Commons Sitting of 24 October 2000

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
MESSAGE FROM THE QUEEN
  SPEAKER BOOTHROYD'S RETIREMENT
  Mr. Graham Allen (Vice-Chamberlain of Her Majesty's Household): I have to inform the House, on behalf of the Prime Minister, that the Address of 24 October 2000 to Her Majesty, praying Her Majesty that she will be most graciously pleased to confer some signal mark of Her royal favour upon the right hon. Betty Boothroyd for her eminent services during the important period in which she has, with such distinguished ability and dignity, presided in the Chair of this House, and assuring Her Majesty that this House will make good the expenses attending the same, has been presented to Her Majesty, and Her Majesty has been pleased to receive the same very graciously, and has commanded me to acquaint this House that Her Majesty is desirous, in compliance with the request of Her faithful Commons, to confer upon the right hon. Betty Boothroyd some signal mark of Her royal favour.
DEATHS OF MEMBERS
Mr. Speaker: I regret to have to report to the House the deaths of Audrey Wise, Member for Preston, and of the right hon. Donald Dewar, Member for Glasgow, Anniesland. I am sure that Members on both sides of the House will join me in mourning the loss of two colleagues and extending our sympathies to the right hon. and hon. Members' families and friends.
WRIT ISSUED DURING THE ADJOURNMENT
MR. SPEAKER acquainted the House that Madam Speaker had issued, during the Adjournment, a warrant for a new writ for the county constituency of South Antrim in the room of Mr. Clifford Forsythe, deceased.
Oral Answers to Questions
  HEALTH
  The Secretary of State was asked—
  HEALTH

    Private Finance Initiative
    Sandra Gidley: What studies his Department has commissioned, undertaken or reviewed concerning the use of private finance within the NHS. [131847]
    The Secretary of State for Health (Mr. Alan Milburn): It is a very real pleasure, Mr. Speaker, to be the first Minister able to welcome you to your new official responsibilities. I am sure that you will discharge your responsibilities with your customary fairness and good humour—qualities which, even during Health questions, I hope will not be too sorely tested.
    The greater use of private finance is helping to modernise the national health service, especially through the private finance initiative. The PFI can be given the go-ahead only when it demonstrates better value for money in comparison with the publicly funded alternative and provides improved facilities for the NHS. NHS trusts are required to monitor performance throughout the lifetime of the PFI contract.
    Sandra Gidley: May I also be among the first to congratulate you, Mr. Speaker? I hope that your choice of clothing is an indication of a more modern approach to come. It is strange to be here; this is my first question.
    Will the Secretary of State concede that the recent King's Fund report is the latest in a series of reports to suggest that local health needs, particularly bed capacity in PFI projects, are not being consistently met? Will he go further than reviewing individual projects, as promised by Ministers in another place? Will he undertake to review publicly all PFI hospital projects?
    Mr. Milburn: I welcome the hon. Lady to her first Health Question Time. I am sorry that I will have to disappoint her by saying no, that will not be possible. The truth is that the PFI is providing much needed new hospitals in many parts of the country, sometimes in communities that have long campaigned for them. It is an efficient means of procuring new hospitals. Indeed, owing to the time and cost overruns associated with the old method, which tended to procure through Exchequer capital, the taxpayer ended up footing the bill for six hospitals and receiving only five in return. I do not know about Liberal Democrat economics, but that does not seem to make sense to me.
    Mrs. Jackie Lawrence: I, too, congratulate you, Mr. Speaker.
    Will my right hon. Friend the Secretary of State give an assurance that the private finance initiative will not threaten UK ambulance services? Will he consider establishing an inspection service for ambulance services, like those for police and fire authorities, so that we can be sure that the funding and performance of UK ambulance services are monitored and that there is an equitable service throughout the UK?
    Mr. Milburn: I assure my hon. Friend that we already monitor the performance of individual ambulance service trusts; it is important that we do so. I can further assure her that, in future, we intend to move away from the PFI approach based purely on the procurement of an individual institution such as a new hospital. As she is aware, when we establish a new hospital in a community, it has implications for primary, community and social services, as well as for ambulance services. The NHS plan

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    published in July sets out a new approach to procurement, whereby private finance will be extended into such areas and out of the purely acute sectors of the NHS.
    Mr. Julian Brazier: May I add my congratulations to you, Mr. Speaker, and, at the risk of embarrassing you, say as a Catholic that it is remarkable that we have our first Catholic Speaker?
    Will the Secretary of State tell his officials to rule out private finance initiatives that involve substantial cuts being made to the number of acute beds in East Kent? I draw the right hon. Gentleman's attention to the fact that, even at the height of summer, there were patients on trolleys in offices and corridors in the Kent and Canterbury hospital and its two sister hospitals?
    Mr. Milburn: There are problems in Kent and we keep the situation under review, but, in all candour, I have to say that many of the problems of pressure on parts of the NHS and of backlogs in repair, maintenance and new developments have not arisen suddenly and recently, but are the consequence of decades of under-investment in the NHS.
    Rather than judging the Opposition on their rhetoric on such matters, we should judge them on their record. We know that, in their final year in office, revenue expenditure on the NHS fell in real terms. In addition, when the Conservative Government left office at the end of their last full Parliament, capital expenditure on the NHS was less than it had been at the beginning of that Parliament. The Conservatives have a record as long as your arm, Mr. Speaker—no wonder the Leader of the Opposition drinks to forget.
    I can provide other facts and compare the Conservatives' record with ours. Capital spending has risen from £1.6 billion a year when we entered office to £2.8 billion a year this year; the biggest hospital building programme this country has ever seen is under way; and two new hospitals have already opened, with another to follow this year, seven more next year and nine the year after. There is a straightforward choice before the country: more investment in health with Labour, or less with the Conservatives.
    Mr. Bob Blizzard: I, too, congratulate you, Mr. Speaker.
    I welcome the new capital investment of £700,000 in the accident and emergency department of the James Paget hospital in my constituency, and the £2 million capital investment allocated for new renal, eye and skin services at that hospital. None the less, after the neglect of so many years, there is more to be done, so may I ask my right hon. Friend what additional capital investment can hospitals such as the James Paget hospital expect?
    Mr. Milburn: We shall make announcements in due course on further capital and revenue allocations to health authorities. As my hon. Friend is aware, the extra investment we are now making provides the foundation for a real expansion of NHS services. Under the NHS plan, during the course of this decade, we expect to build 100 new hospitals and to modernise every accident and emergency department that needs it. In the next few years, there will be 250 new scanners and more beds, nurses and doctors in the system. We have achieved a lot, but we are
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    the first to acknowledge that there is a lot more to do. We have a long way to go if we are to rectify the decades of under-investment over which Conservative Governments presided.
    Rev. Martin Smyth: Mr. Speaker, as one whose first name is Martin, I congratulate you on your new office and assure you of my good wishes and those of my colleagues.
    I acknowledge that we in Northern Ireland have in some ways benefited from the private finance initiative, but we want people to be empowered. Will the Department of Health consider the possibility of enabling purchasers of groceries and other products who do not want air miles to receive instead medical miles, which could allow more money to go into the health service, perhaps for their own treatment?
    Mr. Milburn: That is what we want and it is happening, not only in England, but throughout the United Kingdom. As the hon. Gentleman knows, there is more money than ever before going into the NHS. Of course, that will not solve every money problem and there will continue to be pressures in the NHS—there will be pressures this winter and it would be foolish to pretend otherwise. However, there is a good reason for that: the problem facing the NHS today is no longer purely one of a shortage of cash; it is a problem of capacity. When we have not enough trained doctors and nurses, it is self-evident that it will take time to put that right. The question is, who is best placed to deal with those capacity problems? Are they best dealt with by a party that is committed to growth in the national health service, or by a party that is committed to cutback and closure in the NHS?

    Cancer Research
    Ms Linda Perham: What funding he is committing over the next three years to research into the cancers specific to men. [131848]
    The Parliamentary Under-Secretary of State for Health (Yvette Cooper): Congratulations, Mr. Speaker.
    The most common male cancer is prostate cancer, which kills about 8,500 men each year. The Government are concerned to cut deaths from prostate cancer, which is why we are increasing the Department's directly commissioned research into it by an extra £1 million each year over the next three years, to bring it up to £4.2 million.
    Ms Perham: I welcome you to the Chair, Mr. Speaker. I also welcome the Minister's boost for prostate cancer funds. Will she join me in applauding the achievement of my constituent Colin Osborne, whose Orchid appeal in respect of male cancers has raised £6 million in three years? Will she also recognise the work of the men's health forum, which is also campaigning for increased resources for male cancers? Does she agree, however, that there is much more to be done to increase awareness of male cancers, and of men's health issues in general?
    Yvette Cooper: I certainly congratulate my hon. Friend's constituent on his work in raising awareness of

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    male cancers, but I also congratulate her on her own work in raising awareness, and raising funds for future research as well.
    We agree that there is more to be done. Under the last Government, only £98,000 was spent by the Department of Health on research into prostate cancer in 1996–97. That is why it is so important for us to work with other funders, with the charities and with the Medical Research Council to increase investment in prostate cancer research.
    Dr. Liam Fox: May I be—possibly—the last to congratulate you on your post, Mr. Speaker, and, perhaps appropriately, wish you the health to enjoy your time in office?
    I wonder whether the Minister agrees with the Government's cancer tsar, who was quoted in Nursing Times as saying that
    he would never consider having a prostate cancer test himself because treatment was likely to do more harm than the disease itself.
    On the day that the Government announced £1 million for prostate cancer research, they gave an extra £47 million to the dome. What message does the Minister think that sends about the Government's sense of priorities?
    Yvette Cooper: We believe that it is up to individual men to make their own choices about whether to have a prostate-specific antigen test. That is why we are developing an informed-choice programme, to provide men with all the information that they need to make their own decisions about whether to have the test.
    As for cancer research funding, the hon. Gentleman's party's record is appalling. By 2003, spending on cancer research directly commissioned by the Department of Health and the Medical Research Council will be £73 million. In 1995–96, it was just £25 million. We have said that we will increase investment in cancer by £500 million. The hon. Gentleman has said that he will increase the subsidy to private health insurance by £500 million. Which does he think is the priority of the British people?

    Nurses (Kidderminster)
    Mr. Christopher Gill: How many nurses previously employed at Kidderminster district general hospital have accepted alternative employment within the NHS in the last two years. [131849]
    The Parliamentary Under-Secretary of State for Health (Ms Gisela Stuart): I add my congratulations, Mr. Speaker.
    Neither the Department of Health nor the national health service collects firm details of the future employment intentions of staff. However, Worcestershire Acute Hospitals NHS trust reports that from 1 October 1998 to 30 September 2000 its records indicate that 41 qualified nurses previously employed at Kidderminster general hospital accepted alternative employment in the NHS in Worcestershire.
    Mr. Gill: I must say that I am rather disappointed by that reply. I am sure that the Minister will be as concerned
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    as I was to learn that the chairman of Worcester Acute Hospitals NHS trust has said, "We must attract more nurses and retain them."
    When new Labour was in opposition, it lost no opportunity to criticise the Conservative Government in terms of the national health service. Now, however, the Prime Minister says that the Government failed to estimate accurately the scale of the problems of the NHS. That is the reason why there are not enough doctors, nurses and dentists—
    Mr. Speaker: Order. The hon. Gentleman is making a speech.
    Mr. Gill rose—
    Mr. Speaker: Order. The hon. Gentleman will not get away with making a speech. He had an opportunity to put a question, and that is the end of it. Does the Minister wish to reply?
    Ms Stuart: Thank you, Mr. Speaker. The hon. Member for Ludlow (Mr. Gill) will be delighted to learn that Kidderminster hospital has a full complement of nursing staff. In addition, unlike the previous Government, who cut nursing training places consistently—between 1992 and 1994, the number went down to some 13,000—we have not just increased nursing training places but we have brought back some 5,000 nurses. Furthermore, unlike the Tory Front-Bench health team, we regard women, who form a large part of the nurses who return, as being 100 per cent. members of the work force, not as being worth only 80 per cent.

    Single Currency
    Dr. Julian Lewis: What administrative impact the national changeover plan has had on NHS trusts. [131850]
    The Minister of State, Department of Health (Mr. John Denham): As set out in the second outline national changeover plan published in March, the NHS has carried out a measure of pre-planning for the possibility of UK entry into the single currency. This was carried out by existing staff from within current running cost budgets. Resources have not been diverted from patient care.
    Dr. Lewis: Is not that an extraordinary answer, when it has been estimated that the cost to the NHS of the national changeover plan will total between £75 million and £95 million? That is four times the cost of the new community hospital that is being built to service New Forest. How does the Minister feel about sacrificing four community hospitals to the Government's obsession with the single European currency?
    Mr. Denham: Those Opposition Members who are so fanatically opposed to anything European that they are even further to the right than those on the Opposition Front Bench are in the habit of quoting wild figures, exaggerations and unfounded claims about this matter, like many others.

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    I quote from the press statement put out by Buckinghamshire health authority on 9 October this year. It states:
    The amount of time and money taken up by this exercise so far is a few days in each trust and would equate to a cost of several hundred pounds, rather than the hundreds of thousands of pounds previously quoted in the press.
    Mrs. Caroline Spelman: I wish you all the best, Mr. Speaker, in your new role.
    Despite efforts by the NHS executive to stifle our inquiry into the changeover costs by health authority, we have obtained figures. One of the examples is Buckinghamshire health authority—I am glad that that example has been cited. The changeover plan will cost Buckinghamshire health authority £500,000 and 13,000 staff-days. Does the Minister support that use of public money which could otherwise be used for patient care?
    Mr. Denham: It is outrageous for the Opposition to suggest that such figures have been diverted from patient care, when, as I made clear by quoting from the statement issued by Buckinghamshire health authority, that is not the case. That health authority refers to costs of several hundreds of pounds, not the £433,000 previously quoted in the press. The Opposition should not peddle figures that are simply not true. I am one of those who, unlike the Opposition, believe that at the right time the British people should have the choice as to whether we join the euro, and it is obviously right that a modest amount of sensible planning to anticipate what a change would involve should be undertaken.

    Occupational Therapists
    Helen Jones: What steps are being taken to recruit more occupational therapists for the NHS; and if he will make a statement. [131851]
    The Minister of State, Department of Health (Mr. John Hutton): Qualified occupational therapists increased by 1,000 between September 1997 and September 1999. The NHS plan will see a further 6,500 more therapists and other health professionals by 2004. The Department's recruitment and retention strategy includes introducing more flexible and family-friendly employment conditions, increasing training commissions, attracting former staff back to the NHS, and encouraging flexible retirement.
    Helen Jones: I add my congratulations to those that you have already received, Mr. Speaker.
    The Minister's reply was encouraging, but does he agree that developing new ways of working is vital if we are to recruit and retain more occupational therapists in the NHS, especially as many are women with families? What is he doing to promote that? Will he join me in congratulating Warrington hospital, Warrington Community NHS trust and our local primary care groups, which have recently agreed to review together all their therapy and rehabilitation services, not only to deliver a better service to the patient but to make better use of the skills of the staff? Is not that the way in which we should progress?
    Mr. Hutton: I agree strongly with my hon. Friend. She and the House will know that my right hon. Friend the
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    Secretary of State recently announced a major new investment to ensure that, in future, the NHS provides effective child-care facilities for NHS staff. That would be a major contribution to ensuring that we attract large numbers of extra therapists into the NHS. My hon. Friend will know from discussions with her health authority and her trust the strong and important role that occupational therapists will play in ensuring that the new £900 million investment in intermediate care services, especially for older people, constitutes effective intervention and effective investment.
    Mr. Nick Harvey: While I welcome the Government's commitment to recruiting more occupational therapists, especially in view of the current 20 per cent. shortfall, what steps will they take to ensure that they do not lose occupational therapists? There is a particular problem with pay, which lags behind even that for other NHS professionals. Will the Government take steps on that, on in-service training, which is underfunded in comparison with other NHS profession, and on career development? Occupational therapists do not have the same opportunities as doctors, nurses and other health professionals to move into management in the health service or in social services.
    Mr. Hutton: I am grateful for the qualified support that the hon. Gentleman expressed for what we are trying to do. He is right to say that we need to provide a more attractive career structure for occupational therapists and other NHS professionals. That is why, for example, consultant therapists will work in the NHS in future. That constitutes an extra career grade and is an important development.
    However, I am sure that the hon. Gentleman acknowledges that we must be realistic about the matter. We have an ambitious plan to increase the number of therapists in the NHS. I am not sure about the vacancy rate to which he referred; I think that the information is from the College of Occupational Therapists. I am not sure about the data on which it was based. As my right hon. Friend said, recruitment problems relate to the growing capacity of the NHS. Trusts and hospitals around the country are actively trying to recruit more occupational therapists and other members of professions allied to medicine. The problem is associated with the growth of the NHS, but we will get there, and address the issues that the hon. Gentleman raised.
    Mrs. Linda Gilroy: Congratulations, Mr. Speaker.
    Earlier this year, I attended an open day at Plymouth Derriford hospital for young school students from Plymouth, Devon and Cornwall to see the good work that occupational therapists do. Will the Minister join me in congratulating the occupational therapists on that initiative? What message does he have for young people who are currently considering entering the profession?
    Mr. Hutton: That is a tricky one. I support my hon. Friend's comments and her actions in her constituency to support the expansion in the NHS. I would tell young people in her constituency and everywhere else that the future of the NHS is optimistic and positive as long as Labour is in government. I could not say the same if there was a change of Government, given the Conservative

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    party's record and the legacy that we inherited from it. Under us, the NHS has a positive future; under the Conservatives, it does not.
    Mr. David Tredinnick: May I also congratulate you, Mr. Speaker, on your elevation?
    The Minister should not only consider the recruitment of occupational therapists but that of complementary therapists. Does he know that, under the primary care group system, many areas do not engage homeopaths and herbal therapists, as they used to do? Will he look into that matter?
    Mr. Hutton: I shall look into the matter. Perhaps the hon. Gentleman might like to stand on this side of the House when he asks questions about complementary therapy to see the expressions that they attract from the Conservative Front Bench. I know that the hon. Gentleman has a long-standing interest in the issue and I shall look into the anxieties that he raised.

    Chorley Hospital
    Mr. Lindsay Hoyle: What support and assistance he makes available to Chorley hospital. [1318521
    The Parliamentary Under-Secretary of State for Health (Ms Gisela Stuart): The total projected income of Chorley and South Ribble NHS Trust for 2000–01 is £62 million. The trust is currently forecasting that at the end of the financial year it will be in a balanced position. I am sure that my hon. Friend will welcome the regional office's recent approval for an additional 30-bed medical ward at Chorley and South Ribble district community hospital, which amounts to a £1.6 million capital investment.
    Mr. Hoyle: I thank my hon. Friend for that answer. We welcome the new medical ward at Chorley, which is more success for the hospital. We could have even more success at Chorley hospital if we could end postcode medicine. Is my hon. Friend aware of the silly anomaly concerning the two health authorities of south and north Lancashire? If someone comes from north Lancashire and is to go to Chorley hospital, there may be an eight-week waiting list. If someone comes from south Lancashire, there is a 33-week waiting list. If we were to merge the health authorities, there would be more money for Chorley hospital. We would also end a bureaucratic anomaly within the hospital.
    Ms Stuart: I am aware that in the short term the regional office is promising to support south Lancashire. The long-term solution is a strategic review of the health authority configuration. I know that Members are actively engaged in that. The health authority will have to approve the arrangements. We are proceeding to consultation, and probably towards the end of next year we might be able to reach a conclusion on the best way forward.
    Mr. Nigel Evans: A number of my constituents use Chorley hospital and its neighbour, Royal Preston hospital. I have written to the Minister several times about the case of Mr. Salthouse, who has had three heart attacks. If he is not in hospital, he spends most of his time on a sofa with an oxygen mask. He is receiving
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    continuous morphine. His doctor has said that he is at the severe end stage of heart disease. The only procedure that will help him is percutaneous myocardial revascularisation, and the North-West Lancashire health authority says that it will not pay for it. Talk about the postcode lottery. The authority will not pay because it does not recognise the procedure. However, the procedure is carried out at St. Thomas's.
    I am awaiting a response from Lord Hunt. I have been told by his office today that it has lost my correspondence, although it is ready to send a reply. Through you, Mr. Speaker, may I ask the Secretary of State to ascertain what is going on, to read the response before it is sent to me and to send a positive response to Mr. Salthouse, who is eagerly awaiting a form of procedure that will alleviate the condition in which he is living?
    Ms Stuart: I shall certainly examine the individual case which the hon. Gentleman has raised. I say to the hon. Gentleman and his constituents that with this Government the way forward is to expand the facilities of the NHS through tax revenue. There should not be an expansion of the private medical health care sector, where treatment would depend on the ability to pay for it.

    Beta Interferon
    Mrs. Eleanor Laing: How many patients are currently receiving beta interferon on the NHS. [131854]
    Mr. John Healey: What recent representations he has received on the provision of beta interferon on the NHS for certain multiple sclerosis sufferers. [131862]
    The Minister of State, Department of Health (Mr. John Denham): We estimate that between 1,700 and 1,800 people in England are currently receiving beta interferon on the national health service.
    Over the past six months, my Department's records indicate receipt of approximately 2,000 written representations and four petitions from Members, patient groups and the public expressing concern about arrangements for prescribing and funding of beta interferon.
    Mrs. Laing: I thank the Minister for that answer. He is fond of statistics, but that does no good for the many people in my constituency who plead with me to help them get beta interferon, which they need to try to alleviate their suffering. The Minister has not told the House that the NHS is prescribing beta interferon to less than 3 per cent. of multiple sclerosis sufferers. That is the lowest percentage prescribed by any European Union country. What recommendation has the Minister given to the National Institute for Clinical Excellence to ensure that MS sufferers are not deprived of drugs that their counterparts in the EU are receiving?
    Mr. Denham rose—
    Mr. Speaker: Order. Before I call the Minister, I appeal to hon. Members to be brief. We shall get through more questions if the questions—and possibly the answers—are more crisp.
    Mr. Denham: I apologise for citing statistics, Mr. Speaker, but I was asked how many patients were receiving the drug and that seemed the best way of answering the question.
    The question is a serious one. The answer is that we established the National Institute for Clinical Excellence because, with a number of drugs and procedures, there were problems of postcode prescribing and different patterns of treatment, which, in the case of beta interferon, directly reflected the policy, still in place, established by the previous Government. NICE is considering beta interferon. It has not yet produced its advice. The matter is, I believe, at the appeal stage within NICE. As I and other Ministers have said throughout the procedure, we will not comment publicly on NICE's deliberations until it has completed them.
    Mr. Speaker: I call Mr. Healey.
    Mr. Healey: Thank you, Mr. Speaker, and congratulations.
    Is my hon. Friend aware that seven organisations, including the MS Society, the Association of British Neurologists and the Royal College of Nursing have appealed against NICE's assessment of beta interferon? Is he aware that no Member on either side of the House who has seen the benefits that that drug can bring to some of our constituents with MS has any doubt about its cost-effectiveness? Therefore, I urge him to consider carefully the decision that he and the Secretary of State must take on the final recommendations that NICE will publish shortly.
    Mr. Denham: I acknowledge the considerable efforts that my hon. Friend has made on this topic. I know that he has close links with the MS Society and others. Of course we will consider properly and carefully the recommendations from NICE when we receive them, but, as my hon. Friend pointed out, an appeals procedure is under way. Many organisations will have contributed to that appeals process. It is essential for the integrity of NICE that that is allowed to take its course without Ministers' commenting or speculating on what the final outcome might be.
    Mr. Philip Hammond: I know that the Minister is aware of the concern on both sides of the House about the beta interferon issue, but does he agree that any decision by NICE to deny beta interferon to patients for whom it is demonstrably clinically effective would bluntly undermine the guarantee that was given by the Secretary of State, who said:
    no one will be denied the drugs that they need.—[Official Report, 30 June 1998; Vol. 315, c. 143.]?
    Will the Minister give an undertaking to place in the Library after the NICE decision is announced the submission that was made to the NICE appraisal by the Department of Health, so that hon. Members can see what the Department was really recommending to NICE?
    Mr. Denham: On that point—it is important—I have always worked on the assumption that such submissions would be placed in the public domain, so I am happy to give a positive response. For reassurance, however,
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    may I say that such responses as have been made to provisional determinations have invariably been of a technical nature, or have suggested that the wording may need to be clarified in the interests of wider understanding. However, the hon. Gentleman has made a fair point and I will respond positively to it in that way.
    Mr. Speaker: I call Miss Anne Begg.
    Miss Anne Begg: Thank you, Mr. Speaker. I add my congratulations.
    Although I, too, hope that NICE will soon report on beta interferon, and that anyone with MS who beta interferon will help will get the drug on the national health service, I believe that beta interferon is not necessarily suitable for all MS sufferers. I wonder whether the Minister shares my concern that a number of MS sufferers are pinning their hopes on getting beta interferon when in their case it may not be the most suitable drug. I am wondering what the Government are doing to ensure that there is an educative process to inform MS sufferers that other regimes may be more suitable, so that they are not always waiting around for a wonder drug which, for them, may not be a wonder drug.
    Mr. Denham: My hon. Friend makes an important point. Even the most enthusiastic proponents of beta interferon have not suggested that it works in all cases and circumstances. Beta interferon has never been suggested as a cure for that very distressing condition, so there is a wider set of issues surrounding the appropriate care and support for MS sufferers. Discussions have been taking place between the Department, the MS Society and NICE on the possible preparation of clinical guidelines on wider MS treatment and support.

    Clinical Priorities
    Sir Sydney Chapman: If he will make a statement about the Government's policy on clinical priorities in relation to the reduction of NHS waiting lists. [131855]
    The Secretary of State for Health (Mr. Alan Milburn): The very clear guidance that we have issued states that
    clinical priority must be the main determinant of when patients are seen as out-patients or admitted as in-patients.
    As waiting lists fall, so waiting times, too, will fall. The NHS plan sets out how waiting times will be cut, from a maximum 18 months for in-patient treatment today, to six months by 2005, and from six months for out-patient treatment today, to three months by 2005. Our eventual aim is that there should be waits of weeks rather than months.
    Sir Sydney Chapman: I am grateful to the Secretary of State for that information. Will he confirm that, in 80 per cent. of health authority areas, the number of patients waiting more than 12 months for operations has increased since his party took office, and that for the first time in 25 years, the number of heart bypass operations has decreased? Does not that underline the fact that the right hon. Gentleman has managed to get his in-patient

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    waiting lists down only by postponing complex surgical procedures and pushing through the simpler operations as well as keeping people off the waiting lists for longer?
    Mr. Milburn: No, that is not true. The hon. Gentleman has heard me say before that the allegation from Tory Back-Bench Members that the number of coronary artery bypass grafts and of heart operations in general has fallen is not true. The number of operations is rising. Of course, we need to do more. That is why I have already made the extra earmarked cash available to ensure that we can carry out an extra 3,000 more heart operations this year and next year. I expect to be able to exceed that, largely because of the hard work done by NHS trusts, hospitals, cardiothoracic surgeons, theatre nurses and others up and down the country who have used the money to good effect.
    Let me remind the hon. Gentleman of one thing before he starts raising some legitimate concerns that he and his hon. Friend the Member for Ribble Valley (Mr. Evans) raised earlier about access to heart surgery. It is important to remember that, under the Government whom he supported and of whom he was a member, there was no earmarked cash available for heart operations. It was only when this Government took office that we earmarked cash for cancer and heart disease, which are what many hon. Members, and people throughout the country, would regard as the top clinical priorities.
    Mr. Clive Efford: My right hon. Friend will be aware that increased demand can put pressure on waiting lists during the winter, particularly as a result of people suffering from flu. I congratulate my right hon. Friend on the success of his advertising campaign in increasing the number of people taking advantage of the flu vaccine. [Interruption.] There is some evidence in my area that demand is outstripping supply.
    What is the Department doing to increase awareness of the disease in terms of what precautions can be taken in the household and the workplace to minimise the number of people who contract the disease? There is a myth about how the disease is contracted which the Department could do something to dispel.
    Mr. Milburn: As my hon. Friend is aware, there is a TV advertising campaign and other types of advertisement precisely to inform the public about what they can do. It is most important to ensure that those at the highest risk of serious illness if they contract the flu take advantage of the facilities that the Government have made available to them, which is to get a free flu jab. [Interruption.] I hear Tory Members alleging that the flu vaccine is not available. That is not true. This year we have ordered 11 million doses of flu vaccine, compared with under 8 million last year. We have also extended the range of people who are able to get access to the free flu jab. It is important that, in every part of the country, the free flu jab is offered to pensioners and others, and that people who want to take advantage of it do so as soon as possible by visiting their GP's surgery for their free jab on the national health service.
    Sir Nicholas Lyell: On the issue of clinical priorities, is the Secretary of State aware that Addenbrooke's hospital has now had to cancel the prostate operation on one of my elderly constituents for
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    the fourth time? That is not because of a shortage of surgeons or nurses but because two and a half wards are blocked with elderly patients who cannot be discharged home and because there is a shortage of some 300 private sector nursing home beds in the Cambridgeshire area. Will the right hon. Gentleman liaise with the Secretary of State for social services to get the Government to help solve that problem?
    Mr. Milburn: I am the Secretary of State for social services, so I shall do my best, depending on what sort of day I am having, of course—so far, so good. The right hon. and learned Gentleman raises an extremely important point, which is that, as we now know, what happens in a hospital is directly affected by and directly affects what happens in social services, primary care, community care and, as we heard earlier, ambulance services. That is why we have to encourage much greater co-operation in the local health service. That is also the precise reason why the Government got rid of the internal market, which the right hon. and learned Gentleman supported.

    GPs (East Lancashire)
    Mr. Gordon Prentice: If he will give additional incentives to GPs to locate in East Lancashire. [131856]
    The Minister of State, Department of Health (Mr. John Hutton): East Lancashire health authority is aware of the problem with GP recruitment in its area and is developing a recruitment package that covers all four contractor professions. As part of that process, the health authority is proposing three new applications for personal medical service schemes; exploring the opportunities offered by salaried GPs and nurse practitioners; and reviewing its primary care investment plan to determine what other incentives can be made available through additional investments in GP premises.
    Mr. Prentice: That is a good answer, but is the Minister aware that 5.5 per cent. of all the GPs in my area are due to retire in the next five years? That is the highest such percentage of any area in England outside Greater London. Perhaps the way to get younger GPs into areas where there is an acute shortage of qualified GPs is to pay them more. Will the Government apply themselves to that point?
    Mr. Hutton: I am very glad that I have said something with which my hon. Friend is happy. As I am sure he is aware, however, we are paying general practitioners more. I am also absolutely sure that, if my hon. Friend wants to develop his concerns about the issue and express them to the health authority, it would be very willing to discuss them with him, as would I. My hon. Friend's area has a particular historical problem with which we have to deal. I am aware of the concerns that he and others have expressed about it, and we look forward to working with him to find a sensible way forward.

    Nurses
    Mr. Peter Bradley: What action he is taking to increase the number of nurses working in the NHS. [131857]
    The Parliamentary Under-Secretary of State for Health (Yvette Cooper): The NHS plan sets out proposals to increase the number of nurses, midwives and health visitors in the NHS by 20,000 in the next four years. That is why we are expanding training commissions; improving pay; supporting international recruitment; encouraging family-friendly working practices; and encouraging more staff to return to the NHS.
    Mr. Bradley: I welcome that response, which will be welcomed also in The Wrekin and in constituencies across the country. However, can the Minister explain what action she and her colleagues are taking to recruit—and, crucially, to retain—other professional and technical staff? Would not such action help, and is it not time that such staff were included in the pay review body arrangements?
    Yvette Cooper: My hon. Friend will be aware that discussions on the future of the pay system are under way. We believe that, across the board, the pay system needs to be modernised to provide fair and affordable settlement across the NHS and to support expansion of the NHS. There were already 10,000 more nurses in place in September 1999 than there were in September 1997, and there have been other increases in the work force, too.
    Mr. Archy Kirkwood: I should be pleased if the Minister could tell us what conversations on recruitment and retention she has had with the Royal College of Nursing since July, and what tangible progress has been made. Although some of us were interested to hear the Secretary of State say—rightly—that under-capacity is holding back development of the NHS, the president of the Royal College of Surgeons recently said that it would take 10 years before those problems were properly and adequately dealt with. Will it take 10 years before we get the recruitment and retention of nurses right?
    Yvette Cooper: Christine Hancock of the Royal College of Nursing is on the NHS modernisation board, and continuing conversations are being held on recruitment and retention. There has also been much progress on nurses, such as the fact that, in the first two years of this Parliament, we have put in place 10,000 additional nurses. Considerable progress still needs to be made, but it will take time. One of the reasons why it will take time is that the previous Government cut the number of nurse training places: that is what has made it so difficult to get in place the additional nurses that we need.
    Judy Mallaber: May I, too, offer my congratulations on your election, Mr. Speaker?
    Will my hon. Friend put further pressure on health authorities and trusts actively to examine their working patterns and shift rotas so that nurses who want to return to work are if possible offered the flexibility that they need to combine their work and family responsibilities?
    Yvette Cooper: I can certainly reassure my hon. Friend that we are very keen to increase family-friendly working practices across the NHS. That is why we have a £30 million child care initiative to support staff across the NHS. The Government strongly value the important contribution that people, especially women, can make
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    when combining careers in the NHS with family responsibilities—unlike the hon. Member for Runnymede and Weybridge (Mr. Hammond), who recently said:
    It is a fact that you will get less work out of females
    than out of males.
    Dr. Liam Fox: When Christine Hancock, the general secretary of the Royal College of Nursing, said that
    We now have the evidence that the key nursing posts are being downgraded to save money,
    was she telling the truth?
    Yvette Cooper: Given that the previous Government cut the number of acute beds in the NHS by 43,000 between 1979 and 1997, it would hardly be surprising if the number of specialist nurses had fallen during that period. We are committed to increasing the number of nurses in the NHS, not just by 20,000 across the board, but by expanding the number of senior nurses, including nurse consultants. My right hon. Friend the Secretary of State has announced that an extra 141 nurse consultants will be appointed.
    Dr. Fox: I take that rather second-rate evasion to mean that, yes, Christine Hancock was telling the truth. I wonder when Ministers will start to take responsibility for the health service, more than four years into their term of office. [How. MEMBERS: "Four?."] They are well into their fourth year, and were they to be in office for 40 years, they would still be harking back to the Conservative Government. Is it not true that the 15,000 nursing vacancies and the 12,000 nurses who leave each year are a testament to the Government's failure in office? Is not that compounded by the lack of morale generated by the Government's endless political interference; the lack of authority for ward sisters; the lack of vaccine for patients; the return of TB to our cities; and a winter crisis that now goes on all year—all of it under a Prime Minister who says that Labour never understood the size of the problem? How can nurses, or anyone else, have any faith in a health policy that is such a complete shambles?
    Yvette Cooper: Given that the hon. Gentleman is clearly so sensitive about looking back at the previous Government's record—for example, the cut in nurse training places from 15,000 to 11,000 in two years and the failure to restore the figure to the previous levels under the previous Government—perhaps we should look to the future. The Government are already increasing the number of nurses in the NHS. We have a commitment to expand the NHS and to invest additional money, year on year, in increasing the NHS—[Interruption]
    Mr. Speaker: I cannot have the hon. Member for Woodspring (Dr. Fox) shouting across at the Minister. He asked a question; the hon. Lady is answering it.[Interruption.] She may not be answering it to his satisfaction, but she is answering it.
    Yvette Cooper: Thank you, Mr. Speaker.
    The hon. Gentleman has said that he wants to spend more than £500 million on subsidising private health insurance and more than £300 million cutting the tobacco tax against which his party voted. We have set out where

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    we would find the extra investment needed to expand the NHS. I should like to know where the hon. Gentleman would find the resources to make that cut.

    NHS National Plan
    Ms Joan Ryan: If he will make a statement regarding the representations he has received on his national plan for the NHS relating to hospitals. [131858]
    The Secretary of State for Health (Mr. Alan Milburn): The, NHS plan was formulated with the help of doctors, nurses and managers from hospitals and other parts of the service. It is now being implemented with their help. I have received many representations about the expansion in hospital services set out in the NHS plan. There will be more new hospitals, providing more care to more patients.
    Ms Ryan: I thank my right hon. Friend for that answer. However, I want to raise the question of diagnostic and treatment centres for out-patients. Most people who have contact with hospitals are admitted through out-patient departments, and the throughflow of patients causes those departments a lot of wear and tear. The diagnostic and treatment centres represent an important way to keep waiting lists down, but many out-patient departments would benefit from refurbishment.
    The Government have rightly concentrated on accident and emergency services, but will my right hon. Friend say how he intends to ensure that out-patient departments reach the standards that out-patients deserve?
    Mr. Milburn: That is a very important question. Public and media attention focuses, understandably and inevitably, on in-patient services. There is a very good reason for that, but my hon. Friend is right to say that most people who go to hospital are seen in an out-patient department or in an accident and emergency department.
    We have made a start on the problem, in part by investing new resources in out-patient departments. Those new resources were announced some months ago by the Minister of State, my hon. Friend the Member for Barrow and Furness (Mr. Hutton), but we must also change the way in which out-patient services work. We are not talking about rocket science: many leading out-patient departments in the country have been able to reduce waiting times by making better and more flexible use of staff—for example, by ensuring that nurses carry out more roles, and by using physiotherapists rather than orthopaedic consultants to conduct orthopaedic out-patient appointments.
    Much can be done in that regard, but the NHS plan contains proposals to reform and expand the national health service, and we must ensure that the good practice of some becomes the best practice of all. We have made a start on that and, although there is a long way to go, I am confident that the commitment of NHS staff to change the way they work and the services they deliver will cause waiting times to fall in every hospital and out-patient department, not just in some.
    Mr. Andrew Rowe: The Secretary of State belongs to a Government who talk a great deal about devolution, but is he aware of the
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    growing dissatisfaction among many members of health trust boards, who feel that the amount of discretion that they have is daily being whittled away by increased centralisation when it comes to setting targets, rules and so on? Is the Secretary State not worried about that?
    Mr. Milburn: I would be worried if that was what was happening. However, although I have a great deal of time and respect for the hon. Gentleman, it is clear that he has not read the NHS plan. I shall send him a copy, so that he can ask me a more relevant question next time we have Health questions. The plan sets out the Government's proposals to devolve greater authority and autonomy not only to managers and trust boards in hospitals and elsewhere but, most important of all, to the front-line clinicians—the doctors, nurses and physiotherapists—who, day in and day out, do such brilliant work treating patients.
    Mrs. Lorna Fitzsimons: I, too, welcome you to your post, Mr. Speaker.
    Does my right hon. Friend agree that the role of the patient—the user of the national health service—lies at the heart of the NHS plan? Patients pay their taxes for the service, and are the best judge of its performance. Will he reassure those who have been active in developing the community health council movement that the plan's proposals will strengthen and give teeth to the concept that patients and users should be right at the heart of the NHS?
    Mr. Milburn: That is very much the case. I understand the concerns expressed by hon. Members of all parties about the plan's proposal to abolish community health councils, but many people—in this House and outside it—have long argued that there is a democratic deficit at the heart of the NHS. They have said that we should strengthen rather than weaken the ways in which we monitor what the local health service, which services local communities, is up to.
    I support the argument that monitoring and scrutiny arrangements should be put in place. I believe that it is therefore right and proper that we should lodge that power, authority and influence with those who have been directly elected by the local communities. In the end, it must be acknowledged that members of community health councils are not so elected, but that members of local councils are.

    Mental Health Services
    Dr. Vincent Cable: If he will make a statement on the resources allocated by the NHS to mental health. [131861]
    The Minister of State, Department of Health (Mr. John Hutton): In 1999–2000, nearly £3.5 billion was spent on mental ealth services in the NHS. The NHS plan set out further proposals for investment in mental health services, including new teams for crisis support and primary care, and for young people.
    Dr. Cable: Is the Minister aware of the report that was published over the recess by the Zito Trust, which

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    documented the enormous obstacles facing the severely mentally ill in getting access to the new generation of anti-psychotic drugs which limit the side effects of their treatment? Can he explain why only 12 per cent. of the country's 250,000 schizophrenics have access to these drugs? Is the reason clinical or financial?
    Mr. Hutton: The hon. Gentleman, who takes a great interest in these matters, and rightly so, will be aware that
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    when we published the national health service framework for mental health, we made it clear that our first priority was to improve services for people with severe and enduring mental illness. That is exactly the right clinical, ethical and moral priority for us to have reached. The use of the atypical anti-psychotics has, as the hon. Gentleman will know, been referred to the National Institute for Clinical Excellence, and we are awaiting its guidance on the wider use of those drugs.

Hunter-killer Submarines
3.30 pm
Mr. Iain Duncan Smith: (by private notice): To ask the Secretary of State for Defence if he will make a statement about the Government's decision to withdraw the Royal Navy's nuclear-powered hunter-killer submarines from active service.
The Minister for the Armed Forces (Mr. John Spellar): First, Mr. Speaker, may I say that it is a real pleasure to address you as such for the first time?
I am replying on behalf of the Secretary of State for Defence, who regrets that he is unable to be in the House today.
The Government's decision to withdraw the Royal Navy's nuclear-powered Trafalgar and Swiftsure class hunter-killer submarines from operational service was taken when it became apparent that a flaw in the pipework forming part of the reactor cooling system of HMS Tireless may be generic. As responsible nuclear operators, we decided to carry out a full inspection of all submarines of the strategic submarine nuclear—SSN—flotilla to determine whether this was in fact the case. Some of these submarines were already alongside in refit or undergoing maintenance or repair, and two deployed submarines were recalled.
Initial indications are that the defect may have arisen from the original construction of the submarine and that it is present in other submarines, albeit at an early stage. Let me stress that Vanguard class Trident submarines, which are of a different design, have not been affected.
Until the inspection programme is completed, it is not possible to finalise the repair programme or to quantify the operational implications. The repair is not complex in engineering terms, but, because of the exacting tolerances required for nuclear engineering, it may take some months for submarines to be repaired where this is necessary. The inspection regime and subsequent repair programme will clearly have an impact on our operational programme, although every effort will be made to mitigate this by using other assets and by building on the already close links that exist between the United Kingdom and United States submarine services. Appropriate measures will be taken to protect the deterrent.
I wish to make it clear that at no time has there been any risk to the crew or general public. Safety must take precedence over operational requirements in peacetime, and no submarine will go to sea unless it is safe to do so. Every effort is being made to bring the submarines back into operational service as soon as possible.
Mr. Duncan Smith: It is quite remarkable that a matter of hours after your welcome elevation to the Chair, Mr. Speaker, the Government, for all the crocodile tears shed about bypassing Parliament, chose, on this prime issue of the defence of the realm, not to come anywhere near the House to make a statement about it. After all, this announcement represents the loss of a quarter of our front-line fleet in one fell move. The Government chose simply to try and slide the news away on a quiet Saturday, without any comment.
Some answers to questions need further clarification. The Minister said that he could not give any exact times or be specific. Is the problem that our dockyard facilities
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are insufficient at the two places about which we have heard? If that were the case, would it be possible to use facilities in other NATO nations, and have the Government made such a request? The Minister will recognise that it is a priority to get those submarines back into service immediately.
The hon. Gentleman talked about using other assets, but what specific arrangements are there to cover this gap in capability? For example, he talked about securing the patrol of Trident, our new deterrent, but as it is clearly not possible to use surface ships to glide around indicating where Trident is, how does he intend to do that? Is there a chance that we may be able to fill some of that capability by bringing some of the Upholder class back into service by arrangement with the Canadians, to whom they are about to be leased? Would that assist, and has any arrangement been made for it?
The third question relates to the Swiftsure class, which the Minister discussed. We have two classes of hunter-killer submarines: Trafalgar and Swiftsure. Swiftsure has been in service since the 1970s, and for much longer than Trafalgar. Are the Government saying that they have discovered a problem on Swiftsure, or that Swiftsure vessels have proved pretty reliable during their time in service and that they will be the first boats to be put back into service as there is literally nothing wrong with them? Is the Minister going to withhold all boats from service simply because there may be a possible defect that has not materialised in any other vessel? Finally, what will happen to the crews during this period? Will skeleton crews be left on the boats, and will they lose some of their skills? How will the Minister cover the gap in capability for individual crew members?
Such questions ought to have been raised in the House earlier and answered immediately. The Government should not avoid their responsibilities in this way and it is essentially a damning position for them to be brought to the Dispatch Box by the Opposition on this matter.
Mr. Spellar: I thought that I had had my fill of pompous speeches yesterday, but the speech of the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) follows that great tradition. In reply to his fairly inadequate response, there is a defence debate on Thursday and Defence questions on Monday, and on both occasions he could easily raise such matters without any difficulty.
I shall, however, deal with the hon. Gentleman's questions now, starting with those relating to the Upholder class of submarines, which the Conservative Government scrapped in 1993. When the Labour party came to power, that decision had already been taken and the programme was well advanced. [Interruption.] As the hon. Gentleman rightly says, we followed on from the previous Government's failure to dispose of the Upholder submarines which, however, we managed to sell to our ally Canada. One submarine has already gone to the Canadians and of course I have made inquiries about the availability of the others. The first one will not be available until next March, so that does not seem to be a suitable alternative.
The hon. Gentleman discussed the shortage of facilities. The critical difficulty relates not to facilities, but to the time scale of the repair. The repair itself is fairly basic and, in engineering terms, uncomplicated. However, the

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time for repair is increased by the need to run down the reactor, let its nuclear material cool off, and drain the coolant. The repair is undertaken, tested ultrasonically and by other means, and then the coolant is refilled, which is a time-consuming operation, given the need to prevent airlocks and so on in the system—as anyone who has dealt with radiators at home will understand, although this operation is undertaken at a much higher level of tolerance. The reactor is then started up. Frankly, repair facilities are not the bottleneck, and we are looking at making sure that we have enough teams available to undertake this work. Indeed, the Navy is working on that at the moment.
On other assets, as the hon. Gentleman rightly identified, we have surface vessels with towed arrays. We also have Nimrod aircraft, and shall examine using them more intensively, but that is satisfactory only in the short to medium term. We are already having discussions on other possible facilities with our ally the United States.
On the question of examining for the defect on the Swiftsure class, it is simply a case of looking at the cooling system and ascertaining whether individual vessels have the generic defect. If they have, we shall, of course, include them in the programme of repair and maintenance.
The hon. Gentleman rightly raised another question about crews, the answer to which will partly depend on the nature of the repairs and where the vessels are tied up. As I understand the situation, if the vessels are in a tidal berth, they require more crew on board for watch and engineering functions, and engineers will also be required. If the vessels are in a non-tidal berth, fewer crew will be required.
The hon. Gentleman rightly raised a question about maintaining skills through training. Surprisingly enough, the Navy is already looking at that, as I am sure he would have expected it to. Some sailors may not be required for those watch and engineering functions—if so, the Navy intends to allow them more shore leave to spend time with their families, because there will inevitably be some disruption.
Let me answer the question that the hon. Gentleman did not pose, either, in effect, in his letter or in his questions today, about the length of time involved. Until we have a full report from Navy engineers, we shall not be able to identify the length of time required. Had the hon. Gentleman waited a few days, I might have been in a better position to give him an answer.
Mrs. Linda Gilroy: I thank my hon. Friend for his statement. Does he appreciate that the people who live in communities adjacent to the relevant facilities—such as the Royal Naval Devonport dockyard in Plymouth, which will carry out the work—need to have confidence in their safety and that of their families? Will he join me in expressing confidence in the highly skilled work force and their ability to carry out the work swiftly and effectively? Will he also give me an assurance that his door, and those of his ministerial colleagues, will be open to Members and our constituents, because the spotlight will no doubt remain on this issue?
Mr. Spellar: With regard to Tireless and any of the other submarines, I reassure my hon. Friend that the safety
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of the crews or the general public has at no time been at risk in any way. We operate under an extremely tight and strict safety regime, and independent bodies overlook our work. We want to assure Members of Parliament and local representatives and communities of our on-going commitment to safety in this programme. I welcome this opportunity to pay tribute to the skilled work force who will undertake the work.
Mr. Menzies Campbell: From one Glasgow boy to another, Mr. Speaker, I add my warm congratulations on your elevation. On this occasion, Kelvinbridge salutes Springburn.
Does not the Minister's answer punch a substantial hole in Britain's defence capability for the foreseeable future? That capability was substantially weakened by the decision to sell the Upholder class of submarines. That decision was taken purely for financial reasons by the previous Government. This would have been embarrassing at the time of the cold war. Would it not also have been embarrassing during the Kosovo campaign, when one of those submarines was responsible for using the Tomahawk cruise missile system? Is not that an argument for fitting Tomahawk cruise missiles to the new type 45 destroyers?
Finally, does not this occasion provide an opportunity to put some flesh on the bones of a European security and defence policy? Should not the Government seek co-operation with our European allies and, in particular, co-ordinate patrols with the French with regard to the nuclear deterrent that France deploys alongside the United Kingdom?
Mr. Spellar: I thank the right hon. and learned Gentleman for dividing the Opposition on this matter. I assure him that we have long-standing and close relations with the United States Navy in such matters and that we are already undertaking discussions with it. That welcome move should provide a degree of confidence and reassurance.
On the right hon. and learned Gentleman's point about Upholder submarines, he knows that that decision was taken in 1993. Several Conservative Defence Ministers have since been through the MOD but none of them saw fit to change that decision. There is an argument that having a wider variety of vessels and types of class is an advantage. Of course, huge costs are associated with that—not only in terms of training and operational experience but in terms of support systems and maintenance facilities. That is always a required balance.
The decision to scrap the Upholder class was taken by the previous Administration. That decision has gone by and, therefore, we have to work as effectively as we can with the constraints and the vessels that we have.
Mr. John McFall: I add my happy congratulations to you, Mr. Speaker on this, your first day.
The Minister said that the decision would have no effect on the Trident programme. However, he also said that it would affect the operational programme. What effect will it have on the Clyde submarine base at Faslane? As my hon. Friend knows from a recent meeting with me, we have a very committed work force there. Will

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he ca'canny on the proposals for possible privatisation so that we ensure the maintenance of that base and that good work force long into the future?
Mr. Spellar: My hon. Friend knows that discussions are taking place with the private sector on ship support and that those discussions also involve public sector yards. Indeed, even the work that will be undertaken on the submarines will involve both private contractors and the existing work force. He is right to identify the enormous reservoir of skills at Faslane. Obviously, its work force will be playing a significant role—along with those at Devonport, mentioned in a previous intervention—in getting the submarines operational again as soon as possible.
Mr. David Curry: Given the immense cost of the infrastructure that is needed to maintain a nuclear fleet because of the safety implications, does the Minister think that it is time to reconsider the option of a new generation of diesel boats rather than the proposed Astute class? Will he re-examine the option for diesel-powered submarines, which are cheaper and quieter than nuclear submarines? They have been given increased capability through air-independent propulsion, are ideally suited for coastal warfare, are easier to repair and potentially have a much better export market. Is it not time to go back to basics? Surely we should not go back to Upholder, but consider the future generation of nuclear boats.
Mr. Spellar: That is an interesting proposition and one that I do not recall spokesmen on either Front Bench raising during consideration of our submarine capability under the strategic defence review. Essentially, we and a few other countries have a blue-water international capability. We would not be able to achieve that with diesel submarines, which would also not be appropriate to maintain the nuclear deterrent—unless the right hon. Gentleman is proposing that we should review that policy too.
Mr. Andrew Miller: My hon. Friend may know that I have sailed on one of these boats—with the hon. Member for Mid-Worcestershire (Mr. Luff), the Opposition Whip—and I was particularly impressed by the high level of consideration for safety. In trying to help public understanding of the issue, will my hon. Friend stress that this was a coolant leak, not a radiation leak, and that the processes he described in response to my hon. Friend the Member for Plymouth, Sutton (Mrs. Gilroy) are the normal processes engaged in when cooling down a reactor prior to such work?
Mr. Spellar: I join my hon. Friend in paying tribute to the professionalism of our submarine fleet. I also echo his call to put the problem into perspective. Yes, it was a leak, but it was an extremely minor leak of coolant that was probably less radioactive than the surrounding Mediterranean. However, we have to be mindful of the need to maintain very high safety standards. That is why we inspected Tireless and that is why, when it appeared that there was a possibility of a generic fault, we undertook further investigations. It is also why we are looking at the whole fleet. I am sure that the House and
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the country would expect us to do no less than to follow those standards. Equally, we want to ensure that the fleet is back in operational service as soon as possible.
Sir Nicholas Lyell: Congratulations, Mr. Speaker.
Are there not some internal inconsistencies in what the Minister is telling the House? Is he saying that all 12 of the submarines are unsafe and unseaworthy? If so, why did it take from May until October to take them out of service? If so, how can he tell the House that there was no question of crew safety being an issue? Why do Ministers appear to have taken what would seem to have been an operational decision?
Mr. Spellar: That question sounds like one that was prepared earlier; I thought that I had actually dealt with a number of those points during my contribution, but I will reiterate them.
Once we started to inspect the fault and examine it more closely, what we originally thought was a fairly small crack turned out to be larger and, quite frankly, the external investigation techniques would not have enabled us to ascertain that. Our experts then assessed that it was possibly a design/manufacture fault and could therefore have been generic across the fleet. That is why we undertook the further investigation.
As I said before, we are looking at the faults, but they are at an earlier stage in some of the other vessels. At the same time, however—as I pointed out in my reply to my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller)—we are talking about a very minor leak on the vessel. That does not mean that we did not take it seriously, but it also does not mean that there was any risk either to the crew or indeed to the general public. However, we did take the necessary prudent steps and will continue to take them. There is no inconsistency in those statements.
Mr. Jimmy Hood: May I add my warm congratulations to you, Mr. Speaker? I cannot begin to tell you how pleased and proud I am for you and your family that you were elected yesterday.
I welcome the information that the Minister gave the House that we are due to have a defence debate—rightly so. I see that the Leader of the House is in her place. Will the Minister have a word with my right hon. Friend about holding defence debates a wee bit earlier in the week, in prime time, when more Members are able to be in the Chamber to debate such important issues? All too often, such debates are held at the fag-end of the week and not in prime time.
Will the Minister give us a status position for the Tireless submarine in Gibraltar? That is where we heard that the fault was first detected. Could we be told about the status of the repair to the Tireless?
What is the status of repairs to the diplomatic relationships with the Gibraltar Government? Some diplomatic mistakes were certainly made by either the Ministry of Defence or the Foreign Office or by both.
Mr. Spellar: I certainly hope that my hon. Friend is not implying that Thursday is not a normal parliamentary day. That might give rise to unfavourable comment elsewhere.

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We have been working with the Government of Gibraltar. My hon. Friend will be aware that the Chief Minister, having taken advice from an independent group of nuclear experts, indicated that the Government would not oppose the repair of Tireless. Of course, we have kept them informed of subsequent developments, and will continue to do so.
Dr. Julian Lewis: I accept that the Government experienced difficulties that were not of their own making in their dealings with Gibraltar over HMS Tireless but, given that there was known to be a problem with the vessel that prevented it from being inspected properly for five months, what steps did the Government take to look at other submarines of the same class, which we could have inspected during that long time to see whether there was a generic fault? What steps were taken?
Mr. Spellar: I believe that the hon. Gentleman has misunderstood the situation. Initially, it was thought that there was a fault within Tireless. It was only on subsequent examination—not external examination but after having opened up the system—that it appeared that it was a different fault from that originally perceived, and that, therefore, because of its nature, there was the possibility that it was a design/manufacture fault, which was more likely to be a fault across the fleet, rather than an accident. As a result of that information, it was appropriate to conduct inspections, starting with stripped vessels that were already in refit or repair, to see whether they also suffered from that fault. I believe that that is a fairly straightforward, and fairly common, engineering procedure.
Mr. Tam Dalyell: If it is not an engineering problem, might it not be—heaven help us—a metallurgical, metal fatigue problem? If so, what is the
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likely time scale of the repair, what is the unit cost, and are we sure that it is worth doing at all if it has to do with metal fatigue?
Mr. Spellar: I am tempted to reply to my hon. Friend in the way that I had to reply to his fellow countryman, Mr. James Naughtie, on Saturday and to say that, not being an engineer, I really need to wait on the engineers' report to have a better idea of the nature and cause of the fault and, of course, the suggested recovery programme.
Mr. Crispin Blunt: May I congratulate you, Mr. Speaker, not only on the scale of your victory yesterday, but on your positive endorsement by a clear majority of the House? I express my gratitude for this early opportunity to catch your eye.
The Minister will now be aware of the importance of this weapons system, given the problems with it. Can he say anything about the capacity for emergency deployment while the repairs are taking place? Can he say anything about the policy, announced in the strategic defence review, to reduce the fleet from 12 to 10 boats in the next few years, and whether that will be put on hold for this period or reviewed altogether?
Mr. Spellar: Mr. Speaker may be a good Catholic, but I am not sure that the hon. Gentleman's confession will necessarily redeem him so readily.
On the strategic defence review, the decision was taken to have a balanced fleet, leading to a considerable increase in certain parts of the Navy—not least the introduction of much larger carriers and the introduction of the type 45. I do not believe that the faults that we are experiencing with the current hunter-killer submarines invalidate that underlying philosophy of the SDR, which provides constraints in some areas of our operation because we are expanding in others. It was a case of striking that balance. I do not believe that this issue really addresses that.
Mr. Paul Flynn: Which countries is the deterrent now deterring?
Mr. Spellar: I am sure that my hon. Friend will be fully aware from previous answers that we do not comment on the operation of the deterrent.

Business of the House
3.58 pm
The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): May I join others in welcoming you to the Chair, Mr. Speaker, and seek the permission of the House to make a short business statement?
At the conclusion of the Opposition day tomorrow there will be a motion on the Flags Regulations (Northern Ireland) 2000.
Mrs. Angela Browning: May I, too, publicly welcome you to the Chair, Mr. Speaker?
I thank the right hon. Lady for her statement, with which we concur. We shall be happy to debate the Regulations at 10 pm tomorrow.
On the subject of debate, I believe that you, Mr. Speaker, are aware that, during the summer recess, my right hon. Friend the Leader of the Opposition had cause to call for the return of Parliament, owing to the national crisis caused by the fuel protests. You will know that tomorrow's Order Paper states that we intend, in Opposition time, to debate that subject, but may I, through you, ask the right hon. Lady if she would use her good offices to persuade the Deputy Prime Minister to attend the House for that debate? We understand that he is devolving that responsibility to a Minister of State and, given the importance of the subject, we feel that a member of the Cabinet should reply to the debate.
Mr. Speaker: The hon. Lady will know that that is a separate matter from the business which has been announced.
Mrs. Beckett: You are entirely right, Mr. Speaker; it is a different matter. The hon. Lady will know that the Deputy Prime Minister has heard her words and she will also know that, in common with all Ministers, he has to balance the many demands on his time.

Hatfield Derailment
4 pm
The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): Mr. Speaker, it gives me great pleasure to welcome you as our new Speaker and I should like to add my congratulations to those of my right hon. Friend the Leader of the House.
With permission, Mr. Speaker, I should like to make a statement about the train derailment at Hatfield and the developments since. My noble Friend Lord Macdonald of Tradeston made a statement on this matter in another place on Thursday 19 October.
Last Tuesday, a Great North Eastern Railway train from King's Cross to Leeds was derailed near Hatfield. Four passengers died and 34 were injured. I am sure that all Members of the House will wish to join me in expressing their deepest sympathy to the families and friends of those who lost their lives. I am pleased to be able to tell the House that all but one of those who were injured have now left hospital, and the whole House will join me in wishing them a speedy recovery.
As ever, our emergency services excelled themselves in the speed and efficiency with which they responded. I know that both my noble Friend Lord Macdonald and the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Streatham (Mr. Hill), who is responsible for the railways, witnessed this at first hand when they visited the scene in the aftermath of the accident.
The Economic Secretary to the Treasury, my hon. Friend the Member for Welwyn Hatfield (Miss Johnson)—the constituency where the accident occurred—is sitting beside me, and she also visited the scene. I know that she and, indeed, the whole House will join me in paying tribute to the tremendous efforts of the emergency services, the staff of the Queen Elizabeth II hospital in Welwyn Garden City and of the Lister hospital in Stevenage, not to mention the voluntary organisations who are always there to help and to give comfort. Let me make clear my admiration for the many local people who, in the wake of the accident, instinctively came to help in any way that they could. They are among the unsung heroes whom the House will wish to recognise today.
In my view, it is unwise to jump to conclusions on the causes of the crash before the Health and Safety Executive's inspectors have considered all the evidence. Last Friday, the Health and Safety Executive issued its preliminary findings on the accident. Copies of its report are available in the Vote Office. It found obvious and significant evidence of a rail failure and no evidence so far of a prior failure of rolling stock. Early indications supported the suggestion that a broken rail was the likely cause. The safety inspectors, who are working closely with British Transport police, expect to have cleared the crash site before the end of the week. They will make public any further significant findings.
Further to its preliminary report, the Health and Safety Executive is undertaking a formal investigation into the crash, overseen by a board that includes independent experts. The conclusions will be made public and the Health and Safety Executive hopes to reach those conclusions as soon as possible. I have agreed with the

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Health and Safety Executive that the investigation must look beyond the immediate causes of the crash, to any root causes, including structural and organisational factors that could have contributed to the accident.
The House is aware that Lord Cullen's public inquiry is considering the whole rail safety regime—the management, culture and regulation of safety on the railways. Any material considered to be of use to Lord Cullen will be available to his inquiry team. I am sure that the House will share my view that we should avoid delay either to the investigation or to Lord Cullen's inquiry.
As I said earlier, the Health and Safety Executive's preliminary investigation indicated that a broken rail was the likely cause of the accident. The large number of broken rails on the rail network has been a matter of continuing concern for some time to the Government, the Health and Safety Executive and the Rail Regulator. As recently as 30 June this year, both the Health and Safety Executive and the regulator wrote to Railtrack expressing their concern about this matter and requiring remedial action. They also commissioned an independent technical assessment about the management of broken rails, which will be published shortly.
The House will be aware that, in the wake of the Hatfield accident, speed restrictions were immediately placed on more than 80 sites. I understand that speed restrictions are currently in place on more than 150 sites. I have asked the Health and Safety Executive to look urgently at the immediate actions taken by Railtrack to deal with other sites where broken rails might be a potential danger, and to assure me that Railtrack's procedures are adequate and sufficiently robust to ensure safe operation.
Last night I met the Health and Safety Executive to review progress. Its inspectors are today meeting senior managers from all the Railtrack zones to ensure that the necessary safety measures are in place. Furthermore, I have asked the chairman of the Strategic Rail Authority urgently to meet Railtrack and the train operators to consider any further action that needs to be taken following the accident. Sir Alastair Morton has already held two meetings with the industry and will hold a further meeting tomorrow. On Thursday I shall meet Sir Alastair, together with the chairman of the Health and Safety Commission and the Rail Regulator, to review progress and see precisely what can be done. I shall of course keep the House informed of progress.
The Health and Safety Executive investigation is well under way and we must now focus on the way ahead. There is universal acknowledgement that the rail industry has suffered from fragmentation, a lack of leadership and decades of under-investment. We have created the Strategic Rail Authority to give leadership and direction, and published the 10-year plan—the biggest investment in our transport system for generations.
Yesterday, the Rail Regulator announced support for £15 billion-worth of expenditure by Railtrack—focusing on signalling, track maintenance and renewal—including money specifically targeted at reducing broken rails. It is the regulator's judgment that everything is now in place to equip and incentivise Railtrack to improve performance and safety on the network, with new accountability.
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Today, the Strategic Rail Authority has shown by its announcement about the South Central franchise its clear sense of purpose in improving rail standards. Lord Cullen is undertaking a thorough-going examination of the safety management, culture and regulation of the railways. I stand ready to implement whatever is required as a result of Lord Cullen's proposals.
All that promises a new era for British railways. We all want a safe and well-performing railway, but the tragic event at Hatfield reminds us that, in the future as in the past, there must be no priority higher than safety. That is my guiding principle.
Mr. Bernard Jenkin: May I extend to you, Mr. Speaker, my congratulations on your election and appointment?
I thank the Deputy Prime Minister for his statement and join him in extending our deepest sympathy to the injured and bereaved. I also pay tribute to the emergency services and all those who responded so calmly and effectively.
First, will the Secretary of State join me in commending the Minister for Transport, Lord Macdonald, for the calm and responsible way in which he conducted the Government's response to the tragedy? Will the Secretary of State take this opportunity to express support for the industry in the same way as the Minister? The Minister gave his personal endorsement to the Railtrack chief executive, Gerald Corbett. Will the Deputy Prime Minister take this opportunity to express his support for Gerald Corbett, whom the right hon. Gentleman's Minister rightly identified as part of the solution to a better railway?
Secondly, I agree with many of the comments in the Minister's statement last week. Does the Secretary of State share the sentiment
that credit must be given to the railway industry for the advances made in safety management in recent times?
Thirdly, I commend the Government for resisting the temptation to go for another protracted and inevitably adversarial public inquiry, though I press the Secretary of State, as we did last week, for a special technical inquiry into the question of track management and broken rails.
The Deputy Prime Minister was determined to make the Paddington disaster a watershed for the industry. Then, he called for an end to the adversarial blame culture that has existed on the railways for years. I invite him to accept that the most recent disaster has sparked a genuinely new mood of partnership and co-operation in the industry. The crucial question is this: will the Secretary of State and his appointed regulator join the new spirit of partnership, or will the show trial summits and the blaming continue?
Privatisation has doubled Railtrack investment and billions are being invested in new trains and improving safety. None the less, we have said that changes are needed; is the Secretary of State ready to change, too? Lord Macdonald has set out the doctrine:
of course, punctuality is important, but there is nothing more important than safety.—[Official Report, House of Lords, 19 October 2000; Vol. 617, c. 1201–02.]
Why do the right hon. Gentleman and his Rail Regulator continue to insist that there is no conflict between safety and train performance, when everyone in the industry knows so well that there is?

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The Secretary of State accuses the industry of failing to meet its commitments, but when, on the Channel 4 news last Friday, he said of safety,
but I don't want it to be used as an excuse,
what did he mean? When he is in an aeroplane sitting on the tarmac and the captain says that there will be a 10-minute delay for some safety checks, does he think that that is just an excuse and that the airline should be sacked?
Does the Secretary of State not understand that early indications suggest that it was Railtrack's failure to apply a speed restriction on the faulty track at Hatfield that led to the fatal derailment? Does he not realise that the conflict between the fines for late trains and safety contributed to the failure of judgment on the part of Railtrack and the contractor? Does he acknowledge that, by supporting the regulator's review published yesterday, he is agreeing that those fines should be doubled, which will intensify the conflict between train performance and safety? Do the right hon. Gentleman and the regulator understand that that is what Gerald Corbett means when he calls for a change in the way the railway is run?
I do not doubt the Secretary of State's sincerity. He has campaigned for better safety in transport all his life, but is it not time that the Government provided the regulation that the industry truly needs, which works sympathetically with the safety objectives of the railway and does not conflict with those objectives? I put these points to the right hon. Gentleman as positively as I can. I hope that he will feel able to respond in the same positive spirit.
Mr. Prescott: I thank the hon. Gentleman for his remarks about the emergency services, and I am sure that the whole House extends its sympathy to those who have suffered from the tragedy. I have no wish to make political capital out of these events, but I must confess that, having said that he believes that privatisation was wrong—
Mr. Jenkin indicated dissent.
Mr. Prescott: Well, the hon. Gentleman conveyed the impression that he thought that the organisation of the railway system that he and others helped to create is wrong, so I should have thought a little more humility today would have been suitable. I know that I cannot expect that.
On safety, my answer is the same as that voiced by the Tory spokesman in the House of Lords: that

no objective commentator believes for a moment that our railways have become more dangerous during the lifetime of this Government or, indeed, over recent years.—[Official Report, House of Lords, 19 October 2000; Vol. 617. c. 1198.]
Mr. Jenkin: Privatisation.
Mr. Prescott: The hon. Gentleman claims the achievement for privatisation. I do not want to argue the public-or-private case; I could do so, but this is not the right moment.
We should take the facts into account. The hon. Gentleman refers to the rail summits as "show trials", which I find totally offensive. All the industry came together and said that something must be done about
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safety, especially after the recent railway tragedies. We now have the fewest train collisions on record, train derailments are at an all-time low and the number of significant train accidents has substantially decreased. All these things have come—[HoN. MEMBERS: "From privatisation."] I prefer to thank the management in the industry for co-operating with the Government on those matters.
I do not want to get into the argument about privatisation. All I will say is that we are agreed that there is a fundamental flaw in the way in which the privatisation of the industry was presented to the House. We have tried to change that. We have established the Strategic Rail Authority, despite the Opposition voting against the Second Reading of the relevant Bill. We have introduced a 10-year transport plan setting out investment on a scale not seen in this country for decades, and we have provided the necessary resources and powers. In addition, we now have a powerful regulator. The hon. Gentleman should read the regulator's words. The regulator has said that there is no conflict between targets and safety.
Mr. Jenkin indicated dissent.
Mr. Prescott: The regulator is the one who has examined the matter. I am just telling the hon. Gentleman what the regulator said, which contradicts what the hon. Gentleman appears to believe.
When Lord Macdonald, in the House of Lords, spoke of the continuity of the industry, he was referring to continuity of command. He was not making a particular reference to Mr. Corbett. If the argument is about whether Mr. Corbett has done his job rightly or wrongly, I shall wait for the inquiry to make a judgment.
A matter of concern to the inquiry will be why, although Railtrack knew about the rail break in April and had been supposed to deal with it in June, it had not done so by October. That seems to constitute a management failure. There was an offer of resignation, and I assume that that meant something had gone wrong because of the management.
If the hon. Gentleman is asking me whether I will or will not give an endorsement, let me tell him that I will not. I deal with Railtrack, not with personalities. I have regulators to deal with such matters. I have a Strategic Rail Authority. I have told the House how the investigation will be carried out, and I will wait for the results. I will not take the view that, because a regulator says that something is wrong, it is wrong; I will listen carefully to the arguments.
There are issues, and I do not close my mind to them. If anything in any way interferes with the delivery of safety in our railway system, I am prepared to consider any form of change. That should be the job of anyone who has the responsibility that I have today.
Inquiries are being made, and we have taken action. Paddington was a watershed. Lord Cullen was appointed not to inquire into the circumstances in which these tragedies took place, but to examine the whole culture of safety management. I have made fundamental changes in regard to safety management: I have provided resources for safety on a scale never equalled before. I have toughened up the regulator, and reduced the organisation through franchises. Those are decisions that I made three

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years ago; I am not making them now. They are the right decisions, which is why we shall have a safer railway system.
I hoped that we might see co-operation from those on the Opposition Front Bench. No chance. We should not expect it: we should get on with the job.
Barbara Follett: May I join others in congratulating you on your appointment, Mr. Speaker, and also in welcoming my right hon. Friend's statement?
Some of my constituents were on last Tuesday's 12.10 train to Leeds, and some were injured. They, like me, will welcome the news of improvements in rail safety. Will my right hon. Friend do all that he can to ensure that more communication takes place between Railtrack and its subcontractors, so that people know who is responsible for which section of the line, and when?
Mr. Prescott: I am grateful for my hon. Friend's support, and share her sympathy and concern for her constituents.
Concern has been expressed about the difficulties involving rail contracts and Railtrack, which are a matter for investigation. Mr. Corbett has complained that the maintenance contracts he inherited were fixed-price, determined by the last Government and not by him. I pass no comment on that—I am merely repeating what Mr. Corbett has said—but it is part of what will be dealt with by the inquiry. Let us wait for the results of that.
Mr. Don Foster: I join many others in welcoming you to the Chair, Mr. Speaker.
May I thank the Deputy Prime Minister for his statement, and join him in offering our sympathy to those who were injured in the accident—and, of course, the friends and relations of those who lost their lives? May I also join him in congratulating the emergency services, and the many local people who came to assist?
Does the Deputy Prime Minister, like me, welcome a repenting sinner? Does he welcome a recent statement by the hon. Member for North Essex (Mr. Jenkin) in which the hon. Gentleman at least admitted that the Conservatives had made mistakes during the privatisation of the railways? One aspect of that privatisation led to a development that is of great concern to many people. Notwithstanding the advice that he has been given by the Rail Regulator, does the Deputy Prime Minister accept that, in many people's minds, a perverse incentive scheme is operating? Railtrack is fined if it delays trains, and it is fined if it does not delay them so that it can carry out necessary safety work.
Finally, does the Deputy Prime Minister accept that a further complication is where the money is to come from to improve safety? The Rail Regulator yesterday announced more money for Railtrack for safety measures, but that money will come from the Government. It will be given to the Strategic Rail Authority, which will give it to the train operating companies, which in turn will give it to Railtrack. Why cannot the money go directly from the Government to Railtrack? Can the Deputy Prime Minister assure us that it is new money?
Mr. Prescott: I thank the hon. Gentleman for his remarks about the emergency services. His concerns are shared by a number of other hon. Members.
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On the question whether we should welcome a repentant sinner, I am not sure that the hon. Member for North Essex is repentant. He simply uttered a few political words of convenience. If anything makes that clear, it is his statement at the Dispatch Box today. He said nothing about being wrong. He was already trying to correct the statement that most people outside thought he had made. However, it is not my job to get into an ideological argument about the hon. Gentleman.
My job is to produce a safe, modern railway. The measures that I have put in place will help us to do that. As to whether there is a conflict between incentives, the regulator says that there is not. I am prepared to listen to the argument, but the regulator says, and he has a fair point, that all he is doing in setting targets is referring to the targets set by Railtrack itself. Railtrack set the targets and it failed to achieve them.
The regulator's main concern about the breaks in the rail is that, although there was a large number of such breaks—more than 1,000 in 1980—there has been a reduction, but now the number is starting to rise. The concern of the regulator and the Health and Safety Executive is that, despite Railtrack's promises, it has not taken appropriate action to reduce the number of breaks. That is a matter for investigation. Let us await the outcome. I am keeping an open mind about whether there is a conflict in these matters. The regulator is looking into it and an inspection is under way.
I particularly asked the Health and Safety Executive to consider, in the course of its investigation, the matter of contracts and whether it causes any problems. It is the subject of complaint by the contractors as well as Railtrack.
On the question of resources, the money is extra money. That is clear to everyone from the 10-year transport plan. Also, different forms of finance, which do not have to go through the operators, can be arranged with Railtrack and the Strategic Rail Authority. There are various ways of financing the railways and we are experimenting with one or two different ways.
Mr. Hilary Benn: May I begin by congratulating you, Mr. Speaker?
Will my right hon. Friend join me in offering thanks also to the staff at Leeds station for the efficient way in which they responded to the tragedy by making sure that any relatives arriving at the station to meet people who were on the train were cared for and provided with information?
Given that it is very likely that a broken rail caused the accident, will my right hon. Friend ask the safety inspectorate to offer advice now on the frequency with which the track should be inspected in future?
Mr. Prescott: I thank my hon. Friend for his words of support. I join him in commending the Leeds staff, who had to deal with some of the terrible circumstances arising from the tragedy. Everyone in the railway industry, at all ranks, feels deeply when such a tragedy occurs, and they all do everything they can to assist.
With regard to the frequency of inspections, I have asked the Health and Safety Executive to consider the matter. I know that the regulator is also looking into it and has arranged an independent assessment jointly with the HSE. That report is due in the first week of November

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and will give us a chance to see how robust the management of Railtrack is in dealing with broken rails. It is a matter of dispute between Railtrack, the HSE and the regulator, and we shall hear more about it in due course.
I want the best possible system of safety. I have been concerned that, in the meantime, trains continue to run in places where there is evidence of broken rails or such a possibility in the future. I have asked the HSE to look at whether the inspection system and the management system are robust enough to work properly now.
Sir Brian Mawhinney: May I, too, add my personal congratulations to you on your election, Mr. Speaker?
Does the Secretary of State understand that, to the extent that he focuses the Government's energy on the problem of broken rails, he will carry the House with him? Will he confirm that Railtrack knew last December that there was something wrong with the stretch of track that we are considering? Given that, what action does the Secretary of State believe those responsible for Railtrack should take to ensure the restoration of public confidence, especially in safety under that organisation?
Mr. Prescott: The right hon. Gentleman makes an important point. However, I should prefer it if people reserved judgment until the results of the inquiry are known. Parties to the tragedy have given far too many statements about their views on why something happened or did not happen. It is best to await the inquiry report. In the meantime, there has been publicity about the correspondence between the rail inspectorate and Railtrack, and between the regulator and Railtrack. It clearly shows that the reasons for Railtrack's failure to implement what it recommended and agreed with its contractor are well known to the organisation. That is at the heart of the inquiry, and I do not wish to say more than that.
Mr. Peter Snape: Does my right hon. Friend accept that in a show trial culture, the Conservative party would be in the dock for what happened at the time of privatisation? Does he accept that the Hatfield derailment would never have happened when the railways were publicly owned because local knowledge plays an enormous part in finding weak spots, especially on high-speed tracks? As long as there is a system in which Railtrack lacks the basic skills to maintain the track and has to buy them in, the problems will continue. [HON. MEMBERS: "Rubbish."] Opposition Members say "Rubbish", but every hon. Member knows that, from one end of the country to the other, main lines in Britain look like long-abandoned gasworks, covered with weeds, rubbish and grass. That would never have happened when specific gangs of men were responsible for individual stretches of track. The fault for the shambles of Hatfield and similar disasters lies entirely with the Conservative party.
Mr. Prescott: I do not want to follow my hon. Friend down some of that road. While I understand his points, he gives me a chance to stress that I must concern myself with the facts of the case. Let us consider broken rails. I do not know whether Hatfield would have been prevented before privatisation, but when considering the
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number of broken rails in different periods, hon. Members must realise that in, for example, 1981–82, there was an average of approximately 1,000 broken rails. That figure was down to about 600 in 1990 and it has now climbed to nearly 1,000 again. Throughout that time there have been different forms of management, yet there has been a high rate of broken rails. I do not want to suggest that all broken rails lead to train derailments; no more than 1 per cent. or 2 per cent. do that. However, broken rails are a serious matter.
If we consider the facts and figures for fatal train accidents in the past 25 years, the number of deaths have decreased by approximately 50 per cent. since 1975.
Mr. Eric Pickles: Congratulations, Mr. Speaker.
Many trains are now moving slowly through my constituency. It is startling to my constituents that, the day before the crash, trains were hurtling through Shenfield, whereas a couple of days afterwards, everything ground to a halt. That suggests that Railtrack knew about the specific problems there.
We must come to terms with the fact that, because more people and freight are travelling by rail, demands and strains on the track are much greater. What is considered reasonable for inspections in the context of declining stock is not reasonable in the context of growing demand, especially for heavy trucks, on our system. Does that not emphasise the point that my hon. Friend the Member for North Essex (Mr. Jenkin) made about the need for a clear inquiry into rail safety maintenance?
Mr. Prescott: I thank the hon. Gentleman for his comments. He made a strong point. Indeed, it is one of the reasons for the terms of reference that I gave to the Cullen inquiry. I wanted the inquiry to examine not only a particular incident, but the management and safety cultures within our railway system. That is happening now.
I am sure that many people have realised that trains which were travelling at full pelt are now moving at only 20 mph. Railtrack has a responsibility to implement such policies and to maintain safe track, whether the speeds are 70 or 20 mph. I am concerned about the management procedures. Why are trains that were travelling at full pelt—presumably drivers were not told to travel at a slower speed at Hatfield—now travelling so slowly in areas where there are concerns about safety? It is about management. I think that the Rail Regulator's complaint is that the management was not adequate. I do not know—it is a matter of public comment by the regulator, and Railtrack has entered into the debate. I prefer to wait for the inquiry to give these matters full consideration and to report.
The hon. Gentleman has made a fundamental point for the Health and Safety Executive to consider when examining the Hatfield tragedy. It also involves the entire management of the railway, which Lord Cullen is addressing.
Mrs. Alice Mahon: I add my congratulations, Mr. Speaker—it is lovely to see you in the Chair.
As my right hon. Friend knows, my constituents and many Members use the line in question and GNER trains. I am pleased that he has announced that the inquiry will be wide ranging and will feed into Cullen.

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After the disastrous privatisation of the railways—everybody agrees that it was disastrous—and the 18 years of Tory neglect, will former Tory Ministers be giving evidence to the Cullen inquiry? Will they be brought to account for the mess that they undoubtedly made of both the railways and privatisation?
Mr. Prescott: It is not for me to answer for the Opposition. Lord Cullen is taking advice from all parties. Indeed, the Opposition have given advice, but I do not know whether that was before their change in policy. Everyone should give advice to Lord Cullen on these fundamental matters. I believe that he is about to make the sort of changes necessary to improve safety on the railways that he brought about in North sea oil operations.
Miss Anne McIntosh: I add my congratulations, Mr. Speaker. All Scots will take immense pride in your elevation to the speakership.
I think that this is the first disaster that GNER has suffered. It has had an outstanding record of carrying passengers on the east coast main line through York and the Vale of York. I understand that there have been reports that the Eurostar carriages that have been added to the operation may have contributed to the higher incidence of broken rails. Will the Cullen inquiry have an opportunity to look into that?
Will the Deputy Prime Minister explain why railway disasters are treated differently from aviation and maritime accidents? Would this be a good opportunity to invoke the same procedure for rail disasters as for aviation and maritime disasters?
Mr. Prescott: On the latter point, the hon. Lady makes a sound suggestion, and one that I hope Lord Cullen will consider.
The Government and the Opposition will be giving evidence on how we might implement a more comprehensive and consistent method of dealing with safety between the different transport modes. The Select Committee has made strong recommendations on this matter recently.
As for Eurostar, any train going on to the track must go through a safety procedure. As I understand it, the Eurostar carriages have not made any difference. However, the inquiry will be considering these matters, and it is proper that it should do so.
As I waited for my train on Sunday night, I read GNER's punctuality figures. The tragedy occurred on its rail network but punctuality was about 80 per cent. There does not seem to be much of a conflict there.
Ms Rosie Winterton: Many congratulations on your election, Mr. Speaker.
I welcome my right hon. Friend's statement, but it is of major concern that Railtrack appeared to know that there were problems along the Hatfield stretch of line but seemed unable to force its contractors to carry out remedial work. Although my right hon. Friend will want to see the outcome of the various inquiries, will he seek some immediate assurances from Railtrack that it will put in place management systems to follow up identification
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of a problem where work is not being carried out and where it knows that if it does not take action there will be serious safety implications?
Mr. Prescott: I agree with my hon. Friend. As to whether Railtrack knew about the safety implications and whether contractors failed to carry out the work, that is for the investigation to determine. However, as I have said, it is clear from the correspondence that has been published by both the Rail Regulator and the rail inspectorate that there was conflict of some kind and that they were constantly pressuring Railtrack to carry out improvements in those areas. Nevertheless, the issue is best left to the Health and Safety Executive.
What I have to assure myself is that between now and that inquiry, everything is done to make every part of that railway as safe as possible and to prevent the sort of tragedy that happened at Hatfield. Of course, if there is a breach of safety regulations, there are penalties. Indeed, the ultimate penalty lies with me. If there is a serious breach by Railtrack and it fails to carry out its responsibility under its licence, I can remove that licence.
Mr. A. J. Beith: Congratulations and best wishes, Mr. Speaker, from another in the league of unsuccessful candidates.
In the short term, how quickly does the Deputy Prime Minister think money will feed through in repairs and improvements to the affected sections of the east coast main line track, bearing in mind the impact of the necessary delays and many train cancellations on the business and working lives of the north-east and the Borders, which have become used to an extremely good train service?
Mr. Prescott: Extra resources are immediately available in those areas. However, now that the Rail Regulator has given his report, the Strategic Rail Authority has to produce its strategic plan showing the order of priorities. That involves discussion with Railtrack, which is now under way. I hope that we will be able to get the report shortly from the SRA. The right hon. Gentleman will then clearly see the programme of implementation.
Mr. George Stevenson: I add my congratulations on your election, Mr. Speaker.
Does my right hon. Friend recall the Transport Committee report on rail safety that expressed serious concern about the management, control and monitoring of subcontractors employed by Railtrack? We all welcome the Strategic Rail Authority withdrawing the franchise from Connex, but, given that Railtrack is a monopoly controller of our infrastructure, and given the Government's decision to put £5 billion into Railtrack, how does my right hon. Friend envisage the public interest, safety and public accountability being ensured by Railtrack and its operation?
Mr. Prescott: With regard to the amounts of money that are being made available out of our 10-year transport plan—£15 billion is being made available, with £5 billion going into the track itself—the Rail Regulator has made it clear that he would like the money to be spent in that particular way as part of the licence, and intends to have

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an accountability and monitoring system to ensure that it is. The Select Committee was critical about contracts. I assure my hon. Friend that that is one way in which we are thinking of toughening up the whole operation to ensure that there is accountability in that area. After all, Railtrack has an obligation to maintain a safe railway. My job is to ensure that it does, and 1 intend to toughen up very much in that area.
Mr. John Greenway: I add my congratulations on your election, Mr. Speaker.
I share the view of my hon. Friend the Member for Vale of York (Miss McIntosh) that many thousands of constituents who use the railway are generally very satisfied with the services that they receive from GNER. Were they to be asked, they would give it a strong vote of confidence, but clearly they no longer have confidence in the state of the rail track. They want to know how it can be that Railtrack knew that the track was damaged in some way and substandard, yet the train was allowed to travel at speeds in excess of 100 mph.
The Deputy Prime Minister has made many reassuring statements to the House, which I am sure will be helpful, but can he unequivocally state that there will be no question of any train operator being penalised and fined for delays on the railway if those delays are caused by having to reduce speeds over defective rail lines?
Mr. Prescott: Certainly, the concern must be to ensure that we have a safe railway system. I am a regular user of the company to which the hon. Gentleman referred. It is usually considered that 50 per cent. of the reasons for delay are the fault of Railtrack and that 50 per cent. are the fault of the operators. That varies from line to line and the regulator takes that into account when considering any fines for companies that have failed to meet their targets. We must ensure that the track is safe, that it cannot be used as an excuse for delay and that there is no threat to safety.
I must confess some surprise that, under Railtrack—it was the same with British Rail—there is no register of assets for our railway system. The hon. Member for Tunbridge Wells (Mr. Norman) will know that from his time on the Railtrack board. It is curious that there is no register, and we have been pressing Railtrack about that for some time. We do not know how many stations there are, how long they are or the state of the track. That makes it difficult now as we talk about areas of concern. We are discussing that with Railtrack, and the Strategic Rail Authority has that as a central consideration.
Mrs. Ann Cryer: Congratulations, Mr. Speaker. I should also like to congratulate the men and women who, day in and day out, operate the trains on the east coast main line on behalf of GNER. On the day in question—last Tuesday—I should have been on the 12.10 ex King's Cross to Leeds. Fortunately, I changed my plans and decided to catch the next train that stopped at Stevenage. I was actually on a train leaving Stevenage less than an hour late. That is great testimony to the men and women who operate the railway on that line.
However, I am a little worried about the existing structures. I wonder whether my right hon. Friend is prepared to comment on whether he believes that the
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existing structures for Railtrack and the operating companies are capable, as they stand, of halting the growing list of tragic accidents on our railways.
Mr. Prescott: The House will support the comments about the railway employees and management who deal with tragedies so quickly. I travelled by train on Sunday—there was a regular one-hour service, even into King's Cross. To deal with the challenge in that way shows tremendous adjustment to change. We all want to thank those people for their efforts. However, like all of us, their greatest concern is to maintain a safe railway system. The fundamental question is whether the system that we have inherited is adequate to maintain a modern and safe railway. In my judgment, the answer is no. That is why I introduced the Strategic Rail Authority and toughened up the regulatory procedures. It is why I introduced the resources to enable investment in modern signalling for a modern railway system and to ensure that we have safe and modern rolling stock. That is what we are doing. I believe that that will make a difference—if I did not, I would not be carrying out that policy.
Mr. Elfyn Llwyd: May I add my warm congratulations to you on your election, Mr. Speaker?
Given the recent increasing number of serious incidents—Hatfield, Stafford last Thursday evening and a fatality in north Wales yesterday—involving the clear failure of infrastructure, is it not blatantly obvious to everyone that, with the 150 speed restrictions, Railtrack is letting us down badly? Have the Government given any recent serious consideration to renationalising Railtrack?
Mr. Prescott: The first point is whether I am satisfied that there is a robust management system in place to deal with the difficulties on the rail track. The current evidence, particularly after Hatfield, suggests that it is not as good as it should be. That is what the inquiry will determine. The hon. Gentleman talked about the terrible tragedy on the traffic crossing yesterday. We must have a greater safety culture than there is at present. I have told the House that there has been a reduction in accidents and deaths, but they are always matters of great concern and we should strive to reduce them, and we will.
The hon. Gentleman talked about renationalising Railtrack. We should consider whether renationalising Railtrack would make the railways safer. I gave the figures earlier. Whether public or private, ownership does not necessarily determine whether the rail system will be safer. The facts are there for me to see and I have to make a judgment. The reality is that the culture is not right and has become worse, so we have to make some changes. Lord Cullen is examining those issues, which I have referred to him, and we should allow him to make his judgment on them.
Mr. Tony McWaiter: I add my congratulations on your election, Mr. Speaker—words that hon. Members from the 1997 intake have never used before. We also had no idea that those clothes fitted a man.
Does my right hon. Friend agree that that track in Hertfordshire is the most densely used fast-speed track in Europe? Does he also agree that it should be inspected

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more often than track in more outlying areas? Will he ensure that arrangements are made to inspect that track more regularly than it has been heretofore?
Mr. Prescott: I do not want to enter into dispute with my hon. Friend, but most railway people say that Clapham Junction is the busiest part of our railway system. However, his question about whether regular track inspections are being conducted to reduce the number of rail breaks goes to the heart of the investigation. Although I am sure that Railtrack would say that it was conducting such inspections, and although I should hope that the Health and Safety Executive will assure me that Railtrack's current procedures are adequate, that question will go to the heart of the investigation and the inquiries that I mentioned.
Mr. Alex Salmond: Does the Deputy Prime Minister accept that last week, in the other place, Lord Bradshaw, who is a member of the Strategic Rail Authority, argued that there was an obvious tension between a system of penalty payments for delays and investment in track, and which obviously increases delays in the short term? In his statement, the right hon. Gentleman said that the regulator is now convinced that everything is in place to incentivise Railtrack to improve safety. Why does Railtrack need incentives to improve safety? Is it because it is a private company?
Mr. Prescott: Incentives were used by the state operation in awarding contracts, and Governments and others who award contracts offer incentives for jobs to be completed more quickly. Many reasons are given for offering incentives. However, I concede that the argument has been put into the public arena that there may be a conflict between some of the incentives and targets. I am sure that Lord Cullen will examine exactly that issue. I have also specifically asked the Health and Safety Executive to give us its judgment and conclusions on that aspect of contract work.
Mr. Dennis Skinner: Is my right hon. Friend aware that we are reaching the point at which we are pouring money into those millionaire directors' pockets, but they seem to be ignoring faulty lines and all the rest of it? Does he recall the days when we voted against this Tory hybrid monster of a privatised railway? Does he also understand that there is a growing demand among the general public for taking rail back into public ownership? Hon. Members are also getting a bit fed up of handing over money to friends of the Tory party—it has to come to an end. Will my right hon. Friend agree not to rule out the possibility of taking British Rail back into public ownership, as we demanded when we were in opposition?
Mr. Prescott: My hon. Friend will know—I agreed with him at the time; it is a matter of record—that I thought that privatisation of the railways was wrong. In votes, in Committees and in all sorts of circumstances, we opposed the model that the then Government proposed to the House, and we were right to oppose it. I now find myself as the Secretary of State with responsibility for these matters—[Interruption.] I hope that hon. Members
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will always think that I take a considered view on these matters and seek to justify my view. I have done that in this case.
As my hon. Friend will know, it is Labour party policy not to renationalise the rail system. Why is that our policy? As I argued in conference, we cannot avoid putting money into the pockets of those people. If we renationalised the railway, we would probably have to give them compensation. Although I assume that my hon. Friend would not want to do that, we would have to consider doing it. As the Euro rules and human rights legislation deal with the need to pay compensation, I cannot be free from a requirement to put money into the pockets of people who I do not want to receive it. Additionally, on top of paying perhaps £6 billion in compensation, we would have to wait two or three years to pass the necessary legislation. I would sooner be putting that money into track safety and ensuring that the system works.
As I told the House, the new Strategic Rail Authority, a 10-year investment plan, a new approach to safety and a renegotiation of the franchises will give us a different model. That model will be so successful that the Tories will have to ditch the old model and support the one that we are delivering.
Mr. John Bercow: Further to the right hon. Gentleman's helpful reply to my hon. Friend the Member for Vale of York (Miss McIntosh), does he favour the establishment of a permanent and independent rail accident investigation branch of his Department? Would he be good enough to tell the House what, if any, discussions he has had with his right hon. Friend the Leader of the House about the scope for a full debate on the Floor of the House on the final report of the Health and Safety Executive?
Mr. Prescott: Matters of time and debate are, of course, for my right hon. Friend the Leader of the House, but I am constantly available to discuss such matters either in statements or in debates. [Interruption.] There are many matters that I am prepared to debate, and I commonly come to the House.
On the serious question about the safety structure, I genuinely have an open mind: I have not reached a conclusion about it. I certainly want to wait to find out what Cullen has to say about it. I hear what the Select Committee tells us about how we should reorganise safety, but it is a fundamental question.
I admit that, when in opposition, I complained that the railway inspectorate, which was created under a Labour Government, should never had gone back to the then Department of Transport. I held that view then and I see no reason to change it, but I shall await what Lord Cullen has to say about it, and then come forward with recommendations to the House.
Mr. Gerry Steinberg: I am member of the Public Accounts Committee. Last year, we considered a report by the National Audit Office on the flotation of Railtrack. The report clearly shows that the flotation was an absolute disaster for the taxpayer, track maintenance and the infrastructure of Railtrack. Even the report states that the increasingly favourable perception of investors towards Railtrack since July 1996 has been

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attributed, by the various parties to whom we spoke, to a combination of factors. I shall not list all the factors, but one of the main ones was that the value of shares increased simply because people knew that Railtrack would not invest in the maintenance and structure of the lines, and Railtrack admitted that it did not know what the state of the track was.
We recently met Mr. Gerald Corbett, who suggested that one way forward could be a public-private partnership between the industry and the Government. Has my right hon. Friend considered whether that is a possibility? While not necessarily renationalising the industry, it would at least put it partly under Government control.
Mr. Prescott: My hon. Friend makes several important points about the way in which public assets were sold off at a disgraceful rate. That concern has been looked at by the National Audit Office and various Select Committees. That sell-off meant an awful lot of money for a few people. The irony for myself and for those who opposed Railtrack was that the greater our determination to get the then Government to drop their privatisation proposal—it was at the time of the 1992 election—the more it was said that we were forcing down the price, and that as a consequence when we were elected the price shot up and many people made an awful lot of money. In fact, our argument was that the then Government waited to sell British Telecom until after the election, so they could have done the same with Railtrack—but so be it; that is a matter of history.
With regard to whether we should hold shares in Railtrack or use a public-private partnership, as my hon. Friend may know we still hold 1 million shares in Railtrack, or about 0.2 per cent. of it. The Opposition always thought that we would use the Strategic Rail Authority to renationalise the rail industry by buying shares. There is a difficult balance between the Government owning shares in Railtrack and accepting responsibility without any control. Such matters are constantly being put to me, and my mind is not totally closed to all those issues.
Mr. James Clappison: May I join the congratulations that have been extended to you, Mr. Speaker?
May I also join the Deputy Prime Minister in paying tribute to the role of the emergency services and the two hospitals in Hertfordshire—the Lister hospital and the Queen Elizabeth II hospital—and to the response of local people?
Although the terrible tragedy happened on the fast line of that stretch of track, there is also a slow line, which serves commuters and others from Hatfield and Potters Bar. Does the Deputy Prime Minister agree that safety checks should be every bit as stringent on that section of the track as on the fast section?
Mr. Prescott: Absolutely.

MEMBER TAKING THE OATH
The following Member took and subscribed the Oath:
Rev. Robert Thomas William McCrea, for South Antrim.

Points of Order
Mr. Julian Brazier: On a point of order, Mr. Speaker. I wish to raise a question regarding a breach of the courtesies of the House. It reached my attention only a little while ago, so I was not able to give you advance notice of the matter in writing.
At 12 o'clock today, the Select Committee on Defence presented a substantial report on Kosovo. As you know, Mr. Speaker, the rule of the House is that the Government are required to respond in writing to the Defence Committee within 60 days. However, by 2.30 this afternoon, the Government had held a press conference to reply to the report. Is that a breach of courtesy, or is it merely the greatest possible accolade for a damning report?
Mr. Speaker: There has been no discourtesy in the way in which the matter has been conducted.
Mr. David Maclean: On a point of order, Mr. Speaker. You will be aware that during the summer my right hon. Friend the Leader of the Opposition called on the Prime Minister to recall Parliament, so that hon. Members could discuss the grave crisis that the nation faced as a result of the fuel protests. The Government admitted that the protests almost brought the country to its knees, and they are now taking emergency measures to combat any future crisis.
Tomorrow, the House will have its first opportunity to debate the crisis. A few moments ago, the Deputy Prime Minister told my hon. Friend the Member for Buckingham (Mr. Bercow) that he was always ready to come to the House to discuss important issues. However, he has decided that he will not reply to tomorrow's debate, and that a junior Minister will do so instead.
In view of what was said yesterday by all the candidates for the speakership, and of the Government's acknowledgement—
Mr. David Winnick: This is a speech, not a point of order.
Mr. Speaker: Order. There is only one Chairman in this establishment. If the right hon. Member for Penrith and The Border (Mr. Maclean) is making a point about which Minister is to deal with a debate, I can tell him that that has absolutely nothing to do with the Chair.
Mr. Maclean: I appreciate that point, Mr. Speaker, but in your normal discussions with the representatives of the usual channels will you, as a new and respected Speaker, point out that the fact that neither the Prime Minister nor the Deputy Prime Minister will be present to answer a debate on the gravest crisis facing the country is a slight injustice—not to say a grave insult—to the House? However able the junior Minister involved may be, does not putting him or her forward to respond to the debate mean that justice is not being done to this important matter?
Mr. Speaker: I will be present for the debate, and it is possible that the right hon. Gentleman may be too. That is all that he has to worry about, so that will be all right.
Mr. James Gray: Further to that point of order, Mr. Speaker. The right hon. Member for

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Chesterfield (Mr. Benn) made a fine speech yesterday about re-establishing the primacy of the House, in which particular reference was made to the fuel crisis. We welcome you to your post, Mr. Speaker, but surely, if you are to take steps to re-establish the primacy of this place, you must allow Back-Bench Members to have the ear of the Deputy Prime Minister when we raise our constituents' very real concerns arising from the fuel crisis?
Mr. Speaker: These are not matters for the Chair.
Mr. Gerald Howarth: Further to that point of order, Mr. Speaker. May I urge you to look at the innumerable pronouncements made by your predecessor, in which she made clear her concern about the House's loss of authority in our national life? You, Mr. Speaker, were among the many candidates in yesterday's election who shared her concern. Your predecessor frequently deprecated the behaviour of Ministers in the treatment of the House.
May I therefore invite you, Mr. Speaker, to set out to the House, and for the benefit of the Government Front Bench, what your feelings are on this matter? How do you believe Ministers should treat this House in terms of making statements here rather than on the Radio 4 "Today" programme, and in appearing here to be answerable to us on important occasions, as my right hon. Friend the Member for Penrith and The Border (Mr. Maclean) has pointed out?
Mr. Speaker: I would not want to make comments on these matters.
Mr. Bruce Grocott: Further to the point of order raised by the right hon. Member for Penrith and
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The Border (Mr. Maclean), Mr. Speaker, do you share my concern that on a simple issue such as that of who speaks from the Government Front Bench it appears that many Opposition Members, including senior figures such as the right hon. Gentleman, are not aware of the simple rule that this is not a matter for the Chair but for the respective Government and Opposition? Could you arrange for a crash course in procedure for Members who do not understand that?
Mr. Speaker: I am always willing to give guidance on procedure, but perhaps on another occasion as I am quite busy these days.
Mr. Patrick McLoughlin: Further to that point of order, Mr. Speaker. When you come to give that guidance, perhaps you could advise the Prime Minister's parliamentary private secretary that we do not expect to be lectured by No. 10 Downing street through the Back Benches of the Chamber.
Mr. John Bercow rose—
Mr. Speaker: Order. I hope that this is definitely a point of order.
Mr. Bercow: It most assuredly is a point of order, Mr. Speaker. Will you confirm, with the full authority of your office, that public support for this institution is dependent upon an understanding of its procedures? Is it not the case that right across the country, large numbers of people of all political persuasions and of none fail to understand the sudden afflictions of shyness and reticence that occur when Secretaries of State are called upon to answer Opposition-day debates?
Mr. Speaker: There is one thing for sure—the hon. Gentleman is not shy, so I would not worry about that.

Employment (Religious Beliefs)
5.2 pm
Mr. Edward Leigh: I beg to move,
That leave be given to bring in a Bill to allow certain employers to have regard to the religious beliefs of those whom they employ; to make provision with respect to the application of European Community law to those employers; and for connected purposes.
It is, I am sure, a matter of agreement among all Members of the House that we have a very fine tradition of tolerance in our society. Indeed, it could be argued that long before the American melting pot was consolidated or even dreamt of, we were creating our own melting pot among the English, the Scots and the Welsh. Sadly, our record with the Irish was not so successful. Therefore, during the 19th century, we came to the conclusion that above all we had to be tolerant towards all religious organisations. We recognised that they should be allowed to conduct their affairs in their centres of worship and schools in their own way. That is the system of tolerance that we have built up so successfully in our nation over the past 100 years.
People may ask how all that is relevant to a European Union employment directive. It is very relevant. None of us can argue with the sentiments of the EU directive to ban intolerance on the grounds of race, sexual orientation or religious belief. That is absolutely fine and none of us disagrees with any of it. The problem arises—this is where that happy phrase about the road to hell being paved with good intentions comes in—when we set the overall western secular ethic against the ethic of particular religious organisations. They may have their own ethics and beliefs; they may want to do things in their own way.
If Members were honest with themselves, they would recognise that there are many aspects of some religions—perhaps all religions—and perhaps even of their own with which they fundamentally disagree. Some westerners may have difficulties with the Hindu caste system or with Muslim dietary laws. However, surely we have the sense to accept that other religions should run their religious schools, organisations and bodies in the way they want. My Bill is very simple indeed, as it tells the Government that they should step in and exempt religious bodies from the EU employment directive. To give them credit, the Government have been negotiating those points in Europe, and the Irish Government have worked hard on such matters.
There is now a view that we can take into account the ethos of religious organisations. So far, so good, but does it go far enough? I think we have solved a problem that arose in Holland, where somebody who applied to a theological college for a position was turned down on the basis that he was an atheist and immediately appealed to the courts on the grounds that he had been discriminated against. I think we have dealt with that. Nobody now doubts that Jewish organisations should be able to insist that a Jew should be appointed as a rabbi, or that bishops should believe in God—[Interruption]—in any event, if that is the wish of the Church in question—[HON. MEMBERS: "What about the Church of England?"] Steady!
We have made some progress in these matters but problems arise with other jobs. We have solved the problem in Church schools to the extent that a Church school can insist that a teacher of religion should subscribe to that religion, but what about the other
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teachers, who are not engaged in teaching religious studies? What about the people employed in a Church social organisation? Surely the very raison d'etre of many religious organisations—what drives them and gives them impetus—is that they are made up of believers. Their belief may not be our belief—nor are we talking just about an abstract belief or a vision of God, since some people—and it may seem a quaint idea—beleive that one should not only subscribe to a point of view but should live one's life according to it. Living in such a way can be difficult. All the great religions of the world make severe demands on their followers. None of us can follow all the demands of our religion—we would be saints or gurus if we did. Surely, religious organisations have the right to insist that people behave in a certain way, even if that goes to the heart of their private life, runs contrary to our general secular ethic in the west and attacks the position of certain people and minorities.
Yesterday, we elected as Speaker a man whose faith, for four centuries, meant that he would not have been allowed to pass through the door, let alone take the high office that he now occupies. We have done away with that kind of uniformity, and the House no longer insists on a uniformity of belief or religion. However, are we not in danger of allowing one minority to start attacking and persecuting another and allowing some people to set their conscience, will and view of society over others?
I am not asking anyone in the House to accept the point of view of any religious organisation or the sorts of demands that they make on their members in the conduct of their lives. All that I ask is that the House respect the position of religious organisations, which should be allowed to insist that their members conduct their lives in a certain way, if that is their wish. The Labour party insists that those who work for it are card-carrying Labour members. That is its right and is fair enough. However, if the Labour party can insist that only card-carrying members work for it, cannot a Church school, a Catholic social club, an Anglican youth organisation or a Muslim organisation insist that people who work for them subscribe to all their beliefs?
Mr. John Bercow: The Under-Secretary of State for Education and Employment, the hon. Member for Barking (Ms Hodge), is giggling.
Mr. Leigh: I believe that my point is fair.
One of my first speeches was based on Franklin Roosevelt's four freedoms, which include freedom from want and fear, freedom to engage in one's own form of expression, as well as freedom from religious persecution. Nobody is suggesting that anyone in Europe wants to persecute others—that is not my argument. There has, however, been a flood of correspondence on the subject, and much debate in the Council of Ministers. The Government should make the position clear and get it right by introducing a Bill similar to this Bill to exempt religious organisations. That would allow us to proclaim Franklin Roosevelt's freedom and allow people to conduct their religion and their religious organisations in the way they want. That is all that my Bill seeks to do.
5.10 pm
Dr. Evan Harris: I am grateful to the hon. Member for Gainsborough (Mr. Leigh) for setting out so lucidly the reason why he believes the Bill is necessary.

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The hon. Gentleman discussed the fact that the European directive does not give sufficient exemption. He and the Under-Secretary of State for Education and Employment, the hon. Member for Barking (Ms Hodge), whom I am pleased to see in her place, will know that many hon. Members feel that exemptions in the European directive already go too far in allowing discrimination against groups of people by religious organisations. It is important to recognise, as I hope the hon. Gentleman accepts, that a balance can be achieved. The right to religious freedom should extend only to the point at which the rights of other people are not infringed. We do not allow the religious freedom to carry out fatwas against inhabitants of this country because, to put it mildly, that would damage the rights and interests of other people.
I want to explain why the Bill and its approach must be opposed. I do not oppose the Bill because it represents an attack on religion—in fact, one of its welcome features is that it would provide some protection for individuals with a religious belief from discrimination in employment. However, a balance has to be struck between the rights of religious organisations to express or act on their views and the rights of other people not to have their rights curtailed.
It is important to clarify the definitions used in this debate. The hon. Gentleman said that the Bill would protect people from being discriminated against on the grounds of sex, but that is not the case. The equal treatment directive already does that. Interestingly, he omitted the right that the directive will give of protection against being discriminated against at work on the grounds of sexual orientation, although he said that he supported all the rights that the directive conferred. I am delighted that he applauds the introduction of the right, which does not presently exist in this country, not to be dismissed or discriminated against at work on the basis of sexual orientation. When the legislation is implemented, it will have that effect.

There is concern that too wide an exemption for religious bodies to discriminate on the basis of religious ethos or views would mean that anyone employed, regardless of his or her role, by a private religious organisation or a public organisation with a religious input is likely to be discriminated against—not employed or sacked—because of private sexual behaviour. The hon. Gentleman said that we should expect people's private religious beliefs to be respected. He said that we should not expect people to be able to carry out in their private lives all of the wishes of religion, but we should respect what they are able to do. Many people who are employed by a religious organisation but who do not comply with its rather narrow view of what is right in terms of sexual orientation would be fearful if religious organisations were able to discriminate in that way.
The hon. Gentleman discussed the salutary example of this House. For many years, ours has been a Christian country, and many people still describe it in that way. That does not mean that we should limit membership of the House, which represents that so-called Christian country, to members of the Christian faith. The hon. Gentleman would, I am sure, be among the first to deplore that if it were proposed. Similarly, there is no reason why
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a religious charity or a public organisation with a religious impetus should insist that all its employees should be active believers of that faith.
The hon. Gentleman referred to the interesting subject of religious schools, suggesting that the schools belonged to the relevant religion. We must recognise, however, that Church schools, for example, belong not to the Church but to the nation—they are maintained schools. Fifteen per cent. of capital funding and 15 per cent. of running costs comes from the relevant Church, and 85 per cent. comes from the taxpayer and the state. There is no reason why those schools should be seen as entirely religious entities that have full control over their staffing.
I am prepared to concede some of the hon. Gentleman's examples. A rabbi—he or she—needs to be Jewish to be employed as a rabbi. A religious education teacher in a school of a particular religious ethos is required to be a believer in name and practice, although that is a controversial view. Some people argue that what matters is whether one can teach religious education according to that ethos, not whether one goes to church 49 or 30 Sundays out of 52. I am also prepared to accept that if the Labour party decides that membership is necessary to carry out a political function in that party, it is also a genuine occupational qualification. I suspect that, in terms of one's beliefs, in today's Labour party the requirement goes further than merely carrying a card, but that is as may be.
What I am not prepared to accept—and I urge the House not to accept—is that caretakers in so-called Roman Catholic schools need to be Catholic to do their job, and the same is true for Church of England schools. I am also not prepared to accept that nurses in palliative care centres need to be Catholics if those centres are partly or totally funded by that Church.
We are talking about a genuine occupational qualification. If the exemption goes any further we will give carte blanche for the infringement of other people's rights—the rights of Protestants to work as maths teachers in Catholic schools, of Roman Catholics to work as geography teachers in Jewish schools, and of Catholics to work as French teachers in Church of England schools.
There are 100,000 teachers in so-called religious schools, which provide 15 per cent. in terms of funding. That is a lot of people whose rights might be threatened—and that is just the teaching staff—by the introduction of too wide an exemption. On the basis of too wide an exemption, a range of members of staff of organisations that are partly funded or entirely owned by religious organisations could be sacked or might not be employed.
Nothing that I have said is intended to decry the huge amount of wonderful work that religious organisations do in the charitable, voluntary and educational fields. The message to those organisations must be that the state welcomes that involvement and the practice of those beliefs and, within reason, their promulgation, but not to the point of infringing other people's rights to employment and its benefits, unless a genuine occupational qualification is required, such as that for vicars, rabbis and RE teachers.
On that basis, in the spirit of tolerance that the hon. Gentleman cited in his opening remarks, I urge the House to reject the Bill and the idea behind it, although I will not press it to a vote.
Question put, pursuant to Standing Order No. 23 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business), and agreed to.
Bill ordered to be brought in by Mr. Edward Leigh, Mr. Peter Lilley, Mr. Donald Anderson, Mr. Simon Hughes, Mr. Bowen Wells, Mr. Stephen Pound, Mr. Colin Breed, Rev. Martin Smyth, Mr. Andrew Rowe, Mr. Gerald Howarth, Mr. Christopher Chope and Mr. Nigel Waterson.

Employment (Religious Beliefs)
  EMPLOYMENT (RELIGIOUS BELIEFS)
  Mr. Edward Leigh accordingly presented a Bill to allow certain employers to have regard to the religious beliefs of those whom they employ; to make provision with respect to the application of European Community law to those employers; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 3 November, and to be printed [Bill 175].
Orders of the Day

  Insolvency Bill [Lords]
  [Relevant documents: The Second Report from the Trade and Industry Committee, Session 1999–2000, HC 112, on the draft Insolvency Bill and the Government's response thereto, HC 237.]
  Order for Second Reading read.
  5.19 pm
  The Parliamentary Under-Secretary of State for Trade and Industry (Dr. Kim Howells): I beg to move, That the Bill be now read a Second time.
  Given the way in which this debate has been trailed in speeches and interviews during the past 24 hours by my right hon. Friend the Member for Chesterfield (Mr. Benn), perhaps I should be a little more muted as to the virtues of the Bill than I might otherwise have been. After all, it is easy for a humble Trade and Industry Minister such as myself to get excited about a modest Bill such as this one, designed as it is to help enterprises and small businesses to make a success on behalf of the nation.
  I freely admit that I do not have the vast experience and visionary perspectives of my right hon. Friend. It was my right hon. Friend who used parliamentary time to introduce legislation to allow, for example, the construction of a fleet of Concorde jet aircraft and the administrative triumph of the advanced gas-cooled reactor programme. I have to settle for something that will not cost the nation billions of pounds. Nor, I am afraid, will the Bill allow the likes of Sir David Frost, Andrew Neil or Dame Joan Collins to hurtle back and forth across the Atlantic—suitably refreshed—promoting peace between nations. Such ministerial triumphs are reserved—quite properly—for our political giants.
  I, on the other hand, will state only simple pleasure at being able to bring this now famous Bill, which I even heard trumpeted on the "Today" programme this morning, before the House. The measure will make important changes in insolvency law. The broad purpose of those changes is clear: to support the Government's determination to make our country one that encourages enterprise and is a good place to do business.
  That determination needs to be supported by appropriate measures to increase business confidence. One of the things of which we need to be sure is that those entering and operating in the marketplace can have certainty as to what will happen if a business gets into financial difficulties, or if—ultimately—it fails. We need appropriate and effective procedures to deal with such eventualities.
  Inevitably, there will be cases where businesses get into short-term financial difficulties for one reason or another, but that should not mean that the only—or even the usual—way out of those difficulties is to bring the business to an end. That cannot be in the best interests either of those who have a stake in the business—its suppliers, customers, creditors, employees and so on—or of the wider economy. If the underlying business is fundamentally sound, we need procedures that will make a rescue possible.
  Of course, there will be many cases where there is no realistic prospect of rescue or rehabilitation. Within the procedures for handling those cases when a business does

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  come to an end there is a particular need to be able to deal appropriately with those people whose misconduct brings about the failure. If we do not do that, confidence will be undermined and enterprise will not be encouraged—in fact, quite the contrary.
  Both the Insolvency Act 1986 and the Company Directors Disqualification Act 1986 already go a long way towards providing such a regime. The measure will build on that by introducing important amendments and improvements to existing procedures.
  In a market economy, it is inevitable that some businesses will fail. The reasons for that are many and varied. When that happens, those failures have consequences—not only for the creditors or the employees but for the wider community. If at least some of those companies could be rescued, it is probable that creditors would receive a better return than on a winding up; jobs would be saved and the companies would continue to make a positive contribution to the economy.
  The Insolvency Act, which came into force more than 13 years ago, brought the company voluntary arrangement procedure into our law as a means of rescuing companies. Since then, the number of such arrangements has risen, from 21 in 1987 to 475 in 1999. The introduction of that procedure, which allows a financially troubled company to reach a binding agreement with its creditors, was a fairly radical development, because it focused on rescue rather than on winding up. However, the recession of the early 1990s showed that it was not particularly appropriate for small companies in financial difficulty. As there is no stay on creditors' actions, before an arrangement is agreed, creditors are able to take individual recovery action—such as levying execution on the company's goods. That is the real problem. As a result, the company may, for instance, lose its stock-in-trade and so simply be unable to continue in business, and that renders a voluntary arrangement unworkable and dooms any rescue attempt to almost certain failure. What is clearly needed is a stay—but a relatively short stay—on creditors' rights, so that the company's management can have the opportunity to put a rescue plan to the creditors.
  Of course, there is always the administration order procedure, which does now provide for a moratorium; but the problem for the small company is that, generally, the procedure is too costly for it. There is also an understandable reluctance on the part of management—especially owner managers—to use the procedure because they know that they will be displaced by a court-appointed administrator. So the Bill will give a company's management the option of obtaining a short breathing space within which to put a rescue plan to creditors, and it will stop creditors enforcing their rights, initially for a period of up to 28 days. The provision of that moratorium in the Bill will honour our commitment to
  act quickly to introduce a legal right for a small company in financial difficulty to a moratorium on its debts for a limited period in order…to put together a rescue package.
  Mr. Elfyn Llwyd: I am much obliged to the Minister for giving way at this point. I agree that the Bill has many useful parts, but will the hon. Gentleman look at one subject in particular—the situation where an insolvency practitioner is brought in? I know from personal experience of the law that there
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  have been many cases where the exceedingly high fees that insolvency practitioners charge tip the business into the red and that ruins the whole situation from day one. Will the Minister or his Department examine the question of those scale charges, which are, to put it mildly, exorbitant?
  Mr. Howells: I thank the hon. Gentleman; he has made a very important point. Later in my speech, I shall address the subject of what we are terming, for now at least, nominees, who may well be able to offer services that at the moment can be provided by insolvency practitioners only.
  Some people have questioned whether now is the right time to be acting as we are, when we are reviewing and consulting on what more might be done to improve the prospects for company rescues generally. We see no inconsistency in this. We think that there is little doubt that a stay of creditor actions is an essential part of any rescue procedure. The review of company rescue and business reconstruction mechanisms is looking at potential barriers to rescues, including, but not limited to, those that might be achieved by way of a company voluntary arrangement. What we are doing here is putting in place the first building block in our work on company rescues. The measure is needed now, and it should not have to await the outcome of a wider review. To delay it now would mean that more businesses might be put at risk and unnecessarily lost.
  In summary, we propose that directors should remain in control of the company and its business during the period of the moratorium. To obtain that moratorium, the directors will first have to obtain, and file at court, a statement from the proposed nominee to the effect that the proposed voluntary arrangement stands a reasonable prospect of being agreed and implemented. Subject to the agreement of the creditors, the nominee will become the supervisor, and therefore oversee the implementation of the voluntary agreement once it is agreed.
  The moratorium would last for up to 28 days, but it will be extendable by up to a further two months with the agreement of the creditors—so it could last for a maximum of three months. It will also be binding on all parties. During the moratorium, the nominee will have the task of monitoring the company's activities. If it appears at any stage that the proposal is no longer likely to be accepted by the creditors, he will have to withdraw his consent to act as a nominee. That will have the effect of bringing the moratorium to an immediate end. There will be penalties for directors who seek to abuse the process by making false representations to obtain a moratorium or by seeking to spirit away assets or business records under the cover of the stay. There will also be restrictions regarding the disposal of assets during the moratorium.
  The issue involves balancing many competing interests—those of the company, shareholders, suppliers and creditors, employees and others. However, we think that the proposals in the Bill represent the best fit for all concerned.
  Mr. David Heath: The Minister referred to misconduct by directors, but I have at least one constituent who is extremely concerned about misconduct

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  by an insolvency practitioner. Will this narrowly drawn Bill do anything about the regulation of practitioners, or can we expect further legislation in the near future?
  Dr. Howells: That issue is being considered by the independent company law review that is under way at the moment, and I understand that it is being examined from several directions. It is an important point, because if the insolvency practitioner is considered to be guilty of misdemeanours, the whole process is put in jeopardy. That certainly will do nothing to help a company that is desperately seeking a means of rescue. However, when I come to this point later, I hope that the hon. Gentleman will be able to draw comfort from what I shall say about the way in which the behaviour of insolvency practitioners and, subsequently, nominees and company directors will be monitored and reviewed.
  Mr. John Bercow: I am grateful to the Minister for giving way, especially as I unavoidably missed his opening remarks. Will he tell the House whether the regulations that flow from clause 13, and that relate to the model law on cross-border insolvency, will be subject to the negative or to the affirmative resolution procedure?
  Dr. Howells: I shall certainly come to that point, because it is important and we should deal with it properly.
  Mr. Bercow: The Parliamentary Private Secretary is seeking guidance.
  Dr. Howells: I do not need the notes actually, but it was a good gag.
  In the past few days, we have received several representations about possible difficulties that the introduction of the option of a moratorium might pose for what are known as special purpose vehicles—SPVs. They are ordinary Companies Acts companies, but they are often used in quite complex structures, particularly in relation to large-scale financing operations. Because the proposal to introduce a moratorium has been widely known about for some time, it is unfortunate that the potential problems appear only just to have been identified. However, from the discussions that my officials have had with those who have raised the matter, it is fair to say that the problem seems to arise from what we are told will be an assumption made by those institutions that are involved in such large-scale financing.
  Overall, the sums of money involved are large and those institutions are worried that the proposal that small companies should be able to obtain a moratorium risks upsetting agreed arrangements. If that risk is perceived to be real, financing the arrangements will become more expensive and, we are told, the United Kingdom will become a less attractive place within which to base such arrangements. Clearly, we do not intend the Bill to have such a consequence, so we are urgently considering ways in which the problem might be addressed for the future and for existing arrangements.
  However, in view of the complexities involved and the time likely to be needed to resolve them, our view is that it would not be sensible to address that matter in the Bill. Instead, we are considering whether the appropriate approach would be by way of modification of the
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  eligibility criteria for obtaining a moratorium. Therefore, the Bill proposes a power for the Secretary of State to modify the eligibility criteria by regulations. That may be the best way to deal with the issue once we have determined the real extent of the problem. In case anyone should think that in that way the House might be deprived of the opportunity to debate the issue, let me say that the proposed regulation-making power will be capable of being exercised only by way of the affirmative procedure.
  Mr. Austin Mitchell: My hon. Friend has just said something that worries me greatly. He is effectively saying that we should give a Second Reading to a Bill which—admittedly rather belatedly—vested interests have said might damage them and might not be workable, and that he will take account of those representations in regulations. That is an alarming mess to put before the House. Rather than a special procedure for small companies, would it not be more sensible, even at this stage, to apply to all companies the more simple option of a chapter 11 provision, as in the United States, which protects for a period companies such as Chrysler, which is facing going bust?
  Dr. Howells: No, I do not think that a chapter 11 route is the right one. Chapter 11 is really a licence for lawyers to print money. The previous Government and this Government steered away from that because it is not the best method of addressing the problem. My hon. Friend's point about the lateness of the objections is important, but it would be wrong to pretend that we ought not to take the problem seriously. It needs to be raised before the House. I have explained one way in which we can address it, and I hope that that will be a good way of doing so.
  I should like to take a little further the question of chapter 11 in the United States of America and why we have not adopted a procedure based on it. It is notoriously complex, time-consuming and very expensive. Unlike our procedure, it entails extensive court involvement. Virtually all major steps in chapter 11 require court approval and result in high lawyers' fees. Moreover, there would be serious practical problems in adopting a system that has its roots in a very different business and legislative culture.
  Mr. Martin O'Neill: Did my hon. Friend take into account the fact that chapter 11 is no panacea in the United States? It is bandied about, but closer examination of the statistics suggests that it is not used in every instance. Indeed, it is used quite selectively, often owing to the difficulties that he has just described. The cases in which it is used and works tend to be those in which such arrangements would work anyway.
  Dr. Howells: My hon. Friend makes a valuable point. Perhaps when my hon. Friend the Member for Great Grimsby (Mr. Mitchell) contributes to the debate he can explain to us the virtues of bringing chapter 11 to the United Kingdom, because I cannot see them.
  The Bill will also make other modifications to the company and voluntary arrangement procedures in the Insolvency Act 1986 to improve their efficiency and effectiveness. One difficulty with the present schemes is that they do not bind creditors who are not notified at the meeting called to consider the proposal for a voluntary arrangement. That is an important point because the

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  phenomenon is pretty wide ranging. It means that, if a previously unknown creditor suddenly comes to light—perhaps for a substantial and unexpected claim for, say, faulty goods—that creditor can pursue the company for the full amount of its claim. The result might be that the voluntary arrangement collapses, with disastrous consequences for all concerned. The Bill therefore provides that across the piece—in company or individual arrangements, with or without a moratorium—unknown creditors will be bound by a voluntary arrangement. Of course, appropriate safeguards will also have to be provided to prevent unfair prejudice.
  Another problem is that both creditors and shareholders must agree to a company voluntary arrangement before it can be implemented, and that can sometimes be extremely difficult. In the majority of cases, the company's financial position is such that, if it were to be liquidated, only creditors would receive any payment. The Bill recognises that fact and provides that, in the event of disagreement, decisions of creditors' meetings will prevail over those of shareholders. That will obviate the risk of losing what might otherwise be a workable rescue simply because shareholders cannot or will not agree to all or part of it. However, there will be appropriate safeguards for shareholders' interests.
  On the question raised by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), we consider that, in addition to insolvency practitioners, there may be others who have the skills needed to turn around ailing companies. In recognition of that fact, we have included in the Bill a provision that will allow the Secretary of State to recognise a body whose members could act as nominees or supervisors of voluntary arrangements. We want greater use to be made of voluntary arrangements and to ensure that those who have the skills needed to make rescues work are able to contribute.
  The hon. Member for Somerton and Frome (Mr. Heath) mentioned disqualification undertakings. The power to disqualify rogue directors is an important safeguard for business and public alike. In the past two years, we have disqualified more than 2,800 unfit directors. If confidence in the market is to be maintained, it is essential that those who abuse the protection of limited liability and use companies to cheat creditors are disqualified. We believe that, when the Secretary of State and the director are agreed that disqualification is appropriate, it is in everybody's best interests to achieve it as quickly and as cheaply as possible, and the Bill provides for that.
  Currently, only the courts can disqualify. The vast majority of disqualification orders are made on the application of the Secretary of State under section 6 of the Company Directors Disqualification Act. They are based on evidence of unfit conduct in relation to insolvent companies. However, the process can and does take a long time and it can be expensive for all those involved. The courts have been helpful in devising a procedure, known as the carecraft procedure, whereby an individual can consent to a period of disqualification, but a disqualification achieved in that way still requires court proceedings to be instituted, with delay and cost frequently being the result.
  The Bill provides that, when there is agreement between the Secretary of State and the director, disqualification can be achieved administratively, without
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  the involvement of the courts. When the Secretary of State considers that an individual should be disqualified in the public interest, he will be able to accept from that individual an undertaking not to act as a director for a mutually agreed period of between two and 15 years. The Bill also provides that breach of the terms of such an undertaking will carry the same criminal and civil consequences as breach of a disqualification order, so there will be no diminution in protection for business and public. Concluding matters by way of an undertaking will be possible in the circumstances set out in clause 6, and those in clause 8 following a Companies Acts investigation. Undertakings will also be a matter of public record.
  Mr. Christopher Chope: Does the Minister agree that it would be helpful to the public to know the basis on which undertakings were given? Should there not be a statement of the facts, so that there can be no subsequent dispute about facts that were agreed by the director who gave the undertaking?
  Dr. Howells: I have a great deal of sympathy with that approach, but it is the subject of careful review in several quarters. If the hon. Gentleman will bear with me, as soon as I receive some constructive advice on this important issue, I shall let him know about it. I hope that that is a sufficiently diplomatic response.
  Only 10 per cent. of disqualification proceedings are contested and go to a full hearing; of the remainder, 60 per cent. are unopposed and directors consent to the making of the order in the other 30 per cent. of cases. That suggests that there is a need for such undertakings. This measure should result in earlier protection at reduced cost by cutting the number of cases that go to the courts.
  Of course, not all directors will agree that they should be disqualified, so the existing procedure will remain in place. The hon. Member for Brecon and Radnorshire (Mr. Livsey) nods: I know that he faces serious specific problems, and I hope that the Bill goes some way towards addressing some of them.
  As happens now, the Secretary of State will apply to the court for a disqualification order when he considers that appropriate and in the public interest. The director will remain free to defend the proceedings in court. Nothing has been taken away from his right to defend himself in court if he decides to do so. This could be described as a supplementary vehicle, which can help to cut costs and save time.
  The Company Directors Disqualification Act has been in operation for nearly 14 years, and experience has shown that it could benefit from a little attention. We are taking this opportunity to make some technical amendments to improve its clarity, effectiveness and efficiency. Among other things, the Bill will make it clear that disqualification represents an absolute bar on a person acting as an insolvency practitioner. I hope that the hon. Member for Somerton and Frome heard that, because I know that he is deeply involved in researching the subject, but in case he did not, I shall read it out again. Among other things, the Bill will make it clear that disqualification represents an absolute bar on a person acting as an insolvency practitioner.
  Mr. David Heath: I am grateful to the Minister—although he did not need to read that passage twice,

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  because I heard it the first time. It does not, however, address the issue that concerns me—the difficulty caused by malpractice on the part of a practitioner in insolvency. It stops someone who has previously been disqualified becoming an insolvency practitioner, but it does not deal with the specific case of which I am thinking. It sounds to me as if the Bill does not cover the area involved, and I look forward to legislation that does.
  Dr. Howells: The hon. Gentleman should contact the regulatory body governing the insolvency practitioner concerned, with a view to its investigating. There are numerous means whereby practitioners can be disciplined, as they should be if they are guilty of misdemeanours. We are not entirely the prey of practitioners who may be involved in such activities; means of redress already exist.
  Mr. Bercow: Given that there were 270 more disqualification orders in 1999 than there were in 1997, can the Minister give us some indication of how many of those 270 were contested, and how many of the 1,489 in 1999 were contested, so that we can have an idea of the extent of the disputation and of the delay before the granting of the orders?
  Dr. Howells: I cannot give the hon. Gentleman the figures, but I shall certainly procure them for him.
  The bar that will be placed on a person acting as an insolvency practitioner redefines the court to which an application for a disqualification order should be made. It also redefines the court to which an application for permission to act as a director while disqualified should be made. Disqualification orders made in Northern Ireland will be given the same effect in Great Britain as those made here. That will increase the protection provided by disqualification orders.
  Let me now deal with the question of reporting offences. When reporting suspicions of criminal misconduct by company directors and members under section 218 of the Insolvency Act, the liquidator in a voluntary winding-up in England and Wales does so to the Director of Public Prosecutions. The DPP can then refer such reports to the Secretary of State for investigation. We think that it would be far more sensible for those reports to be made to the Secretary of State in the first place, and that is what we provide for in the Bill. That will streamline the process and ensure that misconduct is dealt with sooner rather than later.
  Mr. Richard Livsey: The Minister will know that, in certain circumstances, it is difficult to get an accurate fix on true accounting by accountants in order to establish what misconduct the directors have committed. Has he any proposals to enforce the production of accurate accounts within a specified time limit so that the case can be proved?
  Dr. Howells: The hon. Gentleman's point is one of the central themes of the decision to institute an independent company law review. It is important that such transparency is at the heart of any changes made to company law. I know very well the grief and difficulty of some of his constituents resulting from apparently creative accounting in a current case. We are looking at the matter carefully.
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  I do not want to pre-empt the publication of the independent review. That is a major piece of work and will be an important quarry from which we can take material to ensure that such problems are properly addressed in company law.
  I return to the reporting of offences. When investigating reports, the Secretary of State can use Companies Acts investigation powers, and section 219 of the Insolvency Act purports to allow answers obtained by use of compulsory powers to be used in evidence. That is clearly contrary to the decision of the European Court of Human Rights in the case of Saunders v. the United Kingdom, and we are taking the opportunity to put the situation right.
  The Administration of Insolvent Estates of Deceased Persons Order came into force at the end of 1986. Broadly, the intention was that all the assets that a debtor owned immediately before his death should be available to satisfy the claims of his creditors in insolvency proceedings started after his death. It was thought that this would include his interest in any jointly owned assets. In this way, the situation in all insolvencies would be the same.
  However, a decision in the Court of Appeal in 1994 in the case re Palmer (Deceased) established that the order-making power contained in section 421 of the Insolvency Act did not bring about that result. I need not trouble the House with the details of that case. Suffice it to say that its result is that property of which the debtor was a joint owner passes on his death to the remaining joint owner or owners under supervisorship rules and is not available to his creditors.
  Of course, substantial assets may be involved. We do not think it right that creditors' rights can be dependent on the mere chance of whether the debtor is alive or dead when they need to have recourse to him. We are therefore taking the opportunity to address the issue and by doing so, we will, so far as is possible, restore a level playing field and create legal certainty in this area. However, we will introduce amendments to the relevant provision in the Bill because difficulties with the current text need to be addressed.

  We propose that clause 11 should be amended so that the trustee of a deceased insolvent's estate should be able to apply to court for an order against the surviving joint owner for the purpose of securing that the debts and liabilities of the estate are met. The court will have discretion to make an order for a sum not exceeding the value lost to the estate.
  In England and Wales, it is a requirement that liquidators of companies and trustees in bankruptcy pay funds from the realisation of assets into the insolvency services account—the ISA—at the Bank of England. For many years, the law has allowed funds held in that account on behalf of insolvent companies to be invested in Government securities for the benefit of the estate. In addition, funds of £2,000 or more remaining in the company's account attract interest at the rate of 3.5 per cent. a year. In that way, the company and its creditors and shareholders can receive a benefit from the use of the funds until they are ready to be distributed.
  For reasons that are now shrouded in the mists of history, similar provisions have never applied in relation to bankruptcy estate funds. There is clearly an anomaly, which the Bill allows us to remove.

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  On cross-border insolvency—the hon. Member for Buckingham (Mr. Bercow), who raised the matter, seems to have left the Chamber—
  Mr. Graham Brady: Briefly.
  Dr. Howells: Indeed.
  Many businesses operate across national boundaries. That phenomenon is likely to expand considerably in the future, and can give rise to problems when a business fails, because some countries are not always willing to recognise foreign insolvency proceedings. That can make the recovery of assets difficult, and sometimes impossible. The absence of any internationally accepted measures to deal with cross-border insolvencies can make the handling of such cases uncertain, inefficient and often very costly. Clearly, that cannot be in the best interests of the creditors.
  In 1997, the United Nations adopted a model law on cross-border insolvency. The United Kingdom played a part in developing that model law, and there is now a concerted push to implement the law in countries such as the United States, South Africa, Canada, Australia and New Zealand, but there is a degree of reluctance to act until the intentions of other countries become clear.
  The order-making powers contained in the Bill will enable us to implement the model law in this country. We think that that is the best way to proceed. It will give a clear indication of our intentions, and it will mean that that can be done at a more measured pace than would be possible if the detailed measures were included in the Bill. Importantly, it will allow for detailed consideration of what should be done, and for appropriate consultation to take place before the measure is brought back to Parliament for consideration.
  We have given careful consideration to the measures in the Bill. The over-arching purpose of them all is to improve confidence in the marketplace. We believe that improved confidence will contribute to the creation of an environment that will encourage enterprise. I am therefore pleased to commend the Bill to the House.
  5.57 pm
  Mr. Richard Page: I know that you have occasionally shown an interest in the equine world, Mr. Deputy Speaker. I do not know whether you have ever gone to a horse sale and seen the yearlings going round the sale ring. Occasionally, one can look at a yearling and immediately identify the sire. There are some stallions that have the ability to imprint their characteristics on their foals.
  The Bill has all the imprint of a Department of Trade and Industry Bill—the best of intentions out of muddle and confusion. [Interruption.] I have sympathy with the Minister, and he may well laugh nervously, but is it sensible for the Bill to be before the House at the same time as the Government are conducting a review of the Insolvency Service, the very service with which the Bill deals?
  I know that the Minister tried to explain that away, as he recognises it as a weak point in his argument. Why did not the review start in 1997, so that the Bill could be up
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  to date and deal with the matters arising from that review? One or two questions have already probed the Minister's defence, and we were told that those matters will be dealt with by amendments. The Minister said that amendments would be introduced, and pointed out possible problems with the international scene. The Bill may make the United Kingdom less attractive for business.
  Before we even start, the Bill is in trouble. I do not blame the Government for trying to implement a manifesto commitment—all credit to them for doing so.
  I remember that when we returned after the general election, and many hon. Members, who are now in opposition, were given more time with our families, the Government rushed forward with a Statutory Right of Interest Bill. It was supposed to solve all small businesses' problems with cash flow and money. However, nothing has happened since. The Bill simply disappeared. There were plans for volunteers and aid for sub-post offices throughout the country. That money remains locked in the toils of the European Union.
  You would rightly take me to task, Mr. Deputy Speaker, if I went through all the Department of Trade and Industry Bills that failed, and I shall not do that. However, the DTI often provides more spin than substance. How much more spin can we get than that provided by the Government's Small Business Service website, which states:
  Government continues to reduce the burdens on business caused by regulation.
  Last year, the Government introduced more regulations than had been introduced in any year of this country's history. They are on track for breaking that record this year.
  Flawed and ineffective as the Bill currently is, let us try to make it work. There is only a short time in the spill-over session to try to sort it out. What greater condemnation is there of the Government's legislative programme than that we have to deal with such an important Bill in the spill-over, in a rush to the line to get it done before Parliament is opened for another Session? Ministers should seriously consider their position; the proceedings have been managed appallingly. However, Conservative Members want to attack the problem by trying to be helpful, to make the Bill work and to help our businesses.
  We all want businesses that can be saved to be duly rescued. I have some experience of the small business world. I do not know how many DTI Ministers have run a business and had to worry about making it succeed from day to day. I know that it is exceedingly hard to start a business; it takes a year or so to break even, and a further year or so to build up a customer base and start to make money. I also know how easy it is to close down a business at a flick.
  I agree with the Minister about the inappropriateness of attempting to introduce a chapter 11 solution in this country at the moment. There is a series of differences between the United Kingdom and the United States, and some are cultural. In the United States, much more equity sharing occurs, and there are many more share options. That is the norm; the process is considered standard. In the United Kingdom, the owner wants to keep everything to himself, and banks have a loan rather than an equity culture. In this country, one can borrow as much money from the bank as one likes as long as one has the assets to back the loan.

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  The current system for a struggling business is a nightmare. The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), who has now left the Chamber, made a point about the cost of insolvency practitioners. That is part of the problem. Business men and women are reluctant to go to the bank because there is a fair chance of the manager starting insolvency proceedings. The main source of insolvency proceedings is the actions of a bank.
  There is another problem. When a creditor calls in an insolvency practitioner, more often than not there is more meat on the bones than there would be if it was simply a matter of keeping the patient alive. For that reason—I say this with all due modesty—I presented a ten-minute Bill in February last year. It tried to divide responsibilities on insolvency, and provided that an insolvency practitioner who recommended that a company be placed in liquidation would not handle the insolvency. That would hopefully lead to a more relaxed, if not independent, view on the matter.
  Several instances have been drawn to my attention of companies that could have been saved if their cases had been properly handled. However, it was more profitable and easier to put those companies into insolvency. With such insolvency comes the death of dreams for many business men and women. The Minister should read my ten-minute Bill before we go into Committee, probably next Tuesday. He will then be able to appreciate the realities that face some businesses when they deal with insolvency.
  Mr. Bercow: I am especially grateful to my hon. Friend for his confirmation that more than mere bones are required to sustain life in the human body. Does my hon. Friend agree that, in the light of his comments on the dramatically increased regulatory burden under the Government, that it would be helpful—especially if it came from the lips of a typically helpful Minister—if the Government gave an undertaking at this juncture to publish a statement of the annual costs of regulation on British business and of their plans in the ensuing year to reduce that cost?
  Mr. Page: My hon. Friend tempts me down a path that I would dearly love to follow. The various bodies that represent businesses in this country show escalating evidence of the price of regulation and the burdens on business. However, Mr. Deputy Speaker, you give me a warning glance, and if I were to go into the Government's appalling record in any detail on the regulations that have been heaped on business, you would take me to task. I must therefore pass up my hon. Friend's kind invitation to outline once more the burdens that the Government have placed on our businesses.
  I can give my hon. Friend one small crumb of comfort. After the next election, when we introduce our policies, there will be a definite reduction in the number of burdens that have been placed on business. When I made those remarks a year ago, there was a great guffaw of laughter from Labour Members; today there is only a muted titter. It is muted because Labour Members realise that this party is coming back and that we have the policies that this country wants implemented after the general election.
  I hope that I shall get unanimous support for my next point. Every hon. Member has experienced constituency cases in which the cost of insolvency practitioners has left
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  little or no money for the creditors. The insolvency practice has changed its name to R3—the Association of Business Recovery Practitioners. I regard that change with some hope that the emphasis in the organisation is starting to be on the recovery of businesses rather than simply on that of creditors' money.
  I welcome the main point of the Bill. However, I must register some anxiety about whether it will work in practice. It will mean extra legislation in a year or so. As the Minister has already admitted, the Bill is only a step down the path. I doubt whether the Bill is constructed in such a way as to succeed in returning the wounded to health while not dragging out the lives of the terminally ill, with the consequent reduction of payment to the creditors. We should make no mistake: whoever deals with the case—new-fangled authorised agents or insolvency practitioners—will get their cut first. We must ensure that the system will create real benefit and not simply mean more time, more bureaucracy and more cost.
  I have given a general outline of the conditions and problems that face small businesses. Let us consider the specifics of the Bill. The Bill contains several controversial provisions, such as creating a new type of insolvency practitioner who can act as a nominee or supervisor of a voluntary arrangement. It envisages that such a person being authorised by a body, and recognised in turn by the Secretary of State, will satisfy certain security arrangements and requirements and will not be ineligible on certain specified grounds. Those persons need not be licensed insolvency practitioners. There is no need for that to happen because an authorised person would be automatically approved if he was already a licensed insolvency practitioner.
  To what extent does a knowledge of insolvency have to be present in order that an individual can qualify to become an authorised person? The Minister started down that route and talked about aspects of the moratorium, both present and future. The new procedure for a moratorium cuts out the role of the court. Under existing law, the company can obtain a moratorium if it petitions the court for an administration order. That is normally heard within four or five days. The court can then continue the moratorium by making an administration order. An individual can obtain a moratorium if an interim order is granted by the court. Again, the court is closely involved at that early stage.
  At present, we have an important safeguard. The moratorium imposes extreme restrictions on the creditors, and the court can carefully place the moratoriums. The new proposals dispense with that safeguard. The company or individual will be able to obtain a moratorium without any involvement of a court. Will that be an acceptable safeguard? It is essential that there is public confidence in the integrity and competence of those who will exercise such powers to impose a moratorium on the creditors. I have no doubt that that will be a subject of considerable discussion in Committee.
  A further problem arises when a debtor, be it a company or an individual, in financial difficulties seeks the advice of a professional person. In many instances, he may seek the advice of an authorised person. That advice will probably be given free, just as any similar advice is given free by a licensed insolvency practitioner now. It is given free—very few things are free—in the hope and expectation that the person giving the advice will be appointed a nominee, a supervisor, administrator or

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  liquidator in due course, and will be remunerated for doing so. That remuneration will more than make up for the free advice given earlier.
  That is how the system works now with licensed insolvency practitioners. I can think of no reason why that should not be how the system will work with authorised persons in future if the relevant provisions are enacted.
  A number of authorised persons will be tempted by the hope and expectation of earning remuneration as a nominee or supervisor in due course. They will want to recommend a moratorium and a voluntary arrangement because that is when they will be paid. If they recommend other procedures such as insolvency, bankruptcy, administration or liquidation, they probably will not be paid. The temptation is therefore a real one, and I believe a great one. It is a temptation that is in direct conflict with the one that faces insolvency practitioners now. Will some of the authorised persons succumb to the temptation? That could be an inevitable consequence of human nature. Is there a real risk that in many instances an authorised person will wrongly advise the debtor to propose a voluntary arrangement because that is the only way in which he will be paid?
  Licensed insolvency practitioners may recommend one sort of insolvency procedure instead of another because they are more likely to be appointed as the insolvency holder in due course. That is likely to happen also with authorised practitioners, who will not be paid at all if they recommend insolvency procedures for which they are not qualified. I do not say that that will happen in every case; it may happen in only a few. However, we must not forget that in these instances debtors are particularly vulnerable. When a man or a woman sees his or her company much at risk and likely to go down after perhaps many years of dedication and hard work, it is human nature that he or she is liable to clutch at any straw.
  There is the other side of the coin. Am I being unduly cynical to suggest that companies in financial difficulties may well hunt about from authorised person to authorised person until they land on someone who will recommend a moratorium?
  The one part of the Bill with which we entirely agree—the Minister will be delighted to hear this—is the amending of the Company Directors Disqualification Act 1986. That will confer a power to accept undertakings of the Secretary of State. We believe that this will be of benefit and of help. We look forward to seeing that part of the Bill pass through Committee sweetly and smoothly.
  There is a curiosity in the Bill which I believe will make it difficult to operate. My understanding of the conditions for granting a moratorium is that the nominee of a company should be satisfied by the directors that it is likely to have sufficient funds during the moratorium to carry out its business. I must challenge the Minister to explain why it is envisaged in the Bill that a company that secures a moratorium might need to borrow money to finance operations, and must be in a position to offer security to potential lenders to the benefit of the company with the sanction of the nominee and the supervisor.
  There is a difficulty in envisaging a situation in which a corporate lender will make loans available when the directors of the borrowing company must act honestly in the interests of their own company and under the
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  supervision of a nominee, who may not be a qualified insolvency practitioner even though he or she may have the dubious advantage of being anointed by the Secretary of State.
  If the lending institution makes an erroneous judgment, a security may be unenforceable. I wonder how many of the creditors, and the banks in particular, will be tempted down that route.
  Like the curate's egg, the Bill is good in parts. It will bring modest benefits and they will be welcome. The fundamental issue in insolvency law is being addressed in the consultation process following on from the publication last year of the Insolvency Service review of company rescue and business reconstruction mechanisms. The Bill is only one step down that path. It would have been much better if it had been tied in to the conclusion of that review rather than being part of a piecemeal operation.
  6.18 pm
  Mr. Martin O'Neill: I welcome the Bill. I realise that it is modest in content and that a review is taking place. I think that we would have complained had we had a modest Bill and no review. We would have complained even more had we had no Bill.
  When we look to the United States, we see the success of its economy and its ability to sustain new business growth and to encourage new businesses to be established. In large part, the business community is self-confident enough to support new enterprise. The culture in this country is more concerned about chasing assets than about preserving businesses. It is equally concerned about punishing short-term business failure, rather than seeking to recognise potential entrepreneurial acumen. It is in that light that we should recognise that the Bill is welcome.
  We are not talking about changing the fundamental legal structure in one fell swoop. We cannot with one axe hack away the centuries of prejudice which had people being sent to the debtors' prison for business failure. Although there has been an increase in the recognition or identification of criminal elements and directors, the overwhelming majority of businesses go bust through incompetence or bad luck, not through criminal activities. The law should, in its way, take account of that.
  We no longer live in Dickensian times, where a Micawberish style of expenditure would result in being sent to prison. Although people, are thankfully, no longer sent to prison for bankruptcies brought about through bad luck or incompetence, they are nevertheless punished in such a way that they are denied the opportunity to start again.
  When I talk to people in the United States who are engaged in supporting new businesses, and discuss with venture capitalists how they look at the matter and what they are prepared to do to support new businesses, the conversation quickly moves towards a line that I heard repeatedly on visits to the United States. They often say that they would rather support someone whose business has failed once, although perhaps not two or three times. They do not want serial failures, but they recognise that, if people have had one or two spats, more often than not those spats will result in them being more aware, better educated and better able to address the challenges.
  We know that, in the first year, businesses are not just undercapitalised and underfinanced. In most instances, they are frightened of the day they never saw because of

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  the draconian punishments that are meted out to those who are deemed to have failed or to be near to failure. We could change the law and have innumerable inquiries, but we must try to change the culture in this country and the way in which it inhibits enterprise and holds back not just enterprise but the willingness of people with money to support those who need that resource to get their businesses going.
  Last year, the Select Committee on Trade and Industry, which I have the honour of chairing, was invited to comment on some of the draft clauses. A rather grudging consultative process was entered into. We had only a few weeks to do it. It was a highly inconvenient time. It had a wee bit of the token about it; the response to some of the points that we made suggested that, but I will not labour that point. However, I will happily wait until after the general election for some thorough reform of insolvency procedures. I hope that it will be within the general company legislation that the next Labour Government are committed to introducing. Like so many of the Government's policies for enterprise and competitiveness, it will be welcomed by the business community.
  The ritual ranting about regulation is different from the complaints that we used to hear about the uncertainties of the business cycle, the problems of inflation or the vagaries of interest rate changes. In the past two or three years, we have had exactly the stability that small businesses need to flourish, but they need other things as well.
  I take the point about the insolvency profession: it is reminiscent of the Boilermakers Society of days of old. It alone had the means and skills whereby the job could be carried out. It is strange that, when Baroness Thatcher and her colleagues tried to end restrictive practices, they seemed to have a certain blindness when it came to organisations in the business sector. They did not seem to have the same 20:20 vision that they had with the trade union and labour movement, but the fact that we recognise the position of the insolvency profession is welcome. That should be widened, and more suitably qualified individuals should be capable of being involved.
  I take the point—it is interesting—that several hon. Members have made about rogue elements within the insolvency profession. There are means whereby they can be dealt with, but it is difficult, in the middle of insolvency, for individuals who are not fulfilling their duties in a proper and fit way to be stopped. I suspect that we shall have to wait for subsequent legislation to deal with that. Nevertheless, we must be helpful.
  Some of us were a wee bit surprised that section 218 of the Insolvency Act 1986 has achieved a place in the legislation. Nevertheless, we could look at it. It might have been possible to consider the matter further if we had more time—or if my hon. Friends had more time, because I do not think that I will be able to participate in the Standing Committee, and I am giving no indication of a willingness so to do. I hope that the Whips Office takes due note of that in the weeks that lie ahead. I am pleased that no Whips are in the Chamber at the moment.
  Quite early in the life of the Government, the then Minister, my hon. Friend the Member for Edinburgh, South (Mr. Griffiths), said that he hoped that legislation would be introduced. Two years ago, the then Secretary of State for Trade and Industry, now the Secretary of State
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  for Northern Ireland, indicated in his important White Paper that legislation would be forthcoming. Some 14 months later, the Bill saw the light of day.
  The Bill started in late February in the House of Lords. It is not that bad that it reached this House by July, but it is unfortunate that there will probably be insufficient time to deal with all its inadequacies. Given the desire for change in the House, it would probably get out of control if we had too much time.
  I imagine that, as the Bill will not be unduly controversial, it will be possible for it to be dealt with, but I hope that the Minister will look at the financing of a company voluntary administration. My colleagues on the Select Committee raised concerns about the company and its landlord, its utility suppliers and those who lease it the tools of its trade. We were not satisfied that the Bill, modest though it is, was too narrow to deal with those issues. An opportunity has been lost. I would be doing my colleagues an injustice if I did not raise those matters with the Minister. They should be dealt with with greater urgency.
  Let me deal with one small point that came up: the question of deceased debtors. There is a human dimension to the process: matters relating, for example, to the matrimonial home of a deceased debtor and the risk that the title to such homes may be put in doubt by the Bill. We would like clarification. Often, when a business person dies, the spouse imagines that he or she still has the assets of a home but, for whatever reasons, those can be arrested. We could have dealt with that in advance of some wide-ranging inquiry.
  As I said earlier, legislation will not resolve the big questions. That will involve a cultural change in our country's business community. However, on some specific issues, where personal and familial problems could be avoided, my hon. Friend the Minister could take the opportunity afforded in Committee to look again. I realise that there are time problems, which are always part of the difficulty.
  This is not the single most important piece of company legislation that the House will face in the next few years. It is a modest but important step because it shows the business community that the Government and the Department of Trade and Industry are on the job and are continuing to pursue the wretched business of insolvency in the United Kingdom, the suffering that it causes to families and individual business people and the way it affects the confidence of those who, with a wee bit better luck and a little chance, might have been able to turn their businesses round or keep them going a bit longer—perhaps the extra three months afforded by the moratorium. It might offer them the opportunity to obtain slightly better advice than they have had in the past. Those things will make a difference in a number of instances, and if that can help to remove the stigma of short-term failure from so many of our potential entrepreneurs, it will have gone a long way to helping the business community and enterprise in this country.
  6.32 pm
  Dr. Vincent Cable: I thank the Minister for guiding us through some esoteric issues in this extremely specialised area of commercial law. As the Minister rapidly read through his highly technical brief, as a non-lawyer and non-accountant I felt a little like the swimmer from Equatorial Guinea in the Olympic games, struggling desperately to keep afloat.

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  As this is a Second Reading, the appropriate approach, as the hon. Member for Ochil (Mr. O'Neill) has already suggested, is to look at the big picture and the big messages that emerge from this specialised and limited piece of legislation. It is essentially about trying to restore the balance between lenders and borrowers and between rentier and entrepreneur. The hon. Member for Ochil referred to the situation in the United States. An interesting study in a recent edition of Accountancy Age showed that, of all the major western countries, Britain has the most creditor-friendly regime. By contrast, the United States has the most creditor-unfriendly regime, which is most friendly to equity and shareholders. The United States has stay-on assets for companies in extreme cash-flow difficulties and it is possible for management to remain in decision-making positions and to manage a crisis in a way that is not possible here.
  It was clear from his speech just over a year ago that the then Secretary of State for Trade and Industry, now the Secretary of State for Northern Ireland, and his right hon. Friend the Chancellor of the Exchequer were endeavouring to push British legislation in a north Atlantic direction. This Bill is a small step on the way.
  I have not had many cases in my constituency, but they all illustrate the big imbalance between lender and borrower in personal and corporate insolvencies and bankruptcies. The lenders are often commercial banks, which have a powerful position in such a situation. They will have a charge on the assets and there will often be a personal guarantee. Their business is highly profitable and secure, which is why the Government have referred their small lending business to the Office of Fair Trading following the Cruickshank report. We often see cases in which the commercial banks are trigger happy and will precipitate an insolvency in a way that a creditor who has much more self-interest with a company will not. We might have a trigger-happy precipitation of a crisis at one end of the chain, leading to thorough, often vindictive, pursuit of assets at the other. If the legislation, through the three-month moratorium, redresses that balance even a little by reducing costs by removing the need for court proceedings, it will have made a useful contribution.
  The legislation seems broadly satisfactory, but I want to put a few questions to the Minister. My first question follows a point made by the hon. Member for South-West Hertfordshire (Mr. Page) on why this limited measure is being introduced in isolation from other inquiries. He mentioned one, which is relevant—the insolvency working party. It is not clear why the findings of that working party are not being assimilated into the legislation and why the legislation cannot wait for that. In addition, an inquiry into bankruptcy law has the important task of determining the difference between crooks and honest business failures. That important distinction is germane to the issue of business disqualification. I am not entirely clear why that inquiry cannot complete its business before the whole of insolvency and bankruptcy law is brought up to date in a consistent way. I agree with the hon. Member for South-West Hertfordshire that there is a process question to answer.
  I want to ask about the international ramifications. The legislation tries to deal with the problem of globalisation of business, such as cross-border lending and cross-border ownership, through encouragement of the model
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  agreements under the United Nations Commission on International Trade Law. That seems to be a sensible approach. I do not fully understand the relationship between the global approach to the harmonisation or reconciliation of different insolvency procedures with the European directive—it is taking place in parallel—that comes into force at the end of 2002. Are the two approaches consistent? Which supersedes which and what is the relationship between them? I do not know the answer. That is an important question if we are talking about the compatibility of regulation.
  On the specifics of the Bill, my colleagues in the other place, who are much more knowledgeable about this than I am, have made some particular points, which I shall rehearse for the record. Lord Sharman, who has a good deal of experience as a practitioner, has drawn attention to problems that arise from the issue of nominees. He says that, although it may be desirable to have nominees who are not qualified insolvency practitioners on grounds of cost—that issue has been raised already—there are powerful arguments for involving qualified people. One of their roles is to advise an insolvent company on the variety of business options and it is important that those concerned are properly qualified. There is a pro and a con there.
  Lord Razzall made the point that, when we are talking about the disqualification of directors, we are talking about proceedings that are often as much criminal as civil. There is usually a combination of the two. If people are to be disqualified on the grounds of possible criminal activity, the principles of the European convention on human rights begin to apply and a more onerous standard of proof is required. As it was not mentioned in the Minister's introductory remarks, it is important to have clarification from him as to how far that issue has been thought through.
  The legislation seems uncontentious and desirable and has our support in principle, but technical issues and possible issues of procedure regarding parallel inquiries need to be answered.
  6.39 pm
  Mr. Austin Mitchell: This is a fairly small and simple measure—which makes it even more surprising that the hon. Member for South-West Hertfordshire (Mr. Page) has made such heavy weather of it. I could not understand what he was getting at. We can welcome this legislation in its own right because it makes some small improvement in the current situation, and that is to be welcomed.
  It has to be pointed out, however, that that improvement is only a minuscule nibble at a major problem that the Government should be tackling. There is a pressing need for proper and effective regulation of accountancy practitioners and for redressing the current odds that favour those who have the money and those who put up the money—particularly the banks—against small businesses which are struggling to survive. The current odds are very unfair and very unreasonable. We need to regulate the affairs of the insolvency practitioners and control their activities so that small businesses are protected rather than used as fee-generating material.
  The 1992 Labour party manifesto dealt with the need to redress those odds, and our 1997 business manifesto dealt with the need for independent regulation of

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  insolvency. Since then, however, we have become very friendly with the business community and those issues have been shelved. We are being presented not with proposals for independent regulation, but with a series of miniature, partial measures—such as this Bill and the shabby Limited Liability Partnerships Act 2000, which we debated some months ago in an equally excitable and crowded House.
  Vested interests have played the dominant role in the passage of this type of legislation. The consultations on this Bill have been dominated by the vested interests. As my hon. Friend the Member for Ochil (Mr. O'Neill) said, the consultations of the Trade and Industry Committee on the Bill were conducted at break-neck speed—so that there could not be proper consultation. The consultations were also dominated again by the vested interests, such as insolvency practitioners and banks, which earn the fees and at whose mercy small businesses lie.
  In reading the report of the debate on the Bill in the other place, I see that those with great names such as Kingsland and Sharman—valiant defenders of the working class and the poor in these matters—made the running and won concessions from the Government. However, the debate is dominated already by vested interests to which a Labour Government should not be making concessions. Now, the Minister tells us that there have been last-minute representations from those vested interests to change the legislation's proposed regulations.
  Although small businesses are struggling, and some of them are dying, we seem to want to consult the vultures that are hovering overhead. We seem to prefer a society for the defence of vultures to a society that protects small businesses or stakeholders, such as employees, unions, consumers and suppliers. Stakeholders want to load the odds in favour of the survival of small companies, but they are not being involved in the consultation.
  The victims of the vested interests—the small businesses closed down by big money—also were not included in the consultations. Mr. Barry Chapman, managing director of J. S. Bass, of Manchester, provides the classic example of a business being closed down by the insolvency practitioners and the banks working in collusion and using force majeure. Voices such as Mr. Chapman's have not been heard in any of the consultations.
  The Bankruptcy Association of Great Britain and Ireland, which is based in Hull, was not consulted in the proceedings. Such consultation was neglected in favour of gimmicks. Although issues such as establishing a rescue culture and tackling rogue directors need to be addressed, they should be addressed within an over-arching regulatory framework and not in minimal measures such as this Bill.
  The safeguards that have been provided so far in our minimalist legislation safeguard only vested interests, which we are anxious not to offend greatly. We are particularly anxious not to offend the banks, which have the monstrous advantage of being able to impose a floating charge. Such a charge is unknown in most other systems; it is certainly unknown in the United States. It allows banks to crucify small businesses and to grab back money that they loan for development. Even a change in bank manager can produce an entirely different climate for small businesses. Here we are, however, loading the odds in favour of those types of large institutions, instead of doing something about the major scandals.
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  Banks have a habit of installing an accountancy firm in a small business, asking it to report on the state of that business, and, subsequently—after the accountancy firm recommends liquidation—giving the insolvency work to the insolvency arm of that same accountancy firm. That is a crying scandal that should have been dealt with. The Royal Bank of Scotland has dealt with it by refusing to give both types of business to one firm, resulting in a reduction not only in the number of liquidations, but in the costs of the overall operation. We should be making that type of provision in this legislation.
  We are consulting the vultures and giving them more power, rather than safeguarding the interests of the victim in the desert who is crawling to shade and safety. The victim might make it to safety if the vultures were not being helped in our insolvency vulture culture. We should be helping the victims to survive, but we are only offering them a little piece of Elastoplast.
  I should like to deal with a few problems in the legislation. Hon. Members are right to praise provision of an extendable 28-day moratorium. However, why have only 28 days been provided? That is a very short time to allow businesses to put their affairs in order and to make a rescue plan. The United States chapter 11 procedure provides for 90 days, and that makes more sense. We should allow more time.
  Additionally, why is that 28-day period provided only for small businesses with fewer than 50 employees? If it is sauce for the small goose, surely it is also sauce for the big gander. Why cannot that protection be extended to medium and large-sized businesses? What is the problem? If we agree that there should be a rescue culture, and that the aim should be to keep the company going, to sustain jobs and to maintain the nexus of stakeholder connections, why is the provision made only for small businesses?
  The Minister told us that the provision is better than chapter 11. I do not think it is, for reasons that I shall explain later. However, if it is better than chapter 11, surely it should be extended to medium and large-sized enterprises, which affect many more jobs and the health of many more communities. Perhaps the Minister will tell us how many firms will be saved by the current proposal, and how many would be saved if the provision were extended to medium and large-sized businesses. If the provision is effective, it should be made available to every business.
  My preference is for a 90-day provision, as under chapter 11 in the United States, which gives companies such as Chrysler a chance to reorganise and restructure their finances, to get a grip on things and to come through. That is what we should do. We should put the onus on bringing the company through. We have a grabbing insolvency culture, in which people say, "Let's get our hands on the assets and flog them off as much as we can. Let's keep things going as long as we can to get the fees as high as we can." The fees are usually exorbitant. The culture should be entirely the opposite; it should be one of keeping firms going, and chapter 11 provides for that.
  As we heard earlier, lawyers have to be paid and chapter 11 is subject to all kinds of constraint, but so is the procedure under the Bill. The new practitioners will have to be paid considerable sums to get the procedure going. Either way, professional assistance and support must be financed, but chapter 11 seems to be more fundamental and better because it changes the whole culture.

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  The Bill will provide minimal protection, which will neither change attitudes much nor provide generous help to small companies. Chapter 11 changes the culture and places the onus on survival, so why not use chapter 11 provisions for medium and large businesses?
  We promised before we came to power to promote a stakeholder culture. We should indeed promote a stakeholder culture, but the employees of small businesses are crucial to such a culture. The employees may or may not be organised in unions, but they should be part of the consultative process to institute the new procedures. Why are they excluded from them? Why is the only interest considered, especially by the banks involved, that of taking the decision for a creditor's voluntary arrangement? That is a matter of vital concern to the employees, both part-time and full-time. Their jobs are affected; they have a vital stake; so why cannot they be consulted?
  Employees will be taken into account in the insolvency proceedings because they will become creditors if things do not work out, even if they were not notified of the arrangements. Why cannot they be included in the consultative procedure? The creditors, part-time employees, pieceworkers and subcontractors working from home all need to participate and be specifically recognised in the process. They need specific protection, but the Bill will not give it to them. That is a serious flaw.
  The vested interests in the procedure are still too strong. If a company runs into difficulty and its directors think that it is trading while insolvent, they are personally liable for its debts. Therefore, at the first sign of a problem, they will rush to an insolvency practitioner, saying, "What are we going to do?" The practitioner will charge them a fee, thus compounding the problem. He may refer the directors to the new supervisor or nominee provided for in the Bill, who will charge another fee.
  The insolvency practitioner who the directors approach is unlikely to be anxious to avoid the opportunity to make money by advising them to use a voluntary arrangement and, subsequently, turning it into an administration, from which he will receive fees. Such scams have been going on for 20 years or more, and I have constantly notified the Department about them, but no action results.
  Let us imagine that a company finds itself in difficulty. Significant creditors will come together and the banks will dominate the proceedings. It is likely that the banks will not agree to a voluntary arrangement unless they first receive a report from an accountant. As now, they will want to see an accountant's report. Therefore, rather than giving a clean bill of health, the accountant will have a vested interest to get subsequent work for his firm. He will suggest that if a company has problems, it should consider a voluntary arrangement, which involves fees, or that it should be put into liquidation, which will provide more fees for his firm. Vested interests are still involved.
  We have not dealt with the problem of restraining the vested interests and requiring that those people in a firm who provide accountancy advice should not deal with the voluntary arrangement or the insolvency if a company goes into liquidation. There is a definite pressure on those people to recommend a certain course of action and that their firm should carry out the work.
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  I have corresponded for a long period with the hapless, pathetic regulators in insolvency and with the DTI about the J.S. Bass case in Manchester. In that case, there was clearly a ramp between Barclays bank and Ernst and Whinney—subsequently Ernst and Young—which was put in to write the report, recommend liquidation, grab the fees and liquidate the company, even though its assets were substantially greater than its debts, so putting it out of business. That firm was bigger than one with 50 employees as referred to in the Bill, so it would not benefit from such arrangements. However, pressures to do what was done in that case still exist and remain unregulated, which will affect the voluntary arrangements, too. We shall not provide effective protection unless we regulate and remove that anomaly so that those who carry out the investigation should not be involved in the other arrangements.
  Will the nominee or supervisor—the man who will handle the turning around of a company—have a duty of care and, if so, to whom will it be owed? Will it be owed to the individual creditors or a creditor, perhaps the bank, or to the creditors collectively? Will it be owed to individual shareholders, to shareholders collectively, or to other stakeholders?
  The Minister made an important point. I had better call him my hon. Friend; I have every confidence in him as a Minister and he makes the points very well. However, he is effectively expanding a state guaranteed market. The insolvency practitioners will have a monopoly; they will have a state guarantee.
  An answer to a parliamentary question that I tabled states that there are only 1,800 licensed practitioners, of whom 1,270 are currently taking appointments. That is a very small number of insolvency practitioners. There is a pressing need to regulate them, as well as adding to their number under the Bill. Regulation should ensure that practitioners publish meaningful information about their affairs, as should the new nominees. What is their record on saving businesses and rescuing jobs? What fees do they charge? Such information should be in the public domain so that a company in difficulty, which is considering bringing in a nominee and submitting itself to a voluntary arrangement, knows who to turn to for help, what support is available and what the fees will be. What information will be published? The public must be aware of such matters.
  If the advice and support service is to be restricted to small firms only, why cannot the DTI provide it? Why must it be provided by another group of practitioners? Why cannot there be fair competition from the public sector? Those involved will be subject to professional regulation, but it will not extend to fees. The Association for Accountancy and Business Affairs has published a series of examples of that. I recommend to the Minister our exciting publication entitled, "Insolvent Abuse: Regulating the Insolvency Industry", which shows that the fees charged go as high as £500 an hour. That is not peanuts. When will such huge charges be regulated? They have a crucial effect on a small firm's ability to survive.
  When will the insolvency profession be regulated effectively? My hon. Friend has said that a new regulator will be appointed. At present, 1,800 practitioners are regulated by eight professional bodies, and the Department of Trade and Industry. I argue that that structure should be simplified to one independent regulator, but the Government propose to add another,

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  non-independent, regulator at the apex of the structure. That regulator will not have the power to deal with individual cases and complaint investigation procedures, and there will not be the ombudsman necessary for effective appeals. The need for an effective appeals machinery, for effective redress and the control of fees, is even more acute for small businesses. The Bill gives small businesses additional help towards survival, but we should regulate the insolvency profession at the same time. The culture in that profession is to grab the fees, and to make them as high as possible.
  It is important to regulate insolvency practitioners. Voluntary arrangements have been in place since 1986. My hon. Friend gave the House figures that show that such arrangements are rarely invoked. In 1998, 11,771 companies were wound up, of which only 470 went into a voluntary arrangement. That shows, tellingly, that the provision made in 1986 is not much used.
  My hon. Friend hopes that the Bill will cause that provision to be used more widely, and so do I, but is the provision little used because people are scared of the insolvency profession and the fees that are charged? Are they worried that they will not receive reasonable and fair treatment? There is no right of appeal about the treatment that they receive and no way to contest the fees that are imposed. Is it not possible that people are put off entering voluntary arrangements more by such factors than by the difficulties that the Bill is designed to ease? I believe that the central problems are the scale of fees and the lack of regulation.
  In conclusion, I am worried that the Bill and its fast-track disqualification procedures will conflict with the human rights legislation to which we now are subject.
  Dr. Howells: I am pleased that my hon. Friend has raised the vexed question of human rights. However, I can assure him that the Department has studied the matter in depth, and we believe that the Bill is compatible with the European convention on human rights.
  Mr. Mitchell: I thank my hon. Friend for that intervention, and I hope that that is the case, but the new procedure makes the Department of Trade and Industry investigator, judge, jury and deal maker in the agreements under which wealthy directors will disqualify themselves. The Bill does not say that the Secretary of State will have to publish a full transcript of any deal struck with such directors. In fact, the convictions in this country of the directors involved in the Guinness affair have been overturned recently by the European Court on the ground that they contravened the convention on human rights in ways similar to those I have described this evening. I am worried about passing a Bill that could be stymied and rendered unenforceable by the appeals that could be generated.
  The Bill is a little mouse of a measure. It is welcome—I love small animals. It will bring about an incremental change, but it will not change the insolvency industry's culture, which is loaded far too heavily against small firms and small entrepreneurs, and against survival and in favour of safeguarding the banks and grabbing company assets.
  The Bill misses an opportunity in that respect. My hon. Friend accused me, in connection with the Limited Liability Partnerships Bill, of trying to regulate through
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  legislation. However, that would not be necessary if the Department of Trade and Industry were to do its job and impose a proper framework of regulation on this benighted industry.
  7.6 pm
  Mr. Christopher Chope: I am delighted to follow the hon. Member for Great Grimsby (Mr. Mitchell). When I worked for Ernst and Young, partners in that firm made it clear that the hon. Gentleman was held in great esteem. There was respect, if not reverence, for his views and for his ability to get publicity for them in the accountancy press.
  I hope that the Minister will respond to one of the questions that the hon. Member for Great Grimsby asked. Why is the Bill not being extended to cover medium-sized and large businesses? One of the rationales for introducing the Bill is that it will save jobs. Only 0.5 per cent. of all businesses have more than 100 employees, but the businesses excluded from the terms of the Bill account for about 55.7 per cent. of business turnover in the United Kingdom, and employ 48.8 per cent. of those employed in this country.
  Extending the provisions of the Bill to larger companies would have a very considerable impact. As the hon. Gentleman has outlined, it might be more realistic to apply them to larger businesses than to very small ones. I am grateful to the Federation of Small Businesses for the data on the proportion of people employed in businesses that are much larger than those specified in the Bill as small businesses.
  I support what my hon. Friend the Member for South-West Hertfordshire (Mr. Page) said about the Bill being considered so late in the parliamentary Session. It need not have happened that way. In appendix 7 on page 58 of the second report from the Select Committee on Trade and Industry, the evidence given on 20 October 1999 by the permanent secretary at the Department is printed. Trying to justify the fact that there had been a minimum period of consultation and a very small number of consultees, he said:
  You will know from the copy consultation letter sent to the Committee that it is Ministers' hope to be able to introduce an Insolvency Bill at a relatively early stage in the 1999–2000 session of Parliament.
  The Bill was included in the Queen's Speech of 17 November 1999, but it was not introduced into the other place until 3 February this year. The Bill received its Second Reading on 4 April, and was considered by a Committee of the whole House for one day on 15 June. The Report stage took place on 3 July, and Third Reading on 26 July.
  The Minister was right to be rather defensive when he began his remarks by referring to the pertinent observations of the right hon. Member for Chesterfield (Mr. Benn) in yesterday's debate. The right hon. Gentleman memorably said that perhaps this should be called the Bankruptcy Bill [Commons] rather than the Insolvency Bill [Lords]. His point was that we should be more inclined to hold the Executive to account for the waste of legislative time, which is precious indeed.
  This is an example of the Government saying that they will legislate at speed but instead legislating very slowly and delaying the consultation process. Then, as the right hon. Gentleman pointed out, after a 12-week recess, the

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  first full day's debate must be given over to this Bill which, although everyone accepts it is important, is not the most important issue facing the country. Yet we have to spend Tuesday debating it because the Committee of Selection meets on Wednesday, and if the Bill is not given a Second Reading before then, the Committee will not be able to decide on the membership of the Standing Committee to meet next week. For the Government to have created a situation in which this House has to debate the least important legislation at the very beginning of the spill-over Session is an indictment of the Executive. We should not allow it to happen again and it should certainly not go unremarked by the House. I therefore agree with the right hon. Gentleman's remarks.
  The Minister has told us that the legislation is proceeding ahead of decisions on two broader reviews, initiated by the Government, on company rescue and personal bankruptcy. It is a pity that the Government seem to be the author of the delay that has resulted in this piecemeal legislation. Let me illustrate my point.
  In December 1998, when the right hon. Member for Hartlepool (Mr. Mandelson), was Secretary of State for Trade and Industry, he launched the competitiveness White Paper. He announced reviews into company rescue and the stigma of bankruptcy. Under that White Paper implementation plan, the idea was that the company rescue review would be completed by July 1999. If it had been, the results could have been fed in to the legislation. Needless to say, it was not completed by July 1999, and the resulting delays mean that the results of the review are not available.
  On the reform of bankruptcy law, the same White Paper in December 1998 announced by the Secretary of State was re-announced on 2 February 1999. He said that the review would report to him by the end of April 1999. Officials did, indeed, report to Ministers by the end of April 1999. The Secretary of State took rather a long time to consider their views—he did not make an announcement until 2 July. In other words, it took him the whole of May and June to decide what to do in the light of a review which had itself taken only two months.
  The right hon. Gentleman then announced that there would be further consultation. The announcement was made at a big event at which the right hon. Gentleman was obviously short of other things to say. He was giving a speech to a joint United States embassy, Department of Trade and Industry and Treasury conference on "Fostering Enterprise—the American Experience". He said:
  I now plan to consult on this proposal and on the possibility of differentiating between bankrupts who have been simply unfortunate and those who are guilty of unacceptable behaviour.
  Fine—but then what happened? We had to wait until 7 April 2000 before he actually issued his consultation document—a further nine-month delay.
  The consultation paper was then issued, setting out five options. Consultees were required to respond by 30 June, which they did, yet their responses are apparently still being analysed—or, if they have now been analysed by the Insolvency Service and the information has been given to the current Secretary of State, he has not yet thought fit to divulge the results to the House.
  It is vital that we have the benefit of the outcome of that much-delayed consultation to inform the Committee's proceedings on the Bill. I hope that the Minister will be
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  able to tell us that the information and documentation will be made available to members of the Committee so that they can use it to inform their detailed scrutiny of the Bill in Committee.
  I fear that the whole exercise has been designed to ensure that the results of the consultation are not available until after the legislation has been passed so that the Government can then say that it is too late and nothing can be done. However, the Government have said that they wish to legislate—although they had the opportunity to do so in this Session and wasted it. As the hon. Member for Great Grimsby said, we now have this mouse of a Bill. What a way to run a Government and what a way to treat this legislature—this mother of Parliaments. The problem is that the Government are obsessed with soundbites and do not get down to the substance.
  I am concerned about a couple of elements in the Bill. In an intervention, I asked the Minister about directors who undertook to accept a disqualification for whatever period and whether there would be any basis for other people to know the facts underlying those undertakings. If a disqualification takes place, particularly if it does not happen in a court, it is important for outside and third parties to have access to the information on the basis of which the decision was reached. This will be important if a director subsequently applies to have his undertaking altered. For example, having undertaken to be disqualified for five years, he could, after two or three years, ask to be relieved of his undertaking and have the disqualification lifted straight away. The people dealing with the arrangements will need to know the basis and the facts on which the director accepted the undertaking in the first place.
  I have an acquaintance who was the subject of proceedings under the Company Directors Disqualification Act 1986. There were implications for him from the consequences of the professional disciplinary hearings that followed. He had a big argument with his professional body because there was no basis on which to agree on the facts on which the disqualification had been based. The abbreviated procedure before the courts had been used in that instance.
  It is vital and in the public interest that there should be an agreed statement of facts, behind which the director cannot go subsequently, so that comparisons can be made between the agreed statement of facts in one case and another. We are talking about a very wide discretion being given to allow disqualifications by undertaking lasting from anything between two and 15 years. It is not as if case law can be studied, so how are people to know what the benchmark is for a disqualification for a period of two, three, five or 15 years?
  It should not be possible for a director to accept an undertaking to be disqualified for a period of as long as 15 years for a serious offence. Similarly, if people are caught speeding on our roads, they might receive a fixed penalty notice, but the police and prosecuting authorities have the discretion to bring the matter before a court if they think it is sufficiently serious. If an offence is sufficiently serious to warrant a 15-year disqualification, or even a five-year disqualification, surely it should be brought before the courts and be open to public scrutiny.
  The Select Committee made that point in its inquiry. It came up with a concise recommendation, on which the

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  Government then commented, saying that they were not convinced of the select committee's argument. in paragraph 41 of its report the select committee said:
  we consider that there could usefully be explicit provision for a statement of fact on which the undertaking was based to be available to the court in the event of subsequent proceedings.
  In their response the government said:
  we note the committee's views and understand its concerns. We are mindful, however, of the danger of placing too much emphasis on the form of the procedure (statement of unfitted conduct) rather than on the substance of the underlying legislation (early provision of the protection for business and for the public generally which the Company Directors Disqualification Act 1986 is intended to provide).
  I am sure, Mr. Deputy Speaker, that in your wisdom you immediately understand the Government's reasoning. However, the members and Clerk of the Select Committee found the Government's response or justification obscure in the extreme, which relates to the obtuse reply that the Minister gave me earlier. I hope that in Committee the Minister will introduce into the Bill a provision that will permit an agreed statement of fact to underlie the acceptance of undertakings for disqualification, which will introduce a degree of transparency important to this process.
  I also wish to express solidarity with the Institute of Directors, which is concerned that undue pressure may be put on directors to accept undertakings rather than go to court, and says:

  We agree that the option of disqualification undertakings should be introduced. However, it will be very important that directors offered the option of an undertaking are not under any pressure to take it, rather than going to court. It would not be healthy for a plea-bargaining culture to develop, on the lines of "Accept a three-year disqualification undertaking, or go to court where we will press for five years".
  The institute's concern is genuine and, to avoid such danger it suggests that
  procedures governing the way in which the option of an undertaking is brought up and discussed with a director need to be developed and published.
  The institute continues:
  There may be much to be learnt here from the Inland Revenue's procedures under which people caught evading tax are offered the option of an informal financial settlement.
  The criteria that apply to whether someone should be disqualified for two, five or 15 years should be made open to all so that a director facing disqualification who is negotiating on his own behalf has access to information that otherwise might not be available. It could be oppressive for him to argue against the authorities, who could say that he might get a much higher sentence if he does not accept the position and goes to court. The Institute of Directors makes a good point, and I hope that the Minister will respond to it.
  I deal now with the financial effects of the Bill. More than once in his opening remarks, the Minister said that savings in time and money would result from the accelerated disqualification procedure. However, according to the explanatory notes to the Bill, there are no beneficial financial effects, which leads to concern about whether the savings that the Minister used to justify the procedure will take place. Indeed, the explanatory notes justify the procedures relating to directors on the basis that that will speed up the process and do not state that there will be a saving. Will the Minister explain a conundrum?
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  Surely, if fewer cases are referred to the court and each case takes less time, savings will result from that accelerated disqualification procedure. If there are not going to be savings, why is the House being asked to rush the Bill through?
  Finally, although some people may feel that these changes will be beneficial, a much larger body of consumers will be concerned about rogues who do not operate within the protection of a company framework. Tomorrow, the hon. Member for Luton, South (Ms Moran) will ask for leave to introduce a Bill on rogue traders under the ten-minute rule motion. Our constituents are genuinely concerned about rogue traders who are not incorporated. The Government are introducing piecemeal legislation and I expect them to confirm that they will not be able to introduce legislation on consumer affairs in the coming Session, as they originally forecast. The result of misuse and waste of parliamentary time is that issues relating to rogue traders who are not incorporated will not be the subject of legislation in this Session or, indeed, during the course of this Parliament, which is to be regretted.
  7.27 pm
  Mr. Page: With the leave of the House, Mr. Deputy Speaker. I began my earlier contribution to this debate by speculating on the equine parentage of the Bill. You were not in the Chair then, and did not have the privilege of hearing my introduction, but many right hon. and hon. Members know that I have an interest in the horse-racing industry. Having listened carefully to the Minister's arguments and hon. Members' comments, I have no doubt that the Bill reflects sound ideas and good intentions. However, I am not fully convinced of its chances of remedying the problems that it aims to address. It seems less of a thoroughbred than I would have hoped and more of a slightly battered carthorse.
  Dr. Howells: Is that me or the Bill?
  Mr. Page: The Minister can relax, as I shall come to him in a moment or two.
  Generally, the Opposition welcome the Bill, with the proviso that we shall try to improve it in Committee. I very much welcome the observations of the hon. Member for Ochil (Mr. O'Neill), who said that, unavoidably, he has to go away. I took great pleasure in his railing against the closed shop of insolvency practitioners. There is great joy in heaven over a sinner who repenteth. I accept the hon. Gentleman's reservation that, if we are going to open up that closed shop, we must make sure that the authorised person is qualified to undertake the work.
  The hon. Member for Twickenham (Dr. Cable) very much agreed with me that the review processes should have taken place before the Bill was introduced. I believe that the House generally is of that opinion.
  The hon. Member for Great Grimsby (Mr. Mitchell) started loyally by saying that he could not understand any of my doubts about the Bill, but spent the next 20 minutes outlining his own doubts and worries about how it would work, and if it would work at all. I share many of the hon. Gentleman's concerns, and he can do no harm in my eyes since he has endorsed the principle of my ten-minute Bill under which the role of the insolvency practitioner in recommending administrative receivership should be

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  taken away from those asked to undertake that receivership. The situation is similar to having a judge and jury who would be paid £10 for letting a defendant off but £100 for finding the accused guilty.
  My hon. Friend the Member for Christchurch (Mr. Chope), having heard the rumour that there will be no Department of Trade and Industry Bills in the forthcoming Queen's Speech, outlined in his efficient and effective manner the chaos of the Government's timetable management. His every word was a hammer blow against the incompetence and inefficiency that the DTI displayed in handling its affairs this year. Normally, I would blame the Minister for that, but he is just the fall guy. The Secretary of State should have taken a grip to prevent the year of confusion that the DTI has gone through. I shall not spend the time of the House going through the various Bills that had to be curtailed or cut in half or the record number of amendments that had to be tabled, as that would take me out of order, Mr. Deputy Speaker.
  My hon. Friend was right to discuss the principles involved in the process of disqualification of a director. They must be clearly understood, and we look to the Minister to expand on what is written in the Bill and to tell us exactly how it will work to prevent future problems.
  One of the Bill's basic problems is that it fails fully to reflect the realities of the business world. The hon. Member for Great Grimsby touched on much of that problem. It is all very well to place a moratorium on the shoulders of a small company facing difficulties. The merits of requiring it to seek the views of an insolvency practitioner on the practicality of proposals for a voluntary agreement with creditors have been rehearsed in the other place, and by me and others today.
  Any creditor of sense will approve arrangements that will ensure the payment of what is owed. I do not dispute that. In real life, however, the slightest hint that a small company is in trouble and may be unable to meet its obligations will almost certainly cause banks or trade creditors to act before the firm's directors can even begin to seek a moratorium. I hope that I am wrong, but I fear that the Bill may prove counter-productive. Often, only the threat that creditors will lose everything allows companies in trouble to recover, as I know from my business experience. However, banks, which are so often the instigators of proceedings, are also often in a protected position, and are therefore released from that pressure.
  I am greatly concerned about the Government's apparent belief—contained in the words of Lord McIntosh in the other place—that the directors of a small company
  should remain in control of the company and its business during the moratorium.—[Official Report, House of Lords, 4 April 2000; Vol. 611, c. 1249.]
  That is hardly compatible with the powers to monitor the company's activities which are to be granted to nominees during the moratorium, or with extensive restrictions on the capacity of such companies to enter into market contracts. We all know the difficulties that will be placed on a small business that is trying to operate during a moratorium and trying to gain money to buy and sell stock.
  It is not surprising that the Minister takes such a relaxed attitude towards allowing the decisions of a nominee to be challenged in the courts by the creditors, directors or
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  members of a company or any other persons who are affected by the moratorium. Whether we like it or not, such a provision is a standing invitation for aggrieved parties to hamstring the aims of the Bill. Nominees are unlikely to be willing to place themselves in situations in which their decisions might be subject to such challenges. Exactly what supervisors and nominees would gain from the new procedures envisaged in the Bill remains to be explained.
  These practical issues must be explored in Committee. The Conservatives will seek more convincing arguments than have come from the other place or, dare I say it, from the Minister today. We shall, however, go into Committee willingly and positively, and try to make the Bill work. We shall do what we can to help small businesses to survive and live longer in a difficult world.
  7.35 pm
  Dr. Howells: I thank the hon. Member for South-West Hertfordshire (Mr. Page)—
  Mr. Deputy Speaker: Order. I am sure that the Minister would wish to seek the leave of the House if he wants to speak a second time.
  Dr. Howells: With the leave of the House, Mr. Deputy Speaker, I should like to reply to some of the points raised. I am afraid that the new regime seems to have gone to my head.
  I welcome the partial support offered by the hon. Member for South-West Hertfordshire, but I am at a loss to understand why the Government are being pressed to hold off. For years, we have been urged to provide for a moratorium in the company voluntary arrangement procedure, and we have been told that that is necessary to make the procedure more effective. Yet the moment that we act to put the first building block in place, we find ourselves urged not to act, but to delay so that there can be time for further consideration. Where does that leave companies that need a breathing space now? Are they to be allowed to go under because the Bill is not sufficiently elegant to draw entirely on the two reviews mentioned by the hon. Gentleman?
  Mr. Page: The Minister is, if I may put it delicately, being disingenuous. He well knows that the complaint that we are making against the Government is that the reviews were not started earlier so that they could have been combined with the Bill. No one wants to hold the Bill up. Indeed, I am complaining that it was not enacted with greater expedition and much sooner.
  Dr. Howells: I accept that there has been some congestion, and that it has been caused mostly by DTI Bills: I know, because I have presented most of them. However, I am staggered to hear the Opposition react as they have. Much of what we are doing is based on a draft Bill drawn up by the Conservative Government of the mid-1990s. For whatever reason—no time or no political will—they could not get their act together to put the Bill on to the statute book. We are trying to enact, but we are hearing grudging delaying tactics from the hon. Member for Christchurch (Mr. Chope). It was pretty rich of him to talk about delays when it was all I could do to stay awake

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  as he went through his catalogue of imagined delays that he presumed the Government to be applying on purpose. That is, of course, complete nonsense.
  Mr. Chope: Will the Minister give way?
  Dr. Howells: No.
  The consultation paper, "Bankruptcy: A Fresh Start", touches on individual voluntary arrangements under the Insolvency Act 1986. Again, however, its scope is much broader than that limited area. I admit that we are a long way from reaching conclusions on those matters, but the changes that we propose through the Bill to the individual voluntary arrangement procedure are needed now if we are to make it more efficient and effective.
  The Bill includes proposals on other important matters, all of which have received a broad measure of support both in and out of Parliament. Those issues are needed now, not at some indeterminate time in future. I hope that we shall hear no more suggestions that the Bill should be delayed.
  Unfortunately, because of lengthy speeches—by me as well as by the hon. Member for Christchurch—some prime contributors to this debate have left the Chamber, for unavoidable reasons.
  I welcome the important contribution made by my hon. Friend the Member for Ochil (Mr. O'Neill), which was the only one to set the issue in a broader context. He reminded us that we should have a different attitude towards honest business failure, which should not carry the stigma that it so often does. The Unites States has a different attitude—that that experience goes under the belt of the business man or woman who suffered it. It is often seen as an asset.
  My hon. Friend also mentioned—as did others—the time allowed for consultation. There is no question about the fact that we were pushed for time. I will not try to excuse it. We tried hard to consult as widely as we could. In response to my hon. Friend the Member for Great Grimsby (Mr. Mitchell), who is also pressed for time, let me say that we talked to some of the "victims"—as he put it—as well as the vested interests that he also mentioned.
  My hon. Friend the Member for Ochil was concerned, as was the hon. Member for South-West Hertfordshire, with the important matter of how to prevent a landlord or a utility company closing in during a moratorium on a company. Paragraphs 5 to 12 of schedule 1 make consequential amendments to the Insolvency Act 1986. For example, the amendments to section 233 will not permit suppliers of gas, water and electricity to require a nominee to pay outstanding debts for supply as a condition of supply during the moratorium. I hope that that is helpful.
  I am glad that the hon. Member for Carshalton and Wallington (Mr. Brake) is present on the Liberal Democrat Benches because his hon. Friend the Member for Twickenham (Dr. Cable) made a constructive contribution. He asked about international issues, which are difficult. The UNCITRAL measures—I cannot think of another way of pronouncing that hideous acronym—cannot apply if the European Community regulation applies. The hon. Gentleman asked whether the power would impact on the EC regulation on insolvency proceedings. I hope that the hon. Member for Carshalton and Wallington will tell him that the answer is no. Where
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  the EC regulation applies, it will do so to the exclusion of any other provision. That EC regulation comes into force on 31 May 2002.
  My hon. Friend the Member for Great Grimsby, who has now left the Chamber—he was here when I looked round just now—warned us not to be lured on to the rocks by the siren voices of vested interests. He repeated some of the criticisms about the restricted nature of the consultation process. As I have said, there has been extensive consultation. Much of what my hon. Friend had to say went beyond the measures in the Bill. You were right, Mr. Deputy Speaker, to let him run with that theme, which I have heard a number of times. It is a healthy route for him to follow. We sometimes need to be reminded that some powerful vested interests might be strengthened by aspects of the Bill if it were not drafted so expertly.
  The hon. Member for Christchurch seemed to do his level best to add to the delay—which may or may not have taken place—in the process of this legislation. However, his argument about introducing transparency into the disqualification undertaking is important. I told him that I would try to answer some of his questions. He seems more concerned with form than substance. The purpose of the disqualification process is to get the director out of the corporate sphere as quickly as possible. That is what concerns me most. The hon. Gentleman questioned how we can guarantee that costs will be less, which is an interesting issue. That is substantially a matter not for the Department but for the courts and defendants. However, I shall try to supply him with up-to-date figures on impact assessment before the Bill goes into Standing Committee—I hope that he will be a member of that Committee because he inevitably graces such Committees with his erudite comments and criticisms.
  The intention is that the case against each director will be prepared up to the point at which proceedings could be issued. At that juncture, the Secretary of State will contact the director concerned, who will be invited to say whether he wishes to consent to a specified period of disqualification by way of giving an undertaking. The intention is not to pressurise. If a director does not take up that opportunity, proceedings will be issued in the normal way. It will remain for the director to decide whether he wants to contest the disqualification application in the courts.
  Mr. Chope: Will the length of the disqualification period be subject to negotiation or on a take-it-or-leave-it basis?
  Dr. Howells: That gives rise to the question whether there should be a schedule of unfitted conduct. Would it be a precondition of a disqualification undertaking and how long might it be? I think that a schedule of unfitted conduct would not be a precondition, but as a matter of practice the Secretary of State would agree the unfitted conduct before accepting an undertaking in accordance with practice post the Woolf civil justice procedure reforms. However, for a variety of reasons, that might not always be possible. For the Secretary of State only to be able to accept an undertaking in cases when a schedule has been agreed would be unduly restrictive and could delay putting in place the protection that the Company Directors Disqualification Act 1986 is intended to provide. It might also increase costs if there is a difficulty in agreeing to a schedule.

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  I hope that I have answered most of the questions. I have no doubt that we can explore them further in Committee. On the basis of what I have said, I commend the Bill to the House.
  Question put and agreed to.
  Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).

  NON-SITTING FRIDAYS
  Resolved,
  That the House shall not sit on Friday 27th October and Friday 3rd November, and the provisions of paragraphs (3) and (4) of Standing Order No. 12 (House not to sit on certain Fridays) shall apply to those days.—[Mr. Pope.]

  Orchard Hill
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]
  7.48 pm
  Mr. Tom Brake: I am grateful for the opportunity to raise this important matter and will briefly outline the services that are on offer at Orchard Hill in case the Minister is not familiar with the establishment.
  Orchard Hill is a campus-style hospital run by the South West London Community NHS trust for people with learning disabilities. It is one of two remaining sites in London for such people. It has a 47-acre site in Carshalton next to the site of the old Queen Mary's hospital for children, which closed some years ago. At present, it is home to about 110 people, most of whom have lived there for all their adult life. The people at Orchard Hill tend to have greater disabilities than most—many have mobility problems or are incontinent, some are blind and most require nursing assistance. The majority are over 30 and nearly 90 per cent. have been at Orchard Hill more than 20 years.
  As well as being a place where people live and are supported by trained staff, the hospital site has other facilities for people with learning disabilities, not all of which are managed by the trust. For instance, they include short-term, in-patient beds for the assessment, treatment and respite care of people with learning disabilities. There is a further education service, providing a wide range of courses; there is a structured curriculum, with the flexibility to meet individual needs—including communication, physical education and life skills—and specialist courses for students with sensory impairments as well as courses on the arts and sciences.
  Orchard Hill can be classed as a unique college for people with learning disabilities. Also on site, there are day services and an experience park. There is a dedicated health centre and a hydrotherapy pool. Some of those services are used by people from the wider community.
  There are, however, some difficulties. The campus is old-fashioned and, by contemporary standards, the buildings offer poor accommodation for the services provided. Residents lack both privacy and homely environments. Although some residents' families consider the care provided as adequate, others consider that the service reflects the running down of Orchard Hill. The Minister will agree that that matter needs to be addressed.
  In 1999, a consultation document was produced on services at Orchard Hill for people with a learning disability. Orchard Hill was under threat of closure. Worried parents took the matter to a judicial review and the decision on Orchard Hill was quashed by Mr. Justice Jackson. It is likely, however, that the South West London Community NHS trust will introduce similar proposals, taking into account the criticisms made by Mr. Justice Jackson. It is for that reason that I requested the debate. For the sake of residents at Orchard Hill and their relatives, it is essential that any further plans to make changes are carried out correctly and appropriately by the trust.
  I seek reassurance from the Minister that plans will proceed in the manner that will—most important—identify and meet the medical, social and sensory needs

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  of each individual, confirming whether, in fact, they need a medical or a non-medical model of care; assess the psychological impact of moving; minimise the anxiety of relatives; improve current standards of care; and provide a relevant service for the future. The Minister will no doubt agree that we have progressed from Victorian policies for the care and treatment of people with learning disabilities that centred on the use of large institutions.
  The most recent guidance for people with learning disabilities is contained in "Signposts for success in commissioning and providing health services for people with learning disabilities", published by the Department of Health in 1998. Orchard Hill can meet many of the recommendations set out in that document. An exception, however, is the recommendation that people with learning disabilities should ideally have experience of community services that are not institutional in style.
  Why has the South West London Community NHS trust proposed changes for Orchard Hill? In part, no doubt, it is in response to Government policy. However, many other reasons for change are put forward.
  Without a major source of capital investment, the viability of the site will increasingly be challenged; it would be unacceptable for residents to remain on a site that was in permanent decline. Change is happening anyway, because the population at Orchard Hill is an ageing one. People are discharged at the request of a relative or of health authorities and, sadly, several residents have died.
  As the cost per capita rises, it is becoming increasingly difficult to maintain quality. The hospital site is mostly made up of older buildings. That is not an appropriate environment in which to provide care and many professionals are reluctant to work in such settings.
  Of course, the new generation of people with learning disabilities expects that services will be more community based and less institutional in style. All national health service bodies have a duty to seek services that make the best use of limited resources.
  In 1998, a project board was set up to look at the options for change at Orchard Hill. It soon became clear that a single model would not be practical. A proposal was made to minimise the disruption to clients with the highest need by retaining some existing bungalows while offering new opportunities to the more able residents by creating some new residential services. It was proposed to use land already owned by the trust and to use the independent sector to offer places to the majority of residents. It was thought that such an approach could be more easily tailored to fit individual needs.
  The response of relatives to the proposals was generally negative. A third were opposed to the proposed changes. A third said that they might support them if the final arrangements were suitable for the individuals concerned. A third were undecided. Apparently, only one person supported the plans, while 68 per cent. of the next of kin felt that the changes presented no opportunities for residents.
  Why was the response so negative? There are several reasons. Next of kin are concerned that the plans will result in the loss of staff who have intimate knowledge of the residents. Most were concerned about the location of future homes, especially as some residents will become the responsibility of the health authority that originally placed them at Orchard Hill. Next of kin were worried
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  that individual placements might not meet the needs of individuals and that monitoring of the independent sector might be deficient. The consultation process carried out by the trust did not appear to address those concerns. That needs to be corrected in future reviews.
  It should not be forgotten that the people at Orchard Hill are severely disabled; the majority have a mental age of between two and five. The site benefits from its surroundings of wide open spaces—a fact that I can vouch for, having visited it on many occasions—and from the safe environment in which people who are hyperactive can release energy and walk safely. Relatives are concerned that those important benefits will be lost—to the detriment of the residents.
  At the judicial review, Mr. Justice Jackson quashed the consultation process because of a flaw in the decision-making procedures; the health authority had not taken into account the promise made to so many residents that Orchard Hill was a "home for life". Although I realise that a public authority cannot be expected to keep all the promises of its predecessors when considering actions that would take the opposite direction to such promises, they must still be taken into consideration. Furthermore, the process was deeply flawed because the trust had neglected to carry out individual assessments of need.
  Mr. Justice Jackson questioned the backbone of the plans for change when he queried whether
  institutionalisation is the real problem for these particular individuals.
  That is a worrying observation and undermines one of the trust's major reasons for undertaking the project.
  For ageing parents of residents, many of whom have contacted me, their sense of security for the future has been shaken. Any future plans must proceed sensitively and appropriately. Given that, in the past, the trust has shown a serious operational deficit, and bearing in mind the Government's calls for care in the community, there is an impression that change is being driven by a cost-cutting exercise and a top-down agenda for the future of learning disability services nationally and by the reconfiguration of all such services locally. I should like to see evidence that change is being driven by all that is in the best interests of users, patients and the general public.
  During the Orchard Hill project, one of the proposals considered was for a care village environment. The situation at Orchard Hill almost fits such criteria already. However, the team considering the proposals did not believe that Orchard Hill adhered entirely to the Government's policy of care in the community. The team was concerned that a ghetto might be created and that the services provided in the village and in other mainstream facilities raised issues of access and integration. However, I question whether the care village proposal was given sufficient consideration.
  As the Minister may be aware, Baroness Caroline Cox and Lord Malcolm Pearson recently published "Made to Care: The Case for Residential and Village Communities for People with a Mental Handicap". The paper states that the policy of integration was associated
  with the swing of another pendulum away from a "medical model" of care towards a model of "social care" based on the assumption that most mentally handicapped people are not ill, but have largely "social needs".
  That swing has obscured the fact that the health needs of people with mental handicap tend to be greater than those of the general population. Many suffer from multiple handicaps, which need medical care and clinical expertise.

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  Baroness Cox acknowledges that, although a move into the community has been successful for many people—because they have gained independence, autonomy, dignity and self-esteem—it does not mean that de-institutionalisation is the most appropriate or suitable option for everyone.
  Initially, those who have been discharged from long-stay institutions have been the people who have been the least disabled and the most independent. Now it is likely to be those who are severely disabled and who require a more complex pattern of care.
  Are village communities a viable option? I believe that they are. They can provide humane individualised care and offer many advantages. Continuous nursing care can be provided most appropriately in such communities. It is important to bear in mind that people who are highly dependent and vulnerable might find that living in a house in a busy suburban area is more confining than living in a village community.
  Financially, the capital costs of moving someone from a hospital to a specially adapted house in the community, without health, recreational or educational services, is about £50,000, while a hospital site can be converted to a purpose-built village, using existing facilities, for about £20,000 per resident. Those figures were provided by Rescare, the National Society for Mentally Handicapped People in Residential Care, and they should not be ignored. Will the Minister use this opportunity to confirm whether he and his Government support the concept of village communities?
  Future proposals for Orchard Hill should not be about substituting good care for possibly ill-thought-out Government policy and potentially unsound monetary gain. The aim of the Orchard Hill project should be to secure a better future for its existing residents and to ensure that the local national health service and Sutton council develop better and more flexible models of service provision for local people.
  I am seeking a guarantee from the Minister that any future changes at Orchard Hill will improve the quality of life of the residents, not just maintain it at its existing level. I should also like the Minister to provide an assurance that, whatever the future of Orchard Hill, its residents will continue to have easy access to open space, with the high level of security that they currently enjoy. Should any of the Orchard Hill residents be moved, the new neighbours who will be living close to them should be educated and prepared to welcome them. I also want an assurance that alternative services to those that are currently available on site will be in place prior to the movement of residents; that the services that are currently free will remain free; that there will be equity between people of similar needs, regardless of their location; that adequate transport arrangements will be in place; and that the resources will be available for care in the community.
  Before any action is taken, it needs to be understood how those changes might affect the resources available to a new generation of service users who might be looking for similar facilities.
  I have spoken at some length, but it is a subject that affects the lives of some of the most vulnerable people in my constituency. I hope that the Minister will follow the
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  developments at Orchard Hill very closely, and will ensure that the review process on which the trust is about to embark is transparent, and provides the best care and education for Orchard Hill residents.
  8.3 pm
  The Minister of State, Department of Health (Mr. John Denham): I congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on securing the debate. I am grateful to him for indicating in advance some of the issues that he intended to raise. I hope to cover most of those this evening; if I do not, I shall certainly look at the Official Report and write to the hon. Gentleman on any points that are left outstanding.
  I welcome the opportunity to discuss the provision of health and education facilities at Orchard Hill and to mention briefly some of the wider issues concerning the development of services for people with learning disabilities. This is a very important issue. First, I am well aware that, for those using Orchard Hill and their relatives, this must be a very anxious time, and I am concerned to ensure that we provide the highest quality care and support for them now and in the future.
  I shall start by covering some of the background to the services and to the situation at Orchard Hill. As the hon. Gentleman said, Orchard Hill hospital was developed next to the old Queen Mary's hospital for children. The service built up on the site when, in the early 1970s, children often could not be transferred to St. Ebba's hospital in Epsom because no beds were available. Slowly, the number of adults with learning disabilities grew, and in the late 1970s it was agreed to have a unit for adults with learning disabilities in the grounds of St. Mary's. That became Orchard Hill hospital. Moving to more recent times, Queen Mary's hospital closed in 1993, although the Orchard Hill site was retained.
  Services for people with a learning disability have obviously changed considerably over the years in which Orchard Hill has been open. In the summer of 1999, Merton, Sutton and Wandsworth health authority issued a consultation document on the future provision of services for people who live at Orchard Hill. The consultation period ran until mid November and the health authority considered the responses in January 2000.
  The relatives of three patients challenged the decision and were granted a judicial review at the High Court in July. Relatives were concerned about the fairness of the consultation process, the health authority's decision to close Orchard Hill and the health authority's failure, as they saw it, to take account of all the relevant considerations before taking its decision.
  The judge ruled that the decision was unlawful on the third point: that the health authority had failed to take account of relevant considerations. Let me say this now: Ministers are always concerned when relatives feel compelled to have recourse to the law in such circumstances. That is particularly the case when the matter concerns vulnerable and disadvantaged members of our society, although I was pleased to hear that the health authority had provided advocacy services for the people with a learning disability and their families, to help them to make their case.
  Let me move to the heart of the case. The judge felt that there were a number of grounds on which the health authority did not have adequate information. There was

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  evidence from correspondence and notes of meetings of prior promises of homes for life to patients and their relatives, and previously declared policy about the site. The judge declared that the indicative assessment that had been undertaken was not capable of supporting the health authority's decision on the future provision of services and that, at the very least, a public authority must take earlier promises into account when considering a course of action. Finally, he was critical of poor financial information—the hon. Gentleman mentioned that issue.
  I am pleased, although not surprised, to hear that the hon. Gentleman is keen to ensure that the future of residents at Orchard Hill is secured and considered in a sensitive, open way and through individually discussed and negotiated care plans; so am I. He made several very important points. Let me begin to address them.
  First, the health authority clearly needs to review its actions following the judgment. I believe that the health authority received the final written judgment only a few weeks ago, at the end of September. The health authority is committed to ensuring that people with learning disabilities, their relatives, trust staff and others are kept informed of future developments concerning Orchard Hill through a news sheet, letters and meetings. The authority is committed to discussing with them the need for further consultation.
  The hon. Gentleman is keen, as are the Government, to ensure that any changes to people's services are based on thorough, high-quality assessments, and that any decisions are based on the overall best interest of the individual client. The health authority is leading a review of the assessment process, in partnership with a large number of stakeholders, including the relatives.
  First, the new process will ensure that there is detailed information on the needs of individuals in terms of their individual and collective need for continuing health care services. Secondly, it will ensure that there is detailed information on the broad range of social care services needed by the individuals and the population of people living at Orchard Hill. Thirdly, it will ensure that there is detailed information about the assessment of the psychological impact on individuals that may be caused by moving them away from Orchard Hill. I believe that those were the three points on which the hon. Gentleman sought specific assurances from me.
  I am sure that the hon. Gentleman will understand that these detailed assessments and the development of individual care plans will take some time. Until that process has been completed for all the residents, the health authority would not be in a position to consider again any preferred locations for future services, or the future of Orchard Hill. The health authority expects to be in a position to do so by the middle of next year. I realise that that may seem a long time, but it is obviously necessary for the assessment process to be thorough and comprehensive.
  The hon. Gentleman is also anxious that future services fully meet people's needs, are provided equitably and are planned and provided in a timely and sensitive manner. I agree with the hon. Gentleman that that must be the case. Indeed, it must also be the case that the services that are provided are available and appropriate for a new generation of service users. We know from research that members of the new generation, rightly, have higher expectations and hope to live close to their families.
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  We also know that there are increasing numbers of people with complex disabilities, and we must ensure that these services are available and appropriate for them.
  The hon. Gentleman referred to the models of care for people with a learning disability. The Government are strongly committed to ensuring that people with a learning disability have the right to choose the kinds of services and accommodation that they prefer. We issued fresh guidance to local authorities and health authorities in July 1999 to confirm that, and we wish to ensure that commissioning policies reflect the diversity of needs and the rights of individuals to make an informed choice about where they live, when their preferred choice can meet assessed need and when it is affordable.
  We also acknowledge that small-scale domestic accommodation can often provide a high quality of care. Such accommodation can offer more potential for social inclusion and enhanced rights. However, as in any society, some people choose—for a variety of reasons—to live in alternative communities. Indeed, the survey commissioned by the Association for Residential Care as part of the work on the forthcoming White Paper on learning disabilities found 73 such communities already in existence. People with a learning disability should also have that right and choice wherever possible, and we are very keen that this option should be open to them and that their preferences are, wherever possible, respected.
  The hon. Gentleman will be aware that nearly £3 billion a year is spent on health and social services provision for learning-disabled adults. We are keen to ensure that the current resources are spent effectively and efficiently in a way that delivers best value to people with learning disabilities wherever they live. However, as my hon. Friend the Minister of State announced last week, we are also looking at ways to ensure that the resources currently used to support former old long-stay patients, such as many of the people at Orchard Hill, are retained for learning disability services. As the hon. Gentleman says, educational opportunities for people with learning disabilities are provided on the site by Orchard Hill college. Those services are for those resident in Orchard Hill and for those living in the community.
  Education services for people with a learning disability are very valuable. It is only in the past 30 years that people with a learning disability have received mainstream education. The Government have been very concerned about improving basic skills provision, and the Moser report recommended that further consideration be given to the needs of people with learning difficulties and disabilities. As the hon. Gentleman may know, the Government recently published a report entitled "Learning to Succeed" and announced £1.5 million for further developments in this sector. This, we hope, will lead to significant improvements in the teaching of basic skills for people with a learning disability. The initiative, together with the new Disability Rights Commission, will help to bring high-quality education to everyone with learning disabilities, no matter where they live.
  It is the aim of Orchard Hill college to continue to provide a wide range of educational opportunities for people living at Orchard Hill and, increasingly, for those living in the community. We support such initiatives and it is our aim that such services continue to become better integrated with mainstream adult educational services.

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  At a wider level, the Government attach great importance to improving services for people with learning disabilities. One of the core principles set out in the NHS plan is that services will be shaped around the needs and preferences of individual patients, their families and their carers. That must apply just as much to people with learning disabilities as to anyone else. Guidance issued to health and local authorities back in 1992 was based on principles of person-centred planning, choice and involvement of both service users and their family carers. Those principles have stood the test of time, but they have not been applied consistently. They will provide the foundation for future service development.
  In October last year, my right hon. Friend the Secretary of State for Health announced that we would be developing a new national learning disability strategy. At the conference of the Association of Directors of Social Services last week, it was announced that the national learning disability strategy would be published as a White Paper in the early months of next year.
  It has been 30 years since a Government took a comprehensive look at learning disability services. The need for this new strategy is long overdue. People with learning disabilities are among the most socially excluded and vulnerable groups. It is now time to make sure that help and support are in place to foster independence, provide new opportunities and deliver quality services.
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  The new national learning disability strategy is intended to do just that. It will seek to eliminate the inconsistencies that we know currently exist, and it will ensure that the delivery and the quality of the services on offer improve. It will make a real difference to many thousands of people, and the strategy has been developed across Government and not just in my Department.
  The hon. Gentleman raised several questions at the end of his remarks and I hope that I have dealt with most of them. If I have not, I shall write to him. He asked about charges, and I can assure him that NHS health care will, of course, remain free at the point of delivery. He asked about the level of security available for individuals. That must be got right and it will be based on an assessment of need. It is certainly our intention—overall and in the case of individual residents—that the quality of services should be improved and not just maintained as a result of the decisions that will ultimately have to be taken.
  I have described how the health authority has responded to the outcome of the judicial review, but I hope that I have also been able to put the local issues into their wider context. I know that the health authority will welcome the hon. Gentleman's continued interest in this matter, and I will ensure that he is kept informed of future developments.
  Question put and agreed to.
  Adjourned accordingly at sixteen minutes past Eight o'clock.