin

      Campbell-Savours, Dale

      Bayley, Hugh

      Cann, Jamie

      Beard, Nigel

      Caplin, Ivor

      Beckett, Rt Hon Mrs Margaret

      Casale, Roger

      Begg, Miss Anne

      Caton, Martin

      Benn, Rt Hon Tony (Chesterfield)

      Cawsey, Ian

      Benton, Joe

      Chapman, Ben (Wirral S)

      Bermingham, Gerald

      Chaytor, David

      Best, Harold

      Clapham, Michael

      Betts, Clive

      Clark, Rt Hon Dr David (S Shields)

      Blackman, Liz

      Clark, Paul (Gillingham)

      Boateng, Paul

      Clarke, Charles (Norwich S)

      Bradley, Keith (Withington)

      Clarke, Rt Hon Tom (Coatbridge)

      Bradley, Peter (The Wrekin)

      Clarke, Tony (Northampton S)

      Bradshaw, Ben

      Clelland, David

      Brinton, Mrs Helen

      Clwyd, Ann

      Brown, Russell (Dumfries)

      Coaker, Vernon

      Browne, Desmond

      Coffey, Ms Ann

      523

      Cohen, Harry

      Hutton, John

      Coleman, Iain

      Iddon, Dr Brian

      Colman, Tony

      Illsley, Eric

      Connarty, Michael

      Jackson, Ms Glenda (Hampstead)

      Cook, Frank (Stockton N)

      Jackson, Helen (Hillsborough)

      Corbyn, Jeremy

      Jamieson, David

      Cousins, Jim

      Jenkins, Brian

      Cox, Tom

      Johnson, Miss Melanie (Welwyn Hatfield)

      Crausby, David

      Cryer, Mrs Ann (Keighley)

      Jones, Rt Hon Barry (Alyn)

      Cryer, John (Hornchurch)

      Jones, Mrs Fiona (Newark)

      Cunningham, Jim (Cov'try S)

      Jones, Helen (Warrington N)

      Dalyell, Tam

      Jones, Ms Jenny (Wolverh'ton SW)

      Darling, Rt Hon Alistair

      Darvill, Keith

      Jones, Jon Owen (Cardiff C)

      Davey, Valerie (Bristol W)

      Jones, Dr Lynne (Selly Oak)

      Davidson, Ian

      Jones, Martyn (Clwyd S)

      Davis, Terry (B'ham Hodge H)

      Jowell, Rt Hon Ms Tessa

      Dawson, Hilton

      Kaufman, Rt Hon Gerald

      Dean, Mrs Janet

      Keeble, Ms Sally

      Dismore, Andrew

      Keen, Alan (Feltham & Heston)

      Dobbin, Jim

      Keen, Ann (Brentford & Isleworth)

      Donohoe, Brian H

      Khabra, Piara S

      Doran, Frank

      Kidney, David

      Dowd, Jim

      King, Andy (Rugby & Kenilworth)

      Drew, David

      Kumar, Dr Ashok

      Eagle, Maria (L 'pool Garston)

      Ladyman, Dr Stephen

      Efford, Clive

      Lawrence, Ms Jackie

      Ellman, Mrs Louise

      Laxton, Bob

      Ennis, Jeff

      Lepper, David

      Etherington, Bill

      Leslie, Christopher

      Fitzpatrick, Jim

      Levitt, Tom

      Fitzsimons, Lorna

      Linton, Martin

      Flint, Caroline

      Livingstone, Ken

      Flynn, Paul

      Lloyd, Tony (Manchester C)

      Follett, Barbara

      Lock, David

      Foster, Michael Jabez (Hastings)

      Love, Andrew

      Foster, Michael J (Worcester)

      McAvoy, Thomas

      Foulkes, George

      McCabe, Steve

      Fyfe, Maria

      McCafferty, Ms Chris

      Gapes, Mike

      McDonagh, Siobhain

      George, Andrew (St Ives)

      Macdonald, Calum

      George, Bruce (Walsall S)

      McDonnell, John

      Gerrard, Neil

      McIsaac, Shona

      Gibson, Dr Ian

      McKenna, Mrs Rosemary

      Gilroy, Mrs Linda

      Mackinlay, Andrew

      Godman, Dr Norman A

      McNamara, Kevin

      Godsiff, Roger

      McNulty, Tony

      Goggins, Paul

      Mactaggart, Fiona

      Gordon, Mrs Eileen

      Mahon, Mrs Alice

      Griffiths, Jane (Reading E)

      Mallaber, Judy

      Griffiths, Nigel (Edinburgh S)

      Marsden, Gordon (Blackpool S)

      Griffiths, Win (Bridgend)

      Marsden, Paul (Shrewsbury)

      Grogan, John

      Marshall, Jim (Leicester S)

      Hain, Peter

      Meacher, Rt Hon Michael

      Hall, Mike (Weaver Vale)

      Meale, Alan

      Hall, Patrick (Bedford)

      Merron, Gillian

      Hamilton, Fabian (Leeds NE)

      Michael, Rt Hon Alun

      Hanson, David

      Michie, Bill (Shef'ld Heeley)

      Heal, Mrs Sylvia

      Mitchell, Austin

      Healey, John

      Moffatt, Laura

      Heath, David (Somerton & Frome)

      Moonie, Dr Lewis

      Henderson, Doug (Newcastle N)

      Moran, Ms Margaret

      Henderson, Ivan (Harwich)

      Morgan, Alasdair (Galloway)

      Hepburn, Stephen

      Morgan, Ms Julie (Cardiff N)

      Heppell, John

      Morgan, Rhodri (Cardiff W)

      Hesford, Stephen

      Morley, Elliot

      Hinchliffe, David

      Mullin, Chris

      Hopkins, Kelvin

      Murphy, Jim (Eastwood)

      Howells, Dr Kim

      Naysmith, Dr Doug

      Hoyle, Lindsay

      Norris, Dan

      Hughes, Ms Beverley (Stretford)

      O'Brien, Bill (Normanton)

      Hughes, Kevin (Doncaster N)

      O'Hara, Eddie

      Hughes, Simon (Southwark N)

      Olner, Bill

      Humble, Mrs Joan

      Osborne, Ms Sandra

      Hurst, Alan

      Palmer, Dr Nick

      524

      Pendry, Tom

      Starkey, Dr Phyllis

      Perham, Ms Linda

      Steinberg, Gerry

      Pickthall, Colin

      Stevenson, George

      Pike, Peter L

      Stewart, David (Inverness E)

      Plaskitt, James

      Stewart, Ian (Eccles)

      Pollard, Kerry

      Stinchcombe, Paul

      Pond, Chris

      Stoate, Dr Howard

      Pope, Greg

      Stott, Roger

      Prentice, Ms Bridget (Lewisham E)

      Stringer, Graham

      Prentice, Gordon (Pendle)

      Stuart, Ms Gisela

      Primarolo, Dawn

      Stunell, Andrew

      Prosser, Gwyn

      Sutcliffe, Gerry

      Purchase, Ken

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Quinn, Lawrie

      Radice, Rt Hon Giles

      Taylor, Ms Dari (Stockton S)

      Rammell, Bill

      Taylor, David (NW Leics)

      Rapson, Syd

      Thomas, Gareth (Clwyd W)

      Raynsford, Nick

      Thomas, Gareth R (Harrow W)

      Reed, Andrew (Loughborough)

      Timms, Stephen

      Rendel, David

      Tipping, Paddy

      Roche, Mrs Barbara

      Todd, Mark

      Rooney, Terry

      Tonge, Dr Jenny

      Roy, Frank

      Touhig, Don

      Ruane, Chris

      Trickett, Jon

      Ruddock, Joan

      Turner, Dennis (Wolverh'ton SE)

      Russell, Bob (Colchester)

      Turner, Dr Desmond (Kemptown)

      Salter, Martin

      Turner, Dr George (NW Norfolk)

      Sanders, Adrian

      Twigg, Derek (Halton)

      Savidge, Malcolm

      Twigg, Stephen (Enfield)

      Vaz, Keith

      Sawford, Phil

      Vis, Dr Rudi

      Sedgemore, Brian

      Walley, Ms Joan

      Shaw, Jonathan

      Wareing, Robert N

      Sheerman, Barry

      Watts, David

      Short, Rt Hon Clare

      White, Brian

      Simpson, Alan (Nottingham S)

      Wicks, Malcolm

      Singh, Marsha

      Williams, Rt Hon Alan (Swansea W)

      Skinner, Dennis

      Smith, Angela (Basildon)

      Williams, Alan W (E Carmarthen)

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Williams, Mrs Betty (Conwy)

      Wise, Audrey

      Smith, Jacqui (Redditch)

      Wood, Mike

      Smith, John (Glamorgan)

      Worthington, Tony

      Smith, Llew (Blaenau Gwent)

      Wright, Anthony D (Gt Yarmouth)

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

      Wright, Dr Tony (Cannock)

      Soley, Clive

      Southworth, Ms Helen

      Tellers for the Noes:

      Spellar, John

      Mr. Keith Hill and

      Squire, Ms Rachel

      Jane Kennedy.

      Question accordingly negatived.

    Clause 25

      INTERPRETATION: COMPANIES AND SHARES.
      11.30 pm
      Mr. David Heath: I beg to move amendment No. 2, in page 10, line 31, leave out from 'nominee' to end of line 32.
      Hon. Members who served on the Committee will recognise that the amendment has some similarities to the discussion that we had on clause stand part on what was then clause 24 and is now clause 25. Yesterday, I received a letter from the Secretary of State which attempted to elucidate the reasoning behind the original wording of the Bill. I thought that I might have struck a slightly curious position when I realised that neither the Ministers in Committee nor the civil servants—which was the crucial thing—quite knew why that part of the clause had been put in. I realise now that it was a slightly tortuous formulation.

      525
      There is still an ambiguity in the Bill which I would like to test with Ministers. If I understand the Secretary of State's letter correctly, clause 25(2)(b), which has the effect of allowing a company to be placed between the Secretary of State and the CDC, is inserted there for one purpose, and one purpose only—to qualify clause 25(4), which deals with associated companies.
      If I understand it correctly, where an associated company is a wholly owned subsidiary of the CDC, it qualifies as a company that is wholly owned by the Crown, and therefore qualifies for associated company status. I do not entirely understand why the Bill is drafted as it is, as an ambiguity is introduced. There is a possibility that a future Government could interpolate a company between the Secretary of State and the CDC, and that is acknowledged in the letter to me.
      Would not it have been easier to qualify clause 25(4)(b), which refers to a company that
      "is wholly owned by the Crown"?
      Why not make it "wholly owned by the Crown or by a company that is wholly owned by the Crown" at that point? Or—perhaps this is an easier way of dealing with it—why not rely on the ordinary understanding of the Companies Act 1985 provision dealing with wholly owned subsidiaries, which provides a perfectly appropriate definition of a wholly owned subsidiary company which could have been interpolated in clause 26 in the definition section? That would have had the effect of allowing a wholly owned subsidiary of the CDC to be treated as an associated company without providing the ambiguity which the Bill provides.
      Will the Minister explain why the Bill is drafted as it is? I appreciate that it is difficult to change the Bill at this stage. Had I received the Secretary of State's letter a few days earlier, I might have tabled a slightly different amendment which would have had the same effect, but in a different way. If he does not explain, we will have to rely on the assurances that the Secretary of State gave in Committee and which I would be grateful if the Minister could repeat—that there is no intention on the part of the Government to interpolate a further company between the Secretary of State and the CDC.
      Mr. Foulkes: First, it is sensible and reasonable for the hon. Gentleman to raise the question, particularly in the terms and manner that he did.
      These are tortuous provisions, as are a number of the Bill's provisions. It is not the only such Bill that I have experienced in 20 years. I had the honour earlier tonight of celebrating 20 years in this House. [HON. MEMBERS: "Hear, hear."] I am grateful to my right hon. and hon. Friends.
      If we had had the wisdom of the hon. Member for Somerton and Frome (Mr. Heath) when drafting the Bill, we might have done it differently. It is largely a matter of drafting style and a matter of taste by the parliamentary counsel. We employed a parliamentary counsel who suggested that it should be done in this way. In this case, as in others, he advised us to retain as much flexibility as possible, to cover all eventualities. The hon. Gentleman will remember that in Committee we discussed dealing with a number of eventualities, however unlikely.
      While the CDC is technically wholly owned by the Crown, we want to ensure that the rights that extend to it as a pic also extend to companies that are wholly owned
      526
      by it. I give the hon. Gentleman the absolute assurance and guarantee that we do not intend to put a holding company above the CDC as he feared. We foresee no circumstances in which we would want to do that, but the provision allows the flexibility to cover any eventuality.
      For example, at the moment we guarantee a loan from the European investment bank by one of the CDC's subsidiaries, CDC (Euro) Ltd.; the amendment would prevent us from taking similar action in the wholly owned period, notwithstanding clause 10, because the subsidiary could not be an associated company. That is why we included the provision. We might have done it more elegantly and less tortuously with the hon. Gentleman's advice at an earlier stage, but the effect remains.
      I hope that in the light of my reasoned explanation, the hon. Gentleman will see fit to withdraw the amendment.
      Mr. Heath: With the leave of the House—[HON. MEMBERS: "NO."] May I speak, Mr. Deputy Speaker?
      Mr. Deputy Speaker: I call the hon. Gentleman for his right of reply.
      Mr. Heath: I am most grateful, Mr. Deputy Speaker. I listened carefully to the Minister. I am of course flattered by what he said about my drafting skills or otherwise. I do not believe that they are exceptional. There is an ambiguity in the clause, but I accept entirely the intention behind the original wording. I therefore beg to ask leave to withdraw the amendment.
      Hon. Members: No.
      Question put, That the amendment be made:—
      The House divided: Ayes 9, Noes 265.

      Division No. 245]

      [11.37 pm

      AYES

      Blunt, Crispin

      Maclean, Rt Hon David

      Brady, Graham

      Russell, Bob (Colchester)

      Brooke, Rt Hon Peter

      Winterton, Nicholas (Macclesfield)

      Fabricant, Michael

      Tellers for the Ayes:

      Leigh, Edward

      Mr. Eric Forth and

      Lewis, Dr Julian (New Forest E)

      Mr. Douglas Hogg.

      NOES

      Ainger, Nick

      Brown, Russell (Dumfries)

      Alexander, Douglas

      Browne, Desmond

      Allen, Graham

      Buck, Ms Karen

      Anderson, Janet (Rossendale)

      Burgon, Colin

      Atherton, Ms Candy

      Butler, Mrs Christine

      Atkins, Charlotte

      Caborn, Rt Hon Richard

      Austin, John

      Campbell, Alan (Tynemouth)

      Barnes, Harry

      Campbell, Mrs Anne (C'bridge)

      Barron, Kevin

      Campbell-Savours, Dale

      Bayley, Hugh

      Cann, Jamie

      Beckett, Rt Hon Mrs Margaret

      Caplin, Ivor

      Begg, Miss Anne

      Casale, Roger

      Benn, Rt Hon Tony (Chesterfield)

      Caton, Martin

      Benton, Joe

      Cawsey, Ian

      Bermingham, Gerald

      Chapman, Ben (Wirral S)

      Berry, Roger

      Chaytor, David

      Best, Harold

      Clapham, Michael

      Betts, Clive

      Clark, Rt Hon Dr David (S Shields)

      Blackman, Liz

      Clark, Paul (Gillingham)

      Boateng, Paul

      Clarke, Charles (Norwich S)

      Bradley, Keith (Withington)

      Clarke, Rt Hon Tom (Coatbridge)

      Bradley, Peter (The Wrekin)

      Clarke, Tony (Northampton S)

      Bradshaw, Ben

      Clelland, David

      527

      Clwyd, Ann

      Illsley, Eric

      Coaker, Vernon

      Jackson, Ms Glenda (Hampstead)

      Coffey, Ms Ann

      Jackson, Helen (Hillsborough)

      Cohen, Harry

      Jamieson, David

      Coleman, Iain

      Jenkins, Brian

      Colman, Tony

      Johnson, Miss Melanie (Welwyn Hatfield)

      Connarty, Michael

      Cook, Frank (Stockton N)

      Jones, Rt Hon Barry (Alyn)

      Corbyn, Jeremy

      Jones, Mrs Fiona (Newark)

      Cousins, Jim

      Jones, Helen (Warrington N)

      Cox, Tom

      Jones, Ms Jenny (Wolverh'ton SW)

      Crausby, David

      Cryer, Mrs Ann (Keighley)

      Jones, Jon Owen (Cardiff C)

      Cryer, John (Hornchurch)

      Jones, Dr Lynne (Selly Oak)

      Cunningham, Jim (Cov'try S)

      Jones, Martyn (Clwyd S)

      Dalyell, Tam

      Jowell, Rt Hon Ms Tessa

      Darvill, Keith

      Kaufman, Rt Hon Gerald

      Davey, Valerie (Bristol W)

      Keen, Alan (Feltham & Heston)

      Davidson, Ian

      Keen, Ann (Brentford & Isleworth)

      Davis, Terry (B'ham Hodge H)

      Kidney, David

      Dawson, Hilton

      King, Andy (Rugby & Kenilworth)

      Dean, Mrs Janet

      Kumar, Dr Ashok

      Dismore, Andrew

      Ladyman, Dr Stephen

      Dobbin, Jim

      Lawrence, Ms Jackie

      Donohoe, Brian H

      Laxton, Bob

      Doran, Frank

      Lepper, David

      Dowd, Jim

      Leslie, Christopher

      Drew, David

      Levitt, Tom

      Eagle, Maria (L'pool Garston)

      Linton, Martin

      Efford, Clive

      Livingstone, Ken

      Ellman, Mrs Louise

      Lloyd, Tony (Manchester C)

      Ennis, Jeff

      Love, Andrew

      Etherington, Bill

      McAvoy, Thomas

      Fitzpatrick, Jim

      McCabe, Steve

      Fitzsimons, Lorna

      McCafferty, Ms Chris

      Flint, Caroline

      McDonagh, Siobhain

      Flynn, Paul

      Macdonald, Calum

      Follett, Barbara

      McDonnell, John

      Foster, Michael Jabez (Hastings)

      McKenna, Mrs Rosemary

      Foster, Michael J (Worcester)

      Mackinlay, Andrew

      Foulkes, George

      McNamara, Kevin

      Fyfe, Maria

      McNulty, Tony

      Gapes, Mike

      Mactaggart, Fiona

      George, Bruce (Walsall S)

      Mahon, Mrs Alice

      Gerrard, Neil

      Mallaber, Judy

      Gibson, Dr Ian

      Marsden, Paul (Shrewsbury)

      Gilroy, Mrs Linda

      Marshall, Jim (Leicester S)

      Godman, Dr Norman A

      Meale, Alan

      Godsiff, Roger

      Merron, Gillian

      Goggins, Paul

      Michie, Bill (Shef'ld Heeley)

      Gordon, Mrs Eileen

      Mitchell, Austin

      Griffiths, Jane (Reading E)

      Moffatt, Laura

      Griffiths, Nigel (Edinburgh S)

      Moonie, Dr Lewis

      Griffiths, Win (Bridgend)

      Moran, Ms Margaret

      Grogan, John

      Morgan, Alasdair (Galloway)

      Hain, Peter

      Morgan, Ms Julie (Cardiff N)

      Hall, Mike (Weaver Vale)

      Morgan, Rhodri (Cardiff W)

      Hall, Patrick (Bedford)

      Morley, Elliot

      Hamilton, Fabian (Leeds NE)

      Mullin, Chris

      Hanson, David

      Murphy, Jim (Eastwood)

      Heal, Mrs Sylvia

      Naysmith, Dr Doug

      Healey, John

      Norris, Dan

      Henderson, Doug (Newcastle N)

      O'Brien, Bill (Normanton)

      Henderson, Ivan (Harwich)

      O'Hara, Eddie

      Hepburn, Stephen

      Olner, Bill

      Heppell, John

      Pendry, Tom

      Hesford, Stephen

      Perham, Ms Linda

      Hinchliffe, David

      Pickthall, Colin

      Hopkins, Kelvin

      Pike, Peter L

      Howells, Dr Kim

      Plaskitt, James

      Hoyle, Lindsay

      Pollard, Kerry

      Hughes, Ms Beverley (Stretford)

      Pond, Chris

      Hughes, Kevin (Doncaster N)

      Pope, Greg

      Humble, Mrs Joan

      Prentice, Ms Bridget (Lewisham E)

      Hurst, Alan

      Prentice, Gordon (Pendle)

      Iddon, Dr Brian

      Primarolo, Dawn

      528

      Prosser, Gwyn

      Stringer, Graham

      Purchase, Ken

      Stuart, Ms Gisela

      Quinn, Lawrie

      Sutcliffe, Gerry

      Radice, Rt Hon Giles

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Rammell, Bill

      Rapson, Syd

      Taylor, Ms Dari (Stockton S)

      Raynsford, Nick

      Taylor, David (NW Leics)

      Roche, Mrs Barbara

      Thomas, Gareth (Clwyd W)

      Rooney, Terry

      Timms, Stephen

      Roy, Frank

      Tipping, Paddy

      Ruane, Chris

      Todd, Mark

      Ruddock, Joan

      Touhig, Don

      Savidge, Malcolm

      Trickett, Jon

      Sawford, Phil

      Turner, Dennis (Wolverh'ton SE)

      Sedgemore, Brian

      Turner, Dr Desmond (Kemptown)

      Sheerman, Barry

      Turner, Dr George (NW Norfolk)

      Short, Rt Hon Clare

      Twigg, Derek (Halton)

      Simpson, Alan (Nottingham S)

      Twigg, Stephen (Enfield)

      Singh, Marsha

      Vaz, Keith

      Skinner, Dennis

      Vis, Dr Rudi

      Smith, Angela (Basildon)

      Walley, Ms Joan

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Wareing, Robert N

      Watts, David

      Smith, Jacqui (Redditch)

      White, Brian

      Smith, John (Glamorgan)

      Wicks, Malcolm

      Smith, Llew (Blaenau Gwent)

      Williams, Rt Hon Alan (Swansea W)

      Soley, Clive

      Southworth, Ms Helen

      Williams, Alan W (E Carmarthen)

      Spellar, John

      Williams, Mrs Betty (Conwy)

      Squire, Ms Rachel

      Wise, Audrey

      Starkey, Dr Phyllis

      Wood, Mike

      Steinberg, Gerry

      Worthington, Tony

      Stevenson, George

      Wright, Anthony D (Gt Yarmouth)

      Stewart, David (Inverness E)

      Wright, Dr Tony (Cannock)

      Stewart, Ian (Eccles)

      Stinchcombe, Paul

      Tellers for the Noes:

      Stoate, Dr Howard

      Mr. Keith Hill and

      Stott, Roger

      Jane Kennedy

      Question accordingly negatived.
      Order for Third Reading read.
      11.49 pm
      Clare Short: Ibeg to move, That the Bill be now read the Third time.
      The purpose of the Bill is to convert the Commonwealth Development Corporation, which was founded by the great post-war Labour Government in 1949, into a public-private partnership, in order to increase the amounts of private-sector investment going into the poorest countries in the world.
      if this were a straight privatisation, the investment pattern would move away from the poorest countries. That is why there has to be a partnership. If the corporation were to remain entirely in the public sector, the quantity of investment would be limited and it would have to be a lender of last resort so that it did not compete unfairly with commercial investment. Our objective is to reduce poverty in the world by assisting the poorest countries to attract beneficial investment and to grow their economies. We sought to entrench the public sector interest in an ethical code and by placing in the Bill a requirement to invest in the poorest countries. Anyone who seeks to invest in the CDC will know what it involves. There is no dependence on the use of powers by any fickle Secretary of State.
      Second Reading and the Committee stage provided useful clarification of the Bill's objectives and purposes, and I am grateful for the points made. There has been some conflict—some of it unnecessary—but we all enjoy

      529
      a bit of that. The Bill is a single stage in advancing the public-private partnership, and we must now restructure the company, create a balance sheet, decide when to take the CDC to the market to maximise the partnership's investment. That would in turn maximise investment in the poorest countries and reduce poverty. I commend the Bill to the House.
      11.51 pm
      Mr. Streeter: We support the Commonwealth Development Corporation, which has flourished for 50 years, primarily under Conservative leadership. We certainly support the objective of reducing poverty in the developing world, and we recognise the need to take the CDC into the next millennium in a new way.
      We continue to have some reservations about the means that the Government have chosen. We will not be able to judge the Bill's success or failure for many years. We will not know whether the Government obtain a fair price for the investment of the past 50 years. Nor will we know for years whether the new CDC will be able to raise its return on capital invested from 8 per cent, at present to the 18 per cent, that investors must receive. We shall not know for several years whether shareholders will achieve a proper return on their investment without bringing pressure to bear on the board of CDC to shift inch by inch away from its developmental objectives—the vital niche roles of investing in pre-emerging markets, creating jobs and changing lives.
      The jury is still out on the Government's Bill. We want it to succeed, but we are taking a step of faith. We have done our best to improve the Bill, but the Government have chosen to turn their back on our wisdom, preferring their own prejudices. I regret that they have done so, and I continue to hold grave reservations.
      The job is not yet done. Some big decisions remain to be taken, and the company go to the market at the right time. It must be floated properly, and the best possible advice is necessary. We call on the Government to rise to the challenge of delivering on promises that are important to us and to thousands of people in the developing world who have a right to look to the new CDC for jobs, hope and dignity in the years to come.
      11.53 pm
      Mr. Wells: The Select Committee on International Development issued two reports on the Bill, setting out detailed considerations that face the House. We are experimenting, and the Commonwealth Development Corporation will move into a different world to that in which it operated before the Bill came before us. It is not only a matter of enabling the CDC to borrow in the private sector, an objective aimed at by the Department for International Development, its predecessor the Overseas Development Administration and the CDC itself. Because of Treasury mumbo jumbo, borrowing by the CDC is part of the public sector borrowing requirement and has been deemed to be Government borrowing. If the CDC wanted to borrow for good reason to invest overseas in good, productive assets, it was prevented from doing so, and we wanted to free it from that.
      The Secretary of State and the Minister have explained that that is not the motivation for transforming the CDC. The Select Committee report accurately reflected what they said. A different CDC has been set before the House, which will begin to function in a new way.
      530
      Some things will change radically as a result of the Bill. I do not think that there is any difference between us on how they will change. The CDC will have to look for a much higher return on equity, so it will not be able to undertake some of things that it has traditionally undertaken, such as initial infrastructural development. It will not be able to undertake to plant a forest in Swaziland, which for 25 years earned no money, but was transformed into a viable, vibrant business in paper production and other wood products.
      The Department should replicate that activity but in a different way. It should set up a fund that works with the CDC and uses grant money from the Department to undertake infrastructural green-field site developments alongside the CDC, which it now cannot do. The Department could get the CDC to manage such developments in the initial stages. An example would be a farm producing avocado pears. We do not get them in the Tea Room at eight o'clock in the morning, when you normally have tea, Mr. Deputy Speaker. A farmer must wait seven years before a tree produces an avocado pear. For that seven-year period, it may be sensible for the Department to invest in the avocado pear farm, have it managed by CDC and then let CDC buy it or have it transferred—I would suggest buy it—when it comes to fruition. It could then take it into the commercial world. That is a serious consideration if we are to get the initial development that the CDC would not otherwise be able to undertake.
      There will have to be a closer relationship between the Department's grant money and initial pump-priming development—which the Department is interested in—and the commercial and private sector. The Bill will separate the two functions, and make each directly accountable.
      The Department will have to consider whether it will give additional loans to the CDC during the period from which it will be formed into a public limited liability company, with all the shares owned by the Government. As I understand the current Treasury rules, the CDC will not be permitted to borrow from the private sector. To develop the CDC—I know that this is in the Government's mind—we want more of its activity in the private sector to be in the least developed countries. I am glad to see in the Department's estimates a provision for lending the CDC up to £1 million, if I interpret the annual report and the estimates for the next three years correctly. I urge the Government to put aside some money to inject additional capital into the CDC when required during the period from which it will become a public limited liability company and before the shares are sold off in the future.
      My next point relates to the sale of the shares when the track record of the CDC has been established. At present, the CDC's annual report reveals that, this year, it made a loss for the first time in many years. It has traditionally made a return on capital of 7 per cent., falling to 6 per cent. It will need to build up its track record to between about 16 and 18 per cent. That requires a huge change in investment—in the direction of investment and in the type of people conducting business in the CDC. Those people will need to find investments and put deals together so as to make that sort of money in some of the least developed and most poverty-stricken countries of the world. Like the Secretary of State, I am convinced that it can be done—it must be done.

      531
      The Secretary of State has often said that she sees the measure as a catalyst that will pull in other private sector investment to the least developed countries. If we achieve that, that will be hugely beneficial to those countries. However, after we have established a record of good investment and returns, we shall have to sell the shares to private sector investors safely in order to undertake that catalytic role. If we do that, it will release more funds that will—I hope—return to the Department for International Development to be used for pump-priming investment in the least developed countries.
      I can see how that would enable the Government's proposals to work. The balance sheet structure will be crucial; that relates to the point made by my hon. Friend the Member for South-West Devon (Mr. Streeter) about selling off the CDC for a fraction of its real value. If we are to avoid doing that, we must get the track record right. We must then sell the corporation to extremely discerning investors, who want an ethical investment in the least developed countries. I suggest that they would be looking for a supra-normal return because they are taking extra risks. However, that does not mean that the countries in which they invest will be exploited—rather it will encourage other people to invest there.
      If the CDC can pull of that kind of track record, it will make a huge contribution towards the solution of a problem that we have never been able to solve: how to get private sector investment into the least developed and poorest countries of the world. It will take some time to do so—perhaps between three and five years. On the other hand, there is the possibility of selling earlier. There are attractions in doing so, but it would mean that we should have to sell the value of the CDC at a discount. I am sure that the Secretary of State and those who succeed her will make a judgment as to that. However, there would be value in taking the course that I have desrcibed, because private investment could be attracted, not only in shares, but in the ability to raise private capital in the private market. That is a huge prize to be grasped at the right moment. We do not have to obtain the maximum value for the shares in the CDC, if we can find a way to expand it earlier than we might otherwise have done, hence achieving the objectives set out in the Bill.
      The Secretary of State has chosen to produce a unique taxation arrangement for the CDC. I have always argued that the CDC should never have had to pay British taxes—I made that point in Committee. The CDC was a vehicle for investment in overseas development. Many of the countries in which it invested did not make a tax charge on the CDC; it seemed immoral that the British Treasury should exact tax. In some cases, the CDC was paying more tax than it was returning in capital and interest to the Treasury. That was stupid because matters then had to be reversed through investment by the Department for International Development.
      With this unique taxation arrangement, the CDC avoids going offshore. Of course, its competitors operate offshore; they invest offshore and raise their money offshore, and there is absolutely no reason why they should not do so. The Secretary of State has set her face against that solution and produced a unique taxation arrangement that puts the CDC on an equal footing with its commercial competitors.
      532
      This is, however, a strange arrangement, and I know that my hon. Friend the Member for South-West Devon objects to it, as demonstrated by some of the amendments and new clauses that he tabled in Committee and on Report. The situation is as broad as it is long and it does not make any difference in the end which arrangement is used. The Bill is psychologically and philosophically in line with the Secretary of State's thinking and the arrangement makes no difference to what we are trying to achieve.
      This is a huge step along a path that we have not yet trodden, and it will be an interesting experiment. If it works, we will all value it highly and commend it.
      12.6 am
      Dr. Tonge: I thank the hon. Member for Hertford and Stortford (Mr. Wells) for his contribution to what has been an extraordinarily acrimonious debate on a well-intentioned Bill. It has been interesting to hear the official Opposition defending God, on the one hand, in their new clause on investment policy, and mammon, on the other hand, in their new clause on share pricing. I suspect that it is yet another example of the increasing schizophrenic tendencies within the Tory party.
      The Liberal Democrats welcome the Bill. There is the potential for more investment in developing countries. Foreign investment is already the largest source of financial flows to the third world and it is increasing rapidly. However, as hon. Members have pointed out, we need the right kind of investment.
      On Second Reading, the Secretary of State said:
      "We hope…that the new CDC will encourage by example much larger flows of foreign investment into the least-developed and poorest economies, by proving that such investment can be safe and profitable."—[Official Report, 24 May 1999; Vol. 332, c. 38.]
      She also said that the Government
      "expect the CDC to operate as an exemplary social, environmental and ethical business. That approach is reflected in its business principles and policies, which cover social, environmental, health and safety matters and business ethics, as well as a statement of the general principles by which the CDC will conduct its business."—[Official Report, 24 May 1999; Vol. 332, c. 43.]
      That is agreed.
      During the various stages of consideration of the Bill, I have tried to express my fears and reservations, particularly on the business principles and ethics of the new CDC. They are absolutely crucial because they replace the additionality test of the old CDC structure.
      I turn briefly to the Organisation for Economic Co-operation and Development's guidelines for multinationals. They have been in place for 20 years and are now under review. They have not had a substantial impact. Some say that things are getting better, but not by very much. Those guidelines could be valuable, and the CDC business principles could be even more valuable in setting an example to other big companies operating in the world.
      As I have said before, many multinationals that subsrcibe to the OECD guidelines produce wonderfully glossy brochures. However, I have here a dossier of complaints entitled, "Problems caused by Multinationals". It refers to labour rights and standards, communities and their environment, consumer protection, national Governments' development strategies, effects on local employment, threats to infant or indigenous industries and

      533
      more. It mentions all the usual multinationals. We have all heard of them, and I shall not go through the list of names because it is late. That is the result of business principles and ethical guidelines to which multinationals subsrcibe in glossy brochures, but in name only, as all hon. Members know only too well.
      The CDC must not let standards slip. It is clear from the countries that I have visited in a limited way in the past two years, and from Government officials that we have consulted, that they want investment and development. Regrettably, they often dismiss environmental and labour standards and sustainability as they are so desperate for growth in their economies. So it will be up to the CDC to make sure that things are done properly.
      The Liberal Democrats support the policy if the Government guarantee that it will not result in less money going to the aid budget and that the business principles and investment policies will really work. In three or four years' time, I do not want to be asking parliamentary questions about labour standards or the destruction of the environment in some country where the CDC is operating. That is why I have had reservations about the Bill, but I wish it well.
      Question put and agreed to.
      Bill read the Third time, and passed, with amendments.

    Trustee Delegation Bill [Lords]
    Not amended in the Standing Committee, considered.
    Order for Third Reading read.
    12.11 am
    The Parliamentary Secretary, Lord Chancellor's Department (Mr. Keith Vaz): I beg to move, That the Bill be now read the Third time.
    I am pleased to bring before the House for its final appearance this short Bill, which sets out to clarify the law relating to the delegation by individual trustees of their trust responsibilities and to improve the protection of beneficiaries. It is the consequence of a report by the Law Commission and it met with support on all sides in another place.
    The noble Lord Goodhart said:
    "I welcome the Bill wholeheartedly…I am sure that it will do considerable good and no harm."
    The noble Lord Kingsland said:
    "I believe the Opposition have absolutely no quarrel with it whatsoever."
    The noble Lord Falconer of Thoroton said:
    "It is unusual to encounter such relative complexity in so short a Bill, but I genuinely believe that this is a worthwhile Bill."—[Official Report, House of Lords, 11 January 1999; Vol. 596, c. 17–18.]
    In Standing Committee, the hon. Member for Surrey Heath (Mr. Hawkins) said:
    "The Bill will provide a helpful simplification of the law of trusts, and will correct one or two anomalies in decided cases. The Bill is uncontroversial and the official Opposition welcome it. I thank the Law Commission for all its work on this measure."
    On the same occasion, the hon. Member for Torridge and West Devon (Mr. Burnett) said:
    "We welcome the Bill…I congratulate the Law commission on its work. We hope that the Bill has a speedy passage through the…House."—[Official Report, Standing Committee F, 22 June 1999; c. 3–4.]
    I was grateful to the hon. Gentlemen for their constructive and helpful approach to the Bill. It mirrored the approach taken in the Second Reading Committee.
    Though short and technical, the Bill will be of some benefit, particularly to joint owners of real property, and I commend it to the House.
    12.13 am
    Mr. Nick Hawkins: At this fairly advanced hour I can be relatively brief. As the Minister has made clear, the Bill is a simplification of the law. I am sure that my right hon. and hon. Friends will be pleased to see a group of lawyers speaking for all the major parties welcoming simplification.
    I should mention that after our Second Reading Committee a couple of small points were raised with me by some trusts experts. Although it is too late for any substantive amendment, in fairness to Macfarlanes, a major City firm which has partners specialising in trust law, I should mention a couple of points. Even after the Bill receives Royal Assent and becomes law, the Government may be able to consider those points and perhaps issue some guidance for clarification.

    535
    Clause 1 provides for the delegation of trustee functions where the trustee has a beneficial interest in the trust assets in certain circumstances and, as the Minister pointed out in Committee, this replaces the delegation of trustee functions under section 3(3) of the Enduring Powers of Attorney Act 1985, which is repealed by clause 4 of the Bill.
    The explanatory notes covering the Bill state on page 3 that the provision
    "will enable a co-owner of land to make effective provision for the disposal of the…land if he or she becomes mentally incapable."
    However, it is not entirely clear how this result might be achieved as the power of attorney provided for in clause 1 is not an enduring one. Macfarlanes was concerned whether, on the face of it, the power would lapse on the donor becoming, in some sad cases, mentally incapable.
    Macfarlanes other query related to the power of attorney under section 25 of the Trustee Act 1925, which is an enduring power. It felt that clarification was required. It wonders whether such a power, even if a donor becomes mentally incapable and the power—
    Mr. David Maclean: I am listening carefully to my hon. Friend. It seems that he has found a serious lacuna in the Bill at this late stage. Surely my hon. Friend should be advising us to vote against the Bill to enable the Government to reintroduce it at an early stage when they have dealt with the lacuna.
    Mr. Hawkins: I am grateful to my right hon. Friend for his intervention. I should tell him that although Macfarlanes is raising some points of clarification, it states that it welcomes the Bill. It feels that it is a measure that will help to simplify the law of trusts. From his experience of the law, I am sure that my right hon. Friend will agree that any simplification of such a complex area of the law is greatly to be welcomed.
    I shall complete the point that I was making. The query was whether, if a donor becomes mentally incapable and the power of attorney is registered within the year, the power will cease to be exercisable after the year has elapsed. Clause 8 authorises an attorney under a registered power to exercise certain powers of appointment of new trustees. Macfarlanes was concerned that it might not be entirely clear how this would extend beyond the initial one-year term of the power of attorney. It may be that the Minister can deal with these points when he replies—
    Mr. Eric Forth: My hon. Friend is obviously trying to be helpful to the House, but he is in danger of having the opposite effect. He seems to be saying at one and the same time that the Bill will help to clarify the law, while going to great pains to explain how those whom he says are experts are telling us that there are points of difficulty. How can it be that if a firm called Macfarlanes believes that there are points that require clarification, the Bill still simplifies the law? This sounds to me like a lawyers' ramp to ensure that we think that the Bill will simplify matters when in fact it requires clarification, with additional legal advice being provided at great expense.
    Mr. Hawkins: I think that I can reassure my right hon. Friend. I understand his concern, but I should tell him
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    that Macfarlanes prefaces its helpful comments in seeking small points of clarification by saying that the policy behind the Bill is "greatly to be welcomed." The Law Commission recognised one or two difficulties in decided cases and the Bill certainly removes some of the difficulties that arose in the Michael Norton case of 1985. I can echo what my noble Friend Lord Kingsland said in another place: that Her Majesty's loyal Opposition welcome the Bill.
    12.18 am
    Mr. John Burnett: We welcome the Bill. I shall be interested in what the Minister says in response to the points made by my hon. Friend the Member for Surrey Heath (Mr. Hawkins) on the mental incapacity of a person who is the donor of a power of attorney or who has had powers delegated by trustees to him. However, tonight is not the night to be prolix, nor is it the night to be verbose.
    We discussed the Bill at great length on 17 March—[Interruption.] Well, at fairly great length. That was on Second Reading. I made a number of points to the then Minister of State and I received a lengthy letter of 29 March dealing with them. We also discussed the Bill at not such great length in Committee on 22 June.
    We welcome the Bill. I pay tribute to the Law Commission for its excellent work. This is a Law Commission Bill which will simplify the law. Nevertheless, I look forward to hearing from the Minister in response to the points made by Macfarlanes, a noted firm of trust lawyers.
    Question put and agreed to.
    Bill accordingly read the Third time, and passed, without amendment.

    PARLIAMENT
    Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),
    That the draft Ministerial and other Salaries Order 1999, which was laid before this House on 29th June, be approved.—[Mr. Mike Hall.]
    The House proceeded to a Division—
    MR. MIKE HALL and MR. DAVID HANSON were appointed Tellers for the Ayes; but there being no Tellers for the Noes, MR. DEPUTY SPEAKER declared that the Ayes had it.
    Question agreed to.

    BUSINESS OF THE HOUSE (Statutory Instrument)
    Motion made, and Question proposed,
    That, if a Statutory Instrument relating to a Northern Ireland matter be laid before the House on Friday 16th July, a Minister of the Crown may, notwithstanding the practice of the House, make without notice a Motion for the approval of the said Instrument at the sitting that day.
    Hon. Members: Object.

  DELEGATED LEGISLATION
  Motion made, and Question proposed,
  DELEGATED LEGISLATION

    DATA PROTECTION REGISTRAR
    That the Motion in the name of Mr. Secretary Straw relating to the salary of the Data Protection Registrar shall be treated as if it related to an instrument subject to the provisions of Standing Order No. 118 (Standing Committees on Delegated Legislation) in respect of which notice has been given that the instrument be approved.
    Hon. Members: Object.
    Motion made, and Question proposed,

    FOOD SAFETY
    That the Food Safety (Fishery Products and Live Shellfish) (Hygiene) Amendment (No. 2) Regulations 1999 (S.I., 1999, No. 1585) be referred to a Standing Committee on Delegated Legislation.
    Hon. Members: Object.
    Motion made, and Question proposed,

    NATIONAL HEALTH SERVICE
    That the National Health Service (General Medical Services) Amendment (No. 2) Regulations 1999 (S.I., 1999, No. 1627) be referred to a Standing Committee on Delegated Legislation.
    Hon. Members: Object.
    Motion made, and Question proposed,
    That the National Health Service (General Medical Services) (Scotland) Amendment (No. 3) Regulations 1999 (S.I., 1999, No. 1620) be referred to a Standing Committee on Delegated Legislation.
    Hon. Members: Object.

    NHS Trusts
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mike Hall.]
    12.23 am
    Mr. Graham Brady: I am pleased to have the opportunity to raise an important matter in the Chamber. There seems to have been a change of personnel on the Government Front Bench, and I compliment the hon. Member for Delyn (Mr. Hanson) on attaining the position of Minister.
    Mr. Gerry Steinberg: Get on with it.
    Mr. Brady: The hon. Member for City of Durham (Mr. Steinberg) has obviously had an enjoyable evening, but perhaps he can contain himself while we proceed with the important matters relating to the future of the health service, particularly the rather chaotic situation into which the Trafford Healthcare NHS trust—
    Mr. Philip Hammond: Does my hon. Friend agree that it is rather a chaotic situation when there is no Minister on the Front Bench to listen to such an important debate?
    Mr. Brady: I entirely agree with my hon. Friend. I was under the impression that a reshuffle had already taken place on the Government Benches, and I therefore congratulated the hon. Member for Delyn.
    I am delighted to see that the Minister for Public Health is now in her place. When she kindly agreed to see me with constituents of mine who work at Altrincham general hospital, representatives of Unison and the Royal College of Nursing, she was not only courteous but had clearly taken the trouble to acquaint herself well with the case, for which I am grateful.
    I sought a broader title for the debate not only to raise the chaotic handling of the future of Altrincham general hospital by the Trafford Healthcare NHS trust, but to consider what the episode tells us about the realities of the NHS two years into the Labour Government's tenure—a Government who were elected on lavish promises to reduce waiting lists and to improve pay and service provision in the NHS. They promised nirvana, but they are delivering chaos and cuts.
    There is constant spin about extra billions supposedly being spent in the NHS, but that spin cuts no ice with hundreds of my constituents who are waiting longer than they need for treatment. It cuts no ice with the 850 constituents who have contacted me to express their dismay at the proposed closure of wards at Altrincham general hospital.
    The spin cuts no ice with the 500 people who die every year unnecessarily because they have to wait too long for heart bypass surgery, according to Mr. Ben Bridgewater, a consultant surgeon at Wythenshawe hospital, which serves many of my constituents. Nor did the Prime Minister's rather flimsy and flippant answer to me when I raised that matter in the House a few weeks ago cut any ice with local people, or those throughout Britain who are concerned about the devastating problems which result from lengthening waiting times for treatment in the NHS.

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    The Government's spin does nothing to alleviate the suffering of the 456,000 people who are on the waiting list for the waiting list, an increase of 84 per cent, under the Labour Government. It does nothing to alleviate the suffering of the 153,000 who are now waiting more than 26 weeks on the waiting list for the waiting list, up 115 per cent, since the Government took office.
    If I can bring the matter more specifically to my region in the north-west of England, the Government's spin does nothing to help the 79,000 people there who are now on the waiting list for the waiting list. Those are the Government's own figures, showing an increase of 76 per cent, since they took office. In the north-west, 29,000 people are now waiting more than 26 weeks to get on to the waiting list. That is up a staggering 263 per cent, since the Government took office. This is a Government who promised an improvement in health services, not just for my constituents but for people across the north-west and throughout Britain.
    It is a remarkable day in the history of the NHS—a milestone under the Government—when we discover that four consultants at the North Hampshire hospital have today been found to be contributing money out of their own salaries to fund another consultant post at their hospital. That does not seem to tally with what we hear repeatedly from Ministers about additional funding for the NHS.
    The picture, confirmed by the NHS Confederation, which surveyed its members in May this year, is depressing. It found
    "declining confidence amongst health authorities and trusts about their financial health."
    Where are the extra billions when confidence is declining in the real world of the NHS—the confidence of the real people who are trying to manage an effective service for the benefit of patients throughout Britain? The survey also found that a number of important developments would be postponed. It said that the real impact of the problems would not be felt until 2000–01.
    The cost pressures identified by the confederation's members included those caused by the meeting of pay awards, drug costs and higher pension contributions, and those caused by having to increase funding for additional staff as a result of the implementation of the EU working time directive.
    The confederation went on to say that the problems were recurring, and that
    "consequently there will be a legacy of unachieved efficiency savings and ongoing recovery plans".
    That does not present the rosy picture that Ministers repeatedly try to paint of what the NHS is currently experiencing under Labour's stewardship. It is not by any means what the people were promised by the Government. It is a rather sorry picture.
    The confederation says that the problems will be felt only in 2000–01, but in Altrincham people are already feeling the harsh realities of the NHS under Labour. The chairman of Trafford Healthcare NHS trust is a Trafford Labour councillor, one of 232 Labour councillors who have been given political appointments by the Secretary of State since 1997. Some weeks ago he presented proposals for the closure of two of the three wards at
    540
    Altrincham general hospital. Before any Labour Members try to suggest that the scandal of political appointments in the NHS is a question of rebalancing the years of Tory appointments to the health service—
    Mr. Jeff Ennis: Hear, hear.
    Mr. Brady: If the hon. Gentleman paid some attention to the figures supplied to me by the Commissioner for Public Appointments, I think that he might be a little less content. The commissioner's office tells me that of those appointed to health authorities and trusts who declare any political activity whatever, 546 declare political activity on behalf of the Labour party, while 149 declare activity on behalf of the Conservative party.
    It is a scandal—what is more, it is a scandal that the Commissioner for Public Appointments has begun to recognise may have very damaging consequences for the management of NHS trusts. The commissioner's 1998–99 report—prepared by the previous commissioner, although published under the tenure of the new one—says that the trend of appointing Labour councillors to trusts and health authorities may lead to the loss of
    "the wider management and professional skills and competencies which those holding office need to fulfil the responsibilities".
    That is a worrying indictment of the policy of stuffing the boards of health authorities and trusts with Labour councillors—people appointed for political reasons rather than because they have the management and professional skills and competence required for the execution of the important functions that fall to them.
    A Trafford Labour councillor announced the plan to close two of the three wards at Altrincham general hospital on 10 May, one working day after local elections in the borough. Those elections were closely fought: Labour retained control of the borough council by just three seats. I suspect that the result might have been slightly different had there been proper consultation when the decision-making process was under way.
    In fact, there had been no consultation at all before the announcement of ward closures. There had been no consultation with the public; the community health council had not been consulted or, indeed, informed; the trouble had not even been taken to inform Salford and Trafford health authority of the proposal. This constituted a major change in health provision for people living in Altrincham and Sale, but no one was allowed to know about it until one working day after the local elections were safely out of the way.
    John Sargent, the chief executive of Trafford Healthcare NHS trust, told the chief officer of the community health council on the telephone on the day on which the closures were announced that they were needed because the Government had failed to fund the nurses' pay wards in full. One is prompted to wonder what damage the Government's recent announcements of £40,000-a-year super-nurses might cause to the health service. If the Government are not prepared to fund existing pay awards, what confidence can we have that they will fund any new proposals that they have introduced, although it is possible that they are just a gimmick and will not be brought into effect for any health service staff, meaning that they will make little difference to the provision of health services throughout the country.

    541
    I and Conservative councillors from Altrincham have joined staff at Altrincham general hospital to fight to preserve a much-loved local hospital and vital in-patient care, which is necessary for many patients with high dependency—patients who could not be cared for at home, even if the care programme were in place, which it is not.
    We have pressed the health authority to insist on proper and full public consultation and to wait for the King's Fund Research Institute report, which had already been commissioned by Trafford South primary care group before the closure plans were announced. The institute's review concentrates on the whole area of provision of services for the elderly in south Trafford. It is nonsensical that the trust even contemplated going ahead with closure of important services for the elderly without waiting for the outcome of that review.
    The trust, however, has continued to press for closure on the ground of supposed urgent financial need—a need that arose, it seems, a day after the local elections. That was the picture until this week. Those who occasionally question the importance of Parliament in national life may care to ponder whether there is any connection between this week's events and the fact that I had secured the debate.
    Perhaps it is just coincidence, but yesterday I was informed by staff at Altrincham general hospital that the chief executive of Trafford Healthcare NHS trust was to be seconded for two years and sent to the regional executive. The supreme irony is that his brief at the regional executive is to develop a new performance assessment framework for the NHS. How would one assess the performance of Trafford Healthcare NHS trust, which has not had the decency to consult local people about a profound change in health service provision that directly affects them, and which has behaved in a manner that raises serious questions about the competence of those involved?
    What are we left with if the chief executive is shunted off on to a two-year secondment? We do not know. When the provision of health care in my area is in the gravest doubt, we lose the chief executive of the NHS trust. According to the trust, we will gain an acting chief executive. We do not know who that will be. We do not know when the appointment will be made. We are left simply with more uncertainty, when what we need is someone to take a clear lead to sort out the mess in the provision of local health services.
    Today, staff at Altrincham general hospital have informed me that Trafford Healthcare NHS trust has issued a statement—it did not come to me directly, but it did go to staff at the hospital, which was an improvement on earlier performance. The statement sets out the trust's decision
    "to defer any final decision on the proposed bed closure until at least the spring of 2000".
    I am relieved and delighted that those of us who care about Altrincham and Sale, about the NHS and about proper health provision have won at least a stay of execution, but I say emphatically: Altrincham and Sale needs its hospital not just until next year, but for good. There is a real need in the area for in-patient facilities. There is a need for such facilities to benefit high-dependency patients who cannot be cared for at home. There is a need for them to provide respite care. My constituency needs hospital beds, not sham provision—undelivered promises—of community services.
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    If I may, I should like to give the Minister a warning. In 1997, the Labour party did not promise the British people increased waiting lists, ward and hospital closures, or massive politicisation of the national health service. They did not promise people in my constituency, or anywhere else, that they would reduce resources and close facilities. Although the Government talk about new billions supposedly being made available for the national health service, they only run down our health service. If they continue doing so, they will pay the price.
    12.40 am
    The Minister for Public Health (Ms Tessa Jo well): Form says that I should congratulate the hon. Member for Altrincham and Sale, West (Mr. Brady) on securing this Adjournment debate, but I think that his constituents will judge whether he has used the time available to him as they would wish. He has spent most of the time available launching a rather cheap and unpleasant attack on national health service staff and a campaign of general smear and innuendo.
    I met the hon. Gentleman, and two nurses working at the hospital, to discuss what I took to be his real concerns about the future of his hospital, and we had a useful and productive discussion—which stands in marked contrast to his speech today. Nevertheless, in the time available to me, I shall try to deal with some points of substance, rather than the political smear in which he indulged.
    The Government have backed up our commitment to the national health service with a real increase in resources. In our first two years in office, we provided for the NHS an extra £2.25 billion, which has allowed an unprecedented number of extra patients to be treated. This year is the first following the comprehensive spending review. As we announced in July 1998, in the next three years, £21 billion extra will be made available to the NHS. Consequently, in England, NHS expenditure will rise by 5.1 per cent.
    Mr. Brady: Waiting lists will rise.
    Ms Jowell: I shall address the issue of waiting lists later.
    In Salford and Trafford, in the current financial year, the unified allocation is £310 million, representing a £19.5 million—6.72 per cent—cash increase. I should be very interested to hear from the hon. Gentleman if his constituents ever received such an increase when the previous Government were in office.
    Mr. Brady: Will the right hon. Lady give way?
    Ms Jowell: Let me finish this point.
    Those resources will allow the NHS locally to treat steadily increasing numbers of people, meet the pay awards for doctors and nurses, and begin the modernisation process that all of us—Ministers, doctors, nurses, other staff, patients, managers and members of the public—so badly want to see.
    Mr. Brady: If all that is true, is the right hon. Lady able to say why the Trafford Healthcare NHS trust should suddenly be in financial crisis? Will she also comment on the trust chief executive's view, expressed to the

    543
    community health council, that the crisis had been caused by the Government's failure to fund the nurses' pay award?
    Ms Jowell: I shall deal with that point in a moment.
    As I said, in the current financial year, the Trafford Healthcare NHS trust received a 6.72 per cent, increase.
    As part of our modernisation of the national health service, we are supporting the biggest hospital-building programme ever in this country. Since 1 May 1997, 31 major hospital developments, worth more than £2.9 billion, have been given approval to proceed under the private finance initiative. The PFI was much vaunted by the previous Government, but not a single hospital was started as a result of their PFI. [Interruption.]
    Mr. Deputy Speaker (Mr. Michael Lord): Order. I remind the hon. Member for Runnymede and Weybridge (Mr. Hammond) that Front-Bench spokesmen do not take part in half-hour Adjournment debates.
    Ms Jowell: Two of our developments are very close to the constituency of the hon. Member for Altrincham and Sale. They are the Central Manchester Healthcare NHS trust and the Manchester Children's Hospitals NHS trust joint venture, which is being redeveloped at an overall scheme cost of more than £200 million, and the South Manchester University Hospitals NHS trust, which is due to be redeveloped at an overall scheme cost in excess of £100 million.
    As part of developing consistency and care based on the best available evidence, providing the context in which care in new buildings will be delivered, the national service framework for older people will focus on those parts of the NHS that are especially important to elderly people. The issues raised by the hon. Gentleman specifically focus on the quality of care for elderly people. Above all, we believe that older people want to retain as much independence and dignity as possible; as members of the external reference group, the views of older people and those who care for them will be taken into account during the development of that framework.
    However, services must evolve and change to keep pace with local demand. In some places, that might mean new hospitals; in others, it might mean closing old ones, changing their use or using hospital facilities in new and innovative ways. It may involve transferring services that have traditionally been provided in hospital into the community, closer to where people live. Indeed, I believe that that was one of the original intentions of the proposals advanced in 1996 for the people of Trafford South, to which I now come.
    Altrincham general hospital is one of four hospitals that make up the Trafford Healthcare NHS trust. It is not a district general hospital in the conventional sense. The hospital provides a range of out-patient services, a minor injuries clinic and three wards with 42 dedicated rehabilitation beds for the elderly.
    In 1996, under the then Government, Salford and Trafford health authority carried out a full public consultation exercise, at the request of the Trafford
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    Healthcare NHS trust. Its purpose was to canvass public opinion on proposed changes to the hospital and to some community services for the population of Trafford South.
    Mr. Brady: I shall be brief. The purpose of that consultation was to assess opinion on the proposal to build a new community hospital. It had always been promised that Altrincham would not lose Altrincham general hospital unless and until that new community hospital was built.
    Ms Jowell: I shall continue to deal with the substance of this debate.
    The health authority received and considered a range of responses to these proposals. At its meeting in November 1996, it approved the provision of a new community hospital at Broadheath. It also accepted that there were genuine concerns about the overall reduction in the number of available in-patient beds, and deferred a decision until a review of rehabilitation services for older people in that area could take place.
    More recently, and against a background of having to balance a forecast end-of-year deficit of £2.2 million, the trust identified savings of £1.4 million. As part of its proposals to address the remaining deficit of £800,000, the trust proposed closing two of the three wards at Altrincham general hospital and increasing its investment in community-based rehabilitation services for older people.
    Regrettably, the trust's proposals for achieving its financial balance had not been formally discussed in advance with the health authority or members of the local health and social care community. Instead, on 4 May, they were agreed in a closed session by the trust board. Salford and Trafford health authority was advised by fax on Friday 7 May of the trust board's intentions.
    I fully appreciate and share the concerns of the hon. Member for Altrincham and Sale, West about the manner in which the trust has sought to achieve a substantial change in service provision. Understandably, the plans agreed by the trust board, and the way in which they were developed and announced, did not receive the support of the health authority or the community health council.
    On 18 May, in response to a question tabled by the hon. Gentleman, my hon. Friend the Minister for Health confirmed that the regional office of the NHS executive had instructed the trust and health authority to agree a joint approach on the future of in-patient services at Altrincham general hospital and on the future shape of its community-based services.
    As a result, the trust board withdrew the decision that it had previously made on 4 May. However, at a public trust board meeting on 1 June, it once again endorsed proposals that involved the closure of two wards at Altrincham general hospital.
    The hon. Gentleman is aware that, at its meeting on 10 June, members of the health authority were unable to support the decision taken by the Trafford Healthcare trust. Instead, the authority noted the trust's decision and agreed to consult with key stakeholders about the nature, availability and adequacy of alternative services before agreeing to any closure of wards at Altrincham general hospital—a point raised by the hon. Gentleman.

    545
    The authority agreed also to take legal advice to determine the need for further public consultation and to review the full range of the trust's proposals for achieving financial balance, including the need for public consultation. I hope that the actions taken by the health authority address the hon. Gentleman's concerns and I understand that, in any event, no decision will be taken by the trust or health authority on the future of the elderly care wards at Altrincham general before spring 2000.
    Furthermore, this time scale will coincide with the publication of the national service framework for older people, which I mentioned earlier.
    The chief executive of Salford and Trafford health authority has indicated that the authority will want to consider also the report being commissioned by the
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    primary care group on services for elderly people, along with other relevant information, before taking any formal action to determine the future pattern of care.
    Hon. Members will find offensive the hon. Gentleman's claim about political bias in appointments. It is our determination to make sure that the best people are chosen to represent a wide range of community interests. As someone who has overseen the process and ensured that all appointments comply with the guidelines issued by the Commissioner for Public Appointments, I hope that the hon. Gentleman will consider withdrawing that remark—
    The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
    Adjourned at seven minutes to One o 'clock.