Commons Sitting of 9 April 2001

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  HOME DEPARTMENT
  The Secretary of State was asked—
  HOME DEPARTMENT

    Crime Prevention and Reduction
    Mr. Keith Darvill: What assessment he has made of the impact of the provisions of the Crime and Disorder Act 1998 that place a statutory duty on local authorities to prevent and reduce crime.[156020]
    The Secretary of State for the Home Department (Mr. Jack Straw): We established statutory partnerships to ensure that the resources and commitment of local councils, health authorities, schools, businesses and voluntary organisations could work better to support the police in the fight against crime. Those partnerships have been very successful and have helped secure the 10 per cent. reduction in crime measured by the 2000 British crime survey.
    This morning, the Chancellor of the Exchequer, the Minister of State, Cabinet Office—my right hon. Friend the Member for Makerfield (Mr. McCartney) —and I announced the allocation of £220 million over three years direct to crime and disorder partnerships to spend on measures to help to tackle local drugs markets.
    Mr. Darvill: May I thank my right hon. Friend for his reply and tell him how welcome the provisions in the 1998 Act for promoting local partnerships are? However, does he agree, first, that more needs to be done to make local authorities more aware of the it implications of section 17 of the Act and to encourage them to make crime and disorder a key consideration in all their areas of activity; and, secondly, that to make further progress in bearing down on antisocial behaviour, the necessary resources need to be devoted to local initiatives both by police and by local authorities?
    Mr. Straw: I agree with both my hon. Friend's observations. A great deal has been done, but there is a great deal more to do; we should not be satisfied with the amount of co-operation that has been achieved until crime is almost eliminated from those areas. I have heard good reports from my hon. Friend about the crime and disorder partnership in Havering; there is no doubt at all that where
    688
    the partnerships are really working, they are very effective indeed in helping to reduce crime and disorder and to make communities feel safer.
    All local crime and disorder partnerships now have to put together their further strategies, which have to be ready by 2002. A great deal of work is going on between the Audit Commission, the Local Government Association and the National Association for the Care and Resettlement of Offenders better to ensure that they produce those strategies.
    On my hon. Friend's second point, I accept the need for resources; many of them can come from the main programmes of local authorities and the police, because those programmes—for example, on housing—suffer if levels of crime and disorder are high. Savings can be made if levels are lower. The money announced today by my right hon. Friends the Chancellor and the Minister of State, Cabinet Office will go direct to the crime and disorder partnerships; they can use it in whatever way they think best—including, for example, paying for additional applications for antisocial behaviour orders.
    Sir Sydney Chapman: However well-intentioned the Crime and Disorder Act 1998 was, is it not a disappointment in at least two respects? First, apparently the child curfew orders are non-existent. Secondly, 1,000 prisoners released early under section 99 have reoffended; some have committed serious offences involving rape, violence and drugs.
    Mr. Straw: As the hon. Gentleman knows, amendments are before the other place to raise the level of child curfew orders to 16. We think that that will work. On early release, that provision was always embedded on the Criminal Justice Act 1991, which established the present sentencing framework. The only difference is that under our arrangements, we are providing proper through-care and better security for those who are released. Every prisoner—except a whole-lifer—is, in effect, released early.
    Mr. Eddie O'Hara: My right hon. Friend will be aware that Knowsley came top of the league for its record on crime reduction. Will he join me in congratulating all those concerned—the council, the police and many other agencies—on achieving that excellent record? It sends out a message to the world that Knowsley is a decent, safe place in which to live and do business—and to that tiny minority who still disrupt the life of the decent citizens of Knowsley it sends the message that their behaviour will not be tolerated.
    Mr. Straw: Yes, I congratulate the borough of Knowsley and the Merseyside police service for all their excellent work in getting crime down. We have provided local authorities and the police with the powers for which they asked us and which they need better to tackle crime and disorder. For example, I am pleased to tell the House that, in respect of antisocial behaviour orders, which the Opposition have promised—and I quote—"to tear up", more than 200 have been issued. The latest analysis of the actions taken by the courts in respect of the small number of breaches has found that, of 19 people thus charged,

    689
    14 received a custodial sentence—a very, very good message that the courts, too, are taking the new orders seriously.
    Mr. Simon Hughes: The Home Secretary will know that we very much support crime reduction partnerships. Following the endorsement by the chief inspector of constabulary, I have received answers from Ministers stating that they see the community beat officer as an important part of the fight against crime locally. Given that level of agreement in the House and around the country, will the Home Secretary tell us what progress has been made in ensuring that community beat officers are in place? Do the Government have a target whereby every community will have its own recognised community beat officer? Have the Home Secretary and the Government yet been able to accept that there is also a place—in addition to neighbourhood wardens—for a community safety force under the authority of the local council to bring together all those other people with safety and policing responsibilities in a way that supports the police, gives a presence on the streets and reduces the amount of low-level and other crime?
    Mr. Straw: To reassure the hon. Gentleman, he will know that there has at last been an increase in the number of officers in the Metropolitan police force, which is very welcome. In addition, the efforts of the Commissioner of Police of the Metropolis in bearing down on sickness are ensuring that there are 500 extra officers available for beat duty who were not previously available. I am sure that the hon. Gentleman will be pleased to hear that, from next year, we shall require every chief officer for every area to say how each ward and borough is being policed, so we are ensuring a much sharper focus on what everyone regards as extremely important—policing at beat level.
    Mr. Robin Corbett: May I ask my right hon. Friend to remind magistrates of the range of non-custodial sentences available under the Crime and Disorder Act 1998, and urge them to use them, because they have a very important part to play in trying to curb reoffending? Will he also consider giving housing action trusts and social landlords, who are managing an increasing number of homes, powers to apply for antisocial behaviour orders?
    Mr. Straw: On the second point, yes, we certainly will consider that, but meanwhile I tell my hon. Friend that there is no reason at all why housing associations should not co-operate with the local authority to get an antisocial behaviour order in respect of a social tenant who is not the tenant of the local authority—or indeed in respect of someone in private owner-occupation, because antisocial behaviour orders are available for all kinds of tenancy.
    On the sentences that should be used, through the Magistrates Association, magistrates are given clear advice about the appropriate level of sentences that they ought to use, and we certainly look to them to issue tough sentences—that was Parliament's clear expectation on antisocial behaviour—when dealing with the terrible anti-social behaviour that has ravaged many neighbourhoods, but which we are now seeing turned around.
    Mr. John Bercow: Given that only 200 antisocial behaviour orders have been made—not the 10,000 that the right hon. Gentleman anticipated; given
    690
    that he started by saying that they were to be used as a last resort, then, four months later, said that they were not; given that the community police officer of the year has described the legislation as "unworkable"; given that, as my hon. Friend the Member for Chipping Barnet (Sir S. Chapman) rightly observed, not a single child curfew order has been issued; and given that local authorities across the country have been smothered with additional duties but deprived—
    Mr. Speaker: Order. The hon. Gentleman is supposed to ask a question.
    Mr. Bercow: I am grateful to you for that reminder, Mr. Speaker. I am coming to the question and I assure you that it will be worth it. Given that local authorities have been smothered with additional duties and deprived of the support to discharge them, why do not the right hon. Gentleman and his quintet of bumbling incompetents admit their consistent failure and make way for a team that wants to minimise bureaucracy, punish criminals and protect the law-abiding majority of decent citizens of this country?
    Mr. Straw: In the unlikely, although possible, event that we were to make way for a team from the Opposition Benches, we would be making way for a Conservative party whose record is indelible: crime doubled under the Conservatives, while the number of people convicted of crime fell by a third. As for the legislation, late last year, the president of the Association of Chief Police Officers described the Crime and Disorder Act 1998 as:
    "The finest piece of legislation in terms of crime-fighting we have had in long time."
    A former Conservative Home Office Minister said:
    "I congratulate the Government genuinely and sincerely on the working of the Crime and Disorder Act 1998 and on the spirit of collaboration with local government that they have inspired by that." —[Official Report 23 June 2000; Vol. 352, c. 599.]
    The other difference between us and the Conservatives, should they ever return to power, is that they would tear up the antisocial behaviour orders. Yes there have not been sufficient of them, but 200 communities are now living in safety as a result of the ASBOs and those communities would otherwise face control by the criminals and drug dealers that were there before.

    Criminal Records Bureau
    Mr. Brian Jenkins: What assessment he has made of the effectiveness of the Criminal Records Bureau. [156021]
    The Minister of State, Home Office (Mr. Charles Clarke): The establishment of the Criminal Records Bureau is being closely managed and monitored and the bureau will operate to high service standards, which will be published. We expect it to begin issuing the higher levels of disclosure documents in the autumn, subject to its systems and processes having been proved under test and pilot conditions and having been shown to be capable of delivering the required level of service to its customers.
    Mr. Jenkins: I thank my hon. Friend for that answer. May I also pass on the thanks of the voluntary groups and organisations, because he listened to them and waived the

    691
    charges? However, what plans is he putting in place to ensure the accuracy and consistency of the information going into the system, so that people have greater confidence in the working of that system?
    Mr. Clarke: I appreciate my hon. Friend's initial remark. He is right to focus on the accuracy of the data, as Her Majesty's inspectorate of constabulary did in its report which appeared on the record in July 2000. We entirely share those concerns, as do the Association of Chief Police Officers, the inspectorate and the Information Commissioner, formerly the Data Protection Commissioner. We therefore welcome the work of ACPO in producing a compliance strategy for forces to implement. All forces have been required to submit action plans to the inspectorate, since when the plans have undergone analysis by the inspectorate. Home Office officials and representatives of ACPO and the inspectorate have met the Information Commissioner to map out a plan of further action, which we hope will lead to a very significant improvement.
    My hon. Friend has rightly raised a key question, as did the Select Committee on Home Affairs in its report. We are giving the issue the highest priority in the implementation of the Criminal Records Bureau.
    Mr. Crispin Blunt: What assessment has the Minister made of the effectiveness of the Prime Minister's crime tsar, Lord Birt, and will we have access to his record of achievement?
    Mr. Clarke: As far as I am aware, Lord Birt does not feature in the Criminal Records Bureau which we are discussing now. I have nothing further to add on his report.

    Prisons
    Mr. Win Griffiths: If he will make a statement on his most recent discussions with the chief inspector of prisons about prison conditions in England and Wales. [156022]
    The Minister of State, Home Office (Mr. Paul Boateng): My right hon. Friend the Home Secretary and I met Sir David Ramsbotham on 5 March to discuss his thematic report on the treatment and conditions of unsentenced prisoners in England and Wales, which was published on 11 December 2000. We discussed a variety of matters to do with conditions in our local prisons.
    Mr. Griffiths: I am sure that my right hon. Friend will know about the unannounced visit that the chief inspector made to Parc prison in my constituency, which resulted in the verdict of an excellent recovery after a very rocky start to the life of that private prison Given that the chief inspector produces reports that show that some prisons do excellent work and that others continue to fail, what discussions did my right hon. Friend have with the chief inspector to try to develop a model of management for the Prison Service that will ensure that best practice is replicated everywhere, and particularly in the prisons that have been failing?
    Mr. Boateng: I met Sir David after the inspection of Parc prison, and we meet regularly on a bilateral basis.
    692
    What emerges from his and my view of Parc—I have visited the prison—is that what works is effective partnership between the prison and the local community, and effective management. Those are lessons that the Prison Service—in the public and private sectors—is taking forward. We can all contribute to that, and I am glad that Sir David has, in the course of his inspection and thematic reports, made his own particular contribution.
    Mr. Simon Burns: Following the adverse report by the chief inspector on Chelmsford prison and following the visit that the Minister and I made to the prison, will the right hon. Gentleman join me in congratulating the staff and governor of the prison on the vast improvements that they have made? I hope that, when the chief inspector carries out his next unscheduled visit, his report will be infinitely better than the previous ones.
    Mr. Boateng: I am enormously grateful to the hon. Gentleman for the interest that he has shown in his local prisons. It helps greatly when hon. Members get involved. I have every confidence in the management of Chelmsford. It, too, is making important links between the prison and the local community. I hope that that will be reflected in Sir David's subsequent reports.
    Ann Clwyd: How many asylum seekers are being held in prison in England and Wales? Is it not totally inappropriate to hold people in prison conditions who are not accused of and have not committed any crime?
    Mr. Boateng: We hold only 1 per cent. of the total number detained at any time in prison. It is a far from ideal circumstance, but we try to ensure that when asylum seekers are held in prison, the conditions and the range of facilities available reflect their particular situation.
    Miss Ann Widdecombe: Will the prisons Minister confirm that, since 1997, the assault rate of prisoner on prisoner is up and the assault rate of prisoner on staff is up, thus making our prisons more violent; that the percentage of prisoners sharing two to a cell designed for one is up, thus making prisons more overcrowded; that the number of hours spent in purposeful activity is down, thus making prisoners more idle; that slopping out is back on some wings of some prisons, thus making them more degrading; that the number of suicides is up, thus making them more depressing; and that the time spent out of cell is down, meaning that prisoners are locked up in idleness for longer? If, as Churchill said, the measure of a civilised society is how we treat our prisoners, where does this prisons Minister stand in the civilisation stakes?
    Mr. Boateng: The right hon. Lady knows very well that in the first two years of our stewardship of the Prison Service, we spent an additional £120 million on prisons for which she did not budget. She also knows that throughout the past four years, we have spent more year on year on education and offending behaviour programmes than her Government ever did. She should also know that this Government are serious about prison

    693
    reform, a task on which her Government successively failed to make any headway. The Conservatives talk about it; we do it.
    Miss Widdecombe: The prisons Minister appears to be saying that he has spent an awful lot of money for declining results. The flip side is discipline in prison. Is it true that television in cells is not just for the enhanced levels, but for standard levels; that it is no longer permanently losable as a result of disciplinary action; and that where there are two to a cell, it is not even temporarily losable as a result of disciplinary action? Will the right hon. Gentleman also confirm that prison governors are unable to punish juvenile offenders with loss of remission or extra days and that when they smash up their cells on the last day, which one governor told me is a regular occurrence, there is nothing that the prison authorities can do? Is it not true that the Government have presided over a revolving-door prisons policy that has led to another 1,000 victims of crimes committed by those who should be in jail? Finally, in light of the success of Thorn Cross, what possible justification was there for the early destruction of the high-intensity training unit at Colchester before the research results were known?
    Mr. Boateng: The right hon. Lady does not do justice to the seriousness of the issue by approaching it in this way. She knows that her Government introduced televisions into cells and that it is this Government, yes, who expanded the number of prisons with televisions in cells. We did that to ensure that prison governors and staff have a range of inducements and incentives to good behaviour, which are withdrawn if there is a failure in good behaviour. That makes a reality of discipline in prisons. We are not simply relying on cheap rhetoric as a substitute, which is precisely what she does time and time again.

    Tower Blocks
    Mr. Hilary Benn: If he will make a statement on the safety and security of residents in tower blocks.[156023]
    The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien): The Government are determined to reduce crime and the fear of crime in all residential areas, including those containing tower blocks. Working with local crime and disorder partnerships, we are introducing a range of anti-crime initiatives, such as the installation of closed circuit television and the provision of concierge-controlled entry points. Some £90 million has been allocated to housing-related projects. Some of today's announcements, including new funding for neighbourhood warden schemes, will help to tackle crime in tower blocks.
    Mr. Benn: I assure my hon. Friend that Leeds will bid early and bid often for the resources that have been announced today. He mentioned concierge schemes, CCTV and more beat officers, but how does he propose to share information about what works in the use of those funds? That is what the group of elderly residents of a tower block in my constituency, whom I met last Friday,
    694
    want to know, so that they no longer feel afraid as they make the journey from the entrance to their block to the sanctuary of their own front door.
    Mr. O'Brien: What works is ensuring that we get the design of tower blocks right. We seek to promote the role of good design in community safety, particularly by the "secured by design" initiative administered by the Association of Chief Police Officers which encourages the adoption of guidelines to improve the security of estates and tower blocks. The scheme offers specific guidance on multistorey dwellings and stresses the importance of controlled access to tower blocks. Research conducted last year on a sample of 50 estates in West Yorkshire revealed crime rates per household which are between 40 and 50 per cent. lower on estates meeting "secured by design" principles. That is one of the key ways in which we hope to ensure that good practice is disseminated.
    Sir Michael Spicer: Talking of tower blocks, what is the latest news in the saga of the Marsham street tower blocks, for which the Home Office is responsible?
    Mr. O'Brien: The hon. Gentleman will be aware that we have been considering that issue with great care, and we are anxious to ensure that when the development is complete, it is secured by design.
    Ms Karen Buck: Last week, I met a group of residents of Adair Tower in North Kensington whose lives have been made hell by three crack houses. One has been closed down but the other two are still operating. Will my hon. Friend join me in congratulating the tenant management organisation and the police on their close working relationship in dealing with that problem? Will he assure me that he and his team are doing everything possible to give the police the tools to act swiftly against crack houses? In particular, will they consider bringing up to date the Misuse of Drugs Act 1971 to include crack, to help the police in their work?
    Mr. O'Brien: I agree with my hon. Friend's points. I know that my right hon. Friend the Home Secretary recently visited the area with her and met some of the local people involved in tackling those problems, and he will consider the points raised during that visit. I assure my hon. Friend that tackling crack and associated drugs is high on our agenda. We cannot tolerate the behaviour experienced by the residents in her constituency, and we are determined to deal with it.

    "Corpus Juris"
    Mr. Howard Flight: What the Government's policy is on "Corpus Juris".[156024]
    The Minister of state, Home Office (Mrs. Barbara Roche): We believe that the way forward for judicial co-operation in Europe lies not in "Corpus Juris" but in

    695
    the measures agreed at the Tampere European Council, including, in particular, mutual recognition of judicial decisions and the creation of Eurojust.
    Mr. Flight: Will the Minister give an absolute undertaking that the Home Secretary will not seek any common European Union legal system or permit any interference by Europe in our judicial system?
    Mrs. Roche: There is absolutely no intention to have a common legal system. As the hon. Gentleman will know, "Corpus Juris" is merely an academic study; it has not been formally proposed or discussed by the Council of the European Union. We have made progress on mutual legal recognition, which the House will know was an initiative proposed by the United Kingdom Government that has been warmly welcomed by other member states.
    Mr. Denis MacShane: The term "corpus juris" is a bit of Euro-babble which, translated into plain English, means a legal means to crack down on the immense fraud that exists in Europe. I should have thought that the hon. Member for Arundel and South Downs (Mr. Flight), as a director of some 17 companies that take investors' savings, would be concerned to join in the crack-down on fraud. I invite my hon. Friend the Minister not to listen to the anti-European rhetoric of the Opposition, but to work to create systems on the basis of mutual recognition to deal with the serious problem of fraud—the black holes into which too much European money disappears. The Opposition should be determined to crack down on the problem, instead of waving it away.
    Mrs. Roche: Of course, the phrase "corpus juris" originally comes from the work done in the reign of the Emperor Justinian. [Interruption.] Before the Opposition get too excited, may I say that my hon. Friend the Member for Rotherham (Mr. MacShane) is right—we do need to crack down on fraud in the European Union, which is why we celebrate the creation of Eurojust, and why, following an open competition—[Interruption.] This is a serious point. Following an open competition, Mr. Mike Kennedy, who is currently the chief Crown prosecutor for Sussex, has been selected to represent the United Kingdom on that important institution.
    Mr. Nick Hawkins: How does the Minister square her initial answer to my hon. Friend the Member for Arundel and South Downs (Mr. Flight), that her Government were against "Corpus Juris", with the votes of Labour Members of the European Parliament as recently as 14 March, when they voted to undermine our traditions of habeas corpus, and for a European public prosecutor—a specific part of the "Corpus Juris" proposals—who would have the power to detain suspects without trial for nine months?
    Mrs. Roche: As the hon. Gentleman and the Opposition know, we are entirely against "Corpus Juris". We have made the Government's position absolutely clear.

    Private Security Firms
    Mr. Bob Russell: If he will make it his policy that streets and other public places will not be policed by private security firms.[156025]
    The Minister of State, Home Office (Mr. Charles Clarke): It is the police who have the job and responsibility of policing our streets. The office of constable is a constitutional role, which we will rigorously uphold. However, we believe that a range of other agencies have a key partnership role to play in supporting the police in those efforts, and we believe that the Private Security Industry Bill will assist that process.
    Mr. Russell: Can the Minister clarify his answer? I am not sure whether he is saying that there will or that there will not be privatised police on our streets. Surely people want proper police officers and more bobbies on the beat. Does he agree that when people have paid their taxes, they expect to see police officers on their streets?
    Mr. Clarke: There are two points. First, the answer to the hon. Gentleman's question is yes—people are entitled to see police numbers going up. The numbers are going up. By March next year, we will have more police than we inherited, and by March the following year, we will have more police than there have ever been in this country, thanks to the decisions taken by the Government. Secondly, it is important for the hon. Gentleman to recognise that although there are currently 126,000 police officers, there are 300,000 to 350,000 private security guards in various parts of the country. It is important that we build effective co-ordination and partnerships between those people and the police.
    Mr. Barry Jones: Can my hon. Friend say whether in our streets and other public places there is now less vandalism and less graffiti?
    Mr. Clarke: I can certainly say that in most parts of the country that is true, but in some parts there are serious issues of vandalism and graffiti that have not yet been tackled fully. That is why we have the crime and disorder partnerships to which my fellow Minister, my hon. Friend the Member for North Warwickshire (Mr. O'Brien) referred earlier.
    Mr. Michael Fabricant: Does the Minister not realise that all the speculation arises from the fall in police numbers? He knows that there are 1,600 fewer police officers now than there were when Labour came to power, and 6,000 fewer special police constables on the streets now than there were when he first came to power. Does he agree with the chairman of the West Yorkshire Police Federation, who said, with reference to the cut of 400 police officers:
    "The blame lies fairly and squarely with Jack Straw… It's a total mess."?
    Mr. Clarke: We have had this argument on many occasions, and I do not think that I have a great deal to add. The fact is that police numbers fell from 1993 until March last year. At about that time, they started increasing significantly. As my right hon. Friend the Home Secretary

    697
    said, they increased by almost 1,000 in the 10 months up to January this year—the biggest increase ever. They increased in almost every police force in Britain. As I said, those increases will ensure that by March next year, there will be significantly more police officers than we inherited. That is a significant achievement and a change from the policy that the hon. Gentleman's Government pursued from 1993. We agree that we need more police officers, but unlike the Conservative party, we have taken the steps to ensure that we will have them.
    Ms Rosie Winterton: The cowboy clampers were out on the streets of Doncaster again on Saturday, coining in as much money as possible from passing motorists. Presumably, they wanted to do so before, thanks to my hon. Friend, the law comes crashing down around their heads in the form of the Private Security Industry Bill. Until that happy day, however, will he consider the possibility of his Department keeping a record of complaints about clamping companies, so that the Security Industry Authority can distinguish between reputable and disreputable companies?
    Mr. Clarke: I shall certainly consider that proposal. I should like to take this opportunity to pay tribute to my hon. Friend for her work to promote the licensing of wheelclampers, which the Private Security Industry Bill is taking forward. The Bill will make a material difference, and I hope that it will prevent the sort of activity that she has seen on the streets of her constituency.
    Rev. Martin Smyth: The Minister will know that an interesting experiment has been conducted at Blue Water, which is paying for local police officers to carry out patrols. Are there any plans to extend that practice, so that police officers will be identifiable in public places?
    Mr. Clarke: Such plans do exist, and there are a significant number of examples, including the Broads Authority in my county. The cities of Hull and Liverpool have put in considerable resources. We want to encourage such partnerships in a wide variety of different ways, whether in public sector bodies such as the national parks authorities or city councils, or in the private sector, as with their use by the retail industry at the Blue Water development. However, I am keen to rebut the suggestion made by the hon. Member for Colchester (Mr. Russell) that that replaces the need for a proper number of police throughout our country. It does not. That is why we want both to increase the number of police officers, as we are doing, and to build partnerships to ensure safer and more secure communities throughout the country. That is the Government's policy, and that is what we will carry forward.
    Mr. Dennis Skinner: How many police officers are engaged in searching for royal lines of crack?
    Mr. Clarke: I deeply regret that I cannot give my hon. Friend an up-to-date account of precise police resources in this area, but I think that he makes his point effectively.
    Mr. Geoffrey Clifton-Brown: Does the Minister accept that the police are becoming less and less
    698
    visible in rural areas, because there are fewer police, fewer special constables and, above all, fewer rural police stations? Does he agree that the rural police, who should be visible and patrolling our streets, will never be replaced by private security officers? They are no substitute.
    Mr. Clarke: I do not accept the hon. Gentleman's suggestion at all. The fact is that Gloucestershire, where his constituency is located, now has 28 more full-time officers than it had in March 1997. Numbers have continued to increase since then. There are now more police in Gloucestershire than there were when the Government came to office. I think that he should welcome that. More generally, perhaps he would also like to welcome—as he has done personally to me—the fact that our rural policing allocations have given significant extra support to rural constabularies such as that of Gloucestershire. That is how policing can be improved in the way that both he and I believe to be necessary.

    Black and Asian Police Officers
    Dr. Brian Iddon: If he will make a statement on the recruitment and promotion of black and Asian police officers.[156026]
    The Secretary of State for the Home Department (Mr. Jack Straw): Most police forces are on course to meet their recruitment targets or come close to them, but there is still a great teal to do on that and on progression of black and Asian police officers. There were 2,915 ethnic-minority officers at the latest count, an increase of just under 580, or about 25 per cent., since March 1997. An inspection of forces by Her Majesty's inspectorate last year found that there had been an overall improvement in forces since the previous inspection in this area in 1998.
    Dr. Iddon: I think that my right hon. Friend will agree that the efforts made so far by Greater Manchester police to recruit from the black and Asian community have been disappointing. Has any analysis of the reasons for that been carried out? Is it something to do with the culture in the police force? Why are black and Asian people in Greater Manchester reluctant to join the police, and are any special strategies being introduced to deal with the situation?
    Mr. Straw: As I said, all forces are making progress, although it has not be, It swift enough. Between March 1997 and January this year, the number of black and Asian officers in the Greater Manchester area increased by 26, from 161 to 187. That is a rise of about 15 per cent.; it is not as high as the increase in the country generally.
    I think that one reason for the shortage is that for a couple of years there was a recruitment freeze in many areas, including Greater Manchester. There are some cultural issues, but I know that the chief constable and chairman of the Greater Manchester police authority are anxious to deal with them.
    Mr. Nigel Evans: Does the Home Secretary agree that we should do much more to encourage young black people and Asians to take up careers in the police force? I have asked some questions in Lancashire about police numbers generally. I was told only two weeks ago that the number of regular constables had fallen by 30, and the number of specials by 121,

    699
    since the last general election. Is there not an opportunity for the Government to redouble their efforts? Could they not visit sixth forms, colleges and youth clubs to encourage young black people and Asians in particular to join the specials, and to see the police force generally as a chance for them to play their part in reducing crime in Lancashire?
    Mr. Straw: The reason for the fall in the number of specials dates back to the Police Service (Health and Safety) Act 1997, a Conservative measure passed towards the end of the last Government that made health and safety requirements the same for volunteer specials as for full-time employed police officers. The former Home Secretary furrows his brow. He may not even have noticed that the legislation was passed while he was Home Secretary, but that is the truth of it, and that is why police services across the country have charted a reduction in specials. We consider that very unsatisfactory, and we want the numbers to increase.
    In Lancashire, there has been a 50 per cent. increase in the number of black and Asian officers during the past four years: it has risen from 33 to 49. As the hon. Member for Ribble Valley (Mr. Evans) may have noticed, the whole of the most recent edition of the Lancashire constabulary's newspaper is devoted to further work that the police are undertaking to increase the proportion even more.
    Mr. Gordon Prentice: There are only 596 women police officers drawn from the ethnic minority communities. That will concern my right hon. Friend, as it concerns me. What can we do to persuade more Asian women to join the police? Is there not a case for gender targets for officers drawn from ethnic minority communities? I suspect that most of those 596 are black women, with only a handful of Asian women. We must get more Asian women into the police force.
    Mr. Straw: It is important for my hon. Friend not to generalise about Asian women. There are significant cultural differences between women of Asian heritage who come from the Muslim tradition and those from the Sikh or Hindu tradition. We know that there is a cultural problem among, in particular, some sections—not all—of the Muslim community in respect of encouraging women to join uniformed services such as the police. That is as much an issue for the Muslim community as it is for the police service, and we must make progress.
    As for whether we should set a specific target, the proportion of women in the black and Asian population of the police service is just below the proportion of women as a whole in the police service. I do not think that there is a case for separate targets at present, but we will certainly keep the matter under review.

    Asylum Seekers
    Mr. John Wilkinson: What assessment he has made with his EU counterparts of the operation of the Dublin convention on the treatment of asylum seekers.[156027]
    The Secretary of State for the Home Department (Mr. Jack Straw): The Dublin convention has not worked as it should. The procedures are slow and
    700
    cumbersome and, crucially for the United Kingdom, agreements between member states to transfer asylum seekers under the convention have been subjected to repeated difficulties because of judicial review challenges in United Kingdom courts.
    In the European Union, we have been leading the case for reform of the Dublin process. We await proposals from the Commission.
    Mr. Wilkinson: Instead of waiting for proposals from the Commission, is it not about time that the Government got a grip of border controls in this country? Is it not a fact that last year there were about 76,000 asylum applicants, and that about 60,000 were ineligible for asylum, but only about 9,000 went back? Is it not high time that European Union countries, instead of playing pass the parcel with humanity, took care to exercise their responsibilities effectively so that applications from asylum seekers are processed in the first EU country in which they arrive?
    Mr. Straw: I agree with the hon. Gentleman's last remark. The principle of the Dublin convention is that asylum seekers' applications should be processed in the first EU country in which they set foot. The difficulty is the way in which the convention has been constructed, and the repeated problems that we have faced over, for example, decisions by our higher courts to classify France and Germany as unsafe third countries, a view with which I respectfully disagree.
    As the hon. Gentleman knows, we inherited the Dublin convention. It was signed in 1990 and did not come into force until October 1997. We have been working hard—I have taken the lead in Europe—to propose changes to it. We have doubled the number of removals over the past four years, but one of the major problems in that context is the convention and the way in which our courts have sought to interpret it. That is why we are engaged in further detailed discussions within the Commission to try to change its wording.
    Mr. Neil Gerrard: In the negotiations on replacing the Dublin convention, does my right hon. Friend recognise that there is a danger that agreement will be reached by sinking to the lowest common denominator? In that context, we might think twice about exporting the voucher system to the rest of Europe. What steps are being taken to try to influence the process, given that we are not, as a result of the Amsterdam treaty, fully signed up to a common system across Europe?
    Mr. Straw: We accepted article 64 of the treaty, which provides for common minimum standards for asylum seekers. Work is taking place on proposals in respect of that. We must move towards a common playing field. We cannot have a circumstance where there is effective free movement across every other country in the EU and we have border controls, and where our definitions of whether someone should or should not be given asylum have been judicially interpreted in a way that is significantly at odds with the interpretations of courts in other European countries.
    I do not accept my hon. Friend's suggestion that we will drop to the lowest common denominator. Every member of the EU is a signatory to the European

    701
    convention on human rights, which sets a basic template for how individuals are treated. For example, it already secures a common policy on ultimate removals, which is why decisions to declare France and Germany unsafe states within the refugee convention are all the less explicable.
    Mr. Michael Howard: The Home Secretary is right to remind the House that the Dublin convention was signed as long ago as 1990, before our problems were on anything like their present scale, and that its objective was to ensure that asylum seekers made their applications in the first EU country that they reached. If the convention is not working as intended, it should be revised or we should consider withdrawing from it.
    In so far as our problems are being caused by decisions of the United Kingdom courts, what steps is the Home Secretary taking to introduce legislation to overrule them? Does he know that, this year alone, nearly 1,200 people have been apprehended in the UK terminal of Eurotunnel in my constituency? What progress has been made to persuade the French Government to ensure that SNCF reinforces the fencing for which it is responsible at the Eurotunnel terminal at Coquelles?
    Mr. Straw: On the right hon. and learned Gentleman's last point, I have had many discussions with, and made representations to, the French Government and SNCF to ensure that they reinforce security measures at their end of the tunnel. As he knows, I have introduced a civil penalty for rail freight as well as other carriage through the tunnel better to secure that and to bear down on SNCF. The French Government have already agreed to introduce juxtaposed controls for passengers on Eurostar services. They have promised to introduce legislation on that by June.
    On the right hon. and learned Gentleman's first question, section 11 of the Immigration and Asylum Act 1999 sought to deal with the problem of the definition of safe third countries in a case known as Adan and Aitsegeur before the Court of Appeal. However, I regret that members of the Judicial Committee in another place have decided on an even wider interpretation of a safe third country. We are therefore considering further changes to legislation.
    Mr. Mike Gapes: Will the Home Secretary confirm that whatever changes we might make, this country will remain a safe haven for Muslims and others who are fleeing from the Taliban in Afghanistan, people such as my constituents who fled the civil war in Somalia, and Iraqi Kurds fleeing Saddam Hussein? Will he also confirm that Labour Members will have nothing to do with the outrageous views of the hon. Member for East Yorkshire (Mr. Townend)? It is about time that the Conservative party removed the Whip from him.
    Mr. Straw: Of course, I confirm that we shall continue to uphold in every particular our obligations under the refugee convention to grant refugee status to those who have a well-founded fear of persecution. I accept my hon. Friend's comments on the hon. Member for East Yorkshire (Mr. Townend). However, I regret that many
    702
    Conservative Members have consistently sought not to tackle but to exploit one of the most difficult problems for Europe.
    Mr. David Lidington: When the Home Secretary next consults his EU counterparts, will he consider why asylum applications in the United Kingdom reached record levels, but fell in Germany and the Netherlands? Will he accept that common sense and experience from overseas suggest that extensive use of the power to detain asylum seekers in secure reception centres and fast-tracking manifestly ill-founded claims are the way in which to deter unfounded claims? Will he recognise at last that the policies that Conservative Members have advocated for some years would result in our being able to tackle the problem and would be significantly better for our national interest than the shambolic system over which he presides?
    Mr. Straw: The hon. Gentleman's figures are wrong. Last year, the number of asylum applications rose by 7 per cent. over the previous year. Applications fell in Germany, but they increased by a higher figure in the Netherlands. We remain seventh in the league table per head of population. The Netherlands has almost twice as many applications per head. That also applies to Belgium, Ireland, Switzerland, Norway, Austria, Denmark and Sweden. It is a Europe-wide problem. It must be thought through, which the Conservative party has failed to do. The number of applications being decided in a year has trebled compared with when the Conservative party left office. As a result, the backlog is at a seven-year low—well below the level when it left office.
    To give a further illustration of the way in which Conservative Members do not seek seriously to deal with the problem, but instead exploit it, it was they who chose to fight against the civil penalty—the £2,000 per clandestine—which has been the single most important measure to bear down on the criminals. They would destroy it.
    As for detention space, like the right hon. Member for Maidstone and The Weald (Miss Widdecombe), the hon. Gentleman speaks about the idea, although it would be impossible, inhumane and ridiculously costly to detain every single asylum seeker. However, when we propose an extra detention centre—in Aldington in Kent—what happens? Conservatives locally and nationally oppose it. That is the policy: they want detention centres anywhere but in their own Conservative backyards.

    Secure Training Centres
    Mr. Tim Boswell: What plans he has to increase the number of secure training centres.[156028]
    The Minister of State, Home Office (Mr. Paul Boateng): The Youth Justice Board has responsibility for commissioning and purchasing places for young people in the juvenile secure estate and has recently announced a £250 million reform plan to improve youth custody arrangements. In the four-year plan, 400 new places will

    703
    be made available in new secure units for boys and girls sentenced to custody. That will be a substantial addition to the present 130 secure training centre places.
    Mr. Boswell: Has the right hon. Gentleman had a chance to study the excellent recent inspection report on the second secure training centre at Rainsborough in my constituency? Will he accept my own evidence from a follow-up visit that it is indeed working successfully? I notice that the Home Secretary nods. As the present ministerial team when in opposition rubbished the imaginative idea of my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), the then Home Secretary, and as it now appears to have had second thoughts about its merits, will the Government commit themselves to the target of 1,000 places that has been offered by the incoming Conservative Government?
    Mr. Boateng: Conservative promises must be judged against the Conservatives' performance in office. They took the power to do this in 1994. It was not until this Government came into office that any were built. Again, it is all yack, yack, yack from the Conservatives. It takes a Labour Government to do anything about crime and disorder.
    Dr. Phyllis Starkey: The Minister will be aware that many of the young people who are likely to go into such secure units have very poor educational achievement and often a variety of other problems. Can he assure me that the units will be sufficiently well funded to provide good-quality support for those young people, meeting their education and other needs, so that they have a realistic chance of leaving the unit able to lead a law-abiding life it their community?
    Mr. Boateng: I can give my hon. Friend that assurance. Recently, Baroness Blackstone, the Minister for Education and Employment, and I visited one of the institutions where the link is being made between custodial experience and the importance of addressing numeracy and literacy deficits, and people's experience on release from custody. That is the objective in Medway and the other secure training centre. The Youth Justice Board is resourced precisely to achieve that objective. Those young people have a chance to improve their education; some of them have that chance for the first time. We must ensure that they do not lose it.

    Police Manpower
    Mr. Graham Brady: If he will make a statement on police manpower in England.[156029]
    The Secretary of State for the Home Department (Mr. Jack Straw): There were 125,537 officers in total in England and Wales on 31 January, an increase of 990 since September 2000 and of 1,367 since March 2000—the largest rise in a single year for more than a decade. On the basis of the money that we have put in, there should be 128,000 officers in total by March 2002 and, by March 2003, numbers should reach record levels, well above the 128,290 recorded in March 1993.
    Mr. Brady: I am grateful to the Home Secretary for that answer. However, his record in office so far is no ground for such optimism. How many additional regular constables, for example, would be required to make up for the loss since he came to office of 6,000 special constables?
    Mr. Straw: The only people who are sad about the fact that police numbers are increasing are Conservative Members.

Foot and Mouth
3.30 pm
The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): With permission, I should like to make a statement on the foot and mouth outbreak. As I have done on seven previous occasions in past weeks, I wish to update the House, before the Easter recess, on the latest position on the disease, set out the measures that the Government are taking and give right hon. and hon. Members an opportunity to raise issues with me.
As of 7 pm yesterday, Sunday 8 April, there had been 1,134 confirmed cases of foot and mouth disease. As of 2 pm today, I had been informed of a further 10 cases. As of 7 pm yesterday, the number of animals authorised for slaughter was 1,366,000, of which 888,000 had been slaughtered and 478,000 awaited slaughter. About 329,000 animals remained to be disposed of. That is out of a total United Kingdom cattle, sheep and pig population of more than 55 million, and against a figure of 500,000 animals that would go for slaughter in a normal trading week.
It is still too early to predict the future course of the epidemic. Epidemiologists are constantly updating their data as the outbreak progresses, but they still cannot say with any certainty how long it will continue. Although there are some encouraging signs, this is an exceptionally serious outbreak with a long phase-out period and we cannot afford a moment's complacency.
There is considerable agreement among the four groups modelling the epidemic. In particular, all have concluded that the two key interventions in tackling the disease are, first, and the highest priority, to cull all animals susceptible to the disease—principally cattle, sheep and pigs—on infected farm holdings within 24 hours; and, secondly, to cull susceptible animals in neighbouring farms that share a boundary—the so-called contiguous cull—within 48 hours.
We appreciate that the latter is very difficult for farmers to accept, but it is vital for the overall success of our disease control policy that all potentially infected animals are culled. I urge farmers, in the strongest terms, to co-operate with us in seeing that through. Expert advice is that those premises will have been exposed to infection and need to be dealt with quickly.
I have written to all livestock farmers making three key points. I have set out advice from the chief veterinary officer on biosecurity on farm. I have urged co-operation with the necessary culling of animals on neighbouring premises to infected holdings. I have also appealed to farmers not to jeopardise their own disease status, and that of other farmers, by moving animals around without a licence. Some of the isolated cases that have appeared in recent days and weeks seem to be directly attributed to farm-to-farm transmission from infected areas to clean areas. That point was made very forcefully to me and the Prime Minister at our meeting this morning with the National Farmers Union, and we share its concerns.
Across the country, the 24-hour report-to-slaughter target is being met in almost 80 per cent. of cases. When cases are not completed within 24 hours, they are being dealt with shortly afterwards. The 48-hour target for contiguous premises is more difficult to meet because of the sheer weight of numbers, but progress is encouraging,
706
with some areas achieving about 70 per cent. within deadline. It is particularly important that we hit that target in any new outbreaks away from the heavily infected areas to prevent further spread, and resources are being concentrated to that end.
In support of that strategy, we have committed more and more resources to ensuring that any possible blockages are removed. We have significantly increased the number of vets on the ground to 1,522, with more being recruited. We are employing more than 650 people as temporary animal health officers, to supplement the 200 regular officers in the state veterinary service. We have appointed 11 directors of operations in the most affected areas. The Army is deployed in all the key areas, with 1,842 troops committed to this outbreak, and I am grateful for the excellent support provided by the Army and the Ministry of Defence.
We have taken other practical steps to eliminate delay. We have introduced a generous standard tariff to speed up the valuation of animals, while at the same time safeguarding farmers' rights. We have reduced the turn-round times for vets visiting farms, wherever possible—for instance, by altering the reporting procedure for new cases.
We are very aware of the financial difficulties that many farmers are facing at this difficult time and we have addressed the problem in four ways. First, compensation for slaughtered animals is currently estimated to reach more than £247 million and is still rising. Secondly, we are paying £156 million in optional agrimonetary compensation to livestock farmers: payments begin this week. The package is worth about £2,750 to the average dairy farmer, £650 to sheep farmers, £650 to suckler cow premium claimants and £450 to beef special premium claimants.
Thirdly, we have introduced the livestock welfare disposal scheme as a last resort for livestock farmers whose animals face welfare difficulties as a result of foot and mouth disease related movement restrictions. The tariffs for animals slaughtered under the scheme are generous. The estimated value of this optional scheme depends, of course, on take-up, but it is likely to be in excess of £200 million.
Fourthly, we have ensured that, where animals slaughtered are the subject of a current subsidy claim, subsidy entitlement will be preserved as a result of the application of EU rules on force majeure. Overall, we have committed more than £500 million to farmers so far in the course of this outbreak.
Vaccination remains an option, but it is not an easy option. There are no easy options. Hon. Members are aware of the arguments for and against vaccination. We are prepared to vaccinate if necessary—we have obtained the approval of the European Union Standing Veterinary Committee for vaccination in the UK under certain circumstances—but it would be a major step to take, with significant consequences. We are constantly reviewing the position and will continue to do so.
Many farmers are currently keeping cattle indoors, which is helping to minimise the risk of the spread of infection. We hope that it may soon be possible to release some areas from restrictions, either completely or partially. There are two aspects. First, we will consider whether we can safely reduce the size of one or two areas that currently extend beyond a 10 km radius.

707
Secondly, once all the necessary veterinary inspections and blood testing have been completed we will consider lifting one or two infected areas completely where there have been no new cases for 30 days. I hope that it will be possible to start making progress on both those actions in the next week or two, but, again, disease control must remain the priority.
My ministerial colleagues in many other Departments and I are doing all that we can to promote the message that the countryside is not closed. More and more properties and visitor attractions are opening again and being publicised. We hope that over the Easter period visitors will return. We have provided updated advice to zoo owners and to royal parks, which will help them to make decisions on whether to reopen
My right hon. Friend the Minister of State is today participating on my behalf in the Informal Council of European Union Agriculture Ministers in northern Sweden. She will update colleagues on the progress of the outbreak here. We are continuing to work very closely with our European Union colleagues, who remain supportive of the efforts that we are making to bring the outbreak to an end.
We will continue to channel all our efforts into ensuring that our targets of 24 hours from report to slaughter, and 48 hours to culling neighbouring farms, are met. With continued support from Members of Parliament, farming organisations and many others, together we can succeed in our aim of eradicating this disease
Mr. Tim Yeo: I am grateful to the Minister for making his statement available a few minutes before he made it to the House.
I shall begin by expressing again my warm appreciation of the efforts of all those who are working to contain the spread of foot and mouth disease. I pay tribute to the role of the Army and the work of vets, slaughtermen and many others engaged in that task. Despite their excellent work, the signs are that foot and mouth disease is not yet under control; I shall return to that in a moment. I am sure that the whole House will unite in expressing deep regret at the scale of the human and animal tragedy now occurring.
In many parts of Britain, farmers are witnessing the destruction of their life's work and the killing of animals that they spent nights and days bringing into the world, nurturing and rearing. Alongside that suffering is another rapidly growing problem: the animal welfare crisis affecting 1.5 million animals, whose owners cannot move them because of foot and mouth restrictions—[Interruption.] I am sure that people who are concerned with animal welfare will note with in Brest the murmuring of Labour Members. There are problems with ewes and lambs in muddy fields and pigs that are in desperately overcrowded conditions; there is real distress as farmers wait for the welfare disposal scheme to start to operate.
On the issue of animals awaiting slaughter under the welfare disposal scheme, will the Minister publish regular figures at least once a week so that the size of that part of the problem can be measured? How long does he expect it to take to cure the large backlog? May I assure him that if special measures or powers are needed for that purpose, we will give our full support to any steps that are likely to be effective?
On the question of compensation, is he aware that I have sent him a letter setting out the categories of farmers who merit additional compensation? In his statement,
708
he referred to agrimonetary compensation. Will he confirm that that was due to farmers because of the weakness of the euro and has no direct relationship with foot and mouth disease?
I do not think that anyone—with the possible exception of the Minister—would try to claim that the disease is under control. Does he agree that if that claim is to be credible, four tests must be met? First, is the 24-hour report-to-slaughter time being met consistently? Secondly, is the geographical spread of the disease being reversed? Thirdly, have the bulk of the movement restrictions on healthy animals been lifted? Fourthly, is the number of confirmed new cases falling steadily? When all four tests have been met I—and, I believe, most others—will agree that the foot and mouth crisis has been resolved. I hope and pray that that day is reached sooner rather than later.
At present, it is hard to judge progress on meeting the first test as the Minister seems to have ceased daily publication of the figures that we need to make that judgment. Until last Thursday, the Ministry published cumulative and daily totals for animals authorised for slaughter; for animals slaughtered; for carcases disposed of; for animals still awaiting slaughter; and for carcases awaiting disposal. Given the Government's readiness to publish figures that contain good news, the suspicion must be that, by failing to update figures daily, they may be concealing the fact that the position is getting worse, not better, especially as the Minister's own figures, which he has just quoted, suggest that the totals are the worst ever in the six and a half weeks since the outbreak was first discovered.
At least 67,000 animals awaiting slaughter last night had been on the waiting list for at least a week. According to the Minister's own targets, no infected animals and no dangerous contact animals should be alive for more than two days. Does he agree that, unless information is available, nobody can judge whether the 24-hour report-to-slaughter target for infected animals and the 48-hour target for dangerous contact animals is being met? Two and a half weeks ago, the chief scientific adviser said that it was essential to meet the first of those targets if the outbreak was to be controlled. Will the Minister confirm that each time he or the Prime Minister says that progress on those targets is being made, they do so on the basis of genuine figures? Will he therefore resume daily publication of those statistics in the five categories that I mentioned? Will he provide the additional breakdown of infected and dangerous contacts that he and I debated in the House last Thursday? Does he agree that as Parliament is starting a 12-day recess tomorrow, daily publication of those figures during the recess becomes absolutely essential?
Does the Minister recognise that there will be great concern at the fact that only 70 per cent. of dangerous contact animals are slaughtered within 48 hours, and only in certain areas? Many dangerous contact animals may contract the infection or be incubating it before they are slaughtered, and the risk of the disease spreading exists from dangerous contact animals, as well as from infected animals.
Turning to the steps that the Government are taking, does the Minister agree that there are frequent reports of delay at the operational level, and of muddle? Does he accept that it would help if an Army commander were put in charge of the slaughter and disposal operation in each region? In this context, will the right hon. Gentleman say

709
from where the 11 directors of operations are drawn? Will he confirm that when the Prime Minister is absent, the meetings of the Government's own crisis management committee, known as Cobra, are chaired not by himself, but by the Secretary of State for Defence, who seems to be unrepresented in the House today, as is the Department of the Environment, Transport and the Regions? Is not the fact that the Secretary of State for Defence chairs the Government's own crisis committee in London a sign that the same approach should be followed on the ground in the regions?
Will the Minister say how many slaughtermen are now being used and whether he is confident that there are enough? How many appeals have been launched by farmers? Does he agree that some appeals may be made because of confusion about what constitutes a contiguous farm? Given that, in some cases, there are reports that, even on a contiguous farm, delays of more than two weeks are occurring before slaughter takes place, some farmers may wonder whether there is any purpose in then slaughtering healthy animals. Surely the purpose of slaughtering animals on contiguous farms is served only if it is carried out quickly.
On vaccination, I understand the difficulty that the Minister has in reaching a decision; it is a finely balanced issue. However, does he realise that he faces this difficulty simply and solely because of the failure of the Government to enforce their previous policy in an effective and timely way? Vaccination is a last resort—an alternative that the Government must now consider because they were too slow in carrying out their own slaughter policy. Will he confirm that it is 10 days since Downing street was spinning that a decision on vaccination would be made in 48 hours?
Does the Minister agree that there are three key questions on vaccination? First, will it speed up eradication of foot and mouth disease? Secondly, will it reduce the number of animals that have to be slaughtered? Thirdly, will it bring forward the date on which Britain's status as a disease-free country is restored? If the answer to at least two of those questions is yes, the case for vaccination is very strong.
Does the Minister agree with those criteria? If he does not, what criteria is he using to decide? Will he publish the scientific advice on which his decision is based? Now that the disease has spread to new, previously uninfected areas—some of which are a long way from existing outbreaks—does he consider that there is a case for using vaccination to create a firebreak around at least one of those areas to help to establish the acceptability and effectiveness of vaccination? While the Government have been contemplating this policy, has a contingency plan been prepared so that stocks of vaccine are in the right place, and have suitably qualified people to administer it been identified?
Will the Government now admit that their own mishandling of the foot and mouth outbreak has contributed significantly to the present scale of the problem? Will the Government recognise that the disease would not have spread as widely as it has if they had taken more prompt and effective action? Will the Minister accept that if he had followed the timely suggestions made by the Conservative party, the situation today would be less serious than it is?
710
The Governments refusal to learn the lessons of the 1967 outbreak, their neglect of the report of the Northumberland inquiry and western command, their delay in calling in the Army and giving them a fuller operational role and their reluctance to consult epidemiologists about the likely spread and scale of the disease have led to the extent of the present problem.
Together, they amount to ministerial negligence, which has cost thousands of farmers their livelihoods, is day by day inflicting appalling animal suffering, is destroying a sizeable part of Britain's tourist trade and will cost industry and the taxpayer billions of pounds. Against that background, will the Minister share with us, as frankly as possible and as he has promised to do, his views on why the disease is not yet under control? Why do his own figures continue to show a worsening position? Does he recognise, even now, that a more urgent and large-scale response is needed if we are to gain control of this hideous crisis?
Mr. Brown: I set that the bipartisan effort to deal with foot and mouth continues.
I thank the hon. Gentleman for his remarks about the scale of the problem, although that must be obvious to everyone. I thank him, too, for his kind words for those fighting the disease in the field—the civilian and military officials who are bearing down on the terrible outbreak.
The hon. Gentleman asked a range of questions, and I shall try to do justice to all of them. I do not think it right to try to turn this matter into a party political issue. The political climate is highly charged at present, but we are discussing a disease outbreak in livestock. The techniques for dealing with it are well understood, and we should be able to discuss the matter in terms of disease control rather than those of party politics.
Let me give the hon. Gentleman the factual answers to his points. There are two types of welfare scheme. There are three welfare livestock movement schemes, and about 90 per cent. of more than 48,000 applications submitted have been approved On average, movement licences are being processed and issued in less than three and a half days from the date of receipt.
On the livestock welfare disposal scheme—a more vexed matter—4,600 farmers have entered 1.6 million animals for that. That is an enormous number of animals, and, to date, only 48,000 have been slaughtered. The 22 abattoirs dedicated to the scheme have the capacity to slaughter around 280,000 sheep, 60,000 pigs and 25,000 cattle each week. Some 230,000 animals are scheduled to be slaughtered over the next few days, and the scheme is being got up and running.
The hon. Gentleman asked about statistics. I shall not repeat our exchange of last Thursday, but we are trying to put together a comparable series of figures. I do not think that he can charge me with publishing "good news figures": I gave the House the facts as frankly as I could in my statement. This terrible outbreak is not "good news". We are doing all that we can to bear down on it, and that should unite the House rather than being a cause of division.
The hon. Gentleman referred to the contiguous cull. He understands as well as I do why that raises difficult issues for individual farmers. He urged us to get on with it and to cull out dangerous contacts within the 48-hour time frame that we set ourselves. I took it from that that he

711
supported our policy, but he went on to ask about vaccination. He was right to say that the arguments on that are not all one way. Am I to assume, however, that he was advocating a policy of vaccination? Was he urging that on us, or was he simply setting it out as an alternative?
The Government's policy is clear: as I said in my statement, we keep vaccination under review, but I shall not move to a vaccination policy without considering all the issues involved, including several difficult ones that we have discussed before. Incidentally, the hon. Gentleman did not say whether the Conservative party takes the view that vaccinated animals should be culled out afterwards or should live on. Was he advocating a firebreak vaccination policy, or was he trying to dampen down the disease? Those questions must be answered before a strategy is embarked on, not afterwards.
The hon. Gentleman asked about stocks of vaccine and contingency arrangements. Yes, we have adequate stocks, as I have told the House on previous occasions; and, yes, contingency arrangements are in place, explicitly relating to the outbreak in Cumbria, where the disease is at its most intense. He asked about the number of slaughterers working: the figure for Great Britain is 457.
The hon. Gentleman referred to suggestions from the Conservative party that we should have acted sooner on a range of things. On 11 March, he first suggested that we should bring in the Army; but, in fact, Baroness Hayman had written to the Minister for the Armed Forces on 9 March, requesting a range of logistical support. On 15 March, the hon. Gentleman suggested that we commence on-farm burial; in fact, on farm burial was first used on 2 March. On 13 March, he suggested that veterinarians should be able to authorise immediate slaughter; in fact, that had been MAFF policy since 22 February—more than 95 per cent. of cases are confirmed on that basis.
Finally, the hon. Gentleman referred to agrimonetary compensation and asked me to confirm that it is paid out on the basis of currency movements rather than compensation for foot and mouth disease. That is true, but it should be remembered that the previous Conservative Government did not pay out a per ny of agrimonetary compensation. It was the foot and mouth disease outbreak in this country that informed our decision to draw down the agrimonetary compensation, in order to get aid swiftly to hard-pressed livestock farmers. Moreover, we have negotiated arrangements with the European Union for the payments to be made early.
Mr. Lawrie Quinn: My right hon. Friend will know that, on Friday, an outbreak was confirmed at Ashes farm in Ruswarp near Whitby. I congratulate all those who so swiftly tried to nip the problem in the bud effectively. Obviously, the tragedy is that contiguous damage has occurred to livestock, but, given the sense of partnership and the mood in our local community, the lack of bipartisan agreement in the House this afternoon would be found offensive. People in Whitby who have worked with me and people in the NFU office in Whitby who have worked so hard to help people get through the difficult decisions that have been needed will find that lack of agreement most offensive.
As my right hon. Friend knows, the farm is close to the North York Moors national park. The big fear in the minds of many farmers—many of my constituents—
712
is the impact of the problem on hefted flocks. Will he assure my constituents and the House that there are contingency plans to try to prevent the spread of this terrible disease on to the moors, where it would cause far more damage than it has done so far?
Mr. Brown: My hon. Friend is right to draw attention to the heroic efforts that are being made in the farming community, and in rural communities more broadly, to work with the Government and especially local officials to bring this disease outbreak to a conclusion. He is also right to draw attention to the particular issues and set of problems that confront us in dealing with the outbreak as it affects hefted flocks and moorlands. The issue is important in the area that my hon. Friend represents, on Hexham moor in Cumbria and indeed in the south-west as well. The Government are looking at what can be done to try to contain the disease in the very special circumstances of hefted flocks on moors without having to cull out all the animals on the moorlands.
Mr. Colin Breed: I, too, thank the Minister for providing us with a copy of his statement a few moments before the debate. I also associate the Liberal Democrats with the words of congratulation and thanks for all those who are working in the field in a demanding and often distressing job.
May I turn to a few practical issues on which, I am sure, many hon. Members have been approached by farmers in their constituencies? On 26 February, I first raised the issue of cattle going beyond the over-30-months limit. What compensation will be offered to those farmers? For those who cannot move their animals and who are now facing horrendous animal welfare problems, will the Minister increase resources to the Intervention Board? That seems to be one of the main problems in clearing the whole issue.
There is a significant backlog; farmers cannot get through; and applications for the animal welfare disposal scheme simply cannot be made.
Will right hon. Gentleman speed up the processing of movement licences for those in unaffected areas, where farmers have waited, sometimes for weeks, to get licences, despite having agreed the sale of their animals with others in unaffected areas? Will he also consider allowing farmers to reclaim the costs of vets' visits, which many of them are now finding very onerous? Those vets' visits are absolutely necessary because of the current FMD outbreak.
Finally, on a more local issue, will the Minister now undertake to instruct the Highways Agency to lay disinfectant matting on the Tamar bridge? He will know that that is a major issue in Cornwall, which is relatively free of the disease, but which is, of course, right next to Devon, which has a significant hot spot. Many farmers and many members of the public simply cannot understand why disinfectant matting cannot be laid on the bridge to provide at least some protection for the farms in south-east Cornwall.
Mr. Brown: I cannot give an instruction to the Highways Agency. [HON. MEMBERS: "Why not?"] I cannot

713
do so because the Highways Agency does not come under the Ministry of Agriculture, Fisheries and Food—as, no doubt, most hon. Members will have spotted.
Mr. Michael Fabricant: It should.
Mr. Brown: I thank the hon. Gentleman for arguing for that extension of my Ministry's powers.
I am advised that the issue of disinfected mats is rather more symbolic than real—that is the professional advice to the Government collectively—nor can I give the hon. Gentleman any comfort on the recovery of the costs of private sector veterinary visits. On movement licences, which he perfectly properly mentions, the best way forward for those in the unaffected areas is to work towards relaxing the movement controls in the disease-free areas, so that movements from farm to slaughterhouse are more easily facilitated. That is the right policy approach, but I cannot yet make an announcement. As soon as veterinarians advise me that it is safe to do so, of course I will.
On the hon. Gentleman's remarks about the welfare disposal scheme, he is of course right. As I said in reply to the hon. Member for South Suffolk (Mr. Yeo), the scheme has turned out to be very popular. About 1.6 million animals have been offered to the scheme, so extra resources are required to administer it, and extra resources are being moved in. We keep the scheme for over-30-month cattle under review, but I have nothing new to say about that today.
Dr. Jack Cunningham: May I ask my right hon. Friend to ignore the lectures from the Conservative party, whose record on BSE and other animal health and welfare issues was so abysmal? It ill becomes Conservative Members to come to the House in that mood and with those attitudes in the current circumstances.
I thank my right hon. Friend and his officials for being so helpful in dealing with the animal welfare problems among breeding flocks on the western fells of the Lake district in my constituency. Is he aware, however, that agriculture and tourism are inextricably linked in the Lake district hills and dales, so the Cumbrian economy is grievously damaged by the unprecedented crisis in agriculture? Is it not time urgently to provide a package of measures specifically to help the Cumbrian economy to weather the storm? Is it not also time for the Government, or—dare I say it?—the Treasury to be flexible, imaginative and generous in these unprecedented circumstances?
Mr. Brown: I have as much sympathy as I am allowed to have with what my right hon. Friend has said. He is absolutely right to refer to the inextricable links between tourism and agriculture in Cumbria, and I am pleased that the Ministry has been helpful in dealing with one of a series of difficult issues on the fells in his constituency. He is also right to tell me to be very careful about where I take advice.
Mr. Tony Baldry: What would the Minister say to my constituent, Mrs. Wilcox of Grove farm, Bletchingdon, which is the parish that is almost next door to Chesterton, where we had an outbreak of foot and
714
mouth some weeks ago? Mrs. Wilcox has 1,000 outdoor sows, producing 500 piglets a week, and she now has 3,000 piglets in temporary straw huts that are flooded because of the exceptionally heavy rain that we have had in Oxfordshire. She requested a welfare cull weeks ago and, although I will not take the Minister through it, there has been a saga of her sending information to MAFF, her vet sending information to MAFF and MAFF saying that it has lost the paperwork and the vet's letters. She got in touch with MAFF on Friday, only to be told that the Ministry had lost all her papers.
Mrs. Wilcox was on the telephone to my office today, almost in tears. The accommodation for her thousands of piglets is bursting at the seams, so what will the Ministry do about such cases? She says that she, the NFU and the National Pig Association cannot get through to anyone on the telephone; but we must have a system so that farmers such as Mrs. Wilcox can have help with their crucial welfare culls.
Mr. Brown: I will ask my private office to take up the constituency case that the hon. Gentleman perfectly rightly raises. Clearly, I cannot give him a response to an individual case across the Dispatch Box, but I will have it examined. He will understand how difficult the foot and mouth outbreak is for the pig sector—fortunately it has not got a hold in areas where pig farming is predominant—and mere are two reasons for that. First, the disease is incredibly infectious in pigs and they multiply the virus very quickly. Secondly, as he knows, because of the stratified nature of the industry, movement restrictions can cause welfare problems very quickly. The hon. Gentleman has nevertheless asked me to deal with that issue, and I will get my private office to consider it.
Mr. Eric Martlew: I thank my right hon. Friend for the statement. May I reinforce the point made by my right hon. Friend the Member for Copeland (Dr. Cunningham)? We need a financial package for Cumbria, which is in the thick of the outbreak and where there is severe financial hardship in some areas. We are getting on with the job in a bipartisan manner without the splits that have appeared here today.
I have two questions for my right hon. Friend. First, now that MAFF owns the lease on the Great Orton aerodrome, which is the mass burial ground for many animals, will he ensure that public health in that area will be looked after not only today and next week but in the many years to come? Secondly, the NFU would like to keep cattle in their sheds—and not turn them out to grass—for one, two or three weeks more. That will cost money; I understand that it is estimated that it would cost £2 million to keep them inside until the end of this month. Will my right hon. Friend consider ways of funding that?
Mr. Brown: On my hon. Friend's second point, my hon. Friend the Parliamentary Secretary is considering a feedstuff strategy for the infected areas where we believe the disease will be borne down on best by keeping cattle housed for longer than they normally would be. He is considering how we can facilitate that.
On my hon. Friend's question about the aerodrome lease, the disposal site and the public health issues, I can give the assurance that he seeks. As I understand it, there are no public health risks, but it is right that we should not just reassure ourselves about that but explain the

715
reasons to local people. We will ensure that the site continues to be monitored, and I will put such work in place.
Mr. Robert Key: Today and tomorrow in my constituency, 3,500 pigs and sheep will be killed. None of them is infected, but they are suffering from animal welfare problems and movement restrictions. Is it too late to provide more flexibility to local vets—they are in the best position to make judgments particularly about the movement of stock over short distances—instead of freezing everything until welfare becomes such a serious problem that it results in the death of many innocent animals?
Mr. Brown: I do not quarrel with the underlying thrust of the hon. Gentleman's question. I am trying to free up the movement restrictions so that we can facilitate the normal workings of the trade. I thick we all agree that that is the best way forward. However, I can do that only in a way that is compatible with the veterinary advice on disease control that is available to me. As soon as I can do what the hon. Gentleman asks, I assure him that I will.
Mr. John McFall: I remind the Minister that some areas are not co-operating fully. On the west highland way, which passes through my constituency and attracts more than 1 million visitors every year, landowners are reverting to type and using the foot and mouth crisis to deny people access to it. Will he remind such individuals to put agriculture in perspective? It provides 0.8 per cent. of employment in the country and 1.8 per cent. of gross domestic product. Tourism is the jewel in our crown and we need full co-operation from the farming and agricultural communities.
Mr. Brown: Many matters are devolved and not my responsibility. Nevertheless, my hon. Friend makes a powerful point: tourism is an incredibly important industry in northern Scotland, where there is no foot and mouth disease.
Mr. John Burnett: Last Saturday, I attended a public meeting in my constituency on the Ministry's proposals for a burial site in the parish of Petrockstowe. My constituents will stand shoulder to shoulder in solidarity with farmers because they understand that hundreds of thousands of carcases cannot lie on adjoining farms for days and weeks on end. However, the problem is gaining access to the site. The choice, which is devastating the village, is to drive through its narrow lanes—or, alternatively, to use the main road via the clayworks. I believe that the owners of the clay company are using this dire crisis to blackmail the Government and my constituents in an endeavour to secure extortionate terms. Will the Minister immediately exercise emergency powers to ensure that the right of way will go through the clayworks to the burial site, not through the village or its narrow lanes, which are utterly unsuitable?
Mr. Brown: Because the hon. Gentleman asked me to, I have considered the problem. As I understand it, there are three possible routes of access: through the village, off the main road or through the clayworks. He is right to
716
say that the private sector owns the clayworks and is denying the Government access. It is an intractable problem. I have every sympathy with him—
Mr. Burnett: Use emergency powers.
Mr. Brown: I do not have emergency powers to seize property owned by the private sector, as opposed to the Government. However, I shall do what I can to resolve the issue, to which I have given careful consideration.
Mr. Tom Levitt: My right hon. Friend will know that last week the Peak district national park had its first suspected outbreak. That was investigated by vets almost a week ago and it has still not been confirmed. Nothing has been done on the contiguous farms. Clearly, when the rest of the Peak district economy is starting to bottom out and improve, it is important that we know as quickly as possible not only if the case is confirmed, but how the exceptionally isolated incident occurred.
Mr. Brown: We need to be careful collectively in dealing with predicted sporadic outbreaks. What we cannot predict is where they will occur. Initial testing shows that the holding in my hon. Friend's constituency is clear of the disease. However, it may be too early to give a final confirmation of that. Like everyone else, I hope that it is clear.
Mr. Edward Leigh: On a serious problem that might affect arable areas, Stevadore and a grain merchant company have told me that the market in the export of grain has collapsed. There is no official embargo, but privately, people abroad have decided not to buy British grain. Will the Minister take the opportunity to make a firm statement that there is no possibility of grain being a vector of foot and mouth and that no one need be concerned about British grain? Will he do his utmost to ensure that our European partners make that clear on the continent? If the export of grain is collapsing, that could have devastating economic consequences in the eastern regions. Will he consider providing compensation for that?
Mr. Brown: I am familiar with one incident, which I hope is isolated, in which there was an argument about a grain shipment which was based on misapprehensions about foot and mouth disease. Grain is not a means of conveying the virus.
Mr. Lindsay Hoyle: I know that my right hon. Friend is aware of the case in south Lancashire, in my constituency. It is now almost seven weeks since it was identified, and poultry, pig, beef and sheep farming in the area faces severe welfare problems. What help can my right hon. Friend give? Can we lift the section D notices and allow the movement of animals as soon as possible, or can we ensure that the Intervention Board works more speedily? I know that it is in a period of crisis management because of the number of cases that it is dealing with, but something must be done to ease the plight of farmers in Chorley. I cannot stress enough the importance of that or of the scale of the tragedy that they face. It is not in the interests of the House that it should

717
attempt to make political gain out of the farming crisis; that is wrong, and the House will not have credibility as long as it is allowed to happen.
Mr. Brown: I must say that I agree with all three points made by my hon. Friend. The credibility of the House is best served when we are seen to debate, in a politically non-partisan way—[Interruption]—the great issues that confront our country.
Mr. Damian Green: What about BSE?
Mr. Brown: The hon. Gentleman shouts away, but he might just consider how I dealt with the Phillips report in the House. I took great care not to be party political, and I wonder whether it would have been the same if we had been in opposition and the Conservative party had been in government.
On the points made by my hon. Friend, I am allocating extra resources to the Intervention Board. He can assure his constituents that as soon as veterinary advice enables me to lift movement restrictions, even partially, I will do so.
Mr. Geoffrey Clifton-Brown: The crisis has been going on for at least seven weeks, and the number of animals slaughtered in that time is dwarfed by the number on the welfare scheme, so it will take longer than seven weeks to put that scheme into effect. Will the Minister therefore consider allocating extra resources to get the scheme up and running, and indeed completed? Will he consider also clearing licences for animals that require them and that could go to slaughter in the zones that are not affected by the disease? That would help to ease the welfare problem.
Mr. Brown: At the moment, I cannot relax the licensing scheme even in the controlled areas, but as I have just told my hon. Friend the Member for Chorley (Mr. Hoyle), as soon as it is possible to relax restrictions, which would have to be done on veterinary advice, I will of course do so. I am considering how practical it is to allow movement of livestock that are trapped in the infected areas to go to abattoirs in those areas and then on through the food chain. That may be possible. Of course, the priority must be to control the disease, and movement controls are vital to its extermination.
Ms Candy Atherton: Will my right hon. Friend join me in congratulating Cornwall county council, local MAFF officials and the National Farmers Union on today opening up sections of the Cornish coastal path? Does he agree that the news, along with the opening of the Eden project and the fact that many of our gardens and all our beaches are open, means that there is much to attract visitors to Cornwall this Easter?
Mr. Brown: My hon. Friend is absolutely right, and I congratulate local officials, public sector employees, local government and the local NFU on working together for the benefit of Cornwall, and on giving the clear impression that agriculture and tourism go hand in hand and can work together.
Mrs. Ann Winterton: What advice has the Minister received from his officials or others about
718
the nature of the outbreak compared with 1967? Why do they believe that the contiguous cull is necessary, especially where cattle are still being wintered in? The Minister will recall that in the 1967 outbreak the disease skipped farms and areas, and there was no rhyme nor reason to it. Secondly, will he confirm that until the House passes an order, the contiguous cull is voluntary and is illegal otherwise?
Mr. Brown: If animals are dangerous contacts and deemed so by the veterinary authorities, the cull is not voluntary; it is mandatory. If farmers are in the controlled zone but outside any other 3 km zone, and if they voluntarily give up their animals for a firebreak policy, as is happening in southern Cumbria, that is voluntary and not mandatory. However, the Government have the power to slaughter any animal that is deemed on veterinary advice a dangerous contact and at risk of carrying infectivity. It is not necessary for the clinical signs of the disease to be apparent, as a matter of veterinary judgment.
On the comparisons between the 1967 outbreak and the present one, I went into that issue in some detail in my previous address to the House. The two outbreaks are not directly comparable. There are various features now that are different from what happened then. The two most important are the fact that, in 1967, there was not the rapid movement of animals around the country that there is now—there was not the highway infrastructure. Also, as the hon. Lady well knows, the 1967 outbreak was predominantly in cattle and pigs and in the midland belt of England, including her constituency, whereas the outbreak now is predominantly in sheep and predominantly a phenomenon of the western part of Great Britain, with hot spots particularly in lowland Scotland, Cumbria and Devon.
Mr. Huw Edwards: There are now 14 outbreaks of foot and mouth in Monmouthshire and the situation is extremely grave. I was speaking to farmers in the Chepstow area this morning, where it has been particularly serious. The 48-hour contiguous cull has far from been reached in that area, despite discussions that took place when my right hon. Friend the Prime Minister attended my constituency last Tuesday. We were assured by the Assembly Minister, Carwyn Jones, that there would be liaison officers in Monmouthshire in a day or two, but I am not aware that they have yet been appointed. I also point out to my right hon. Friend the concern of farmers in areas winch border England. There may be an outbreak, say, in Herefordshire, but there may be contiguous farms in Monmouthshire. Who is responsible for notifying those farmers?
Mr. Brown: The contiguous farm policy applies even across borders pertaining to the responsibilities of different Ministers. I had an opportunity to discuss some of the issues with the Agriculture Minister for Wales this morning, and with leaders of the farmers unions in Wales, as well. We are all working together for a common purpose, but I will draw my hon. Friend's specific remarks to the attention of the Welsh Agriculture Minister.
Mr. Steve Webb: The Minister will understand that farmers whose animals have had foot and mouth infections and who want to stay in the business are putting aside the compensation payments that they have

719
received to restock after the crisis is over. Given the limited entitlement to social security benefits for people who are in businesses that are making no money, can the Minister advise them of what they are meant to live on?
Mr. Brown: I have set out the support payments available to farmers in those circumstances, and I understand that the social security arrangements, where they obtain, have been carefully set out. The big decision for farmers who have received a compensation payment is whether to restock the farm holding or renew any tenancy arrangements that may have been interrupted, or whether to pause and think very carefully about what the future holds for them.
There is a serious discussion still to be had with the industry about the shape of support payments and in particular the future support arrangements for the sheep regime. The hon. Gentleman is familiar with some of the issues involved—the hill farm allowance, the sheep premium regime in the European Union, how far we are to make use of the second pillar of the rural development regulation, and how far we should advance our plans for genotyping the national flock to make it more scrapie resistant. These are all issues to be discussed with the industry, but our first priority must be to defeat the disease.
Ms Sally Keeble: I welcome my right hon. Friend's statement about his plans for easing restrictions in some areas. Is he aware that the NFU in Northamptonshire is keen for restrictions to be eased locally, especially in view of the size of the area to which they apply and the length of time that has passed since the case that we had? Can he say a little more about the areas in which he is considering easing the restrictions, and about the timetabling of the decision, so that my farmers know roughly when they can expect some movement in that respect?
Mr. Brown: I cannot set a clearer timetable than the one I set out in my statement, because all these matters depend on veterinary advice. It is the areas where earlier outbreaks occurred—especially those in the east of the country—that seem to be early candidates for the lifting of movement restrictions and the return to more normal trade. I have under active consideration the question of whether it will be possible to do something further with the areas that have remained disease free throughout the outbreak, including East Anglia, the north of Scotland and west Wales. However, it would be dangerous to set a timetable for what is, after all, a biological phenomenon. I am advised that unexpected outbreaks are still likely to occur. By far the best thing we can do is to bear down quickly on such outbreaks and cull out the infected animals and contiguous premises.
Miss Anne McIntosh: Will the Minister now respond to the requests that I made some two or three weeks ago and consider vaccination at least in respect of rare and pedigree breeds in this country? Such breeds are priceless and can never be revived. Will he also look favourably on a request that was made by a number of farmers regarding the 30 mile exclusion zone that extends from Hawes? The affected area is much wider than the recommended 10 km zone.
Mr. Brown: I asked representatives of the National Sheep Association this morning whether they believed
720
that vaccination would play any part in a rare breed survival strategy. Their answer was an emphatic no. It is not that I have not thought about the issue or that I do not have it under consideration—I can assure the hon. Lady that I do. However, there are very strong arguments against the use of vaccination even in trying to protect rare breeds. The people who care for the industry most and who know it best are firmly opposed to the use of a vaccination strategy, but we are considering other things that we can do to protect rare breeds, including the preservation of genetic material.
Mr. Win Griffiths: Although it is gratifying that the number of new cases seems to be falling daily, the evidence of the past few days, which shows that the spread of the disease extends well beyond the areas where most of it has been found before, is extremely worrying. For example, a case recently arose in south Wales, in Nelson, near Caerphilly. Will my right hon. Friend tell me whether the investigations of the National Assembly for Wales, MAFF or the Scottish Parliament have produced any ideas about whether such outbreaks are caused by airborne factors, careless movement of vehicles on farm-related business, or unauthorised movements? Also, what is being done to try to get up to speed on culling in contiguous areas?
Mr. Brown: My hon. Friend is right that more needs to be done to ensure that the culling out of contiguous premises is achieved within our target range of 48 hours. As to the cause of sporadic outbreaks, more work still needs to be done, but it seems that they are caused by farm-to-farm transmission.
Sir Patrick Cormack: Is the right hon. Gentleman aware that many of us who attended the presentation that he kindly arranged last week came away feeling that there will be no future for hefted sheep or moorland animals unless he accepts a policy of vaccination very soon? Does he accept that many farmers in my constituency and elsewhere feel that, despite all his good intentions, which are not in dispute, there is a lack of co-ordination and clarity, and no central direction? His answer to the question asked by the hon. Member for South-East Cornwall (Mr. Breed) about disinfectant on the Tamar bridge illustrated that point. Who precisely is in charge? Who can take the decisions and lead the national fight against this national scourge?
Mr. Brown: On the Tamar bridge, the advice that is available to the Government suggests that the disinfected mats are of only marginal utility. Of course, the objection to them is that they might do more harm than good. On the broader question of hefted sheep on moorlands, and in Cumbria in particular, there are several strategies for saving them, including vaccination. I have not ruled the latter out, but there are several other approaches, including containment and testing of animals to see precisely where the disease is. Let me make it absolutely clear that I am not for the gratuitous culling of animals. It may be possible to deal with the problem just by containing it.
Mr. James Plaskitt: Farmers in Warwickshire to whom I spoke today are anxious for a speeding up of the slaughter rate under the

721
welfare scheme. Can my right hon. Friend say more about the additional resources that he can provide for the purpose?
May I introduce a word of bipartisan encouragement? Mr. Philip Bushill-Matthews recently wrote in my local newspaper an article that begins by congratulating the Government on their handling of the foot and mouth outbreak. He is the Conservative MEP for the West Midlands.
Mr. Brown: I am grateful for that bipartisan support. As for speeding up the slaughter element of the welfare scheme, we are bringing onstream sufficient capacity to take out around a quarter of a million animals a week, and some 230,000 are lined up for slaughter in the next few days.
Mr. Nick Harvey: May I urge the Minister to devote more resources to the clearance of carcases in Devon? Now that more progress is being made with the cull, carcases are literally piling up and typically not being moved for seven, eight or even nine days. What advice does the Minister suggest I give to constituents who are complaining about the effluent from carcases running into duck lakes or past their front doors, about carcases piled up on the school bus route and even about carcases between two caravan parks, which, obviously, are causing a serious odour problem?
Is the Minister aware that his officials in Exeter say that a lack of trucks to move the carcases is one of the problems? Can he do something about that? Farmers are threatening to turn up and deliver the carcases to the Ministry if the trucks do not collect them.
Mr. Brown: A lack of sealed trucks suitable for moving the animals to disposal sites is part of the problem, but at the heart of it has been the difficulty of finding a suitable disposal route, or series of disposal routes, in Devon. That has been an intractable problem throughout Great Britain while we have been dealing with the outbreak, but it has proved particularly difficult in Devon for a range of local reasons. I am sure that the hon. Gentleman is familiar with all those reasons, and merely stating them will not, of course, solve the problem. As was demonstrated by the discussion that I just had with his hon. Friend the Member for Torridge and West Devon (Mr. Burnett), it is very difficult to find disposal routes in the west country that are acceptable to the Environment Agency and also to local people. However, we are doing our best and we believe that we now have suitable disposal sites.
Mr. Gordon Prentice: Does it not beggar belief that there should be any unauthorised movements at all? Seven weeks into this contagion, there are still farmers out there moving livestock that can contaminate healthy beasts. Has the Minister made any estimate of the number of unauthorised movements? If we track down those irresponsible farmers, what sanctions can we use against them?
Mr. Brown: Those who break the law will be prosecuted, and prosecutions are pending. I cannot give an estimate of illegal activity, but let me say this: the
722
overwhelming majority of farmers who have been hit by this terrible disease outbreak have behaved not just responsibly but wry bravely, in the most adverse circumstances. I pay tribute to the law-abiding majority, who are working hind in hand with the Government to bear down on the disease.
Mr. David Curry: Does the Minister accept that one way of fighting the disease is for the Opposition parties to do what they are there for—to hold the Government to account and ask questions? If they do not, government will be worse than it would be otherwise.
Does the Minister also accept that the debate on vaccination will not go away until he sets out clear criteria against which we can judge whether the circumstances have indeed arrived in which vaccination can be resorted to, or ought to be resorted to? At present, it is being floated almost as an abstract concept. Until we know how the Minister will reach such a conclusion and in what circumstances, he will become increasingly frustrated by our questions and we shall become increasingly frustrated by his answers.
Mr. Brown: I have no quarrel with the first part of the right hon. Gentleman's question. As for the second, more targeted part about vaccination, there is a range of ways in which a vaccination strategy might be used. They all have their difficulties as well as their claimed benefits. The matter has been much discussed in public; moreover, I arranged a presentation on the issues yesterday and was pleased to observe a good attendance on the part of Members on both sides of the House. I look forward to giving evidence on the question of vaccination to the Select Committee, when the Select Committee is ready to receive me.
Mr. Tony McWalter: As a Hertfordshire Member, a county where the disease has not yet occurred, may I ask whether my right hon. Friend is aware of the remarks of the hon. Member for South-West Hertfordshire (Mr. Page) that to have a burial site in Hertfordshire would be "reckless"? Will my right hon. Friend take my assurance that I believe that the county should do everything that it can to play its role in helping to deal with a national crisis? Furthermore, will he assure me that there will be no limitation on movements and no other dangers involved in the policy, which I have broadly welcomed?
Mr. Brown: I am grateful to my hon. Friend for what he has said. I under stand that it is the Opposition's policy to advocate the burial of carcases rather than on-site burning to dispose of them. I may be wrong, and perhaps there is a different policy for Hertfordshire.
Mr. Owen Paterson: The Minister's policy of taking potentially risky carcases across safe areas to sites where a huge pyre will be built to burn them has been much criticised by experienced vets of 1967, and runs counter to the recommendations set out in the 1969 report. The situation has been made worse by the muddle in deciding who accepts that the site is right. Sites in my constituency have been approved by the Environment Agency, but have been the subject of massive disapproval from everyone else. Other sites have been approved by

723
other agencies but blocked by the Environment Agency. Who decides? Is it MAFF, the Army or the Environment Agency? Will the right hon. Gentleman let me know? Some of my constituents, such as the Arrowsmiths, have had rotting carcases on their farms for six days.
Mr. Brown: I read in the newspapers over the weekend that the hon. Gentleman thought that foot and mouth had been caused by an escaped virus from Porton Down, or a stolen virus. If he really believed that, he would have asked me about it, rather than drawing my attention to quarrels about landfill and burial sites. There will always be such quarrels. Whether it is safe environmentally to use them is, of course, a matter for the professional views of those at the Environment Agency. It is not clever to drop a lot of dead animals in the water supply. We must take these environmental considerations into account. We must take into account also the views of local people, who may agree with burial or landfill as a general proposition, but become much more sceptical about it if it is to be done near where they live.
Mr. Ben Bradshaw: Is the Minister aware that his Department's guidance—urging the reopening of some public footpaths—is being ignored by a number of county councils, thereby delivering a further and entirely avoidable blow to the tourism industry in the run-up to Easter? Will he confirm that there has never been a case of foot and mouth being spread by a walker?
Mr. Brown: There are always uncertainties about the way in which foot and mouth disease is spread. It happens mostly by animal-to-animal contact or by farm-to-farm spread. Although I do not know of a case of a walker having spread foot and mouth disease, I cannot say definitively that it has never happened. However, all these issues must be dealt with in a sensitive and proportionate way. My advice remains the same: that those who enjoy the countryside should stay away from farmed livestock, but otherwise enjoy the countryside; the countryside is not closed.
Mr. David Tredinnick: Does the Minister accept that it is not only in Banbury where there are problems with the welfare disposal scheme? In Leicestershire, farmers have been quoted three weeks to a month. There are piglets trying to eat other piglets. The situation is desperate. If the right hon. Gentleman is to solve the problem, he will have to introduce a massive increase in resources now—he might have to bring in the Army—otherwise, he will never cope with the problem.
Is the right hon. Gentleman aware that the contiguous slaughter in Leicestershire is running at 120 hours and not 48? When, finally, will he answer my questions about homeopathic borax, which has been shown in previous outbreaks to go a long way towards preventing animals from getting foot and mouth disease? Why will he not at least set in motion a trial? I have raised the matter with him on several occasions. I have tabled written questions and I have raised the matter with the Prime Minister. When will we get an answer? When will chemists get some instructions?
Mr. Brown: On the hon. Gentleman's final point, I concede that he is due an apology from me. He has asked twice about the use of borax as an alternative
724
therapy. That is a matter of professional judgment, but I have promised him a reply twice and he has not yet received one. He should have done so before now, and I shall ensure that he receives a reply.
On the welfare disposal scheme, I have explained the substantial demand and the need for extra resources to ensure that it carries out its functions. We are also prioritising work by trying to deal with the hardest cases first. The hon. Gentleman is right to draw attention to the stratified nature of the modern pig industry and the welfare problems that movement restrictions quickly create. I shall draw the constituency case that he raised to my officials' attention and ascertain whether I can get something done about it.
Mrs. Linda Gilroy: I think that my right hon. Friend understands that the tourism industry as well as agriculture is greatly affected in Devon as well as in Cumbria. Like my right hon. Friend the Member for Copeland (Dr. Cunningham) and others, I ask him to urge his colleagues to make available an appropriate package of assistance.
On a visit by the Paymaster General at the weekend, it became clear in discussions with Mr. David Beardsley, the secretary of the Federation of Small Businesses for Devon, that we need enough good-quality business advisers on the ground to assist people who are taking the difficult business decisions that hon. Members have mentioned to make sensible decisions and to know what is already available. That was more than the people to whom we spoke realised.
Mr. Brown: As my hon. Friend knows, I am passionately committed to business advice for those whose farm-based businesses are in transition. I secured moneys last year specifically for helping smaller farmers through the period of transition. The scheme is available to all farmers, and I have managed to carry the underspend on that budget into this financial year. Clearly, the special case that can be made for Cumbria and the west country means that they will be treated as priorities when resources are allocated.
Moreover, I promise to draw my hon. Friend's remarks to the attention of my right hon. Friend the Minister for the Environment, who is considering those issues more generally.
Several hon. Members rose
Mr. Speaker: Order. Today is the last opportunity for the Minister to come to the House before the recess. I want to call every hon. Member, but I need the assistance of those who wish to speak. Questions must be brief so that I can call every hon. Member.
Mr. Tom King: Obviously, the sympathy and understanding of the tourism industry are crucial if we are to crack the problem of foot and mouth. What has happened to the taskforce? The Chief Secretary is present. Will we have a statement about the taskforce's proposals before the House rises? An announcement about the small firms loan guarantee scheme will not begin to tackle the scale of the problems. People believed that they faced a problem that would last three to six weeks. Those in the tourism sector realise that this year is almost a write-off

725
for them. The question for some facilities is not whether the countryside is open for business but whether they will ever be open again.
Mr. Brown: The question goes slightly wider than my ministerial responsibilities, but I shall draw it to the attention of my right hon. Friend the Minister for the Environment, who chairs the taskforce. I understand that there will be no statement before the House rises; I accept that that is no comfort to the right hon. Gentleman and I shall try to provide a fuller reply that is.
Mr. Dennis Skinner: Does my right hon. Friend agree that, in times of crisis, it is important for the Government to have a surplus, not a deficit? Do farmers who receive the compensation ever thank him for the fact that the Labour Government have a surplus in their budget, not a deficit like that lot opposite? Do they tell him that they will vote Labour this time, instead of voting for that lot who left them not only in the lurch but with BSE?
Mr. Brown: Those points are often made to me, but in private.
Mr. Archy Kirkwood: The Minister understands that the recent outbreak is a devastating blow to livestock producers in south-east Scotland. The borders is one of the principal world centres for breeding sheep, especially Cheviots. Will the Minister re-examine the position whereby local vets have discretion about the 3 km cull? Everyone understands that, if there is a suspected case on a farm, slaughter is the only option in the infected place and on the contiguous farms. However, mass prosecution of a 3 km cull dictated by MAFF in London without proper reference to local vets could decimate the local economy and the sheep industry in south-east Scotland.
Mr. Brown: Administration of those matters is devolved to the Scottish Parliament. It is a matter for the Scottish Minister rather than me, although we all receive the same professional advice. I do not want to go further because there is local discretion and it is up to the Scottish Minister with responsibility for agriculture how that is exercised.
Mr. Douglas Hogg: Where do we stand now in terms of collection centres? The Minister will know that, for the small producer, sending small loads to an abattoir is pretty uneconomic. A collection centre would be much more practical for that person.
Mr. Brown: The point that the right hon. and learned Gentleman makes is absolutely correct. As he will recall, at the beginning of the outbreak, I had hoped that it would be possible to set up collection centres specifically to help smaller farmers to assemble sufficient batches to go in commercially attractive groups into the abattoir and the food chain. So far, it has not been possible to do that, but, as soon as it is possible to bring such a system into play, I would like to do so.
Mr. Michael Howard: Is the Minister aware that, last week, the leader of Kent county
726
council, in an attempt to explore the possibility of reopening footpaths in Kent, asked the Minister for the Environment how an area might be moved from the "at risk" category to the "provisionally free" category? He was told to ask MAFF. The next day, he asked MAFF and he was told to ask the Department of the Environment, Transport and the Regions. Does that not epitomise the way in which the crisis has been mishandled by the Government?
Mr. Brown: I suspect that there is more to the story than that. In any event, I hope that the right hon. and learned Gentleman and I can travel the same journey together in steadily liberalising the regime in east Kent.
Mr. Michael Fabricant: Has the Ministry any guidelines on the siting of cremation pyres? May I draw to the Minister's attention the problem that I have in my constituency? A cremation pyre is being built in Hood lane, near Longdon in Staffordshire, within 200 yards of a village. Does he accept that, whatever the reality of the toxicity of the smoke, people are very concerned about the smells and the dirt? There are a number of people with asthma, emphysema and other breathing problems. Is there any way that the pyre can be moved before it is ignited tomorrow morning?
Mr. Brown: I do not want to intervene in the local decision-making process. There are consultations and a range of different factors is taken into account, including the wishes of local people. These are not very popular neighbours, yet it is essential to dispose of the carcases. I am afraid that I can give the hon. Gentleman no more satisfaction than that.
Mr. Simon Thomas: May I share with the Minister the increasing sense of despair among many farmers in my constituency? Silage is running out; access to summer pastures is denied; and there is a real problem with the Intervention Board. There was also a problem with licensing from restricted areas to non-restricted areas; I accept the Minister's figures on licensing without restricted areas. Will he set targets for the welfare-to-slaughter scheme, so that we can measure progress? Does he accept that the maintenance of my party's bipartisan approach in Wales depends on the Government and the Minister meeting their own targets? There is still a gap there. Will he do more to ensure that the welfare-to-slaughter scheme can work and that we get the slaughter within 24 hours?
Mr. Brown: I have candidly set out for the House both the targets across Great Britain and the rate at which they are currently being achieved, and said that extra resources are still being brought in to ensure that we get even closer to those targets than we are doing now. As the hon. Gentleman will know, administration of the fight against the disease in Wales is, of course, a devolved matter for the Welsh Assembly. However, I promise him that there is very close co-operation and co-ordination between my Ministry, which is dealing with the outbreak in England, the Welsh Assembly, which is dealing with it in Wales, and the devolved authorities in Scotland.
Mr. Andrew Rowe: My local NFU has approached me and, I imagine, most of my colleagues in Kent about the future of the Invicta abattoir at Lamberhurst. I am sure that, like many other abattoirs, the Invicta abattoir is currently suffering from a lack of trade. However, if it closes, it will not be available to assist with culls or any other action that is needed in the future. Can the Minister reassure me that such essential abattoirs will remain open during this period?
Mr. Brown: We have tried very hard, even before this disease outbreak, to support abattoirs, and there are various public policy reasons for our wanting to do so. I am not familiar with the particular circumstances of the Lamberhurst abattoir to which the hon. Gentleman referred, but if he would like to write to me about them, I shall certainly investigate and see what I can do.
Mr. Howard Flight: West Sussex has had the good fortune not to be infected, partly because of the care taken by farmers. Some 10 days ago, two landfill sites were designated in the Horsham district council area, but I am very pleased to say that, on Friday, I was advised that MAFF had reversed the decision. Nevertheless, that risk seemed to arise initially because of a complete lack of liaison between the Department of the Environment, Transport and the Regions—which had designated the sites—the Environment Agency, county councils, district councils and MAFF. As was reconfirmed today in a letter from MAFF, those sites could have been used for animals slaughtered in contiguous culls. Is there adequate liaison on those matters between all those who are involved in them?
Mr. Brown: Yes, there is. The difficulty, of course, is the need to consult a great many people about a range of different options and to do that as rapidly as possible. An enormous amount of work is being undertaken, but the time constraints are very short. Although that might seem like confusion to the outsider, mostly it is not—it is a lot of people working very hard to very tight deadlines. The hon. Gentleman said that he is pleased that that option will not be taken in the area that he represents and I understand why he says that. However, may I gently say to him that burial is the option being advocated to me by Opposition Front Benchers?
Mr. William Cash: The Minister will know that the first and main conclusion of the western command report, which was issued after the 1967–68 outbreak, was that standing instructions should be provided for any further foot and mouth outbreak. Will he not only tell us whether any such standing instructions exist, but ensure that they are placed in the Library so that we know exactly whether they have been followed? Secondly—as DETR Ministers are not in the Chamber—will he, please, inform his colleagues that those who live in Stafford borough council area and Newcastle-under-Lyme cannot understand why, under current rules, they do not qualify for business rate relief? Will he, also take such action as comes generally within his purview to ensure that they ale put on the list?
Mr. Brown: I shall pass on the hon. Gentleman's public expenditure bid to my right hon. Friend the Secretary of State for the Environment, Transport and the Regions. As for the 1967 outbreak, in my last address to
728
the House, I set out some of the differences between what is happening to us now and what happened in 1967. The features of this outbreak are unique and there is no map to guide us through it. On the specific subject of burial, the use of burial on the small farms and for the small numbers of animals that pertained in 1967 is quite different from the type of circumstances pertaining now. We really do have to be sensitive to the dangers to the water supply and to the water table features.
Mr. Peter Luff: On bipartisanship, may I caution the Minister about relying too heavily on the words of the Conservative MEP Philip Bushill-Matthews, who was mentioned earlier by the hon. Member for Warwick and Leamington (Mr. Plaskitt)? That article was written four weeks ago, when we were all a good deal less unhappy than we are now with the handling of the crisis. More substantially, the Minister will be aware that the disease seems to be growing very fast in Worcestershire and that that is a matter of considerable concern. That is probably one of the reasons why residents in the vicinity of the Throckmorton airfield site—which is being used as a mass burial site by his Department—are not objecting to the principle of burial on the site, despite the fact that there was absolutely no consultation with them before the announcement. However, could he, please, ensure that the 25 or so parliamentary questions that I have tabled on the site are answered rapidly? Could he also, either now or in writing later, give me an assurance that there will be no burning of animal carcases whatever at the site?
Mr. Brown: I shall do my best to ensure that the hon. Gentleman's parliamentary questions are answered both rapidly and accurately, although it is not always as easy as it might appear to achieve both those aims. I shall check with my officials, and if I can give him the assurance that he seeks, I shall write to him within the next day.
Mr. Stephen O'Brien: May I urge the Minister to establish an MPs' hotline? As the recess begins tomorrow, it is essential that it should be operating and properly staffed. How many extra staff has he taken on in his office, as that has been one of the few routes by which MPs have been able to raise serious issues on behalf of constituents? The Intervention Board is clearly in crisis. Mr. John Barnett, of Mickley hall, in Broomhall near Nantwich in Cheshire, now has more than 1,000 pigs waiting to be accepted for the animal welfare slaughter scheme, even though he applied on 23 February. As of today, he has still received no response, despite many assurances in the meantime.
Mr. Brown: I have already explained the pressures that the scheme is under. A hotline has been established for Members of Parliament, and I shall give the hon. Gentleman the number when this exchange comes to an end. The strengthening of private offices has been undertaken in the Ministry. Two extra people in my office are dealing with incoming inquiries, of which there have been about 120 from Members of Parliament alone.
Mr. Graham Brady: What advice and assistance have been given to the National Trust and other owners of deer parks, such as Dunham Massey in my constituency, on the steps that

729
have been taken to safeguard the deer on their properties? In particular, what consideration has been given to the possibility of vaccination to protect those animals?
Mr. Brown: I understand from my hon. Friend the Parliamentary Secretary that advice has been issued on the management of deer. The most recent veterinary advice that I saw was that there was not a case for culling wild deer, on the ground that it would do more to spread the disease than to eliminate it. There are continuing discussions with those who have responsibility for managing substantial tracts of land on how to handle wildlife during this disease outbreak.
Mr. James Gray: Wiltshire is one of the areas approaching, we hope and pray, clean status, the last outbreak having been something like a month ago. Will the Minister give careful consideration to raising the restrictions there, as well as in the areas in the east of England that he mentioned earlier? Will he also give some thought to three issues that have been raised with me that could put that status in jeopardy?
First, we accept the need to bury, and Wiltshire is prepared to play its part in taking carcases from elsewhere for burial—that is a reasonable thing for a county such as ours to do—but will the Minister give farmers and the tourism industry an absolute assurance that lorries travelling through the constituency are 100 per cent. disinfected and totally safe? I am sure that they are, but farmers seek reassurance on the point.
Secondly, those farmers who have been granted licences have to take their lorries into Gloucestershire in order to go to disinfection centres, because there are so few centres around. Will the Minister consider opening new disinfection centres in Army, RAF or local authority sites, so that lorries need not go into infected areas before returning to Wiltshire?
Thirdly, when it comes to lifting the restrictions, which we all hope will be soon, will the Minister consider doing that progressively, following the same pattern as the outbreak, so that abattoirs and other parts of the infrastructure are not suddenly heaped with a huge burden that they cannot handle?
Mr. Brown: All three points are good and fair. We are considering lifting the restrictions in the hon. Gentleman's area, but I cannot give him a timetable. We are also considering whether it can be done in phases, rather than in one single move. We are further considering whether it will be possible to establish new disinfection centres, for exactly the reasons that he outlined. He accurately described the regime that is supposed to apply to the movement of vehicles. The vehicles are inspected to ensure that they conform to the standards that we have set out. The disease spread risk is absolutely minimal.
I understand why people want reassurances, and the hon. Gentleman was right to ask for them. I am happy to give him the reassurances that I have just set out.
Mr. Speaker: I am sure that the House would want me to thank the Minister for making his statement and replying to every hon. Member who sought to question him.

Point of Order
4.59 pm
Mr. Menzies Campbell: On a point of order, Mr. Speaker. Have you had any requests on behalf of the Secretary of State for Defence to make a statement to the House? There are reports that a British forces' helicopter containing a number of personnel has crashed in Kosovo. Has a Minister from the Ministry of Defence sought your leave to make a statement to the House about that matter?
Mr. Speaker: I am sorry to hear about that terrible matter, but a Minister has not approached me.

Orders of the Day

  Finance Bill
  [Relevant documents: Minutes of Evidence from the Treasury Committee, Session 2000–01 on the 2001 Budget, HC 326-i to iv.]
  Order for Second Reading read.
  5 pm
  The Chief Secretary to the Treasury (Mr. Andrew Smith): I beg to move, That the Bill be now read a Second time.
  Notwithstanding the gravity of the foot and mouth situation, it is good to move Second Reading at a time when the fundamentals of our economy are stronger than they have been for a generation. Because of our reformed monetary framework, tough fiscal rules and prudent choices, we now have the lowest inflation for 30 years, and it is the lowest in the European Union; the lowest long-term interest rates for 35 years; the highest business investment for 40 years, at over 14 per cent. of gross domestic product; the lowest unemployment since 1975, with more people in work than ever before—more than 1.1 million more than in 1997; and sound public finances, cutting free of the millstone of debt run up by the Opposition when they were in government.
  The Government inherited a £28 billion deficit and debt at an unsustainable 44 per cent. of national income, but we have made the biggest net cash debt repayment in one year by any British Government at £34 billion, and have reduced net debt to below 32 per cent. of national income. Because we have cut debt and unemployment and achieved higher growth and earnings, we are freeing up resources for priority areas in a sustainable way.
  Mr. Andrew Tyrie: Over the past four years, the Chief Secretary to the Treasury has made much about reduction in debt. Does he agree that debt reduction varies over the business cycle? Are the Government prepared to publish their cyclically adjusted estimate of debt reduction over the past 20 years?
  Mr. Smith: I am happy to give the hon. Gentleman that information. However, if one looks at the projections of fiscal balances in the Red Book, one can see that cyclically adjusted, as well as unadjusted, we are well within our fiscal rules. Indeed, because we put those rules in place and stuck to them, we have reduced the debt to GDP ratio and, as I explained, released resources for priority services. The fall in debt charges alone has freed £7 billion compared with four years ago. The fall in spending on unemployment has freed about another £4 billion.
  On that basis, we can plan ahead and invest for the long term in the nation's priorities: education, health, fighting crime, transport and science. Those are the priorities on which our future prosperity depends. The Bill builds on that strength and continues to deliver on our promises. The Budget of my right hon. Friend the Chancellor makes a clear choice about Britain's future and sets out a platform on which to build opportunity and prosperity for all. Like the Budget, the Bill takes a balanced approach, with stability as its foundation. Our hard-won economic stability enables us to deal with decades of underinvestment in public services, skills and
  732
  infrastructure, and it is the basis for the success of Britain's businesses and a better deal for pensioners, children and families.
  Maintaining and locking in that stability for the long term is at the heart of the Bill. We are taking a balanced approach, built around fairness, with support for children, hard-working families and pensioners; investment in our schools, hospitals and transport system; a sustainable environment; and higher productivity and enterprise, with employment opportunities and skills for all.
  Following that balanced approach, this is a Bill for families and children and one that tackles poverty. We have made a clear choice to take account of the costs of children through the tax and benefits system and to help every child make the best start in life. It is a matter of choice that we have increased child benefit to £15.50, a rise in real terms of no less than 26 per cent.
  Clause 52 proposes the children's tax credit at £10 a week, equivalent to a 2.5p cut in income tax for those families. From next year, it will be £20 a week for families in the year of a child's birth. A family who received just £11.05 per week under the last Government will receive £25.50 a week under this one. We are increasing maternity pay to £100 by 2003 and we will increase the payment period from 18 to 26 weeks, as well as introducing two weeks' paternity leave for new fathers.
  The Bill takes further steps to make work pay. Twenty-five million taxpayers will gain from the widening of the lower 10p tax rate in clause 51, at a cost of £1 billion. Now, more of their income will be taxed at that lower rate, rather than at 22p. We have put up the working families tax credit by £5 and increased the minimum wage. Those two together mean that the guaranteed minimum income for families with children and with someone in full-time work will rise to £225 a week. That will make a real difference to families on modest incomes.
  To ensure that pensioners share in the nation's rising prosperity, we are increasing pensions above inflation and above earnings by £5 a week for single pensioners and £8 a week for couples, with further rises of £3 and £4.80 next year. Because of the measures that we are taking this year alone, households will be, on average, £240 a year better off and families with children will be, on average, £420 a year better off. Two million of the poorest pensioners will be at least £800 a year better off.
  Living standards for a typical family have risen by 10 per cent. since the last general election, with particular help going to the poorest and those who need it most. That is the measure of our commitment to building not only a strong economy, but a strong society—one that is making people better off.
  Of course there is more to do. We must build the best possible environment for business to flourish and productivity to rise. Our ambition is to achieve a faster rise in productivity than our main competitors over the next decade. We want successful companies in all sectors to invest and expand. We have already created a more favourable company tax environment, with the lowest corporation tax rate ever in Britain and, overall, the lowest rate of any major industrialised country. We have reduced the long-term capital gains tax rate on business assets to 10 per cent.
  Recent evidence of progress has been encouraging. In the last year, the economy has grown at 3 per cent. and manufacturing productivity by 4.4 per cent. Business

  733
  investment grew by 2.4 per cent. last year and we are now investing at a rate of over 14 per cent. of gross domestic product—the highest level for 40 years.
  In January, Arthur Andersen and the Brussels-based GrowthPlus organisation released their pan-European benchmarking study on the environment for entrepreneurship and concluded that the United Kingdom, ahead of Europe and the United States, is the country that provides the environment that is most friendly to entrepreneurship.
  We still have some way to go and we have proposed further reforms to promote competition, investment, innovation and enterprise. To promote long-term investment and to protect investors, we will take forward Paul Myner's recommendations in the review of institutional investment; we will abolish the minimum funding requirement and, through tax and regulatory reform, we will make it easier for institutions to invest in venture capital. We are building a competitive and modern tax system for large firms, with changes to double taxation relief in clause 79 and the abolition of tax on most payments between companies within the UK tax jurisdiction in clauses 83 to 85.
  Mr. Ian Taylor: As I reflect on the Chief Secretary's investment calculations, I wonder what effect changes in the economic background since the Budget will have. For example, cuts in capital expenditure in the telecommunications industry are leading to considerable job losses, and there will be a knock-on effect from the United States. Does he have any post-Budget feel for the outcome in the UK over the year?
  Mr. Smith: Yes. Information available since the Budget could not, of course, have influenced the figures in the Financial Statement and Budget Report. It is interesting and instructive, however, to examine the average of the independent forecasts, the most recent of which have been published since the Budget. Their growth predictions for the UK average 2.6 per cent., which is towards the upper end of the Budget prediction of between 2.25 and 2.75 per cent. To that extent, we have had some reassurance from the independent forecasters.
  The hon. Gentleman mentioned external circumstances, and any slow-down in the United States would be a matter of concern. That, too, could not have been factored into the Budget predictions, but the general estimate is that a 1 per cent. slow-down in the United States would affect the UK export market by about 1 per cent. and would affect GDP by around 0.25 per cent. I hope that that answers his question.
  Mr. Oliver Letwin: Unless I misheard my hon. Friend the Member for Esher and Walton (Mr. Taylor), he was asking about investment rather than growth. It would be interesting to hear the Chief Secretary's latest analysis of that.
  Mr. Smith: Prospects for investment are sound and in line with our forecasts. Recent trends have also been encouraging. We are not complacent, but the soundest basis on which we can attract and sustain investment is the platform of stability that the Government have put in place by applying and sticking to sound fiscal rules, by
  734
  having sound money, by hitting our inflation target and by investing in skills and improving competition so that we have a successful and dynamic enterprise economy.
  We are carrying that work forward in the Finance Bill. For large firms, for example, there will be the changes in double taxation to which I have already referred. We shall consult on a widely welcomed measure: the possible extension of the research and development tax credit to larger firms. We are also consulting in detail on relieving tax when companies sell substantial shareholdings. Since 1997, enhanced capital allowances and new tax credits to encourage research and innovation have already saved business more than £1 billion. Increasing research and development by large companies can have a big impact on the UK's long-term productivity.
  The Bill will also improve the environment for small and medium-sized enterprises. Clause 62 doubles the value of share options that can benefit from tax relief through enterprise management incentives to £3 million. Clause 61 extends the right to benefit from that relief to all employees. Alongside the measures introduced in the Bill, we are reducing the burden of tax and regulation on small firms with a package of measures to cut the administrative burden of value added tax, and that, too, has been widely welcomed. We are simplifying small business corporation tax by making companies' annual accounts the basis for calculating tax, cutting at a stroke the need for a parallel paper chase.
  The Bill will make the tax system more responsive to specific needs to benefit businesses, communities and people throughout Britain. In particular, it will help to ensure that areas left behind by rising prosperity are helped to catch up, with a package of six tax cuts, totalling £1 billion over five years, targeted on enterprise in our poorest areas.
  We are also giving a boost to the British film industry by extending tax relief for British films for a further three years, under clause 72. We are reforming betting duty. In recognition of the importance of our national heritage, we are bringing in a scheme to reduce VAT on church repairs and making refunds available to national museums and galleries that allow the public free admission.
  Mr. Michael Jack: The right hon. Gentleman mentioned further support for the British film industry. What rate of return has so far been received for the taxpayer's investment in that industry, and does it justify the additional help that will be given?
  Mr. Smith: The industry's recent success—in awards as well as rewards and returns—fully justifies the steps that we have taken. Moreover, the fact that the extension was made possible was warmly welcomed not merely in the industry, but by commentators and more generally.
  We are also initiating consultation on tax relief for community sports clubs, acknowledging their invaluable contribution to recreation and a strong society.
  On skills, we recognise that today's economy demands more workers with higher skills and qualifications to fill new jobs. However, up to 30 per cent. of all employees do not have basic level 2 qualifications so, as well as the extensions to the new deal and the provision of training to people on benefits, we want to encourage companies and employees to upgrade their skills. To back up the tax relief that we already offer on employee training, we shall

  735
  consider a new tax credit to support training. We are launching an independent study to enhance the supply of highly skilled scientists and engineers, who are also an important part of the work force for productivity and future growth.
  Britain is already one of the best business environments in the world. We shall continue to look at new ways to help Britain's companies raise their productivity. The reforms that we are making through the Bill will make the environment for all businesses better still.
  Moreover, following on from previous Budgets and the steps that we have taken to tackle climate change, improve air quality, promote lower emission fuels and renewable energy, and regenerate rundown areas, the Bill carries forward the Government's commitment to a sustainable environment. Clauses 1 to 3 effect our cuts in fuel duties for ultra-low sulphur petrol and ultra-low sulphur diesel and enable the Government to provide reliefs for pilot projects to develop more environmentally friendly fuels.
  Clauses 8 to 14 increase to 1,549 cc the engine size below which the lower rate of car vehicle excise duty is paid, reform VED for goods vehicles, and implement the new exemption for tractors and agricultural machinery. Altogether, those measures are worth £1.6 billion a year to motorists—equivalent to a 4p pet litre cut in fuel duty for motorists—and £660 million to the haulage industry, which is equivalent to a 7p per litre cut in fuel duty for hauliers. The measures also promote less environmentally damaging fuels and vehicles.
  The introduction of the aggregates levy in clauses 16 to 49 seeks, in a revenue-neutral way to promote the use of recycled aggregates and other alternatives to primary aggregates to reduce environmental impacts of quarrying such as damage to biodiversity, visual intrusion and nuisance to nearby communities.
  Mr. David Heath: I am sure that the Chief Secretary is aware of the useful talks between his colleagues in the Department of the Environment, Transport and the Regions and the major quarry producers about creating a rebate scheme for companies that introduce environmentally friendly measures. Given that that is on-going, that it is referred to in the Red Book and that there is now no incentive for companies to introduce measures that would make their activities more environmentally responsible, would not it be more sensible to delay the introduction of the aggregates levy until the rebate is ready?
  Mr. Smith: It would not be sensible to delay the levy, for the logical reasons that I am about to give, but the hon. Gentleman makes a good point about introducing more environmentally responsible quarrying methods, and we are attracted in principle to the approach that he advocates. Of course, some difficult definitions and criteria will have to be sorted out, but we shall continue to discuss that possibility.
  It is important that we go ahead with the levy to provide an incentive to use more environmentally sustainable alternatives and, in a revenue-neutral way, to use the funds from the levy to cut employers' national insurance contributions and to establish the new sustainability fund, which will come into operation at the same time as the levy in April next year. As announced in the pre-Budget report, £35 million a year will be allocated to the fund and we shall consult further on the details of its operation.
  736
  The climate change levy and the landfill tax, dealt with in clause 102, together with the aggregates levy, demonstrate our readiness to provide incentives for the environmentally sustainable use of scarce resources. By bringing actual market costs more in line with real economic costs, economic instruments that allow those involved in environmentally damaging activities to respond according to their circumstances meet the public good as well as helping the environment. Attaching a price to environmental detriment creates a permanent incentive for innovation and investment in less polluting methods of production and encourages the consumption of cleaner products.
  Revenues from new environmental taxes are being used to cut the rate of national insurance, rather than to boost the income of the Exchequer. That is not only economically rational, but environmentally responsible. Those Opposition Members who delight in opposing such measures are simply refusing to face up to the tough choices that are necessary if we are to take our environmental responsibilities seriously.
  The Bill sets out a clear choice for Britain's future. This Government have built a platform of economic stability as a basis for future prosperity. The choice that we have made is to build on that stability. We have chosen more investment in our public services, not less. We have chosen sensible tax cuts for hard-working families, not underinvestment and cuts in our public services, which are the undeniable consequences of the policies—such as they are—of the Conservative party.
  This is a Finance Bill for families and children, and it tackles poverty and unemployment in our poorest communities. It will help Britain's businesses grow. It will carry forward stability as the basis for a strong economy and a strong society. It represents the way to deliver opportunity and prosperity for all, and I commend it to the House.
  5.23 pm
  Mr. Oliver Letwin: I must begin by congratulating the Chief Secretary, who managed to occupy almost 24 minutes of the House's time so elegantly and beautifully, while saying almost nothing at all. That was, of course, forced on him by the character of the Bill.
  It is odd to debate Finance Bills on Second Reading. I suppose that we are forced to do so by the conventions of the House, but, of course, no hon. Member on either side of the House would deny the necessity of having a Finance Bill. The debate on Second Reading is intended to be about the principle of the Bill, so I suppose that perhaps we ought to—[HON. MEMBERS: "Sit down now."] Exactly, but this is not the Finance Bill that we should have liked, and I hope that the House will take my remarks in that light.
  As always, I declare my interests as set out in the Register of Members' Interests but I have no idea how the remarks that I am about to make could possibly benefit them. None the less, I declare them all the same.
  The background to the Bill is not quite as the Chief Secretary outlined it. It begins with a long record of taxation by stealth to pre-fund the rapid growth of expenditure. There has been a 3 per cent. increase in the tax burden measured as a proportion of gross domestic product, and that comes to about £30 billion a year.

  737
  I apologise, Madam Deputy Speaker, for boring you by reminding you of the analysis that Her Majesty's Opposition have repeatedly made of that increase, but I shall outline that as a precursor to the latest developments.
  Our complaints to date have been as follows. First, there has been no sign yet of any efficient expenditure. You may be aware, Madam Deputy Speaker, of the posters that have appeared in our streets which ask people why, given that they have paid the tax, they have not seen any extra policemen or received the operations that they expected and so on. There is sign of expenditure but no sign yet of efficient expenditure.
  Secondly, we have repeatedly asserted that the rise in expenditure is ultimately unsustainable without a consequential increasing tax burden into the future. That would have the further consequence of decreasing the competitiveness of our economy.
  Thirdly, we have made what I think is an undeniable argument; it is undeniable because I have not heard the Chancellor or his colleagues deny it. If expenditure is not to result in the inefficient rise in taxation in two or three years' time that the Government deny they will engage in, it must result in an inefficient cut in expenditure growth. We have said that and we have said it again, and I have been listening hard for Ministers to explain how they can increase expenditure at its current rate and then suddenly cut its growth and find that public services are delivered efficiently. As far as I know, that has never been achieved anywhere in the world and I would be surprised to find that it can be done here.
  Mr. Edward Davey: I had understood that the Conservative party was in favour of the Government's spending proposals. Will the hon. Gentleman therefore explain whether the Opposition would cut expenditure inefficiently or raise taxes?
  Mr. Letwin: I am surprised that the hon. Gentleman, for whom I have considerable admiration, has not attended to the interesting debate between the Government and ourselves. The Government claim that the Conservatives' policy is to reduce expenditure by 2003–04 by £16 billion, although the figure varies by the day. The actual policy is to reduce expenditure, compared with Government spending plans, by £8 billion, and that would reduce the rate of growth to a sustainable level.
  I make my remarks only by way of background, because we have recently moved into a new phase. There has been a clear change in the mood with which commentators greet statements by the Chief Secretary and the Chancellor. Let us imagine moving forward to 2003, and ask ourselves whether we can be as confident as the Treasury once was that there will be no slow-down and that the economy will continue to grow with the abolition of the cycle that my hon. Friend the Member for Chichester (Mr. Tyrie) alluded to implicitly. The answer is that, without any forecasting, we cannot be as certain as we once were.
  If there is a slow-down, we must then ask ourselves whether the Budget and the Finance Bill that embodies it—and previous Budgets and the Finance Bills that embodied them, and the next two Budgets—are as prudent as the Chancellor and Chief Secretary now imagine them to be.
  738
  The answer must surely be no. If there is a slow-down, all my arguments will have rather more force in three years' time. It will be all the more necessary to cut expenditure growth and the more inefficient not to do so. It will be truer that tax rises at that time will occur when the private sector can least afford them Alternatively, the Government could choose—I doubt that "Mr. Prudence Brown" would dream of doing so because he does not have this reputation—to allow for ballooning borrowing. That is an unenviable set of choices.
  The Government have so constructed things at a time of great uncertainty that, if the worst predictions are to be proved true, they will be faced in three years' time with the prospect of raising taxes at the worst possible moment, cutting expenditure when it would be least efficient to do so, or with ballooning borrowing, which is never efficient.
  The problem is not that the Bill aggravates the situation, which is why I congratulated the Chief Secretary; in truth, the Bill does not do much at all. The problem is that it does nothing to address the underlying problem that the Government have built up in successive Budgets and Finance Bills.
  Ms Sally Keeble: In the scenarios that the hon. Gentleman paints for three years' time, he does not seem to hold out a hope that his party will be in government.
  Mr. Letwin: Dear me; I shall pass over that comment in the spirit of last year's proceedings, in which we engaged in serious economic and fiscal debate. Conservative Members intend to keep the debate at that level. [Interruption.] I think that we had such a debate. I hope that the Paymaster General agrees, because we saved her from the disaster of a double tax relief regime that would have squeezed multinational companies out of the country for ever. The nation should be a little grateful to us. We were not alone in that. The Confederation of British Industry and many others also played a part. We helped her to become the saviour rather than the destroyer of British industry.
  Let me deal with one item, which I am inclined to describe as the only real measure in the Bill. It took the Chief Secretary 19 minutes to reach it and he spent two and a quarter minutes on it. That is odd because it occupies 33 of the 108 clauses and is the only major new tax in the Bill. Why did he do that? He has the awesome might of the Treasury behind him. Presumably scribes have been working for weeks on his great speech. He could have mounted a defence of the magnificent new measure, but instead we got 19 minutes of silence on it, two and a quarter minutes of febrile meanderings and a complete refusal to deal with the serious matter raised the hon. Member for Somerton and Frome (Mr. Heath). As usual, the question was not quite on the mark because the problem is worse than it implied. Nevertheless, the Chief Secretary should have given a proper reply, but was unable or unwilling to do so.
  Why so little attention to the measure? The reason must be that the aggregates tax is a text-book example of everything that is wrong with the Government's fiscal approach. It is, as the Chief Secretary suggested, like its famed predecessor, the climate change levy.
  The Financial Secretary to the Treasury (Mr. Stephen Timms): Good.
  Mr. Letwin: That is the official view. That will not, however, be the opinion of most people who have to pay it. Moreover, the levy and the aggregates tax share the feature of the Holy Roman empire which was not holy, Roman or an empire: the climate change levy is not about climate change and the aggregates levy is not about aggregates.
  Its first feature is that it is a tax, which marks it out as a true measure of the Government. It is, of course, a stealth tax. In fact, it is probably the stealthiest of taxes. If the aggregates tax were a tax on aggregates and calculated or designed to have the slightest effect on their extraction, it would at least be declaring what it was about. Its name would suggest that purpose. However, the Treasury has distinguished economists, including micro-economists, working for it. They know, and must have told Ministers many times, that an aggregates tax will have no such effect.
  Instead, the tax will have two other effects. First, it will raise the amount that it costs to extract aggregates, and hence reduce the sum that people are willing to pay for the land from which the extraction occurs, so it is a tax on land. Secondly, it will raise costs at the other end, on production for construction, so it is a tax on construction. However, the Bill does not refer to a construction tax or a land tax. Why not? [Interruption.] My hon. Friend the Member for Chichester is right: because there are echoes of development land tax. The last thing that the Government want to do is admit that they are imposing a tax on land or construction, because those would be unpopular, so they have devised an immensely ingenious idea—they have gone to the middle of the value chain and called the levy an aggregates tax, which sounds like an environmental measure.
  The Chief Secretary let the cat out of the bag, however. Why not delay the implementation of the tax until it has been redesigned by the ingenuities of the Financial Secretary, who managed so to contort himself that by the end all those affecting climate change do not pay any climate change levy, but everybody else does? He could have designed a system that would induce those who are affecting climate change to affect their production of energy. In due course, the Chief Secretary, the Financial Secretary or another member of the Government who is inclined towards prestidigitation could have come to the House and announced a weird and wonderful scheme that exempted from the aggregates levy those extracting aggregates in such a way that they ended up, nevertheless, extracting fewer aggregates. For the moment, however, we have a classic stealth tax. It is a tax on land and construction, so the Government want to introduce it before any of the things that I have described have happened.
  The next element of stealth is a classic example of the Government's method of proceeding. I almost admire it and have grown almost to love it, but the nation will not admire or love it. The tax is introduced under the rubric that it is fiscally neutral. That is a wonderful phrase. Every time the Government introduce a tax, they say not only that it is environmentally beneficial when it is not, but that it is fiscally neutral. How is it fiscally neutral? There is an offset on national insurance contributions. That is the Government's favoured methodology.
  740
  If the Chief Secretary is willing to come to the Dispatch Box to contradict me and give the House an assurance, I will withdraw what I am about to say. Let him promise that in succeeding years there will not be a rise in that tax without an exactly concomitant decrease in national insurance contributions, and I will withdraw my assertion. I see no sign of movement. I predicted that I would see no such sign because it is precisely the Government's intention to create an addition to the tax base that will enable them in due course to extract more from their land and construction tax than they have relieved from national insurance contributions. When that happens, there will be few people in the House who will remember this debate because very few people want to attend a debate about so boring an item as the Finance Bill. The Chief Secretary did his best to make sure that the Members in the Chamber would leave so that they would not remember some years from now that he had not responded to my assertion.
  The fact is that the tax is a device. As I said, I have come almost to love it because it is so widespread and so brilliant. Yet, oddly enough, it is now so transparent that it is not as brilliant as it once was. In due course, this land and construction tax will rise inexorably with little or no concomitant decrease in national insurance contributions. It is therefore a stealth tax in every dimension. It is stealthy because it is not about the item that it says it is about; it is stealthy because it is about other items that it does not say it is about; it is stealthy because it says it is fiscally neutral but it will actually go up; and it is stealthy because, in the end, this is a Government who depend on stealth taxes to raise large sums to fund ultimately unsustainable public expenditure programmes.
  There is a worse problem. It is parallel to what happened last year with the brilliant device of double tax relief, the proposals on which had to be withdrawn. The Government have made an error, which I suppose comes from haste, and they—and more to the point, the nation—will come to rue that error. For a long time, we in this country have taxed natural resources in public ownership. The petroleum revenue tax is the classic example. None of us on either side of the House has an objection in principle to such a tax.
  I am sure that the Chief Secretary advisedly used the term "taxing the use of natural resources". I am sure that he or the person who wrote his speech meant that term, but a precedent is being set which I doubt the Chief Secretary or the Chancellor intended. If they did intend it, they are a great deal less benign than I am inclined to give them credit for being. So far as I am able to determine, there has never been a tax on privately owned natural resources. This is a departure. We are talking about land that, in most cases, is in private ownership. A private operator comes along and extracts natural resources, having paid a market price for the land, so that it can deliver a product to private sector users engaged in construction. At no point in the chain are we dealing with a national resource in the sense of one that is in public ownership. The tax that is being applied is therefore an intervention in the marketplace. Once one starts down that route, there is no limit.
  The following are not covered by the tax: coal, lignite, slate, shale, soil, vegetables and organic matters, anhydrate, ball clay, barytes, calcite, china clay, feldspar, fireclay, flint, fluorspar, fuller's earth, gems, gypsum, metal ore, potash—we do not have much of that in

  741
  the UK—rock phosphates, sodium chloride, talc, spoil and waste by-products, by-products of continental shelf drilling, spoil from roads, stone used for dry-walling, armourstone, rock and stone not crushed.
  I hesitate in reading out the list, because I see the Financial Secretary's eyes lighting up. He no doubt has it in mind to introduce a series of fiscally neutral measures, taxing each and every one of those commodities in due course. With the aggregates tax, he and his colleagues have opened the barriers to exactly such taxation. I said that they did not mean to do so, and I hope that that is true. It is a horribly inefficient and complicated way of extending our tax base. It involves a new series of taxes, each with its own complexities.
  Mr. Patrick McLoughlin: I am interested in all the exemptions from the tax that my hon. Friend outlined. I thought that the Prime Minister and the Secretary of State for Trade and Industry had given an undertaking that they would do everything possible to avoid red tape and complication. Surely my hon. Friend has got the exemptions wrong and the tax is straightforward, or we do not have joined-up government.
  Mr. Letwin: I have terrible news for my hon. Friend. Those are not the exemptions; those are merely the matters that are not covered by the present tax. We have not even seen the exemptions—they are not in the document. The exemptions are yet to come; that is the purport of what the Chief Secretary told those on the Liberal Benches. We are to be presented in due course with a scheme of bewildering complexity produced by the genius of the Financial Secretary. I hazard a guess that the scheme will exempt one class, which will be exactly the class of those who extract aggregates. If that does not happen, I will buy the Financial Secretary a lollipop, even in these hard times.
  I hope that I have said enough to suggest to the House that the Opposition are not wholly in love with the aggregates tax. Indeed, we shall oppose it. We shall scrutinise it in Committee in the detail that it deserves.
  Mr. Andrew Smith: Will the hon. Gentleman tell us what he and his party will do to tackle the environmental damage and costs of quarrying?
  Mr. Letwin: As the Chief Secretary is doing nothing through the tax to tackle the environmental damage caused by quarrying—the tax will not affect the extent of quarrying in the United Kingdom—that is a question for the Department of the Environment, Transport and the Regions. It is a serious question, but his tax does not affect it. As I pointed out, the tax is a tax on land and on construction. It will not affect by one jot the amount of aggregates extracted in the UK.
  I move on to two items that are not in the Bill and on which I hope that we can reach agreement in Committee. When we dealt with double tax relief and the control of foreign companies last year—at exhaustive length, as I think that the Paymaster General would agree—and in subsequent statements, the Government made clear two things, both of which I had hoped would be reflected in the Bill, but are not. Although these are properly matters
  742
  for the Committee stage, I flag them up now so that the Government have the maximum amount of notice of what we shall be banging on about. I make no apologies for banging on at great length about these matters.
  First, when the splendid resolution on onshore pooling was brought back into the Bill, it was a specific concern to many of us and to a number of major UK multinationals that here might be a problem for those who were forced by the provisions to restructure so as to achieve a flatter structure of subsidiaries, whose subsidiaries were currently held indirectly, in particular in the United States, Japan and Germany.
  The problem arises when a UK-based multinational plc holds a low-tax subsidiary which is itself the owner of a high-tax subsidiary or vice versa, and when, in order to achieve the onshore pooling effect, it is necessary to sell the subsidiary of the subsidiary to the UK multinational plc, in order that it should be the direct owner so that the onshore pooling can occur. The Paymaster General will recognise that that is the effect of the Finance Act 2000. During consideration of that legislation, we pointed out that, for some existing UK plcs, the restructuring exercise could produce uncovenanted tax costs in overseas jurisdictions where capital gains can be crystallised by the mere act of reselling holdings within a group structure. I think that the Paymaster General promised that she would consider the matter. I suppose that she might have done so, but it has not been dealt with. The Bill contains no transitional provisions to accommodate the difficulty, but such measures should exist and the Opposition will table amendments accordingly.
  Secondly—
  Mr. Brian H. Donohoe: Secondly?
  Mr. Letwin: I mean secondly only in respect of the small area about which I am speaking: items that are omitted from the Bill.
  Secondly, when the original proposals were made on double taxation relief and control of foreign companies, it was promised that those components would be accompanied by a third measure to allow either exemption or roll-over relief for companies that were disposing of substantial shareholdings. Indeed, I believe that that promise was sustained throughout the long saga of the revision of the double taxation relief proposals. I described a moment ago the manoeuvre in question, which is necessitated by the requirement to establish a flatter structure of holdings.
  It would be sensible if companies that were forced into that position by the DTR and CFC provisions could claim either exemption from capital gains tax at the time they sold or restructured their holdings within the group, or a roll-over relief that allowed them to continue indexation—bearing it in mind that it is indexation, rather than tapering, that still goes on in the business world. Alas, that promise appeals to have disappeared into a long-grass Green Paper—if Green Papers can be composed of long grass—and is not contained in the Bill, but the Opposition and British business believe that the Bill should contain such provision. Again, we will table amendments accordingly.
  I fear that the most astonishing omission from the Bill is neither those tidying manoeuvres nor the others that we shall suggest in a constructive spirit in Committee.

  743
  This debate is occurring after a pretty harrowing 90 minutes, in which hon. Members interrogated the Minister of Agriculture about what is probably the worst crisis to have hit the British countryside in the past four years. It is certainly a crisis that will lead to very significant difficulties for many of the constituents of hon. Members on both sides of the House, so one would have expected the Bill to contain serious measures to alleviate it. Of course, it could not contain all the measures that are needed, as many fall outside its scope, but one would have expected it to deal with the tax side. I do not refer to our £500 million interest-free loan scheme—a proposal that could not be accommodated within the Bill, although it could and should be implemented by the Treasury—but there are other such omissions.
  In particular, we desperately need measures to refund VAT input charges much more rapidly than usual. I shall explain that point a little more, although I think the Paymaster General will have taken it on board with lightning alacrity, given her great knowledge of the VAT system. Usually, when hoteliers or farmers who have a bed-and-breakfast proposition, or whatever else, come to Customs and Excise and find that at the end of a three-month accounting period the VAT input charges that have been paid on consumables exceed the VAT output charges that they have levied on their customers—the problem being that there were no customers—they have a right to claim a refund.
  There is no debate about that arrangement, as it is part of the ordinary workings of VAT, but there is a problem. The Paymaster General will be aware of the difficulty, although I think that most of us will be more aware of it as ordinary citizens and constituency Members of Parliament. The fact is that Customs and Excise is jolly slow at making such payments. The Paymaster General shakes her head, but she stands in danger of being sent copies of all the documents that we have accumulated in respect of cases of slow payment by Customs and Excise.
  It is clear that there ought to be a rapid refund scheme, which should automatically ensure that people receive a quick refund of, say, a month's worth of VAT input if they qualify for relief.
  The Paymaster General (Dawn Primarolo): If the hon. Gentleman has examples of cases of Customs and Excise not responding as quickly as it should have, I sincerely hope that he will send them to me—however great their number—so that I can chase them up.
  Mr. Letwin: We certainly will, but let me tell the Paymaster General some sad news. I am surprised that she is not already aware of it. I am not saying that Customs and Excise has not been acting at its usual pace; I am saying that it has acted at precisely its usual pace.
  I do not know whether the Paymaster General has had any dealings with Customs and Excise as a customer, so to speak, as opposed to in her capacity as a Minister, but I assure her that the speed with which it responds to requests for money back is not as great as the speed with which it responds to requests from her private office. The pace is, in fact, rather slow. In the normal course of events, that is not a problem: things are settled in time, and interest is paid. The Conservative party proposes that there should be symmetry in the interest charged on late payments in one direction or the other, but we shall let
  744
  that be for the moment. At least there is an interest charge, and, as I have said, in normal times the problem is not so great. Today, however, having to wait for even a couple of months could mean the difference between life and death for some small businesses. Payment should be made on the nail—on the day.
  Mr. Andrew Smith: That being the case, why has the hon. Gentleman not sent in the examples?
  Mr. Letwin: Because we are not long past the date of first accounting. We are dealing with the problem today, and today is April the something or other—the ninth. We are eight days past the accounting period. The problem is that nearly all the companies with which we are dealing—sole traders—will have been dealing on a three-month basis. If they have a month's or six weeks' worth of VAT output zero and a large amount of VAT input and put in a claim, in the near future we shall hear complaints that they have not received an input refund, believe me.
  Mr. Donohoe: Can the hon. Gentleman tell us just how many examples he has been given? He said earlier that he had been given examples; now he is saying the opposite.
  Mr. Letwin: What I said was that the Paymaster General stood in danger of being given each example.
  Mr. Donohoe: How many?
  Mr. Letwin: None—because we have come to the end of the three months. [Interruption.] Oh dear; I hope that we can raise the intellectual level of the debate. We are dealing with a problem that will have begun to occur in the last eight days. We have been dealing with a foot and mouth crisis that has been worsening over the past six to eight weeks. People will have made their three-month returns. I guarantee to the Paymaster General that if no steps are taken, we shall see a flood of complaints about late repayment.
  It should, incidentally, be no problem for the Paymaster General to agree to our proposed amendment if it is really true that, as she and her colleagues seem to be claiming, there is no delay. Why not make the arrangement automatic? If there is no problem, let us solve it—that is, let us ensure that there cannot be a problem.
  The second difficulty arises on the Inland Revenue side—the income tax side. There are two particular problems in this connection. The first concerns those with tied accommodation: we think especially of tenant farmers. There is an oddity in that the Inland Revenue treats the second house owned by such a tied-accommodation dweller as a principal residence for the purpose of not levying capital gains tax. That is a long-established principle in law. Unfortunately, when the working families tax credit was melded into income tax and when—I take it—people's arrangements were moved from the Department of Social Security to the Inland Revenue following the legislation, that principle was not applied. People in tied accommodation who need the working families tax credit now cannot receive it, because they have a second house that is not treated as a principal

  745
  dwelling for that purpose. A simple amendment will suffice, and we will table one. I hope that we can reach agreement on it, because it is urgently necessary.
  Dawn Primarolo: Is the hon. Gentleman saying that second accommodation that generates income takes people beyond the WFTC limits?
  Mr. Letwin: It may or may not be generating income; the capital sum alone would take people beyond those limits. A wealth test, rather than an income test, is causing the problem. Where there is sufficient income, we are much less worried. The problem arises when there is not sufficient income, and people who would otherwise qualify for the WFTC are excluded by the wealth test.
  The second problem on that front involves farmers, hoteliers and other sole traders who, in July, will make corporate income tax payments that they will not eventually be due to pay. There will be an adjustment in due course, but it will be of little benefit to someone who becomes bankrupt and cannot reclaim the money because he or she is not in business. We need a scheme—again, we shall table an amendment on which I hope we can reach agreement—to allow automatically for an early provisional claim. It is the wording of the relevant Act—the Taxes Act 1988—that is causing the problem, and we hope that our amendment will solve it. That too is urgently necessary.
  Finally—I appreciate that the House will be longing for me to finish—[HON. MEMBERS: "No, no."] Kind though that is, I am sure that my hon. Friends are, in fact, longing for me to finish, and I shall.
  Let me end by saying that there is another absence from the Bill, less immediately important than others but structurally more important. We need—in this Bill, or in the next Finance Bill or the one after that—to see the vast changes in tax structure, and the great tax reductions, that Conservative Members have advocated. We need to see, from 2003, a removal of tax from savings and dividends for basic and starting-rate taxpayers; we need to see a significant increase in the limits on approved share options for small and medium-sized enterprises; we need to see a considerable rise in pensioners' age-related allowances; we need to see the introduction of transferable allowances for married couples, the exemption of widowed parents' allowances from tax, and the increasing of a much-restructured child tax credit by £200 for children under five.
  Those are measures for which we have been calling. They are measures that need to be installed in a Finance Bill. What better opportunity could there be than that provided by a Bill as empty as this—and, we hope, subsequently to be denuded of the ludicrous aggregates tax?
  Mr. John Bercow: Does my hon. Friend recall that, according to the last Labour party manifesto, how and what Governments tax send clear signals about the economic activities that they wish to encourage or discourage, and the values that they seek to entrench in society? Can my hon. Friend tell me, on the basis of that commitment by the Labour party, why it has chosen in government to punish families, savers and motorists?
  Mr. Letwin: I can only assume, using my hon. Friend's impeccable logic, that those are the activities that the
  746
  Government wish to discourage; but, as that would be to discourage nearly everything that goes on in the United Kingdom, I am driven to the conclusion that it is by mistake that the Government are taxing them. We hope to save them from that mistake, in part by introducing measures that will relieve some of the people described by my hon. Friend, and in particular will give people a major new set of incentives to save and provide for themselves over their lifetimes. That is another urgent necessity if we ate to avoid a society that depends increasingly on the very means-tested benefits that the Chancellor of the Exchequer has misguidedly extended so far.
  Mr. Oliver Heald: Does my hon. Friend shire my concern that the savings ratio has plummeted under this Government? Does he agree that the removal of the taxes to which he has referred would give a much-needed boost to the savings sector? What are his views on the steady decline that we have seen, and what are the likely consequences?
  Mr. Letwin: My hon. Friend is, of course, right. He need not consult my views, however: paltry as they are, they do not bear comparison with the grand majesty of the Treasury's own views. The Treasury has said—perhaps the Chancellor failed to read the Red Book at this point, and allowed the Treasury to speak for itself—that if the savings ratio remains as low as it is at present, it is a very worrying sign for the economy. So it is: but we are not concerned just with the savings ratio in any given year.
  As my hon. Friend knows, what we are concerned with is the long-term culture of saving, or the long-term absence of a culture of saving. That has the most profound effects. It is not something that affects only the availability of domestic capital. I was interested to see that the Chief Secretary failed completely to answer a question about gross fixed domestic capital formation. Either he does not have any idea what the trend is or, as I suspect is more likely, he has an idea but does not want to tell us.
  That is not the only way in which the savings culture, or an absence of it, has an effect. Much more profoundly, it has an effect on the relationship of the individual with the state and with society at large. If an individual is given insufficient incentives to save as he goes through life, it is inevitable that at some stage, if his income is low, he will be cast on to state benefits. In many instances, that is degrading for the individual. Much more important, it creates a dependency that institutionalises a huge fiscal problem.
  As benefits extend to almost 50 per cent. of the population, and as we go through the cycles that Ministers so grandly think that they have abolished, we shall increasingly see fiscal accounts being shot to hell by increased expenditure on means-tested benefits. That is to no one's benefit. It seems nice to the individual who is receiving the benefit but it does not seem nice when the individual is paying tax to support the benefit, or engaging in the borrowing that will lead to the tax to support the benefit.
  There is a serious problem, and the Government or the Treasury are aware of that. What are the Government doing to cure it? The answer is nothing. What are the

  747
  Opposition proposing to cure it? The answer is much. That is why we shall advance the tax measures that I have described.
  The Bill contains almost nothing except one nasty and classic example of a stealth tax, which we shall oppose. The Bill fails to contain the very things that it needs to contain, such as urgent measures to deal with foot and mouth, long-term strategic measures to deal with the failures of our tax system and a remedy to the problems that arose in the course of the previous Finance Bill. One could not produce a Finance Bill that does less or does it worse than this one.
  6.2 pm
  Mr. Denzil Davies: The hon. Member for West Dorset (Mr. Letwin) seemed to say at the beginning of his speech that he did not see much point in considering the Finance Bill on Second Reading. I do not know whether he was saying that. Most of us would wish to have the debate; otherwise, he would lave been deprived of 39 minutes of a rather rambling but no doubt intellectual speech. That would be to do him an injustice.
  The hon. Gentleman rambled from the aggregates tax eventually to savings. His treatment of savings was extremely simplistic. There is much evidence that the savings ratio decreases when people are confident about the economy. [Interruption.] People may be confident of their jobs, confident of growth and confident in the Government. He suggested that there will not be capital for investment because the savings ratio is low. The United States has a low savings ratio, but it manages to provide considerable capital—partly through the stock market—for the investment that he wishes to see.
  Mr. Letwin: If there is an excuse for considering the Finance Bill on Second Reading, to hear the right hon. Gentleman is possibly it.
  First, does the right hon. Gentleman recognise that I was referring to domestic sources of savings? I take his point that one can call on external so trees, but those are difficult in terms of the exchange rate. Secondly, does he accept that if the savings ratio remains low despite the lack of confidence that is beginning to emerge, there is genuinely a worrying trend?
  Mr. Davies: I do not think that there is a lack of confidence. If people were less confident about the economy, they would probably save more. These things happen from time to time. There is no correlation between a bad economy and low savings. People do not save when they are confident. They seem to save more when they are less confident. That seems to be the history of this difficult subject, which the Treasury and many economists have considered over the years.
  The purpose of a Finance Bill is to provide the legislative means to put into effect the taxation changes, about which we heard about from my right hon. Friend the Chief Secretary, that are announced in the Budget. It is necessary to have a Finance Bill to put most of them into effect. There are clauses that provide for a reduction in fuel duties and a reduction in vehicle excise duties. There is the welcome increase in the children's tax credit and the increase in family tax credit. There are small but extremely helpful changes to VAT, which I believe are welcomed by businesses, especially small businesses.
  748
  There is also the welcome way in which my right hon. Friend the Chancellor of the Exchequer provided income tax relief by extending the threshold on the 10p lower rate rather than providing relief on the basic rate. As my right hon. Friend the Chief Secretary said, that relief provides in a full year about £1 billion extra assistance for those who pay tax at the lower rate.
  I move on to table A.11 of what my right hon. Friend referred to as the Red Book. It is no longer the Red Book, but I do not want to be pedantic. Perhaps it is a book of many colours. The tax reductions that are given legislative form by the Bill amount to perhaps slightly more than £3 billion in this financial year. That is not an insignificant amount to put back into the economy when the outlook for the global economy—I do not think that there is any dispute about this—is looking less certain.
  Such a sum, together with the public expenditure increases for the next three years announced in the autumn by my right hon. Friend the Chancellor, should, apart from the intrinsic merits of spending that money, provide a welcome cushion for the British economy if the world economy, especially the economy of the United States, slides into recession. It is to be hoped that it will not, and that there will be merely a slow-down. The tax reductions, which amount to about £3 billion, and public expenditure will obviously help to cushion a global recession or slow-down, if there is one.
  Those of us who are not directly concerned with business and commerce do not always realise the pressure that the global economy and global competition now put on domestic industry, especially manufacturing industry. That pressure also bears on some sectors of service industry that have to compete internationally. To maintain profit margins, costs must continually be kept down or cut and prices not be increased. Indeed, prices often must be reduced. That places tremendous pressure on industry and businesses.
  As I see it—perhaps I should not say this—the problem is becoming not rising inflation but a falling rate of inflation. If the trend continues, there could be a fall in the general level of prices. That would take us into deflation, as may have happened in Japan over the past few years, where inflation has probably settled at zero.
  I must be careful what I say because my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), like me, was around in the 1970s, when inflation was high. Having been around at that time and in the early 1980s, when inflation was also high, I do not find an inflation rate of 1.9 per cent. worth worrying about. I worry slightly that perhaps we should have a higher rate of inflation. I do not know how the harmonised European figures are meant to apply to Britain, but they suggest that our inflation is about 1 per cent.
  I am not particularly worried about a rate of inflation of 1 per cent. As someone who was around in the 1970s, I am amazed at how rapidly over a fairly short time—10 or 15 years—the level of inflation has fallen from the high levels of the 1970s to 1 per cent. or 1.9 per cent. Many people will claim credit for that, but most is claimed by that worthy group of people known as the central bankers, who could be described as the high priests of monetary policy. The past 10 years constitute the decade of the central bankers, who have peddled their ability, expertise and prudence in monetary policy. They maintain that its mysteries are best left to the high

  749
  priests because they approach such matters with clean hands, unsullied by the grubbiness and self-seeking of democratic politics and politicians.
  As I have said that I do not worry about inflation, I might as well say that I do not believe central bankers. I do not believe that central banks or monetary policy had much to do with the sharp fall in inflation in the past 10 to 15 years. It was caused mainly by forces that are outside monetary policy. Many factors contribute to intense global competition. They include the reduction in tariff barriers—in many cases, their elimination—and the working through the system and elimination of controls and regulations, which perhaps date from the second world war. We are now in a position that is similar to that before the first world war. There is complete freedom of movement of capital, and money can move quickly and easily from country to country. There has been an immense advance in technology, which is easily transferred to developing countries. That enables them to compete with countries that are described as more developed than they are.
  The fall of the Berlin wall, the break-up of the Soviet system and the intensification of competition that that caused also affected the global economy. Countries that were on the other side of the iron curtain are now trading in the same way as western countries. All those factors have driven down costs and prices through the intensity and universality of competition.
  The fall in inflation therefore has little to do with central bankers and monetary policy. Indeed, my impression is that central bankers are, to use an American phrase, behind the curve. The Federal Reserve and the European central bank are behind the curve. Indeed, our much revered Monetary Policy Committee seems to take decisions on last month's figures and not on what it believes might happen in future. The Federal Reserve is not merely behind the curve; although it is supposed to be independent of Government, it is not independent of Wall street. Mr. Dow Jones frightens the living daylights out of Alan Greenspan, who is the Caiaphas of the high priesthood of central bankers.
  We get wonderful language from the Federal Reserve; some time ago, the chairman criticised Wall street for irrational exuberance. Let us leave aside the philosophical question of whether exuberance can be rational. Given that it was irrational, rational language, debate and argument from the chairman of the Federal Reserve would do no good. It did not. He was frightened to do anything because he did not want to upset Wall street. He was following the bubble upwards, and presumably hoping that it would burst itself so that the Federal Reserve would not get the blame for the consequences, which are now occurring.
  The asset bubble, whether comprising shares in America, property in Japan and, on a lesser scale, property and shares in Britain, appears, paradoxically, to be a consequence of low inflation. Investors and managers have never adjusted to a world of low real income returns, and they therefore look for bubbles and capital assets to supplement or prove their existence.
  Even if we accept that the central bankers managed to decrease inflation from very high levels, once it is down to 1 per cent. or 1.5 per cent., they are out of a job. Central
  750
  bankers are not needed when we approach zero inflation because they cannot do much. A 0.5 per cent. or 1 per cent. cut in interest rates when rates are 5 per cent. and inflation is 1 per cent. or 1.5 per cent. is hardly likely to have an effect. We fear that global competitive pressures will push prices down, and no amount of interest rate reductions by central bankers will have much effect.
  Mr. Letwin: The right hon. Gentleman is presenting an interesting argument. To the extent that falling prices are generated by competition and technology rather than excessive monetary restraint, why does he believe that that is bad?
  Mr. Davies: It is not bad up to a point, Lord Copper. However, it is bad when inflation reaches zero and general prices start falling. I believe that capitalism needs some inflation. A deflationary position, whereby general prices fall, creates enormous problems for businesses and manufacturing industry, especially in Britain.
  Mr. Edward Davey: If growth in the real economy is strong and unemployment is down, does it matter if monetary variables are falling?
  Mr. Davies: It matters if prices fall. A good example is the steel industry. The problems in the steel industry in south Wales are created by the falling international price of cold-rolled coil. It has fallen to a point where it is not possible for the British steel industry to make a profit in many areas of Britain. Somebody else may make a profit somewhere else in the world, but not the British economy. Japan has a different sort of economy, but it showed the dangers of general price deflation.
  We are therefore back to good old fiscal policy.
  Mr. Letwin indicated dissent.
  Mr. Davies: I can understand why the hon. Gentleman shakes his head because he is a creature of the 1980s fashion that fiscal policy is bad and monetary policy is good. He now nods, but in economics, fashion changes, and it is beginning to change now. Fiscal policy is again beginning to become more important than monetary policy.
  I welcome the Bill for two reasons: the merits of the different tax changes, and because some money, including public expenditure money, will be put back into the economy. Four years ago, we handed over monetary policy to the Bank of England, but perhaps fiscal policy will come into its own again. Monetary policy will not solve the real problems in the world economy: falling prices, with which the Federal Reserve, the European central bank and the Bank of England cannot deal.
  I am glad that the Chancellor introduced the Bill, that he has not put all his trust in central bankers and that perhaps fiscal policy will again become fashionable.
  6.19 pm
  Mr. Edward Davey: It is a privilege to follow the right hon. Member for Llanelli (Mr. Davies), but I must take issue with some of the economic points that he made. The previous group of academics to claim that monetary policy was ineffective were extreme right-wing economists who believed in the

  751
  hypothesis of rational expectations and that macro-economic policy had little effect on the actions of private agents in the economy. It is unusual to hear someone from a different wing of the political spectrum presenting the same argument. Although I agreed with the right hon. Gentleman that, in certain circumstances, fiscal policy can be effective, nowadays monetary policy undoubtedly has by far the greater impact, particularly in the short and medium terms, on the economy—it has the greatest impact on aggregate demand in the economy.
  The right hon. Gentleman gave an interesting historical analysis of economic trends, but I refer him to periods in the early 20th century and in the 19th century, in this country and other advanced industrialised economies, when prices fell during strong economic activity. The idea, therefore, that one cannot have both deflation and strong economic growth does not hold up to historical analysis. It is to be welcomed when prices fall. My constituents certainly like to see prices go down when they go into shops to buy the services and goods that they need.
  The Finance Bill is unusual compared with other Finance Bills, for three reasons. First—it is quite a serious reason—there is no report from the Select Committee on the Treasury to accompany the Second Reading debate. In the past—I checked the record—the Select Committee has published a report, which helped proceedings in the debate. The reason we do not have a report is, I believe, that there is some disunity among members of the Select Committee, which I regret. We felt that the report would probably not be unanimous. There was no report last year; that has been repeated this year. However, we have the benefit of the evidence—to which I shall return, because there are some interesting nuggets there for colleagues to consider.
  Secondly, the Finance Bill is relatively short compared with previous ones, at least in the recent past. This time last year, we were dealing with a Finance Bill with 558 pages which ended up having 597 pages. However, this Bill is still far too long. It is 292 pages long—much longer than most Finance Bills, even in the 1980s. That worries me. If the Government are trying to sweep up before a general election and not put a heavy Finance Bill before the House, and they still come up with a Bill of 292 pages, I am extremely worried for the future. It should have been a very short Bill.
  Either Ministers are intent on continuing to hound business and the private sector with too much tax legislation, or they are not in charge of their civil servants, who are putting forward far too many schemes, which Ministers are not throwing out. Nevertheless, the Finance Bill is unusually short compared with recent attempts.
  Thirdly, as the hon. Member for West Dorset (Mr. Letwin) said, the Bill is relatively uncontentious. Most of its contents, with the except on of the aggregates levy, are relatively uncontentious, but we will judge the Bill not just by its contents, but by how it deals with the wider issues that are affecting this country—the big picture issues.
  Before I come to those, I want to relate a serious matter to the House. I hope that Treasury Ministers will go away, check the record and have an answer ready for the winding-up speeches. I believe that the Chancellor of the Exchequer misled the Select Committee on the Treasury when he gave evidence on 20 March. He was being
  752
  questioned by the hon. Member for Bury St. Edmunds (Mr. Ruffley) about the tax burden; it is something to which he returns assiduously. In reply, the Chancellor said:
  "The facts in the Red Book are accurate; but I am pointing out to you that, as far as the inherited situation was concerned, the tax burden was due to rise to 38 per cent."
  He was referring to the Conservative figure published in the November 1996 Red Book.
  I was interested in that, so I asked the Chancellor to confirm that the 38 per cent. figure was
  "calculated on the same basis as the figures in the Red Book".
  The Chancellor replied, "Yes." I went back to him again and asked:
  "On exactly the same basis?"
  He replied, "Yes." However, I have checked with the House of Commons Library and it appears that the 38 per cent. figure was calculated on a different basis from the figures that appear in the Red Book.
  In November 1996, when the Conservative Government said that the tax burden was due to rise to 38 per cent.—I think that it was 37.9 per cent. to be precise; perhaps it was 38 per cent. in the following year—the European system of accounts 1995 was not operating. The ESA 1995 was introduced in 1998 by the Office for National Statistics. If we recalculate the figures in the November 1996 Red Book and adjust the tax burden figures, we get a very different tax burden—it is considerably lower. The reason why it is lower is that, under the ESA 1995, money GDP was raised by around 2 per cent; so the figure that the Chancellor quoted to the Select Committee was not calculated on exactly the same basis as the figures that appear in the current Red Book. I hope that Ministers will check that and apologise to the House if I am right.
  Mr. Deputy Speaker (Mr. Michael Lord): Order. I appreciate that these are complicated matters and that they are, to some extent, matters for debate, but I think I heard the hon. Gentleman say that the Chancellor had misled the House or the Committee. He should not use those words.
  Mr. Davey: Of course I withdraw those words if they were incorrectly used, but I understood that there was, shall we say, a discontinuity between the words in the record and the analysis that I was offering the House. I hope that Ministers can try to correct it.
  I go on to the big picture and how we should judge the Bill. The Liberal Democrats believe that the Bill fails to provide the extra resources needed for our schools, hospitals, police and pensioners. My hon. Friend the Member for Truro and St. Austell (Mr. Taylor) set out those needs on 13 March in the House. I shall not repeat everything that he said, but he made some pertinent remarks, particularly about schools, hospitals and pensioners, why they need extra resources and why the Budget and the Bill fail to provide those extra resources.
  In my constituency, class sizes in secondary schools have gone up to record levels—levels not seen since 1973. Despite some increase in capital spending, for which I give the Government credit, there is still a huge backlog of repairs. I give one small example to Ministers. In St. Mary's primary school, Chessington, three outside

  753
  classrooms are still extremely cold in winter and far too hot in summer, and they still do not have lavatories. They are not yet included in any refurbishment plan, for replacement by permanent modern buildings. There is therefore still a backlog of repairs.
  There is a huge teacher shortage in my constituency, too. Whether we talk to a primary or a secondary head teacher, the message is still the same. They are having real problems recruiting staff. That means that there are sometimes no teachers in front of classes.
  In my constituency, there is a huge problem with hospital bed shortages. In recent months, there has been a large increase in admissions to the accident and emergency unit. The hospital authorities have tried their best. They have put beds in seminar rooms and closed the day surgery in order to use the beds for overflow from A and E, but there has still been a huge increase in the number of overnight stays. They have gone to a hospital nearby, Tolworth hospital, and, following some suggestions from me and others, managed to open a ward temporarily. They did that because they needed intermediate care beds. In my constituency, nursing homes have closed and the number of care beds has reduced significantly. That has caused a huge problem for the hospitals. We need to tackle those bed shortages. Recently—I think last week—the British Medical Association produced a survey to that effect.
  There are huge shortages of general practitioners and a lack of medical students applying to train in consultancy and general practice. Those are the problems. It is interesting to note that one of the key problems generally in the public sector is a shortage of staff. Whether it is in the health service, schools, police or other public services, there is a significant shortage. The Budget contains some measures to deal with those problems, but it does not go far enough, particularly in relation to London and the south-east, where the problems are particularly acute.
  As my hon. Friend the Member for Truro and St. Austell said, in this Parliament, private sector wages have increased by an average 15 per cent. whereas public sector wages have increased by only 10 per cent. Therein lies a huge problem. Until we tackle it and make it clear that we value our public sector workers and provide them not only with financial rewards but with status, those shortages will continue to undermine attempts to modernise our public services.
  The Bill also does not provide the resources necessary to ensure fairness to pensioners. Although there have been increases in the minimum income guarantee, as we know, many people do not claim the guarantee. The latest figures show that more than half a million pensioners who are entitled to the minimum income guarantee do not claim it. That fact demonstrates the problem with the Government's overall strategy for tackling pensioner poverty. If Ministers continue solely down the route of means testing and do not increase the basic state pension, pensioners will continue falling through the holes in the safety net and not receive the money that they desperately need.
  Hon. Members talk about prices decreasing, but many pensioners face increasing bills. Their council tax bills, for example, are certainly not being reduced. In just three years—since 1998, when they started running Kingston
  754
  council in my constituency—the Conservatives have pushed up the average yearly council tax bill from £700 to £950. Pensioners in my constituency have to pay those tax increases on low increases in the basic state pension.
  Mr. Howard Flight: Is not the increase in Kingston's council tax due to changes in the sums provided by central Government? I think that the hon. Gentleman will find that real spending levels are much the same.
  Mr. Davey: I am grateful for the hon. Gentleman's intervention. He is indeed right that part of the increase is due to the Labour Government's failure to provide a decent grant settlement to the royal borough of Kingston. I have to tell him, however, that it is due also to the incompetence of the current administration, which has wasted money and failed, for example, to collect parking charges to which it was entitled.
  Mr. Deputy Speaker: Order. We are going rather wide of Second Reading of the Finance Bill.
  Mr. Davey: I am grateful for your warning, Mr. Deputy Speaker.
  I was describing how the Finance Bill does not deal with the needs of pensioners. Pensioners in my constituency tell me that they are also worried that, should they become frail in their later years, they will not receive personal nursing home care. The Government have not provided any measures in the Bill to ensure that personal care is free for elderly people in nursing homes. I believe that that is a major error. The Bill does not provide the necessary funds.
  When the Chancellor did appear before the Select Committee on the Treasury, I was very worried because, in his evidence, he seemed rather complacent about some of those issues. I asked him three times to provide figures on health spending, particularly the Government's average spend, in this Parliament and in the previous Parliament, on the national health service as a percentage of national income. He told me twice that he was about to give me the figures, but of course failed to do so. However, the figures show that, on average, in the previous Parliament, 5.5 per cent. of national income was spent on health, whereas, in this Parliament, 5.4 per cent. is being spent on it. In this Parliament, therefore, the average resources that the Government are providing for the health service have decreased. I think that the Chancellor's failure to defend his record on health spending said it all.
  The Chancellor was also rather economical with the truth on education spending. Although he told us his plans for the future and the figures that he hopes to deliver, as we have seen before he often does not meet his spending targets or spend the money that he says he will spend. He did not reassure us.
  Mr. Donohoe: Can the hon. Gentleman give us one example of the Chancellor not delivering on his promises?
  Mr. Davey: Indeed I can. In evidence to the Treasury Committee, Treasury officials told us that, this year, based on their initial assessment of spending plans, spending Departments are already underspending by £1 billion.

  755
  That is a concrete and classic example in which the Chancellor promised us that he would spend a certain amount but Departments are not spending it.
  The Chancellor failed to examine his own record on education and admit that, on average, under his stewardship in this Parliament, we have spent less on education as a proportion of national income than was spent in the previous Parliament. Liberal Democrat Members therefore very much regret this Budget and its accompanying Finance Bill. Although it is not what the people of this country want, the Chancellor has chosen to put tax cuts before spending increases. Some people believe that, by putting tax cuts before investment and public services, new Labour is acting more like the Conservatives.
  The Bill fails to address another big picture issue which, to his credit, the hon. Member for West Dorset has started to address—the economic consequences of foot and mouth. It is a major issue both for the individuals, regions and sectors affected by it and for the economy as a whole. The outbreak is devastating for those individuals and their livelihoods. In the past few weeks, the House has heard many examples demonstrating that fact.
  We also know that foot and mouth is proving to be highly damaging to certain regions and sectors. The House may be surprised, however, to learn of the effects of the outbreak on businesses in my constituency, which has some farms although not very many. One example demonstrates the knock-on effects of foot and mouth. I quote it not to belittle the effects of the outbreak on the tourism and agricultural sectors, but to demonstrate the breadth of its knock-on effects.
  The example is a shop in my constituency called Kosmic Kites, in Surbiton. This month, in a letter to me, its proprietor Mr. Paul Hankin wrote:
  "I write out of desperation, as my Business appears to be falling apart due to Park and Public land closures …
  My shop has been trading for 9 years, last year was the most successful so far, and all the signs were that 2001 would be even better";
  but
  "since Park closures my takings have fallen by 85 per cent."
  That business, which was built up over years, is not in one of the sectors that we usually associate with damage from foot and mouth, but it is still being severely damaged by the outbreak. It demonstrates the seriousness of the situation.
  There is a wide variety of assessments and forecasts of the effects of foot and mouth. Very recently, the Centre for Economics and Business Research argued that it would result in a 1 per cent. decrease in GDP, costing the economy up to £9 billion. However, that may have been one of the more exaggerated and alarmist forecasts. Other forecasts have said that the effect on GDP could be as low as a 0.1 per cent. However, I have read various analysts' forecasts, and the most persuasive one comes from Goldman Sachs. Although Goldman Sachs states that it is difficult to make an estimate—because of factors and uncertainties regarding the length of the outbreak; a substitution effect in which people spend money in shops and urban areas rather than in the countryside; whether people will go on foreign holidays or delay domestic holidays; and the short, medium and long-term effects on the public's perception of visiting the countryside—it predicted that, this year, foot and mouth would have a
  756
  0.3 per cent. negative effect on growth. However, its more extreme forecast suggests that GDP will be affected by as much as 0.6 per cent. If that worst scenario materialised, an awful lot of jobs and businesses would be lost. Foot and mouth is having a major effect, and it could have a disastrous effect on economic growth this year.
  Clearly it is the Government's job to take action on foot and mouth. I think that everyone will agree that disease control is a public good that cannot be left to the private sector. The control of disease has benefits for the whole of society, and the Government have a duty to act to control it.
  An interesting paper by David Harvey, from the Centre for Rural Economy, was published last month, entitled "What Lessons from Foot and Mouth? A Preliminary Economic Assessment of the 2001 Epidemic". It is necessarily very preliminary. It says that the benefits of being free of the disease are probably worth £1.2 billion a year. There is a huge economic benefit to getting rid of the disease quickly, so the Government must do everything that they can.
  The Government have introduced business rate relief on loans to those who are struggling, but we feel that they should go further. I hope that they will seriously consider some of the proposals from the hon. Member for West Dorset on VAT, for example, in a cross-party way. The Liberal Democrats intend to make other proposals. For instance, it would be possible to extend carry-back of trading losses from one year to three, to help businesses now by allowing them to offset current losses against profits made two or three years ago so as to get a tax repayment in the coming year. It is about the timing of relief against losses. The Bill gives us an opportunity to help to tackle the financial problems that businesses face because of foot and mouth.
  A macro-economic issue that is no longer entirely in the Government's hands, but is important in tackling the economic consequences of foot and mouth and dealing with the problems caused by the slowdown in the United States of America, is the policy on interest rates and the exchange rate.
  Mr. David Heath: Does my hon. Friend agree that my hon. Friend the Member for Northavon (Mr. Webb) was right to say earlier today that there is a strong argument that the compensation payments given to farmers whose stock is culled to allow them to restock later should not be treated as a liquid asset for either taxation or benefit purposes, because that militates against sole traders in desperate straits getting the support that they need?
  Mr. Davey: Yes. That is pertinent to this debate, because we could use the Bill to introduce measures to tackle the problem. I hope that the Paymaster General will respond to that point.
  The US slow-down, combined with foot and mouth, has had a serious effect on aggregate demand. We look forward to the Monetary Policy Committee reducing interest rates. I support an independent central bank, and believe that its independence should be guarded jealously, but it is right for us, as constituency Members, to send signals that we believe that the economic situation on the ground is deteriorating significantly enough to warrant interest rate changes.

  757
  Monetary policy needs to be directed towards helping agriculture, manufacturing and tourism, which were already suffering before foot and mouth and the US slow-down. The high exchange rate was already hitting those sectors extremely hard. Some of the weakest sectors in our economy are being hit yet again. The simplest and quickest way to relieve these problems would be for the committee to take action on interest rates, and we hope that that would also affect the pound.
  This is not the Bill that Britain needs. It does not secure the finances that our public services need; it puts tax cuts before investment in our health service, schools and police; and it fails to deliver imaginative proposals to deal with the foot and mouth crisis. We needed a different Budget to tackle large class sizes, long waiting lists, police shortages and pensioner poverty. The Liberal Democrats will continue to campaign until we get those changes.
  6.45 pm
  Mr. David Borrow: I am very pleased to be taking part in this debate. I look back to Finance Bills since 1997. In April 1997, people in my constituency asked me how a Labour Government could deliver better public services and pensions, when the Conservative Government had been running a deficit of more than £20 billion a year, costing each man, woman and child £500 a year. They were sceptical about the notion that, in those circumstances, a Labour Government could hope to boost public services, improve the lot of pensioners and look after the disabled.
  I remember many a time on the doorstep explaining to people that the Government's strategy was to reduce the cost of failure by reducing unemployment and getting more people into work, so that more were paying taxes and fewer claiming benefits. That strategy, based in large measure on the new deal and on careful management of the public finances in the first two years, has delivered what we promised four years ago.
  Unemployment has dropped by about 500,000 or 600,000 and the number of people employed has increased to a record level, by 1.2 million. That in itself has transformed the public finances and made the space to provide extra resources for public services. The fall in unemployment in just about every constituency has been mirrored in mine, where the rate is now about 1.5 per cent. In 1997, 1,534 people in South Ribble were unemployed; by this February, the figure had dropped by 42 per cent., to 883.
  Last Friday, I attended a business breakfast at Runshaw college in my constituency, where the Under-Secretary of State for Education and Employment, my hon. Friend the Member for Barking (Ms Hodge), was guest speaker. It was the 13th business breakfast that I have attended since being elected. The basis for the discussions was not the problems that were raised in the past about how companies would survive and how we could avoid making people redundant; the focus was on how to ensure that we have a sufficiently educated, skilled and trained work force to do the jobs that need doing.
  The problem for many companies in my constituency is in recruiting the skilled work force that they want. We need to invest in education and training through greater
  758
  public investment, rather than looking for more tax cuts in the immediate future, which would do nothing to help to provide the work force that companies in my area need.
  Two major manufacturing companies in my constituency have greatly increased their work force since 1997. One might be surprised that either of them, especially Leyland Trucks, was able to do so. In 1997, Leyland Trucks employed 600 people making trucks. Given the weakness of the euro in the past few years and the trading position, the market is difficult, but the company has increased its work force to 1,000 in four years and achieved success in the climate created by the Labour Government in that period. Schwann's Pizzas has benefited from major investment and increased its work force considerably; it is probably now the third largest employer in my constituency.
  My answer to people who talk about whether the Government have spent enough on public services and whether they should spend more is that we need to get the fundamentals right. We must ensure that people have jobs and that companies prosper if we are to make space in the public finances for further investment.
  I listened with interest to the hon. Member for Kingston and Surbiton (Mr. Davey), who talked about the Labour Government's failure to invest in services. Since Christmas, I have visited more than 20 schools in my constituency. The head teacher of virtually every school had the same message: investment is coming through to education; there are more classroom assistants and computers; extensions are being built; and modernisation is taking place in many schools.
  I shall give a few examples of the new buildings and extensions that I have seen in the past few weeks. Tarleton high school has had a major extension and benefited from more than £0.5 million of investment in its new Ribble building. When I visited Little Hoole county primary school a couple of weeks ago, a new classroom was being built. A week ago last Friday, I visited St. Catherine's Roman Catholic primary school and had the pleasure of cutting the first sod prior to a two-classroom extension. Last week, I visited the Church of England primary school in Tarleton, which had just completed the erection of a new classroom. A couple of months ago, I visited Cop Lane Church of England primary school in Penwortham, which has a new hall. Those small schools have received major investment and can see the difference that a Labour Government make through investment.
  Mr. Jack: Will the hon. Gentleman give way?
  Mr. Borrow: I am always happy to give way to the right hon. Gentleman.
  Mr. Jack: If life is so good, will the hon. Gentleman explain why pupil numbers are now at 1,800 in Lancashire's largest comprehensive school in my constituency, which desperately needs a new school hall because only 350 pupils can take school dinner at one time? Can he also explain why the head teacher tells me that he does not have sufficient resources to introduce the new sixth-form curriculum properly?
  Mr. Borrow: The answer to that—which also applies to Woodlea primary school and Balshaw's high school in my constituency, where major investment is still

  759
  needed—is that, after 18 years of a Conservative Government who did not invest in school buildings, there is a huge backlog of building work and repairs. My constituents, like those of the right hon. Gentleman, need the continuation of a Labour Government, who are pledged to maintain investment in education.
  Let me turn to a different area—health, which has already been mentioned. The four hospitals that serve my constituency—Ormskirk and District general hospital; Southport general infirmary; Chorley and South Ribble district general hospital; and the Royal Preston hospital—have all had major investment in the past four years. I am arguing strongly for further major investment in Chorley and South Ribble district general hospital, because the Government have allocated more than £1 million of investment in renal services for the north-west. South Lancashire, which includes South Ribble, has the worst renal services provision in the north-west. Together with my colleagues in south Lancashire, I am making a strong argument for investment in Chorley and South Ribble district general hospital so that it can set up a dialysis unit. If we are successful, that major investment will have resulted from the fact that the Labour Government have a proven Budget approach over the past four years, have got the economy going well and have created space in the public finances to invest in improved public services. We should all welcome that.
  A few moments ago, I mentioned the business breakfast that I had at Runshaw college, a further education college in my constituency. Bernard O'Connell, who runs the college, told me that it was receiving significant new investment and would shortly open a second campus in the constituency of my hon. Friend the Member for Chorley (Mr. Hoyle). I was told that the new campus would be dedicated solely to mature students and that the college was seeking to expand the number of graduates whom it educates from 300 to 1,000. Again, that fits in with the need, which I mentioned earlier, for better education and training for the work force in my area if we are to compete successfully in a competitive economy, which my constituents wish to do.
  Let me touch briefly on the comments on pensions made by the hon. Member for Kingston and Surbiton. In 1997, his party's manifesto, in a similar fashion to those of the Conservative and Labour parties, pledged to increase the basic pension by the rate of inflation. However, the Liberal Democrat manifesto added that, if extra resources were available, they should be targeted on the poorest pensioners. The Government have done that through the minimum income guarantee. Occasionally, it would be nice if Liberal Democrat Members congratulated the Government on finding those extra resources to ensure that, as from this month, a single pensioner in my constituency will have a minimum income of more than £92, compared with £68 four years ago. That significant change has been brought about only by the fact that we have a Labour Government.
  A few moments ago, I mentioned that one argument that we had in 1997 was about the new deal, a programme opposed by both Opposition parties. Even for a constituency such as mine, which has low unemployment, the new deal is a not insignificant factor in its development. A new partnership has been set up in Leyland to create a Tesco store that which will employ about 300 people. The partnership involves Runshaw college, the Union of Shop, Distributive and Allied
  760
  Workers, Tesco and the local authority. It will mean that 300 people will be taken off the long-term unemployed register, trained at Runshaw college and, at the end of their training, provided with jobs at the new Tesco store, when it is built. Three hundred jobs out of an unemployment total of 885 will virtually wipe out any remaining unemployment in South Ribble. The partnership seeks to train and develop those with the lowest employment skills, so it is targeting those who most need that. As I said, my constituency has skills shortages, but it needs schemes to bring people without skills into the labour market.
  A significant amount of the discussion at the business breakfast on Friday morning was about the measures that the Government need to take, not simply to reduce the number of unemployed but to bring people into the employment market in the first place. We discussed a range of measures that were needed to provide better child care support and better help for disabled people to bring into the labour market those who are currently excluded from it. When there is a tight labour market, we need to look at ways in which we can give people who feel that they cannot get a job the right training and education to go for those jobs, and receive the right back-up.
  I welcome the measures to reduce VAT on church repairs. I have received representations from my constituency, in particular from St. Andrew's church in Leyland. Those concerned will be pleased by the Government's response.
  I also wish to refer to the welcome measures to introduce a tax credit for the development of vaccines, particularly in connection with TB and the AIDS epidemic. That is a useful development. When I was in Uganda last summer, I saw the impact of the Government's debt relief proposals, through the heavily indebted poor countries programme, on improving education and health provision in that country. That is particularly important in assisting in the battle against AIDS.
  The Bill mentions discussions with pharmaceutical companies about making drugs available more cheaply to the developed world. It has long been my view that, when drugs are developed by major pharmaceutical companies, they are targeted at the developed world. The business plan assumes that the companies can make a profit and cover their costs on the basis of charging high prices in North America and western Europe. Those companies should be able to supply drugs at cost price to the poorest countries of the world, without provision for the cost of development. They would not be selling the drugs to those countries at a market price—the same price at which they would sell them in western Europe or North America.
  South Ribble is a semi-rural constituency and I have raised with MAFF and the Treasury the issue of the climate change levy and its effect on the horticulture industry. I recognise that we have won half the battle by getting a 50 per cent. discount. I recognise also that Ministers are unlikely to agree to an increase in that 50 per cent. discount at this time. However, the big increase in gas prices has added a burden to the horticulture industry. Ministers must closely monitor the situation, given those factors and their effect on the glasshouse industry. While the 50 per cent. discount was welcome, it may not be sufficient to ensure that the industry can compete with others in western Europe.

  761
  Last Friday, I attended a meeting of Labour party members with the Minister of State, Cabinet Office, my right hon. Friend the Member for Makerfield (Mr. McCartney), and we discussed the foot and mouth outbreak. Many of the people who were there remember the devastation of the closures of pits, steelworks and shipyards and, in my constituency, the collapse of Leyland motors and the high level of unemployment that resulted. They remember also the failure of the then Conservative Government, during the late 1980s and early 1990s, to do anything to alleviate those difficulties or to assist the dozens of small firms in my constituency who suffered as a result of the collapse of major employers.
  At that point, it did not seem to be part of the Tory agenda to assist individuals and companies in distress. That may be the Conservative way. Whatever failure occurred under the previous Government, the Labour Government should be prepared to use the prudently managed public finances of the past four years to assist the rural economy and those areas—particularly Cumbria—that are suffering greatly. That does not require an amendment to the Bill, but a willingness to use part of the Budget surplus to assist the rural economy.
  7.5 pm
  Mr. Ian Taylor: The hon. Member for South Ribble (Mr. Borrow), who came in at the last general election, did not pay due tribute to the fact that economic growth in this country—which has delivered some of the benefits that the Government have attempted to give to his constituency—actually started before 1997. There was a pre-1 May 1997 history and, in terms of economic growth, the Government took over considerable benefits.
  The Government are near the end of their first term. To be truthful, I see this Finance Bill as a fag-end Bill. It has none of the gusto and excitement of a Government who expect to be re-elected, yet many Labour Members think that that is a possibility. However, it does not show any of the radical drive and determination that would make the House sit in awe, saying, "My goodness—what a Government! What are they going to do in the next Parliament if they get back in?"
  This is a tired Finance Bill, very much lacking in ingenuity. That is, of course, why most of this Second Reading debate has been about anything other than the Finance Bill. Hon. Members have talked about the economy, or about what the Bill might have contained had the Conservatives had the opportunity to write it. I know that your generosity of spirit is enormous on these occasions, Mr. Deputy Speaker, and I hope that it will extend to me as well.
  There was controversy in each of the Finance Bills that I have experienced after coming to the House in 1987. This is the least controversial of them all. However, some of the policies behind it—the Government's policy on tax and spend and their broader macro-economic judgment—involve some interesting and controversial issues.
  The Government had the real misfortune, as the Chief Secretary said in response to my intervention, of having written the Budget before the economic climate began to change. The foot and mouth problem is immense, and I do not blame the Government for not taking that into
  762
  account in their economic judgment. Nevertheless, it needs to be considered in terms of the tax and spend measures announced in the Budget, and particularly in terms of whether the fiscal balance reflected in the Finance Bill is the right one.
  Economic confidence in the United States has almost fallen off the cliff, which is obviously having a big effect on US growth projections. That is bound to have a knock-on effect on us. The United States has been living beyond its means for a long time. We tend to be tolerant about that, because the US economy has undoubtedly been successful. However, its deficit and its desire to suck in funds from the rest of the world to cover economic difficulties could be put at risk during this year.
  If American interest rates fall and the Fed decides, for domestic reasons, that it must cut interest rates, there could be a point at which—even if the dollar is regarded as a safe haven at a time of economic concern—investors in the United States may hold back or withdraw.
  In those circumstances, the Americans would suddenly find that they had to put their own house in order. They would also find that the rest of the world would be that much more sympathetic if the American Government stopped behaving as if "America First" were the only policy that they could adopt. President George Bush has had an inauspicious beginning to his period as President. As a Conservative, I am almost tempted to say, "Come back Al Gore, all is forgiven" but I will suspend judgment. However, I should draw attention to the fact that the American President has decided that the word "compassionate" never appeared in his manifesto.
  Other factors affect the domestic economy. The Chancellor will have carefully to reconsider some of his assumptions. For example, a rise of £5.7 billion in corporation tax revenues is predicted in the coming year. However, such buoyancy of corporation tax revenues may be delayed, or a thing of the past. Most of the companies now reporting are certainly reporting sharply lower profits.
  In the overall Budget, there is always too little emphasis on the state of our home market, by which I mean not the United Kingdom, but the European Union. The 2000 trade figures from the Office for National Statistics should always be borne in mind when we discuss our domestic position. Some 57 per cent. of UK goods exports go to the EU, and only 16 per cent. to the United States. Some 54 per cent. of those exports go to eurozone countries, and more than half our total trade in goods is with the eurozone, while the United States accounts for 14 per cent. More than half our total trade in goods and services is with the EU.
  It is highly significant that the 12 countries in the euro represent, in population and in other ways, 80 per cent. of our home market. That sector of our home market has a single currency, and a higher-than-tolerable sterling value causes difficulties for our jobs market and results in decline in our manufacturing base. The good news in the constituency of the hon. Member for South Ribble is welcome, but if we do not soon resolve the imbalance between sterling and the euro in our home market, our manufacturing industry will suffer even more. According to figures that I have seen, 83,000 jobs have been lost since the euro was introduced through direct or indirect association with investments from eurozone countries. That is serious, and we should watch the position closely.

  763
  The Budget statement did not draw much attention to that situation, and nor did it assess our position against the convergence criteria that the Chancellor has set for the euro. Perhaps we shall hear more about that on the first day after the general election.
  The factors that depress domestic demand are important. The Institute for Fiscal Studies has said that if spending is to grow by more than GDP growth beyond 2003–04, further increases in taxes will be required. We heard earlier about the difference between monetary and fiscal policy, but fiscal policy is very important in a single monetary zone.
  In both the single currency zone that is the United Kingdom and in the European monetary zone, Governments must recognise the importance of fiscal policy levers. Any party that wants to be in government must accept that the overall burden of taxation must sometimes go up and sometimes go down. There is no magic about the percentage of GDP that a Government should take in taxation at any given time: the point is whether the figure taken is the right one when the economy is expanding or contracting. We hear too much cant from both sides of the House about that. Everyone now accepts that we have given independence to the Bank of England, and we shall possibly give it in the end to the European central bank, too. We must understand that fiscal policy needs to be a good deal more energetic than it has been in the past.
  Other factors will affect the Chancellor's ability to adjust taxation. We are increasingly realising the problems that arise from lack of tax harmonisation within the European Union. I am not, incidentally, arguing that there should be such harmonisation: I have already said that fiscal judgments should be made by Governments nationally, so that they may adjust to the economic circumstances of the time. My point is that there is a problem with holding the opposite view; if all judgments are made in isolation from what is going on in the rest of the home market, we shall have massive difficulties.
  Excise duties provide an illustration Mon of that point. Smuggling is one of our major growth industries. In brewing, the volume of smuggled beer equals the output of at least three British breweries. The figures are extraordinary. The cigarette industry also has huge smuggling problems, which the Government have not reflected in the Finance Bill. They have fiddled with excise duties but not tackled the fun fundamental problem of how to stop smuggling if there is a financial incentive for doing it.
  Another matter for consideration in the European Union is value added tax. The Daily Telegraph today carries a story suggesting that there is a European Commission threat to our VAT flexibility. I am afraid that the story is yet another that has much more to do with that newspaper's policy objectives than with news reporting. In reality, the agreement on VAT—that there should be a minimum rate of 15 per cent. unless there is some dispensation—was made under the previous Conservative Government, who were much more shrewd than the reporters of The Daily Telegraph seem to recall.
  There are many aspects for consideration within our home market. Perhaps because the Government do not want to be too exposed on the European issue, they constantly hold back from explaining to the British people the full facts of life. I admit that the Front Benchers of
  764
  my own party sometimes do the opposite by increasing people's worries about the European Union, but I have never been entirely in line with their contemporary policy on Europe. Both sides must observe our competitive position in the EU while trying to ensure that we do not get so far out of line—as, for example, on excise duties—as to cause ourselves the kind of internal damage that arises from losses to the Treasury from smuggling.
  The European central bank also needs to get its act together. Much more attention should be paid than seems to be paid by the current president of that bank to changing economic conditions. I hope that there will be an interest rate cut. However independent the ECB is, there is no reason why the UK Parliament should not send it a signal that it should cut its rates. We have no official Government or central bank representation on the ECB because we have not yet joined the euro, so I must hope that the voice of a humble Back Bencher—and an Opposition one at that—may be heard.
  Let me turn to the detail of the Finance Bill. The climate change levy is touched on, somewhat abstrusely, in clause 103. I wish that that had been examined in much more detail. I shall not go into the arguments about its overall purpose: there is no doubt that reducing emissions is a vital objective. Whether that is best done, however, by giving incentives for technological adaptation or by a levy is a matter on which I am much more comfortable with my own party's policy.
  I want to mention Air Products, a company in my constituency. Incidentally, and just to raise a competitive edge, I should point out that the chief executive of British Oxygen is a constituent of mine, but now I want to discuss the position of Air Products. The Government simply have not listened to the arguments of the industrial gases industry about the unfair and damaging impact of the levy. The separation of air into oxygen, nitrogen and argon by cryogenic distillation is the most energy-intensive process in the country. It is much more so than chlorine production and aluminium smelting, but they have been exempted from the levy. The process does not pollute the environment, so it is not covered by the regulations that the Government have insisted on as the criteria to define those processes that are eligible for an 80 per cent. discount.
  Air Products challenged the Government by arguing that air separation is a chemical process, as defined in paragraph 17(a) of the eligibility table in paragraph 51 of schedule 6 of the Finance Act 2000, and that it should thus be allowed to enter the Chemical Industries Association agreement for the 80 per cent. discount. The company has provided written independent expert opinion from a professor of chemical engineering at Bath university that supports that interpretation.
  The interpretation has been rejected and may be subject to a legal challenge, but I ask the Government to understand the consequences. Air Products has had to announce to its customers that, from 1 April, it will make a surcharge to recover the cost of the levy. That will have a further impact on the international competitiveness of industries such as chemicals and steel, and will add inflationary costs to the domestic sector in the food industry, in which liquid nitrogen is, of course, used for freezing, and in hospitals in respect of oxygen. I visited Air Products recently to open a combined heat and power plant—that is a small way in which the company can try to reduce its costs. However, I urge the Government to be

  765
  realistic about the issue; the knock-on effect for companies that use materials such as those provided by Air Products will be very serious indeed.
  I have no interest in Air Products other than the fact that it is a constituency company. I have some separate business interests that are in the Register of Members' Interests. Given that the Finance Bill affects any company, I make that declaration for the avoidance of doubt.
  I have some comments on something that is close to the heart of the Paymaster General: IR35. [Interruption.] Perhaps it is close to some other part of her anatomy, but if it is not her heart, I do not want to speculate too much.
  There is still confusion about IR35 in the industry. The Government have done many good things—stimulating entrepreneurial spirit, trying to make the economy capable of accepting the inward investment of high-tech companies, and stimulating the high-tech industry itself over a longer period—so why oh why is IR35 still a blight on the landscape and causing confusion? The court case last week may have pleased the Inland Revenue in some ways, but it certainly added to the confusion. It took an 88-page document from the High Court even to try to clarify the existing position.
  Dawn Primarolo: I am sure that the hon. Gentleman appreciates that in the case that was resolved last week, the court ruled in favour of the Inland Revenue on every count and leave to appeal was refused. It is important that proper dialogue now takes place. I hope that he and other hon. Members will support me in that. We have already written to the main body, the Professional Contractors Group. IR35 is the law of the land, but discussions about its implementation and the advice that is given would benefit enormously from the positive engagement of those who are still unhappy with it. I hope that he will agree and encourage others to engage positively with the Government on the matter.
  Mr. Taylor: The Paymaster General is her usual winning self; I could not possibly refuse that encouragement. I hope that the PCG takes up her offer.
  There is definitely a need, however, to achieve a clearer understanding, in all circumstances, of what constitutes an employee. Accepting that IR35 is the law of the land, it would none the less be better if we could obtain that clarification. There is frustration out there—in what are broadly described as the knowledge-based industries—that IR35 is still a problem. I have heard the Government referred to as a sales prevention agency; they are certainly a job confusion industry when it comes to IR35. The Minister of State, Home Office, the hon. Member for Hornsey and Wood Green (Mrs. Roche), rightly talks about changing immigration qualifications to bring in skilled workers, but many skilled workers in this country think that it might be easier to get jobs abroad. I stress that, even if the court was clear on the matter, some of the applications of IR35 regulations are less clear to people working in the industry. The Paymaster General should continue to be concerned about that.
  I wish that the Chancellor had made better provision for inheritance tax. That may be a sensitive issue for Labour Members, but the inflation adjustment of the allowance for inheritance tax is not sufficient and needs radical
  766
  review. Many people from all walks of life, in my constituency and elsewhere, feel trapped by the measure. It is important to send a signal that the trickle-down of wealth from one generation to the next is worth while. We should share that aim throughout the House; it is not something to be penalised. As always, the people who are most adept can better protect themselves from the ravages of inheritance tax than those who find, too late, that they have been caught by it.
  I do not think that the Government have yet woken up to the fact that the damage that they did to pension funds through the changes to advance corporation tax continues to accumulate. All the good work—although I do not necessarily endorse the details—in encouraging people to take out pensions, such as the stakeholder pensions that have just come in, could be undermined by the apparent attack on pension funds.
  This afternoon, I recalled that I had been rather far-sighted on that issue. I put the first question to the new Prime Minister after the last general election. I asked him whether pensioners would suffer damage from
  "changes in advance corporation tax which he might propose."—[Official Report, 21 May 1997; Vol. 294, c. 703.]
  He did propose those changes and pensioners suffered. The reality is that they are still suffering and the Government have not made up for the damage that was done.
  On a related point, the Government could have taken up the constructive proposals on annuities that were aired because they would have benefited many pensioners.
  I do not have time to go into many other small points. However, I increasingly come across a serious issue when I talk to pensioners in my constituency and elsewhere: it is one thing to bring in tax credits, but it is altogether different when the means-testing and all the other aspects—the reliefs, the clawbacks and the tapers—become so complicated that only professional advisers are capable of explaining them. Many people who should benefit from measures introduced by the Government simply do not have access to professional advisers, or have never taken professional advice; they may be reliant on citizens advice bureaux and similar organisations. I notice that Help the Aged described the system as "massively complex" and said that it involved "endless form filling". Will the Government please think about that?
  The issue is serious. I do not necessarily attack the Government's right to use means tests, although I do not think that they are the correct way forward. However, introducing means tests creates obstacles for the people one most wants to help. So often, the people at the bottom of the pack are hit hardest. It is good that the lowest rate of income tax is 10p, but many people do not benefit from that because they pay no tax at all—they rely on benefits. I hope that the Government will take that on board.
  In short, the Bill is a missed opportunity for a Government who want to appear radical and who expected further years in office. They could have taken up the constructive suggestions made by the shadow Chancellor to relieve savers from income tax, which would have been hugely beneficial, but which will now have to await the return of a Conservative Government. They could have given even more targeted help to pensioners. The Government could have helped those who

  767
  are distressed by their great difficulty in understanding the tax system to obtain the benefits to which they feel that they are entitled.
  Overall, I am worried about the Government's economic judgment. I am concerned that their public expenditure plans may require much more boosting from an increase in taxation than would be wise. The Government have more homework to do. On the specific issues that I raised, I hope that there is still time for amendments to be tabled in Committee. If they are drawn up in the terms that I have suggested, I am sure that they will be greeted with acclamation on the Conservative Benches.
  7.30 pm
  Mr. Brian H. Donohoe: This has been a popular Budget, and I am sure that the Finance Bill will deliver. About 42 per cent of the population believe that the proposals are good for them personally, but, perhaps more important, 52 per cent. believe that the proposals will be good for the country. Furthermore, 55 per cent. of the population think that the Chancellor is doing his job properly, although listening to the Opposition, people would not think that that was so.
  The Government have done a great deal to help my constituents, and the Budget will deliver more for them. We have already heard about the proposal on the minimum wage, which is very important indeed—£4.10 is more than half as much again as those involved in the low-wage economy would have dreamed of in my constituency. Many of my constituents will benefit enormously from the increase in the minimum wage, but there is a problem: some charlatans in my constituency—and, I am sure, elsewhere—do not pay the minimum wage. I ask my colleagues to consider further policing of the minimum wage.
  When a young trainee hairdresser in my constituency asked for the minimum wage, she was told that she would no longer have a job if she expected that increase. That is despicable, and the Government should ensure that that is not allowed to happen again.
  In my constituency, 1,400 young people have benefited from the new deal, and more than 750 of them have entered full-time employment. Some 2,800 of my constituents have gained from the working families tax credit, which guarantees those in full-time work up to £214 a week.
  The Budget behind the Bill builds on the progress that the Government have made since 1997. Under the children's tax credit, the hard-working families in my constituency receive £10 a week, and 20 for the first year of a child's life. It is good that those policies have been introduced in my constituency. There has been a £5 increase in the working families tax credit, which will guarantee £225 a week by October. The 10p tax band has been extended. Maternity leave has been increased from 18 to 26 weeks, and maternity pay will increase from £60 to £100 by 2003.
  Most important, the Budget and the Bill will restore hope in my constituency, which the Conservative party neglected for a generation. In fact, a clear indication of just how well the Budget has been received is that the post offices in my constituency are now paying out almost a quarter more again than in previous weeks. That is a success in itself.
  768
  In 1993, more than 4,650 people were unemployed in my constituency. In the 1980s, the figure was even worse. The Tories have absolutely no idea of the misery caused by unemployment. We have heard about constituencies with unemployment levels as low as 1 per cent., but some areas of my constituency have unemployment levels of more than 50 per cent. and three generations of some households have not worked. That problem is being addressed for the first time in a generation, but the policies are still not penetrating my constituency as they should. For example, unemployment there is still 3 per cent. above the national average.
  I have heard people argue that there is a north-south divide. That is certainly true, but there is also an east-west divide. The east of Scotland is overheating and there has been substantial job drift from west to east. Unemployment levels are 40 per cent. in some parts of my constituency, but across the whole constituency it is 8 per cent. However, it is as low as 1 or 2 per cent. in the east of the country.
  Something must be done, and more would be achieved by targeting public sector jobs, which are at our disposal, to the west of Scotland. Those jobs could include the armed forces jobs that are out for tender at present. I understand that about 5,000 will be created in a new training college, which the Army will set up, and that it has been argued that it should be based in the east of the country, but I would argue forcefully that it should be set up in the west.
  In summary, the Government understand that the economy is based inside society itself and that we are talking about people, not just numbers. Number crunching is all very well, but the people whom I represent understand the issues only on the basis of the food that they have on the table. Prudence is sensible. A stable economy is essential—it is good for business and for the families in my constituency. It is certainly not pap, as some might say. Clearly, because of that success, for the first time in many years we can afford to rebuild the society in which we live.
  The base work has been done, and we now have record spending on education and health in and around my constituency and record investment in young people. For the first time in a generation, pensioners have been helped in a way that they understand. Of course, all that would be destroyed if the Conservative party were to return to power at the general election, as it has already committed itself to saving about £16 billion on public spending. Those cuts would most affect those who need the help most in my constituency.
  7.37 pm
  Mr. Michael Jack: I listened with keen interest to what the hon. Member for Cunninghame, South (Mr. Donohoe) said, and I take issue with the figure of £16 billion in cuts because—I am sure my hon. Friends on the Front Bench would be only too pleased to give him chapter and verse—the figure is not £16 billion. Although we on the Conservative Benches accept our responsibilities, we have learned to use public finance better than the Labour Government have—hence, the fact that we can deliver expansion across the board in many public services, such as education and health, and we can do so with better value for money.

  769
  At the outset, I remind the House that I have made certain business declarations in the Register of Members' Interests. I have no clear idea whether the Bill affects those interests; none the less, I thought it right to put that declaration on record.
  The first thing that I observed is that this year the Finance Bill costs £14.70 for 291 pages—not such good value as Harry Potter and certainly not so exciting. In fact, the Financial Times managed to use the wonderful headline, "Concise Finance Bill aims to avoid controversy". I am delighted that the Paymaster General and the Chief Secretary are still here, especially the Paymaster General because she has the job of steering through the House what is—according to the Financial Times—an uncontroversial Bill. She knows, of course, that she will be in for an easy time.
  I was interested in Ernst and Young's comments on its web page. That is the place to go these days for up-to-date, incisive, interesting and exciting comment. It said:
  "Budget rehash fails to excite."
  The Bill illustrates one of the problems with the Chancellor's announcing and reannouncing recycled ideas, which are then not exciting in the Budget or the Finance Bill because we can all search back through two or three copies of the Red Book to find some explanation of what appears in the Bill—for example, the aggregates tax.
  Ernst and Young makes an interesting point when it says:
  "the Chancellor's speech rehashed old announcements. He clearly isn't too interested in the business vote."
  I am sure that those on the Treasury Bench would disagree with that, but that is the perception of those on the outside.
  Ernst and Young makes another equally perceptive comment about the Chancellor. Of the Chancellor, the company states:
  "From a personal tax point of view, we think he has yet again yielded to compulsion to tweak things."
  This Chancellor cannot let go without making minor changes; I shall come on to one of them later in my remarks. Ernst and Young asks whether voters will be enthused by this approach—I suspect that they will not.
  The aggregates tax has been mentioned. My former tax adviser in the Treasury, Mr. Edward Troup, considered the layout and format of the Bill and wrote in the Financial Times:
  "Take land remediation—giving a tax reduction for cleaning up contaminated land. That takes up 14 pages of the bill. You do have to wonder whether all this effort is worth the benefits that will come from it."
  That is an interesting point when we consider the amount of legislation that is afforded to descriptions of the aggregates tax. As my hon. Friend the Member for West Dorset (Mr. Letwin) said in his sage remarks, we are searching for the purpose of that.
  If the Government are genuinely concerned about the exploitation of aggregate materials from land-based sources, why did they not seek to sit down with the aggregates extraction industry to try to negotiate a binding
  770
  compact with it to reduce the amount of material that was taken from virgin sources and to encourage the recycling of previously used materials?
  Dawn Primarolo: My hon. Friend the Financial Secretary engaged in exactly such discussions with the industry before the aggregates tax was introduced.
  Mr. Jack: I am grateful to the Paymaster General for that clarification, but that is exactly the kind of discussion that resulted in the climate change levy. The Financial Secretary may have held the discussions, but we still have the tax.
  If the Government are genuinely concerned about environmental matters, why do the clauses that deal with this matter not comment on the effect of aggregates extraction on the marine benthos? If the Financial Secretary, who is now fingered with the tax, had cared to consider the effect on grounds used for fish spawning and examined the discussions about aggregates extraction from mid-channel sites, he might have thought that protection of the spawning grounds of fish, such as sole, was an important issue.
  If the tax were genuinely environmentally oriented, I would have expected marine-derived aggregates to be affected, but they are not. The tax is restricted solely to land-based extraction, which gives the lie to the Government's line that the tax is a great environmental measure. With the climate change levy and the landfill tax and no corresponding reduction in national insurance charges, the aggregates tax takes it place on the growing list of nice little earners.
  I am sorry that the hon. Member for South Ribble (Mr. Borrow) is no longer here, because he and I would have shared common cause over the impact of the climate change levy on the horticulture industry. Those on the Treasury Bench were kind enough to listen patiently and assiduously to my remarks in the debates on the Finance Bill last year, but the problems have not gone away. The cost of energy to the horticulture industry has risen and the Government have done nothing in the climate change levy to recognise the fact that it is a carbon-neutral industry.
  Much has been made of the missed opportunities in the Bill. The Paymaster General has taken a close personal interest in the exercise of rewriting our tax law, and the Bill is a missed opportunity in that regard. I have held discussions with the Confederation of British Industry, the Institute of Chartered Accountants in England and Wales and the British Chambers of Commerce and they all continue to express concern about the complexities in our tax system. In the same way that the tax law rewrite exercise was established, the Bill could have contained a clause or two that would have established a study to consider simplification of the tax system.
  Mr. Letwin: As one would expect, my right hon. Friend is making an interesting speech. Does he agree that, if the Government were genuinely concerned about the complexity of the tax system, it is unlikely that they would be introducing new taxes?
  Mr. Jack: My hon. Friend makes the point. This is not the time or the place to have the broad argument about the way in which new taxes are introduced or about the

  771
  type of Bill that we need, but such issues should have been addressed. If the Chancellor were trying to carve out a reputation for himself as a reformer, he and the Government would get to grips with the complexity of the tax system. Comments about simplification—particularly from the Chartered Institute of Taxation—abound on the site of accountingweb.co.uk and those arguments are well known to the Financial Secretary and the Paymaster General. I do not need to repeat them, but it is sad that the Bill fails to deal with such issues.
  I am glad that the Bill introduces changes that deal with employee share ownership and the enterprise management investment scheme. I welcome them and the fact that the Chancellor has seen fit to put right some of his over-indulgence in the tax take on items such as fuel. We sometimes forget that we are talking about the people's money and the use to which a Government put it. Whether the tax take is set at the right level is a matter for the debates on the Budget and the Finance Bill. Conservative Members have illustrated the rising tax burden under this Administration and we have suggested ways in which we can deal with that problem.
  Other right hon. and hon. Members have referred to the national crisis that has resulted from foot and mouth disease. It has implications for the farming economy, the rural economy and food industries. A call has been made for proposals to try to tackle the economic consequences of this dreadful disease, and I wish to suggest several measures that the Bill could introduce. For example, one clause deals with the enterprise investment scheme and new clauses could touch on the venture capital trust scheme, which is the other issue that I wish to mention.
  The enterprise investment scheme and the venture capital trust scheme are financial vehicles that aim to encourage investment in sectors of higher than normal risk. They do so by providing the investor with income tax relief at 20 per cent. on the amount invested. They deal with capital gains made under the investment and also allow for the losses incurred to be deployed in other areas of financial activity.
  There is a problem, however. The qualifying conditions of those two financial schemes and the corporate venturing scheme—which is the third strand of help for rural Britain—prevent them from being used to help land-based industries. They expressly rule out agriculture and horticulture as qualifying trades. I can understand that when the schemes were originally devised, there may have been extremely good reasons for those conditions, particularly in the light of the old business expansion scheme. There was also the worry about investing in land when the existing inheritance tax proposals were already fairly generous in respect of people buying farms as a means of securing capital wealth for future generations in their families.
  We now face a national emergency, and, if we want to encourage more new investment of a slightly riskier nature, I ask the Paymaster General to consider amending the qualifying provisions to allow either of the two schemes to be used for the benefit of agriculture, the food industry, tourism and rural Britain. If the Treasury is concerned about the extent of the impact of removing the qualifying conditions, it is possible to draft the Bill so that the beneficial amendments that I have suggested are restricted to the areas affected by foot and mouth.
  772
  What enterprises would benefit from the changes? Farmers could use the rural development plan and work together to establish new cattle-breeding enterprises to overcome the strictures of foot and mouth, for which they might seek outside capital. The enterprise investment scheme and the venture capital trust scheme could open up the flows of capital that they need. Farm-based food businesses, tourism and other rural industries could also be encouraged, perhaps by taking advantage of the farm business tenancy arrangements that enable tenant farmers to create new business on their enterprises. Tenant farmers will be hardest hit by foot and mouth. They have no asset base to fall back on and would benefit from my proposals.
  Corporate venturing is designed in a similar mode to the enterprise investment scheme. It enables people from the world of corporate business to invest so that they gain a tax advantage in the financial vehicles that I have outlined. The food industry and supermarkets have a role if they truly want to invest in and sustain Britain's rural economy. By amending the qualifying conditions in the corporate venturing scheme, the Treasury could induce a new flow of money to be made available to those two schemes to act as vital seedcorn capital.
  I make those suggestions because of way in which the state aid rules limit the amount of public finance that can be used to help the process of recovery in Britain's rural economy. I hope that I have illustrated, in a simple and straightforward way, that three existing tax vehicles could be modified to help the rural economy at a vital time.
  The hon. Member for Kingston and Surbiton (Mr. Davey) referred to roll-over losses. If a farmer makes losses for six consecutive years, there is a presumption that the farm is not being run on a commercial basis and further losses cannot be used by the farmer to offset against other income. Given the problems that farming faced before foot and mouth and those that it will face in the recovery period when we get on top of the disease, we should consider those arrangements. Bearing in mind the rarefied circumstances of the disease, trading in those tax losses might also be considered as a way to help the enterprises derive other revenue, or at least to enable the losses to be used against other ventures in which farmers might become involved if they use any of those three schemes. We need a more creative approach to the tax mechanisms.
  I asked the Chief Secretary about the film industry partly because I wanted an economic justification for additional help, but also because it inspired the way in which I thought about the issue. The film industry, which has not had the problems of foot and mouth, is receiving extra help because it is a creative industry, just as the Government have maintained the extra-statutory concession that enables theatre "angels" to move losses from one west end venture to another. The same creativity must be used if the tax system is to assist our rural economies.
  I was intrigued to discover that we are to give VAT relief on children's car seats as part of the Government's package to help families. I sought a justification for that, but could find nothing in the press release REV/C&E 3. It merely says that the VAT will be reduced from 17.5 to 5 per cent. I wanted further information and tabled a question to the Department of the Environment, Transport and the Regions, asking the Secretary of State how many

  773
  child road deaths had been caused by defective child car seats in the past three years. I did that because the Red Book justifies the relevant clause by saying:
  "Around 6,000 children under eight years old are killed or injured each year on Britain's roads."
  I thought that defective car seats might be responsible, but the Red Book gives a further piece of advice. It says:
  "It is vital that child car seats are correctly fitted and used to help protect children from harm when travelling by car."
  That is true, but hardly borne out by the facts issued by the Department of the Environment, Transport and the Regions.
  In clause 94, proposed new paragraph 7(2) of schedule A1 states;
  "The following are 'children's car seats'",
  and the definition includes
  "the combination of a safety seat and a related wheeled framework",
  so the measure is a way to reduce the cost of children's buggies. Every manufacturer of buggies will add a few straps and claim that they are a new car safety seat. I alight on this aspect of the Bill because I can find no justification for it. Indeed, it falls into the same category as further help for the film industry, which the Chief Secretary could not justify.
  I am mystified. What is the Government's strategy on VAT? We recently learned of the extra losses in revenue from VAT, but the Government are cutting it further. When the local Blind Society recently asked me why VAT could not be reduced on aids for the visually impaired, I was left struggling for an answer. Children's car seats—cheap buggies—can have a totally unjustified reduction in VAT, but the aid that makes life bearable for the visually impaired has to bear its full weight. We are owed an answer to that.
  Clause 81 deals with life assurance. As the Financial Secretary courteously dealt with my question on that last year, will he this year see whether it is possible to make the capital gains tax changes in life assurance policies so that the holders of those financial assets will have the same benefits that have been visited on those who hold assets outside them? It is high time that the corporate rate was brought up to date.
  I mentioned the climate change levy, which is dealt with in clause 103, in the context of the horticulture industry. I note with interest that although clause 100 relates to the landfill tax, it fails to make a corresponding reduction in national insurance charges.
  I think we all feel a bit odd about the Bill because we were not expecting to be here debating it. We thought that we would be out on the streets arguing about its content, where there would be more raw meat for us to get our teeth into. However, we are discussing it and have to take note of the missed opportunities. Bearing it in mind that foot and mouth is the nation's main problem, I hope that by our making positive suggestions, the Bill might be modified so that it can benefit rural Britain.
  7.59 pm
  Mr. Jim Cunningham: I shall begin by asking a question that Opposition Members have not answered tonight: do they propose to make £16 billion of
  774
  cuts if they come to power? Perhaps the key to the answer lies in the fact that they have performed a U-turn. Proposals for cuts were certainly being touted some time ago, but the suggested figure was £8 billion. Now they say that they will make Whitehall so efficient that they will save all that money without making cuts in services. The Opposition should not be ducking and weaving because it is not only the House but the country that is entitled to an answer.
  The point has been made that the Chancellor is not interested in business. If that is so, why has he made allowances on VAT for small businesses and cut corporation tax? Those are not the acts of a Chancellor who is not interested in business. According to the Opposition, the Budget is not interesting, perhaps because interest rates and inflation are low. It might be more exciting for them interest rates and inflation were high, and perhaps that is what they would like. Low interest rates and inflation help to foster competition and to create jobs. Low interest rates affect people who under the previous Government would have suffered negative equity—a little thing that the Opposition forget.
  I welcomed the introduction of the minimum wage and I welcome also the increase in the basic rate. The Government should be proud of that, and both the introduction of the minimum wage and the increase should excite some Members. I welcome, too, the reduction in youth and adult unemployment because under the previous Government there were between 3 million and 4 million in unemployment, and it was the scourge of young and middle-aged people throughout the country. Ageism was dragged into the argument as a form of selectivity for jobs. People have never really understood what that was all about.
  I understand why my hon. Friend the Paymaster-General introduced the 1R35 rules, but I also accept the point made by the hon. Member for Esher and Walton (Mr. Taylor). There have been abuses of the rules, as I am sure he agrees, but my hon. Friend should do everything in her power to reach agreement on the matter. Several constituents have approached me about it, and we must consider the definition because I am concerned about the possibility of individuals losing their jobs or contracts. I have raised the matter a number of times with my hon. Friend. I agree with the hon. Member for Esher and Walton that everything must be done to encourage both sides at least to get talking to try to resolve the issue.
  In Coventry, we have had bad news today that Marconi will shed jobs, but I do not know the exact figure yet. We know that Marconi will also increase the number of jobs in Coventry, but I do not know whether that will be a restructuring exercise or something else, because the company has said that it is considering restructuring worldwide. I do not want to be alarmist, but we must be vigilant. I must once more highlight the fact that several months ago, Rolls-Royce said that it was to restructure, with jobs in Coventry going to Canada. However, through the good offices of my right hon. Friend the Secretary of State for Trade and Industry, discussions are taking place between the trade unions and Rolls-Royce's management to try to save as many jobs as possible. Although we feel reasonably confident that things are going well, it is worth while now and again pointing out blips that affect us as constituency MPs, and I have highlighted two in particular.

  775
  I welcome the cuts in fuel duty, which demonstrate that at least the Government listen to the public on that matter, as they always have. The question was whether they should introduce a mini-Budget and erode confidence or wait for the proper time to make changes. I welcome, too, the help given to hauliers and the environmental rebate scheme that has been introduced to the tune of £35 million. I welcome the tax help given to companies such as Rolls-Royce for research and development.
  Under the previous Government, 47p in the pound was going to pay off interest on Government debt. We have got that figure down to 16p in the pound, and the money saved is being ploughed into services. I hope that the Opposition are listening because they could avoid the charge that they will make £16 billion of cuts by being creative.
  I welcome the financial measures to help disabled people, which have not had much mention today or in earlier Budget debates. The disabled person's tax credit must be welcomed because over the years we have had many debates about how we should help people with disabilities. I welcome also the guaranteed minimum income of £250 a week for families with a provider or other adult who is disabled. That should be applauded, but it has not been highlighted.
  The charge that the Chancellor does not do much for business can be answered by the fact that many small businesses with a turnover of more than £100,000 per annum will not pay VAT. If that is not a measure that helps small businesses, I do not know what is. Recently, however, my attention has been drawn to retention payments. I would not claim to have great Treasury experience, but I know that the issue affects small businesses who employ only a few people as well as larger businesses. Of course, it may take them years to get retention payments back, and many have a small cash flow, which can present major problems. I hope that Ministers will consider whether something can be done to help small businesses on that matter.
  We must welcome the Government's news that over the next five years there will be a 50 per cent. increase in NHS funding. I have not heard the Opposition say very much about that tonight. One of the big problems facing the NHS, as we all know, is recruitment. The Government have made available £135 million for that, and we must applaud it.
  I want to draw the Government's attention to a matter that has been raised with me by pensioners and groups representing the elderly—the worry about how they will finance community care for themselves. We know about the cost of caring for elderly people in residential homes. I hope that my hon. Friend the Paymaster General will say something about that because in some areas people who run such homes are going out of business. I do not expect any ready-made answers tonight, but the matter should be considered.
  Another area that concerns me personally, because I have experience of it, is the need to restore dignity to public services. We could do a lot more about that. I have said that before, but it is always worth saying it again. I refer in particular to local government, because in the past it has spent its fair share of time being the whipping boy on which we blame every ill in society, from cuts to legislation that affects the delivery of services. I do not need to go through every aspect of that legislation because most hon. Members will know what I am referring to.
  776
  I am glad that my right hon. Friend the Secretary of State for Education and Employment has started to take action to improve education by reducing class sizes. We must review teachers' salaries and do more to encourage more people into the profession, as Ministers are doing. We must ensure that teachers feel that they are doing a full-time job and that—to return to the dignity of public service—the public once again respect their teachers.
  I have two universities in my constituency, so it would be remiss of me not to raise issues affecting students. The House must consider the Cubie report and how soon its recommendations can be implemented, although that will obviously not be during this Parliament. My hon. Friends should consider other ways of ensuring that students do not end up with massive debts when they leave university, which remain a millstone round their neck when they get a job.
  Universities are looking at various devices to raise resources. Laptops have been an issue recently in Coventry—anyone who did not have a laptop might not get a place at a certain university there. There has also been the suggestion of top-up fees, although I know that my right hon. Friend has set his face against that. We must be vigilant about such matters in the next Parliament.
  A further matter of concern is the plight of mature students who want to go into the medical profession and take night school courses, but find those difficult to sustain because of their lack of income. I hope that Ministers, especially my right hon. Friend the Secretary of State for Health, will look into that.
  The Government have done much that we should welcome. We welcome the £200 winter fuel allowance, which was a major step. We welcome pension increases, although some pensioners are still pressing for a link with earnings. No doubt we shall return to that debate in future. The Government have done much, and we want to do more, in relation to concessions for pensioners on public transport.
  An issue that concerns me in Coventry is the amalgamation of schools that is currently taking place. To some extent, that can result in school closures. The formula is under review, and I hope that the review will be speeded up. More flexibility in the formula is needed so that schools in my constituency can be kept open, and the buildings can be used for other community or medical purposes. There is much to welcome in what the Government have done for the national health service, the education service and small businesses. The Opposition may find the Budget dull, but it gives people confidence to know that inflation is low and that interest rates are low, which helps investments and avoids negative equity.
  8.14 pm
  Mr. Robert Walter: I draw the House's attention to my entry in the Register of Members' Interests—not that I think that the Bill will make any difference, although my right hon. Friend the Member for Fylde (Mr. Jack) had some interesting proposals, which would have made a slight difference. Alas, he is no longer a Treasury Minister.
  Introducing the Bill, the Chief Secretary spoke of a balanced approach, and made quite an issue of that. In a number of areas, the Bill and its proposals present a precarious balance, especially in respect of excise

  777
  duties, where the balance is still tipped in favour of the criminal and foreign business, and against the law-abiding, otherwise successful British business.
  Since the implementation of the single market, the failure of Government to recognise the enormous divergence between excise duties in Britain and those in the near continent has encouraged the smuggler and damaged British business. In my North Dorset constituency, three pubs have closed in the past two months. That had nothing to do with foot and mouth, although that is having a devastating effect on pub takings. It had much to do with business rates, council tax increases and the minimum wage. Most of all, the availability of cheap booze, both legally and illegally acquired, has brought about the closure of The Silent Whistle at Shillingstone, The Sir Winston Churchill at Wimborne and The Damoury Arms in Blandford.
  I am grateful to Mr. David Woodhouse, the managing director of Hall & Woodhouse, an extremely successful independent family brewer in Blandford, for providing me with up-to-date data on the subject. As a premium beer producer, the firm has just won the Tesco "Beer of the Year" competition with a new brew, "Golden Glory", which goes on sale next month. Mr. Woodhouse faces the possible closure of more pubs in the future. Outside the House, I mentioned to my hon. Friend the Member for West Dorset (Mr. Letwin), the shadow Chief Secretary, a pub in his constituency, which is under serious threat.
  The Government will claim that they have not increased beer duty this year. However, the problem has not gone away. The problem is the fact that beer is significantly cheaper in France and, in a single market, the population will seek to arbitrage the difference if there is an economic benefit to be gained. Let us consider the price advantage of duty-paid imports of beer from France.
  Many factors affect the net profitability of duty-paid imports: the type of beer imported—whether it is canned or bottled, whether it is premium or standard beer, and whether it is a French or a UK beer; the destination in the UK to which the beer is being taken; the capacity and type of transport being used; and the type of operation—whether it is a smuggling gang, a lone bootlegger or just a home shopper. I shall deal in a moment with those three very different but not untypical types of importer, all of whom have a similar net profitability, which is estimated to be about 8p a pint.
  Since the start of the single market, four major factors have changed that price advantage. There have been changes to the rate of UK beer duty—thankfully, no change in the upward direction this year; changes to French beer duty, which has gone up, and exchange rates; higher ferry fares, following the end of the duty-free allowances in July 1999; and the recent increasing success of Her Majesty's Customs in deterring smugglers from using their Transit-style vans, thereby increasing confiscation rates.
  Data for the past five years indicate that volumes have borne a close relationship to the net price advantage. The exception was in 1999, when smuggling volume was particularly high, but that was probably distorted by those stocking up for the millennium celebrations. In the first three years after the single market was established, volumes were lower than might be expected, which
  778
  probably reflects the time taken by importers and suppliers fully to recognise and exploit the financial opportunities.
  Many factors have altered the profitability of personal imports of beer from France to the UK over the past decade. The rate of UK beer duty was increased by a penny a pint in 1993, 1995, 1998, 1999 and 2000. The change of the duty system in July 1993 meant the equivalent of a further penny on a pint.
  On the other side of the equation, France increased its rate of beer duty in 1995. The abolition of duty-free sales in July 1999 resulted in increased ferry fares, which raised the cost of the average day trip by about £10. For the average day tripper, that was the equivalent of about 7p a pint. As I mentioned in recent years, Customs and Excise has deployed increased resources at Dover to stop and confiscate a fair proportion of the larger vehicles, such as the Transit vans used by smugglers. That has forced many smugglers to use smaller and less conspicuous vehicles. It has also added to the smugglers' costs over the past four years. It has been estimated that their costs have increased by about 9p a pint.
  Does that mean that the Government are winning this war? I should like to demonstrate that they are not winning it. The spectrum of duty-paid beer imports covers a wide range of importers and products. I should like to give three short examples. Although they relate to different types of enterprise that involve the importation of widely different loads and types of beer, I want to show that the net profit in each case is less than 8p a pint.
  My first example is that of the genuine personal shopper and day tripper. Although the indicative limit that is imposed by the customs is 110 litres of beer per head, most people bring back far less. The average quantity brought back by legal shoppers is about 10 litres per head. My example assume s a load of 13 cases of been, which can be packed relatively easily into the boot of a family saloon car, but represents slightly more than six months' average consumption for a UK adult. Although most of the gross profit of such an exercise is spent on travel, the day tripper makes a small saving and has a free day out in Calais. He would bring back bottles of beer at 86p a litre, which he can buy at Tesco or Sainsbury's in Calais. As he is bringing back 13 cases, he will have bought about 78 litres. That represents a saving on Tesco's prices here of about £66, which consists essentially of duty. The ferry will have cost about £40, and let us say that his petrol will have cost £15, if he was travelling from London. That produces an overall saving of £11 on an investment of £122, which is a net saving of 7.7p per pint.
  Let us now consider the more serious side of the equation, and turn to the criminal fraternity. I want to speak about those who are in the business of bootlegging and smuggling. My second example is that of the bootlegger who sees the financial opportunity of smuggling. He buys the cheapest possible beer and fills his estate car with as much as it can hold—usually about 60 cases. He will not use a Transit van, because of the risk of being obvious to Customs as he comes back through Dover. The weight of 60 cases of beer is almost a tonne—a load that makes the car illegal and potentially dangerous. Our bootlegger then sells his cheap beer to his friends and neighbours when he gets back, but to do so he must offer better value than the traditional source, which is the supermarket. To beat that competition, he

  779
  must undercut the supermarket price by at least a third, so he is unlikely to achieve a profit of more than about £5.50 a case.
  Nevertheless, the bootlegger will expect to make from his beer a profit of about £50 on a trip. He will probably supplement that gain by trading in tobacco and cigarettes, about which I shall speak more in a moment. Of course, he runs the risk of vehicle confiscation and imprisonment, but he will probably not factor that risk into his calculation, on the assumption that it only ever happens to somebody else. His arithmetic is likely to be as follows: he buys the cheaper beer for £3.70 a case, probably from Eastenders in Calais. He fills up his D-reg Volvo or Peugeot estate with 360 litres of beer, T, or 60 cases. The average UK price is probably about £8 a case, but he will sell the cases on at £5.50 each, making a gross profit of £1.80, or £108 for the trip. After he has taken out his travel costs, he will have made a profit of £48 on an investment of £282, with a margin of 7.6p a pint.
  Now for the real criminal: Mr. Big. My third example is the organised gang of criminal smugglers. They are remotely controlled by Mr. Big, who hires drivers to import his beers in Transit vans, or, increasingly, in pick-up trucks. The beers will usually be English brands, as they can be resold in the UK without arousing suspicion. They might have been legally exported to French shed warehouses, of which there are many within striking distance of Calais, Cherbourg and so on. To maximise the load, the smuggler will probably bring back 12-litre cases of cans, which weigh less than glass. His pick-up truck will have been fitted with specially stiffened springs to enable it to carry a load of more than a tonne. The observations of the Brewers and Licensed Retailers Association suggest that 90 cases would be a typical load for such an operation.
  Mr. Big may run a fleet of up to a dozen such vehicles, with arrangements for transfer on to a lorry near Dover for onward transportation to the midlands and the north. With a fleet of that size, he would expect probably to lose a vehicle a week to confiscation by Customs. Such losses will be built into his calculations. As he is dealing in UK brands, the saving is essentially the duty difference between the UK and French rates. The beers will be distributed via a large network of cornershop off-licences, van sales on housing estates and so on, but the retailers will need a reasonable incentive to risk their licences by selling illegally imported beers, so there is an estimated sales cost of, say, £2 a case.
  The criminal in question will be bringing in more than 1,000 litres of beer in his pick-up—or 90 cases—and saving duty of about 50p a litre. Obviously, he will have ferry costs and he will have to pay the driver and perhaps a mate, which will probably add another £60. He has probably built into his costs a premium for losing the occasional vehicle—perhaps one in 20—of about £75, and there will also be sales costs. That means a net profit of about £145 to £150 a trip. On an investment of £1,300 or £1,400, that is a profit of about 7.5p a pint.
  So, it is clear that, for beer, the margin remains. That margin is revenue lost to the Treasury. It is the criminal smuggler who is in business, but it is my business men, my brewer, whom I mentioned, and my publicans who are losing money and, in some cases, going out of business. The margin is not the 26p duty differential
  780
  between Britain and France. As my figures demonstrate, the margin—the bootlegger's margin—is less than 8p a pint.
  On Friday I spoke to another publican in my constituency, Mr. Charlie Hancock, who runs the Fleur de Lys in the village of Cranborne. His concern related to tobacco duty. Five years ago, his off-sales of liquor and tobacco amounted to about £1,000 a week, three quarters of which were accounted for by cigarettes and tobacco. They are now virtually zero. The story is repeated in pubs, off-licences, convenience stores and village shops in my constituency and, indeed, throughout the country.
  Mr. Jim Cunningham: The hon. Gentleman speaks of what was happening five years ago. Would he like to tell us what was happening seven years ago, under the previous Administration? What he has described is nothing new. I recall that the then Paymaster General was asked to investigate, and did not exactly deliver.
  Mr. Walter: The hon. Gentleman rightly points out that the problem is not particularly new. I referred to what was happening five years ago because that was the example given to me by the publican. The revenues on tobacco duty that the Treasury is receiving are at best static, and fell dramatically in the last full financial year—1999–2000—as a result of smuggling.
  Mr. Letwin: The point that my hon. Friend has just made is seminal. We argued year after year that the time would come when there was a crossover, and revenues would decrease. The constant refrain from the Government was that that would not happen for years, if ever. Now here we are, in the year in which it has happened.
  Mr. Walter: My hon. Friend is absolutely right. Let me return for a moment to beer duty. Figures for which I asked the House of Commons Library show that, in real terms, the Treasury take from beer duty has not really moved in the past 10 years, although consumption of beer, wines and spirits has increased significantly. As my hon. Friend has pointed out, the Treasury take from tobacco duty has fallen, despite all the evidence that tobacco consumption has risen in the intervening period, while duties have risen as well.
  May I now return to my publican in Cranborne, a delightful village? The villagers have not stopped smoking; that is not the reason for the fall in his off-sales. The problem is that the villagers now have another source, a man who can get whatever they want—cigarettes or tobacco—and at a fraction of the price. What has been the Government's response? Even in this Finance Bill, it has been simply this: blindly to increase the duty on cigarettes by 6p a packet, and to continue to line the pockets of the bootlegger.
  Since May 1997, the price of a typical packet of cigarettes in the United Kingdom has risen from £3.12 to £4.22. That is more than three times the rate of inflation. From each of those packets the Chancellor collects £3.37 in excise duty and VAT—80 per cent. of the retail price, and a much higher amount than is collected in any other European Union country. In fact, United Kingdom cigarette taxation is the highest in the world.
  The Chancellor lost potential tax revenue—excise duty and VAT—of almost £5 billion between 1997 and 1999, not because less tobacco was smoked but because the

  781
  smuggling of cigarettes and hand-rolling tobacco has accounted for an ever-increasing share of the total market. As I have said, UK tobacco consumption has increased since 1997, following 25 years of substantial decline.
  There is a root cause of all this: the exceedingly high and ever-rising level of tobacco taxation. The Government have estimated that in 1999–2000 total cigarette consumption was around 76 billion, of which 13.6 billion—18 per cent.—were smuggled. The Tobacco Manufacturers Association has estimated consumption in 1999 to be 84 billion, of which 21 billion were non-UK duty paid, and 17 billion—about 20 per cent. of cigarette consumption—were smuggled. Total consumption of hand-rolling tobacco, the equivalent of some 21 billion cigarettes, had doubled since the opening of the single market, and nearly 80 per cent. of that consumption was non-UK duty paid.
  Liz Blackman: Is the hon. Gentleman aware that the tobacco industries of countries such as Spain and Italy, where tobacco duty is considerably lower than in the United Kingdom, are being undercut by non-EU tobacco that is not subject to any duty? The logic of his argument would seem to be that he wants tobacco duty to be cut. Given the examples of Spain and Italy, his argument does not stack up.
  Mr. Walter: Illegal imports into Spain and Italy, especially of counterfeit tobacco products, are another problem and the subject of another debate.
  It has taken the Chancellor almost two years to take steps to attempt significantly to curb tobacco smuggling. His steps have been too little and too late. Over about three years, the extra financial resources made available to Customs and Excise have amounted to less than £300 million, compared with an admitted tax loss of at least £5 billion. The Tobacco Manufacturers Association anticipates that in the year 2000 the tax loss as a result of smuggling will be about £4 billion.
  Even by the Treasury's reckoning, the measures that have been introduced are designed only to contain smuggling at a level of slightly below 20 per cent. of the market. Although the seizures of smuggled tobacco products in the UK are running at a higher level than they were in 1999, Customs and Excise still believes that what it knows about smuggling is only the tip of the iceberg. The industry believes that the iceberg is significantly larger than the Government admit. Whichever view we take, it is clear that the more effective policing of smuggling will not by itself be an adequate remedy. The root cause is tax, and that issue must be tackled as well.
  In August 1999, the Chancellor commissioned a report from Martin Taylor on tobacco smuggling, and he claims to have implemented its recommendations. A recent Treasury Select Committee report deplored the manner in which the Government published only snippets of Mr. Taylor's advice that support the new strategy for dealing with tobacco smuggling. The Government refused to publish in any form Mr. Taylor's advice in full.
  Mr. Letwin: My hon. Friend is developing a powerful argument. Does he agree that if what the hon. Member for Erewash (Liz Blackman) said was material,
  782
  the Government would have had no trouble in publishing the full text of Martin Taylor's observations? Mr. Taylor would have acknowledged that the duty differential was not the cause of the problem. The Government's extreme reluctance to publish suggests that Martin Taylor was aware that the duty differential had a serious effect on the smuggling problem.
  Mr. Walter: The reports that I have of the contents of Martin Taylor's report—I do not know whether I quote accurately because we have not seen the report—suggest that it would not be possible to halt tobacco smuggling into the United Kingdom without cuts in the high level of UK tobacco taxation.
  In his pre-Budget statement in 1999, the Chancellor stated that he would form his Budget judgments on the appropriate level of tobacco duties, taking into account a wide range of factors. In his Budget this year, the right hon. Gentleman had the opportunity to demonstrate that even if he considers tobacco taxation to be a morality issue, he none the less recognises that the policy that he has pursued so far has not worked.
  The Chancellor has seen revenue from tobacco taxation reduce. He has failed to reduce tobacco consumption, contrary to the Government's health policy targets. He has increased the level of criminality with the increased number of smugglers. Most important, he has failed to protect children, who potentially are the targets of indiscriminate selling by illicit traders.
  The Chancellor should launch a full and independent review of the UK's tobacco market, the extent of illicit market penetration and the Government's tobacco taxation policy and its fit with other policy objectives. Such a review should be undertaken urgently and published. That would make it clear that a market, a significant proportion of which is in the hands of criminals, is out of control. Such a market cannot be regulated to control under-age smoking or fulfil the Government's health objectives.
  The figures for liquor and tobacco suggest a law of diminishing returns. At a time of increasing consumption, the tax revenue is static or, in the case of tobacco, declining. That is nonsense.
  8.40 pm
  Mr. Eric Illsley: I shall make a few short comments on the Bill. Some relate to those of the hon. Member for North Dorset (Mr. Walter) on smuggling, which I have raised in such debates in the past. He described it in considerable detail.
  I warmly welcome much of the Budget. Many of the Bill's provisions are welcome in my constituency, especially the assistance for families and children, such as the working families tax credit and the children's credit. The reductions in fuel duties are also welcome. However, in the debates that we have conducted on fuel duty in the past few months, insufficient attention has been paid to oil companies' profiteering. We are debating differences of 1p or 2p in fuel duties while oil companies register record profits and the oil-producing countries meet to try to restrict oil production even further so as to increase those already obscene profits.
  Although I warmly welcome much of the Budget, many of its benefits for my area will be eclipsed by one or two other matters that the Chancellor could have tackled.

  783
  I pay tribute to him for his excellent stewardship of the country's finances, to which the moneys that we can provide for education and health are a testament. However, in the next few weeks, my area will suffer because of our local government settlement, which has again left us several million pounds short of our budget target. We are used to that predicament, because it began in 1990 under the present system for local government finance. My area was one of 20 that were capped by the previous Government when they introduced the poll tax and the standard spending assessment formula. The latter has always worked against my area, and the problem is therefore historical. If one starts from a low base, one will always be at the low end of the scale.
  Benefits such as the tax credits and lower tax starting rate for people on low incomes—there are quite a few of them in my constituency—could be overshadowed by the fact that the local authority has to cut services or introduce charges for them because of the shortfall in its budget. It is saddening that, despite the excellent Budget and interesting Finance Bill, we face cuts in our local government budget for a different reason. That takes a little of the gloss off the Budget.
  My local health authority is one of the lowest funded in the Trent region and the country. It has a shortfall of approximately £3 million, which will prevent it from fulfilling many of the important targets that the Secretary of State for Health has imposed on it. We have considered tobacco smuggling, about which I shall speak shortly. My area has high rates of lung cancer stroke and heart disease. Reducing tobacco consumption is therefore vital. The explanatory notes to the Bill state:
  "Smoking is the single greatest cause of preventable illness and premature death in the UK. Tobacco use is detrimental to health with significant wider social costs. The Government is committed to reducing smoking".
  I sign up to that and agree that, as well as educational programmes, one way of achieving that is to increase duty to dissuade people from smoking—basically, to make it too expensive. However, as the hon. Member for North Dorset pointed out clearly and in considerable detail, that policy has been undermined to some extent by the number of cigarettes brought in from abroad.
  There are areas in my constituency where retailers, tobacconists and newsagents cannot se11 legal cigarettes. The amount of smuggling that goes on in those areas makes it unprofitable for them to continue selling certain types of cigarette, if not all cigarettes. When I go out and about in my constituency, retailers tobacconists and newsagents constantly complain that they cannot sell cigarettes in their area.
  The hon. Gentleman went into great detail on the revenue losses and all the rest of it. I do not want to follow him down that path, but newsagents and tobacconists in my area can point to the points of delivery. Articulated lorries bring in a huge number of smuggled cigarettes. They are brought to one central point: an entrepreneur, for want of a better word, brings in the tobacco. He then sells on to a network of "runners". They will purchase the packs of cigarettes and sell them to an even wider distribution network. By using that system, the penetration within the local area is extremely deep, covering huge areas.
  Last year, I raised the matter in the equivalent debate. A few months ago, a retail trade magazine decided to publicise smuggling to draw more attention to it and to
  784
  reduce it in its own way. It was aimed not at those in the example that I have just quoted, but at newsagents and tobacconists who were selling smuggled tobacco: legitimate traders who had decided that the only way to make money from selling tobacco products was to go the way of the smugglers and to sell the stuff more cheaply from their own shops.
  Jane Griffiths: Does my hon. Friend share my concern that legitimate, law-abiding newsagents, tobacconists and off-licences in my constituency who do not wish to sell smuggled and contraband goods are being intimidated into doing so, with threats of damage to their property and sometimes threats to their children?
  Mr. Illsley: My hon. Friend has anticipated my next point. I am grateful for her intervention because it emphasises the point that I am about to make. The retail magazine in question decided to draw attention to the issue of legitimate traders selling contraband goods at a lower price. Members of Parliament—I am sure that many colleagues took part—were invited to go to newsagents who had volunteered to take part in the scheme and who had, in so doing, allowed their names to be published in the magazine.
  On the day that I visited one particular newsagent, I was surprised to pull up outside his shop at the same time as the local constabulary and the local press. I went into the shop and found out that, that morning, the newsagent had received an anonymous message on an answering machine telling him that, if he went ahead with the promotion to reduce the number of smuggled cigarettes by drawing attention to the problem, he would face the problems that my hon. Friend the Member for Reading, East (Jane Griffiths) has outlined. He was frightened out of going ahead with the idea that the magazine had promoted. The publicity event at which that newsagent and I were to speak to the local press had to be cancelled because he was so afraid of the consequences of going through with it. He felt that way not because of the criminal element to which the hon. Member for North Dorset referred, but because of a semi-criminal element among his fellow retail newsagents and tobacconists.
  As my hon. Friend the Member for Reading, East said, newsagents and tobacconists seem to be in a catch-22 situation: either they stop selling cigarettes or choose to sell smuggled cigarettes, or perhaps they are forced to sell smuggled cigarettes because their colleagues want to do so. It is a difficult situation.
  As the hon. Member for North Dorset said, the retail price of a packet of cigarettes is about £4.20, whereas a packet of smuggled cigarettes typically costs £2. Additionally, all brands are available from those who will take the risks associated with smuggling. However, I must tell my hon. Friend the Member for Erewash (Liz Blackman) that I am not sure that reducing our tobacco duty to bring it into line with other European countries' is the answer to the problem. As she said, sales of cheaper European cigarettes are undercut by even cheaper eastern European cigarettes.
  We have to pay more attention to the issue. We have either to try harder to prevent smuggling by providing more money for that effort or to re-examine tobacco duties within the overall European context. Hand-rolling

  785
  tobacco is one of the biggest earners for smugglers, as the price paid for it here is very substantially more than that paid in the rest of Europe.
  Dr. George Turner: Does my hon. Friend accept that, in the long term, if the Government are to achieve their health objectives, they will have to accept a reduction in revenues from tobacco duty? Is it not therefore logical for the Government to attack the smuggling problem rather than to reduce the price of cigarettes? As we know, cigarette pricing is one of the greatest influences in encouraging people to stop smoking.
  Mr. Illsley: I do not disagree with my hon. Friend. We have to find solutions other than reducing tobacco duty to tackle the smuggling problem. Although we can consider that option, as I said, the idea is to increase the duty to try to stop people smoking, and perhaps to prevent young people from taking up the habit by pricing them out of the market. However, I am worried that that policy is being defeated by the general availability of very cheap cigarettes. There is no easy answer to the problem; if there were one, I am sure that previous Governments or the current one would have found it.
  People in my own area have health problems such as heart disease and lung cancer that are caused primarily by smoking. I should like extra resources to be provided to stop smuggling and for education programmes to appeal to young people not to smoke. As I am sure my hon. Friends will agree, banning tobacco advertising is a step in the right direction.
  I am the honorary adviser to the Northern Licensed Victuallers Association, which has made representations to the Government on alcohol smuggling. The hon. Member for North Dorset dealt in great detail with alcohol smuggling. Contraband alcohol is often sold in legitimate retail outlets by publicans, licensees or off-licensees. In the past, however, wholesale licences were one way of stopping such sales. Wholesalers had to have a wholesale licence to operate, but would lose their licence and have to cease trading if they were found to be selling contraband alcohol. I again suggest that Ministers consider that approach. I know that it was abolished a few years ago, but perhaps that measure could be revived to combat smuggling.
  The climate change levy is referred to only briefly in the Bill. The levy, along with the 80 per cent. rebate for the integrated pollution prevention and control industries, is administered by the Treasury, but much of the detail of how to qualify for rebate and exemption is dealt with by the Department of the Environment, Transport and the Regions.
  I am sorry that the hon. Member for Esher and Walton (Mr. Taylor) is no longer here, because I agree with what he said about certain processes being exempt from the levy. He referred to air separation. That industry supplies gases for industrial use, but it is also a process in itself. Certain glass furnaces in my constituency are fuelled by an oxygen process, but following the climate change levy negotiations they no longer qualify for a rebate. The gas consumption of a glass furnace also increases with its age, so a furnace that qualifies for an 80 per cent. rebate today
  786
  may fall foul of the targets some years down the track, at a point in the cycle where the company cannot afford to refurbish it.
  I hope that the Government will bear those difficulties in mind in future years when they consider the rate of the levy and the exemptions. They should be aware of how the levy works in practice and how it affects air separation companies, for example. The hon. Member for Esher and Walton mentioned the British Oxygen Company, which has a plant in my constituency. Glass companies are also very concerned about these issues.
  8.57 pm
  Mr. Nick St. Aubyn: I was interested to hear the hon. Member for Barnsley, Central (Mr. Illsley) setting out his latest criticisms of the climate change levy, an earlier complex stealth tax that we were given too little time to consider in the previous Session. He told us of some of the many problems that it is causing. We shall no doubt hear a similar story in a year or two if the aggregates tax goes ahead. The problem with stealth taxes is that no one, not even in the Government, understands them. It is only later, when they hit people between the eyes, that the problems become apparent.
  Mr. Illsley: In my defence, I should say that I raised the issue of the climate change levy more than 12 months ago, not only in meetings with Ministers but in debates on industry. Many of the fears of industries such as the glass industry were allayed by the 80 per cent. rebate.
  Mr. St. Aubyn: The hon. Gentleman was brave enough to defy the Millbank thought police and give his own view. I congratulate him on that, but the Government cannot have listened to him, because there are still problems, as he said, that are a great worry to business. The same will be true of the aggregates tax and all the other stealth taxes.
  The problem lies not only in understanding the stealth taxes but in quantifying them. A year ago, the Chancellor predicted how much he would raise in revenue in the year now ending. According to his estimate in this year's Budget, he has raised £8 billion more than he expected to raise just 12 months earlier. That shows how inaccurate Government forecasts are from one year to the next.
  Mr. Letwin: Is my hon. Friend aware that, if one looks at the figures for the public sector net cash requirement and the repayment of the public sector debt, over the last two years, the forecasting error of Her Majesty's Treasury is some £55 billion, which is the single largest forecasting error in British economic history?
  Mr. St. Aubyn: I am grateful to my hon. Friend. I was not aware of that fact, but I do know that the Government are hopelessly off-target when they try to project what is happening to our economy and even what is happening to their own finances.
  Mr. Michael Jabez Foster rose—
  Mr. St. Aubyn: I shall give way in a moment.
  The Government preen themselves on the fact that, this year, there has been a substantial debt repayment. However, over the next few years, their own predictions

  787
  forecast massive borrowing nearly twice the size of that repayment. Indeed, given their forecasting error, according to my hon. Friend the Member for West Dorset (Mr. Letwin), it could be several times as big. With their stealth taxes and lack of clarity, the Government have created a far more volatile situation for tax collection and the economy as a whole.
  That is why we shall take no lectures from the Government when, for example, we announce that we are concerned about the history and performance of the tobacco tax regime. I welcome the comments of my hon. Friend the Member for North Dorset (Mr. Walter), as we know that the amount raised by tobacco tax has gone down. When we call for a review of that area of policy, we should be mindful of the fact that, under the previous Chancellor, the Conservative Government undertook a review of alcohol taxation. Following that review, we decided to have lower rates of alcohol tax.
  The Government's policy on alcohol of duties has been influenced by the previous Government's review, and it is significant that, in the current Parliament, the take from alcohol duties has been sustained; in fact, it has gone up by nearly 10 per cent. By contrast, the Government have ratcheted up the rate of tobacco duty and receipts from tobacco duties have declined significantly. Therefore it is not enough for the Government to say that any discussion of a review of tobacco taxes would inevitably mean less money for our schools and hospitals, because their strategy on tobacco tax has failed. Their aggregate levels of tax are so volatile and their predictions so uncertain that they cannot possibly argue that a small change in one area of tax policy would have consequences for spending on our schools and hospitals.
  That brings me to a much more important point. The Conservative Opposition have identified savings that might be made in the running of government, which add up to £8 billion a year without affecting a single penny of the money spent on our schools and hospitals.
  Mr. Letwin: I am sorry to interrupt my hon. Friend again, but he has reminded me of something. He may recall otherwise, but I believe that a member of the Treasury team said that the purpose of raising tobacco duties would be, by hypothecation, to raise more funds for the health service. Does he remember that and does he think that, mysteriously, the Government should now be cutting health expenditure if that were a genuine promise?
  Mr. St. Aubyn: My hon. Friend is obviously more willing than I am to embarrass the Government at this stage of the proceedings. He is right; we were told that the additional duty would go directly into the health service. I agree that we are now told that, despite the fall in the take from tobacco duty, the Government can still afford to increase spending on health, education and other key areas. The Government themselves have detached the debate about the optimum rate of tax on tobacco from the debate about how much we spend on our school is and hospitals.
  We have identified £8 billion of savings. The Chief Secretary has studied those savings carefully and I thank him for doing so. I am sure that he agrees that we have identified £8 billion of savings that will not affect schools and hospitals.
  Mr. Andrew Smith indicated dissent.
  Mr. St. Aubyn: I shall gladly give way to the Chief Secretary if he can tell me which part of the £8 billion
  788
  that we shall save will affect our schools and hospitals. I am sorry that the Chief Secretary is not willing to engage in debate. We must assume that the £8 billion of savings that we have identified will not affect our schools and hospitals.
  We have identified savings in other areas by managing the business of government better than this Government have done. That is why we can talk about measures such as abolishing the basic rate of tax on savings. We feel that it is unfair that people who, out of their earned and taxed income, have put money aside should then find that their reward—the interest on those savings—should be taxed again before they receive it. That has had something to do with the fact that the amount of savings in our economy—the savings ratio—has declined savagely since the Government took office.
  It is striking that, at a time when the Government are preening themselves about the amount by which they are repaying Government debt, consumer debt has gone through the roof. Economists are worried by the prospect of debt repayment being a real constraint on consumers in the coming years. That is one of the reasons why they raise questions about the Government's sometimes absurdly confident assertion that they have abolished the economic cycle and boom and bust. That claim becomes hollow to anyone in farming or tourism, or in the other, smaller industries that support those two sectors. They know all about boom and bust under this Government. That goes to show that no Government—even one as intent on central planning as this one—can prevent the hiccups and surprises that different sectors of the economy throw up from time to time.
  The Conservative party will not only abolish the basic rate of tax on savings, but will help married couples and take 1 million pensioners out of tax altogether. Above all, we must have a less complex tax system, and it is that aspect of the Bill that I find particularly objectionable. The Bill piles on the complications in our tax system. For example, there are 22 rates of company car tax; there are different rules depending on whether one takes out a mini-ISA or a maxi-ISA; the Government have introduced the working families tax credit, the children's tax credit and changes to child benefit, and baby bonuses are to be introduced.
  All of those clawbacks, reliefs and tapers add to a complex system. Witnesses to the Treasury Select Committee have made it clear that the trouble with complex allowances and incentives is that, if no one understands them, they will not incentivise anybody. That is why the waste in administration dwarfs any potential gain at the micro level in the economy by stimulating people to do whatever civil servants and the Government decide is the latest fad.
  Mr. Tom Levitt: The hon. Gentleman tells us that tax credits are a waste of time, yet they are the very elements of the Government's policy that are tackling poverty—particularly by giving those on the lowest wages an incentive to stay in work. His party has said that it will scrap those tax credits. What will he do for the lowest paid?
  Mr. St. Aubyn: We find complex tax credits and incentives to be self-defeating. They become so specific and obscure that no one understands them. A third of

  789
  those entitled to the minimum income guarantee for pensioners have yet to take it up. What good is that? Pensioners do not understand why they should fill out a 48-page form in which they are asked such absurd questions as whether they are on strike or whether they are expecting a baby.
  Mr. Flight: Might I point out that 500,000 parents have failed to take up the children's tax credit because that is so complex?
  Mr. St. Aubyn: I am grateful to my hon. Friend.
  At the beginning of winter, 1 million people who were entitled to winter fuel payments from previous winters still had not received their money.
  Mr. Levitt rose—
  Mr. St. Aubyn: I shall give the hon. Gentleman another chance.
  Mr. Levitt: First, the hon. Gentleman is criticising a children's tax credit that has existed for only three days. Secondly, is he aware that the take-up of working families tax credit is far higher than it was for family credit? His party's past policies relied on people not taking up their credits. We want people to take them up.
  Mr. St. Aubyn: The working families tax credit is so complicated that the Government are reforming their own system. That says all that need be said about the complexity of their policies.
  The Finance Bill gives us the aggregates tax, which my hon. Friend the Member for West Dorset has brilliantly exposed as an appalling example of the worst evils that stealth taxes bring to bear. That raises a fundamental issue. Are we to achieve a tax base through a series of insidious, invidious and stealthy measures, as has been the Government's systematic approach over the past four years? Alternatively, are we to develop a tax system based on rates that businesses and people accept are broadly reasonable? Under such a system, people could spend more of their time generating new business and paying their tax along the way, rather than having to employ an army of accountants to figure out the Government's latest wheeze and how to get round it.
  We believe, fundamentally, that an internationally competitive economy needs a clear and simple tax system, in which the burden is reasonable. Quite apart from the fact that taking money from people who live and work in our country is a drain on the growth of our economy, if those people feel that the system is unreasonable, not knowing how the money is being taken but realising that it has been, the brightest and best will have a massive incentive to make their way elsewhere in the world where the climate is far more friendly.
  That is an underlying reason why the Government's strategy, as exemplified by the aggregates tax, is leading us down a treacherous path. The Government will wake one day to find their economic forecasts as unreliable and unsustainable as their tax forecasts have proved to be over the past four years.
  790
  I have many constituents—perhaps more than most Members—who are consultants. They have followed with great interest court proceedings against the Government over the infamous IR35. While the Government won that case, it was extraordinary—unprecedented, I—believe—that anyone was allowed to bring a case in an English court of law against the Government on a tax measure. Although the case was lost, I believe that those who brought it won the principle and the argument. In particular, they exposed a disgraceful practice that the Inland Revenue intended to employ.
  The Revenue was not going to apply the mutuality of obligation test—a critical test of whether someone is employed or self-employed. It appears that the Revenue told its staff that that test was not to be mentioned unless the taxpayer mentioned it first. That is a fundamental breach of duty. If we must have the hugely complex tax system that the Government have given us, Inland Revenue civil servants should, at least, give the taxpayer a level playing field. They should bring their expertise to bear fairly on the points brought before them. The Revenue should not hold cards up its sleeve to try to deceive taxpayers into putting themselves into a category in which they pay far more tax than they were intended to pay in reason or in what the House agreed to.
  I hope that there will be sufficient opportunity in Committee to investigate the Government's proposals in more detail. It is clear, however, that they have set a course on which, given the chance, they will continue. If they return after a general election, there will be more stealth taxes, more complexity and far more barriers to business. At a time when the world economy is, at the very least, uncertain, that is the last recipe that we need if our country is to survive as the type of prosperous economy that the Government inherited four years ago.
  9.14 pm
  Mr. John Grogan: One of the mantras of the long-serving 19th-century Tory Prime Minister, Lord Liverpool, was a warning to his colleagues not to interfere with what he described as the "people's pleasures". During the past hour, we have heard powerful speeches about cigarettes and beer from the hon. Members for Guildford (Mr. St. Aubyn) and for North Dorset (Mr. Walter) and from my hon. Friend the Member for Barnsley, Central (Mr. Illsley), so it would be wrong to let the few minutes of the debate available for my speech pass without some reference to clause 6, which, to all intents and purposes, abolishes the existing duty on betting—another of the people's pleasures.
  It is proposed that, from next January, duty will no longer be levied on bets, but that there will be a tax of 15 per cent. on bookmakers' gross profits. That is a great step forward.
  At this point, I should declare an interest: I am still buying drinks with my modest profits from a bet on Red Marauder on Saturday. It followed a win on Papillon last year. Like many punters, I look forward to tax-free bets next year. Indeed, the only possible argument for the Prime Minister delaying the general election until next May is that we could all place tax- free bets on that possibility. That may, of course, not be the overwhelming argument.

  791
  The views of the industry are revealing. John Brown, chairman of William Hill, who is to be credited with coming up with many of the ideas that influenced the Chancellor, said:
  "This is great news for the British punter, for UK plc and the Treasury … The punter wins, because this will make it possible to offer deduction-free betting for the first time since betting shops were introduced. The Treasury wins, because we will be able to repatriate our offshore operations, enabling the taxman to share in all the profits we make on our international business. UK plc wins, because we have a real opportunity to be the world leaders in online betting."
  I shall briefly consider those three propositions. It is worth remembering that 50,000 people work in the betting industry, which is valued at between £6 billion and £7 billion. The forecasts for the development of e-betting show that it is not a future aspect of e-commerce; it is very much with us at present. A recent report from Merrill Lynch stated:
  "UK gambling is poised to enter a golden era of long-term structural growth".
  The global online market is set to soar to £123 billion by 2015.
  The changes that the Chancellor is making to betting duty, combined with the strengths of the industry in this country—of integrity, which is recognised worldwide; of an IT infrastructure; and of a skilled work force—mean that the UK can look forward to being a dominant force in the industry. It is encouraging that William Hill, Coral and Ladbroke have all said that they will abandon their offshore operations and come back to the UK. The Tote is abandoning plans to set up in Malta. The industry has great prospects.
  There are great prospects also for an increase in the Chancellor's tax take. He is taking a bit of a punt—a bit of a gamble; Treasury predictions are that if there is no increase in betting, the tax take could fall by about £150 million over the next two year—about a third of the current rate. However, all the predictions are that, as in Ireland, with a reduction in duty there will be a considerable increase in betting turnover and that, within a few years, the Treasury will take more in revenues than under the current system. Indeed, if it persisted with that system, given the threat of offshore betting, there is every likelihood that its take would decrease over the coming years, thus reducing the amount of money to be spent on schools and hospitals.
  Finally, the measure will be good news for punters. Obviously, there must be an infrastructure to deal with problem gamblers. One should never forget that gambling causes a great deal of misery for some people and the industry must always be aware of that.
  Ultimately, of course, we must all remember—even those of us who won on the grand national—that the bookmakers win. The effect of the Chancellor's measures would be that, if one started off with £100 to bet on horses or on football, the current tax take would allow one to make £460 of bets before all the money was lost. Under the Chancellor's new measures, that amount will increase to £700, but the bookmakers will get the whole £100, either way. However, I commend this neglected measure to the House.
  9.20 pm
  Mr. Howard Flight: The House has had an interesting debate on what is a tired and dull Finance Bill; it is hardly the radical, vote-winning
  792
  stuff that we expected in an election year. The main measure is the new stealth tax—the aggregates tax. As my hon. Friend the Member for West Dorset (Mr. Letwin) said, that tax was not even mentioned in the Chancellor's speech. As with IR35, the defining measure of a stealth tax is whether the Chancellor mentions it in the Budget speech. Of course, there was no mention there of the 33 clauses that comprise the Budget's main new tax.
  There are 292 pages of further tax complication. As various hon. Members have said, the volatility—nay the inaccuracy—of economic forecasts should cause the House to worry about the Government's economic judgment as we enter an economic period more difficult than the past eight years have been. When the Chief Secretary opened the debate, I could not help but think that his speech was motherhood and apple pie. Like the Budget and the Finance Bill, it had been drafted before the American economy started to go off a cliff and before stock markets fell seriously. We are likely to experience the knock-on effects in Britain. I do not know whether the Chief Secretary has seen the national institute figures for the first quarter, which came out at the end of last week. They estimate that growth will be only 0.3 per cent., and that growth for the year will be about 1 per cent. That still trails behind euroland and is hardly 2.6 per cent., but he confidently glossed over the fact in his speech.
  The Chief Secretary concentrated on the progress of economic events that had broadly been forecast in 1996 by the then Conservative Chancellor, except that taxation has been some £28 billion per annum higher—about 3 per cent. of gross national product. I cannot resist referring to the Chief Secretary's comment, with which all Conservative Members agree, that a healthy economy and good investment require sound money. I assume that that was his code for saying that he cannot, therefore, support the euro, given that it is such a weak currency.
  My hon. Friend the Member for West Dorset gave a splendidly cogent tour de force of the Bill and its background. We all know that there have been four years of taxation by stealth to build up the necessary surpluses, allegedly, to sweeten the electorate in an election year. The disappointment has been the fact that there has been little sign of the delivery of additional Government expenditure to date.
  Dr. George Turner: The hon. Gentleman says that there has been no delivery. In Norfolk, the capital input from Government was £4 million in the final years of the previous Conservative Administration; it is nearly £30 million this year. Delivery is under way.
  Mr. Flight: I thank the hon. Gentleman for that intervention; he makes my point. It is no good talking about the money—whether that point is true or false—because the question is about delivery. The hon. Member for Kingston and Surbiton (Mr. Davey) also said that actual expenditure on health and education was higher as a proportion of national income under the previous Administration than under this Government.
  The main task of my hon. Friend the Member for West Dorset was to expose the 33 clauses that deal with the aggregates tax. It is not, in fact, a tax on aggregates, but a land tax. As the Chief Secretary's comments suggested, it echoes the development land tax. The aggregates tax and the climate change levy—which is also purely a

  793
  tax-raising measure—are the two main politically correct stealth taxes. The Government have not set in stone the promise that tax revenues will be offset by alleged reductions in national insurance.
  Both taxes are designed to raise revenue and clothed in language that pleases the politically correct, but neither will benefit the economic life of our country. The climate change levy will severely damage manufacturing industry and the aggregates tax will put up the price of roads, housing and everything else that is built.
  My hon. Friend hoped that the Government would at least accept amendments to measures outstanding from the previous Finance Bill, such as the new onshore pooling arrangements, the new arrangements for controlled foreign companies and fair taxation arrangements for restructuring. He also pointed out that, surprisingly, there was nothing in the Bill to deal with foot and mouth problems, but he has given clear notice of the issues on which we shall look to table amendments. Problems need to be anticipated. We should not just wait for things to happen, because the farming industry and related sectors are suffering from this terrible crisis.
  The right hon. Member for Llanelli—[Interruption.] I apologise for my pronunciation—and I am a quarter Welsh, too. The right hon. Member for Llanelli (Mr. Davies) made an interesting speech. It is true that a lower rate of saving is partly a function of economic confidence, but it is usually a function of declining disposable incomes. The one statistic that has been glossed over is the fact that there has been a near halving of disposable income growth after tax in recent years. People have borrowed to finance consumption even though they have tried to keep up their gross savings.
  The right hon. Gentleman echoed the worry that, in the current climate, there is the risk that people will seek to rebuild their savings too quickly and will cut their consumption substantially. That will cause economic volatility, so he argued in favour of fiscal management and he has a perfectly fair point. Monetary management is still necessary. We should never forget that the Federal Reserve's failure in the 1930s to keep up the money supply led to the great depression. The cause was monetary not fiscal.
  The hon. Member for Kingston and Surbiton clearly asserted himself as a man of the 1980s, or perhaps the 1990s. He saw monetary policy as all important and attached less importance to the scope of fiscal policy. He said that the Chancellor had misinformed the Treasury Committee about the figures for taxation. The hon. Gentleman pointed out that the changes to European Union definitions meant that the 38 per cent. figure was roughly equivalent to 36 per cent., so it was not correct of the Chancellor to claim that there had been no change in the proportion of gross national product taken in taxes. Even if people are not aware of the specific figures, they are well aware of the fact that there has been a massive rise in the tax take as a result largely of the stealth taxes that have been inflicted upon us.
  Mr. Levitt: Surely the rise in the tax take can be explained by the fact that fewer people are unemployed,
  794
  so more people are working and paying tax, and by the economy's success, which means that more people are paying higher rate tax.
  Mr. Flight: We could debate that at length, but the hon. Gentleman knows that corporation tax is the biggest source of increased tax revenue. That is due only in part to the growth of the economy; the substantial reason for its increase is the introduction of tax liabilities, the quarterly payment and the failure to reduce the thresholds. As usual, we have had the fine spin. It told us that corporation tax rates have been reduced, but the net effect of the policies has been to increase them greatly. The key point is that the tax take is up by £28 billion, which is substantiated in all quarters and by the Red Book. Any assertion by the Government that they have not upped taxes or increased them as a proportion of national income is manifestly wrong.
  The hon. Member for Kingston and Surbiton also said that spending on health and education as a percentage of national income is lower under this Administration than under the previous Government.
  The hon. Member for South Ribble (Mr. Borrow) began by suggesting that his constituents had been sceptical of the Labour Government's ability to increase public spending. That is hardly surprising given the poor delivery in recent years. I advise him to be a little sceptical of the Chancellor's promises. It is clearly impossible to maintain an increase in public spending of 3.7 per cent. per annum for long without increasing taxes substantially. If the electorate are foolish enough to return this Government, they will face either a spending cut or much higher taxes.
  My hon. Friend the Member for Esher and Walton (Mr. Taylor) came out with some splendid phrases. He described the Finance Bill as tired, which explained why much of the debate centred on other subjects. He said that the Government had the misfortune to draft their Budget prior to the major change in global economic circumstances in the past two or three months. In particular, he said that they should be wary of the buoyancy of corporation tax, which they predict will rise by £5.7 billion in a climate in which corporate profits are under pressure. He also alluded to our economy's problems being a result of the euro's acute weakness and the lack of confidence in it. However, he did not refer to the German poll in which 75 per cent. of people wanted to keep the deutschmark.
  Mr. Ian Taylor: My hon. Friend is immensely perceptive, but I am not sure that that is exactly what I said. The euro has been a stable and strong economy if one has regard to the internal effect of the store of value of money and the level of inflation. Of course there have been problems on the external exchanges. The strength and volatility of sterling is a major issue for the Government and the country.
  Mr. Flight: I think that the euro is a currency, not an economy. If my hon. Friend spoke to any of his friends in Germany and France, they would be concerned about it being weak among the major currencies, when it should be a relatively strong reserve currency. For better or worse, the relative weakness of the euro against the dollar, with sterling in the middle, has been the problem for us.
  My hon. Friend was the first to say how the high levels of tax on tobacco, alcohol and fuel have led to a massive increase in smuggling. He also referred to the

  795
  common-sense argument, which prevailed in the past, that it is unwise for taxation of such staples in this country to be hugely different from that in adjacent European countries. Indeed, as Labour Members will note, under the 18 years of Conservative Government the differences were much smaller than they are today.
  My hon. Friend also referred to clause 103, which makes certain amendments to the climate change levy. He put it politely when he said that he had some support for the objective but doubted the means of achieving it. He referred in particular to the damage that will be done to the industrial gases industry. He also highlighted the continuing problems of IR35. If I understood the Paymaster General correctly, the measure having been passed, she is now inviting everyone to come to see her to achieve a sensible resolution of tilt many outstanding problems. It cannot be the Government's aim for the surviving high-tech economy in this country to be damaged by a foolish tax regime.
  Attention was also drawn to the lack of anything in the Bill to implement the recommendations of the McDonald report and to end the obligation to buy an annuity at the age of 75. The Governor of the Bank of England has made it clear that he views long-term interest rates as artificially low in the yield curve owing to the distortions created by the obligation to buy an annuity. The volume of money coming on to the market from money purchase pension schemes is rising by 20 per cent. per annum, and it was about £9 billion last year. The Government have boasted of the gilts that they have bought in, but even they can see that soon there will not be enough gilts to go round to finance the annuities market.
  McDonald's recommendations contain nothing that would cause a loss of revenue or constitute an additional cost, as has been asserted in recent replies, and the members of the McDonald committee will respond strongly to the Government's misapprehensions. Above all, those reaching retirement age strongly object to being obliged to subsidise Government borrowing by being forced to buy annuities at artificially low rates of interest. The effect is to lock them into bad value for the whole of their retirement.
  The hon. Member for Cunningham, South (Mr. Donohoe) gave loyal support to his Government. In essence, he said that the Chancellor and the Budget were wonderful. He usefully drew attention to the problems caused by the different levels of prosperity in east and west Scotland, and sought more policing of the minimum wage legislation.
  My right hon. Friend the Member for Fylde (Mr. Jack)—[Laughter.] There is something wrong with my pronunciation. I come from south of Watford. He pointed to the Chancellor's inability to resist the temptation to tweak the figures and echoed the criticism made by my hon. Friend the Member for West Dorset of the aggregates tax. My right hon. Friend usefully made the point that if the Government were seriously concerned about the environment, they would do something to protect fish spawning grounds in the mid-channel. Nothing in the aggregates tax addresses marine extraction; indeed, one of its effects will be to increase marine extraction.
  My right hon. Friend referred to the iniquities of the climate change levy and the damage that it will do to the horticultural industry, which is dear to my heart. Given
  796
  the considerably greater efficiency of that industry compared with most of its European competitors, there is no logic in that measure.
  On another subject dear to my heart, my right hon. Friend welcomed the employee share ownership measures and the reforms of the enterprise management incentive scheme and venture capital trust rules. As I recollect, those changes adopt most of the recommendations made by the Opposition in the Standing Committee that considered last year's Finance Bill. My one plea is for those provisions to be made simpler. Such schemes are for small, unquoted companies. The legislation is so complex that those businesses will say that they cannot afford the lawyers necessary to explain and implement it. They need simpler legislation that works, not something that may be a wonderful deal, but is too complicated.
  I remind the hon. Member for Coventry, South (Mr. Cunningham) that the Conservatives are modestly committed to paring back the Government's £72 billion spending commitments by a mere £8 billion, not £16 billion. I am sure that he will be pleased to know that all our sampling has told us that the Labour poster about the cuts has done us, not the Government, a great deal of good.
  My hon. Friend the Member for North Dorset (Mr. Walter) made a valuable contribution by pointing out in considerable detail how excessive taxation of alcohol and tobacco has led to massive smuggling, reduced tax revenues by £5 billion and corrupted large numbers of citizens. That has all happened before. Historians among us may have heard of Parson Woodforde, a country clergyman who, like every other respectable member of society, used to buy his coffee from the smuggler. Over-taxed coffee had turned everyone into a coffee smuggler. The law of diminishing returns has not only reduced Government revenues, but vastly increased smuggling, which the Government are unable to tackle. I am sure that, had he been here, the Chancellor would have enjoyed my hon. Friend's contribution.
  Many of my hon. Friend's comments were echoed by the hon. Member for Barnsley, Central (Mr. Illsley), who gave a frank and decent commentary on the Budget and expressed concern that the benefits to his constituency would be damaged by the local government settlement and the lack of health funding.
  Finally, the hon. Member for Selsby—[Interruption.] The hon. Member for Selby (Mr. Grogan) gave us a fascinating exposition of clause 6. Would that the Government had followed the political incorrectness of clause 6 and acknowledged the realities of the world with the climate change levy and the aggregates tax. We welcome clause 6, which brings sanity to an industry and increases revenue. If the Government applied the same logic to IR35 and everything else, the Budget would be popular.
  9.42 pm
  The Paymaster General (Dawn Primarolo): I thank my right hon. Friend the Member for Llanelli (Mr. Davies) and my hon. Friends the Members for South Ribble (Mr. Borrow), for Cunninghame, South (Mr. Donohoe), for Coventry, South (Mr. Cunningham), for Barnsley, Central (Mr. Illsley) and for Selby (Mr. Grogan) for their contributions. I particularly congratulate my hon. Friend the Member for Selby on his excellent gain on Saturday. I understand why he can speak so eloquently about the reform of betting tax.

  797
  I also thank the hon. Members for West Dorset (Mr. Letwin), for Kingston and Surbiton (Mr. Davey), for Esher and Walton (Mr. Taylor), and for North Dorset (Mr. Walter), the right hon. Member for Fylde (Mr. Jack), the hon. Member for Guildford (Mr. St. Aubyn) and, finally, the hon. Member for Arundel and South Downs (Mr. Flight), who described the hon. Member for Kingston and Surbiton as a man of the 1980s. If I remember correctly, the hon. Member for Kingston and Surbiton would have been about 15 years of age at the beginning of the 1980s. I know that Liberal Democrats mature quickly, as they must because of the short tenure of their position in the House, but I do not believe that they mature that quickly.
  The debate has been good humoured. We were entertained particularly by the closing remarks of the hon. Member for Arundel and South Downs. In the short time left to me, I shall answer the various points that have been made. Several hon. Members raised issues connected with foot and mouth disease and suggested measures that could be taken. I shall deal with those remarks towards the end of my speech.
  The hon. Member for West Dorset commented on double taxation relief. I remind him that the changes announced when the pre-Budget report was published will enable companies to obtain relief for tax suffered of up to 45 per cent. in lower-tier subsidiaries. That and other changes will ensure that many companies do not need to restructure to obtain the relief. Of those that decide to restructure to optimise their tax position, many will be able to do so without a foreign tax cost. The hon. Gentleman will no doubt be aware that one of the reasons for multinationals' use of offshore holding companies is precisely to avoid tax on capital gains in respect of the sale of subsidiaries. He should be aware that companies that are setting up activities overseas for the first time will now be able to do so without the complications and costs that are involved in using an offshore holding company.
  We hear a lot from the Opposition about unnecessary burdens and complexities. Under the previous Tory Government, however, the UK company investing abroad was forced to use an offshore holding company or be disadvantaged by the tax system. The new system ensures direct investment that is not penalised. I am sure that we will return to that matter in Committee.
  The hon. Member for West Dorset expressed regret that the Government have not introduced a relief in the form of deferral or exemption. I am sure that British business deeply regrets the fact that the previous Government did nothing about that throughout their 18 years in office. The matter is currently subject to detailed consultation. I recall that the previous Government were not especially keen to consult people on business tax issues, but this is an important issue. Anyone with the best interests of British business at heart will want to ensure that the reform serves the competitive position of the UK for some years to come. Business has shown a strong desire to engage in discussions on the matter, and the Government have said that we plan to be committed to introducing legislation in the Finance Act 2002.
  My hon. Friend the Member for South Ribble answered eloquently the points that were made by the hon. Member for Kingston and Surbiton. He is to be congratulated on
  798
  the 13 business breakfasts that he has attended and on telling the House about all the matters that were debated during them. He is also to be congratulated on having visited 20 schools in his constituency since Christmas. Clearly, he can testify to the fact that the money is coming through in terms of investment and buildings. He also made a special plea about the research and development tax credit on vaccine development. I paid close attention to his points about consultation.
  The hon. Member for Escher and Walton—[HON. MEMBERS: "Esher."] I am sorry, it is catching; I am sure that Front-Bench Members will continue to prompt me. The hon. Gentleman expressed regret that this was the least controversial Finance Bill, and went on to say that it was therefore of no benefit. Presumably, the Bill is not controversial because the Opposition agree with many of the measures that it contains. It is rather odd to hold the view that Finance Bills are good only if they can cause huge rows across the Floor of the House, instead of concentrating on whether they benefit our communities.
  For instance, the hon. Gentleman did not comment on the children's tax credit or its extension in 2002 in respect of the baby tax credit. Neither did he refer to the extension of the working families tax credit, the reduction on duty for ultra-low sulphur diesel and petrol, the green technology challenge fund, changes in vehicle excise duty, the package of VAT measures to help small and medium-sized companies or the VAT reduction for museums and galleries. All those issues are relevant and important to the people who watch the proceedings of this House.
  No Conservative Member who suggested that this was not a good Finance Bill pointed out that the Government were tackling climate change and improving air quality, or that they had put together a package to regenerate our towns and cities and to protect the countryside. Nor did any Conservative Member mention the VAT reforms in respect of housing for which the empty homes campaign had lobbied so long and hard. All those moves will immediately benefit the community, but Conservative Members say that the Bill is not relevant and does not matter. That just shows how out of touch they are with the priorities of people outside and what those people want to be changed.
  The right hon. Member for Fylde made a number of comments about foot and mouth, to which I shall return; but for some reason he specifically alighted on the subject of VAT on children's car seats. Perhaps I can help him a little. In 1999, more than 1,000 children were killed or seriously injured while travelling by car. If children are to be protected, it is vital that they sit in children's safety seats that are appropriate to their age, weight and height, meet the latest safety standards and are correctly fitted each time they are used. Some parents currently use second-hand car seats that may or may not meet the latest safety standards. We therefore considered it right to cut VAT on brand-new, better-quality car seats by some £15. I am sure that that has given the right hon. Gentleman more of an answer than he received in response to his parliamentary questions, but if he wants more detail I shall be happy to give it to him.
  The hon. Member for West Dorset referred specifically to tobacco receipts. The fall in revenue receipts in 1999–2000 was due primarily to changes in the timing of

  799
  the Budget and changes in duty rates. The revenue receipts for 2000–01 have exceeded the Revenue's forecast.
  There are a few points that need to be made again. The vast majority of cigarettes that are smuggled are smuggled from beyond the European Union: they come from places where there is no duty on such products. The Government have clearly stated that they will not allow criminals to dictate either our tax or our health policies—of which tax is the prime mover.
  The hon. Member for Arundel and South Downs spoke of harmonising duty rates. I remind him that harmonisation with French duty rates would cost £1.5 billion. A man who describes a reduction of £8 billion or £16 billion in public expenditure as necessitating merely a pruning, rather than a cutting, of public services needs to be more careful about making such sweeping statements.
  The Government's strategy of using £209 million over three years to clamp down on smuggling is having results. In the first nine months of this year, 2.1 billion cigarettes did not reach the United Kingdom, or were prevented from being circulated in the United Kingdom, and 6,700 vehicles were seized from people trying to smuggle products into this country. Smuggling of tobacco products is a terrible scourge of our community: it undermines legitimate trade, increases criminality—as was pointed out by my hon. Friend the Member for Barnsley, Central—and denies the Exchequer he money to which it is entitled. It also undermines our health policy. The Government's tactics are the right way to deal with smuggling.
  Mr. St. Aubyn: Will the Paymaster General give way?
  Dawn Primarolo: My time has been shortened because the hon. Member for Arundel and South Downs spoke for longer than had been agreed. I will say what I want to say about foot and mouth disease, and I will return to the hon. Gentleman if there is time.
  The hon. Member for West Dorset asserted that Customs and Excise was not paying back input VAT quickly enough and that that was causing problems. When he was pressed, he said that problems might be caused in future. The tax authorities are required to repay within 30 days, and the arrangements that the Government have put in place will ensure that the return is made as quickly as possible. If he has examples of cases where that is not occurring, he must surely bring them to the attention of the authorities.
  The hon. Gentleman referred also to the working families tax credit and those who are in tied accommodation and have a second home, and the capital value of the second home counting towards the capital that is held as a family, which means that they were not entitled to the tax credit. The situation is slightly more complex than that for people who are in tied accommodation. However, there are ways in which the situation can be dealt with. A great deal of information is being given to communities that are suffering from the economic effects of foot and mouth, whether in tourism, the food industry or farming. The latest information about people's rights to receive benefits comes from the Benefits Agency. I understand that the leaflet is about to go on to the internet. It is being circulated to the communities to which I have referred.
  800
  The right hon. Member for Fylde asked a series of
  questions about our enterprise investment schemes, venture capital schemes and venture capital trusts. In particular, he asked that further consideration be given to the qualifying conditions. He was generous in saying that he did not expect a response immediately from me this evening, and I am grateful for that. I will consider carefully what he said. I think that he acknowledged that the Government were not in a position to give blanket exemptions in major parts of the tax system.
  The right hon. Gentleman mentioned roll-over relief for agriculture. The Government extended it to six years in December 2000. Again, I will pay careful attention to his arguments. Where help already exists within the tax system or through sensitive application of the system, we can help communities. I am sure that all hon. Members would expect us to do so. As part of that, the Treasury, Customs and Excise and the Inland Revenue have been working hard to identify ways in which the Government can offer practical help to businesses in rural areas that are being damaged by the outbreak of foot and mouth. They will continue carefully to examine all the suggestions that are coming forward.
  We want rural businesses to survive, and to survive the outbreak. They need to continue to generate jobs and prosperity for our communities. However, the Government have done a great deal, including many things for the non-farming business community in rural areas: there are powers to grant hardship rate relief, the introduction of a small firms' loan guarantee scheme, and the work that the Inland Revenue and Customs and Excise can do to give as much help as they can to local communities. An emergency helpline operates seven days a week from 7 am to 12 pm. The very companies that the hon. Member for West Dorset said could be anticipating problems should be contacting that helpline before problems occur, not afterwards. In those ways, we shall be able to ensure that we are giving the maximum help that we can to the communities that are affected.
  The Bill contains support for families and for pensioners. It sets out clearly a choice for Britain's future. The Government are building on a platform of economic stability as a foundation for future prosperity. We have made the choice to build on that stability. We have chosen to invest more in our public services, not less. We have made sensible tax cuts for hard-working families. There will not be under-investment and cuts in public services, which are the undeniable consequences of the Conservative party's policies.
  The Finance Bill is a measure for families and children, and it will tackle poverty and unemployment among our poorest communities. It is a Bill for companies; it will help Britain's businesses grow and secure a long-term rise in prosperity for all. I commend it to the House.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 319, Noes 175.

  Division No. 183]

  [10 pm

  AYES

  Abbott, Ms Diane

  Anderson, Janet (Rossendale)

  Adams, Mrs Irene (Paisley N)

  Armstrong, Rt Hon Ms Hilary

  Allen, Graham

  Ashton, Joe

  Anderson, Rt Hon Donald (Swansea E)

  Atherton, Ms Candy

  Atkins, Charlotte

  Austin, John

  801

  Bailey, Adrian

  Denham, Rt Hon John

  Banks, Tony

  Dismore, Andrew

  Barnes, Harry

  Dobbin, Jim

  Barron, Kevin

  Dobson, Rt Hon Frank

  Battle, John

  Donohoe, Brian H

  Bayley, Hugh

  Doran, Frank

  Beckett, Rt Hon Mrs Margaret

  Dowd, Jim

  Benn, Hilary (Leeds C)

  Dunwoody, Mrs Gwyneth

  Benn, Rt Hon Tony (Chesterfield)

  Eagle, Angela (Wallasey)

  Bennett, Andrew F

  Eagle, Maria (L'pool Garston)

  Benton, Joe

  Edwards, Huw

  Bermingham, Gerald

  Efford, Clive

  Berry, Roger

  Ellman, Mrs Louise

  Best, Harold

  Ennis, Jeff

  Betts, Clive

  Etherington, Bill

  Blackman, Liz

  Field, Rt Hon Frank

  Blears, Ms Hazel

  Fitzpatrick, Jim

  Blizzard, Bob

  Fitzsimons, Mrs Lorna

  Boateng, Rt Hon Paul

  Flint, Caroline

  Borrow, David

  Flynn, Paul

  Bradley, Keith (Withington)

  Follett, Barbara

  Bradley, Peter (The Wrekin)

  Foster, Rt Hon Derek

  Bradshaw, Ben

  Foster, Michael Jabez (Hastings)

  Brinton, Mrs Helen

  Foster, Michael J (Worcester)

  Brown, Rt Hon Gordon (Dunfermline E)

  Foulkes, George

  Fyfe, Maria

  Browne, Desmond

  Gapes, Mike

  Buck, Ms Karen

  George, Rt Hon Bruce (Walsall S)

  Burden, Richard

  Gerrard, Neil

  Burgon, Colin

  Gibson, Dr Ian

  Caborn, Rt Hon Richard

  Gilroy, Mrs Linda

  Campbell, Alan (Tynemouth)

  Godman, Dr Norman A

  Campbell, Ronnie (Blyth V)

  Godsiff, Roger

  Campbell-Savours, Dale

  Golding, Mrs Llin

  Cann, Jamie

  Gordon, Mrs Eileen

  Caplin, Ivor

  Griffiths, Jane (Reading E)

  Casale, Roger

  Griffiths, Nigel (Edinburgh S)

  Caton, Martin

  Griffiths, Win (Bridgend)

  Chapman, Ben (Wirral S)

  Grocott, Bruce

  Clapham, Michael

  Hain, Peter

  Clark, Rt Hon Dr David (S Shields)

  Hamilton, Fabian (Leeds NE)

  Clark, Paul (Gillingham)

  Healey, John

  Clarke, Charles (Norwich S)

  Hendrick, Mark

  Clarke, Eric (Midlothian)

  Hepburn, Stephen

  Clarke, Rt Hon Tom (Coatbridge)

  Heppell, John

  Clelland, David

  Hewitt, Ms Patricia

  Clwyd, Ann

  Hill, Keith

  Coaker, Vernon

  Hinchliffe, David

  Coffey, Ms Ann

  Hodge, Ms Margaret

  Cohen, Harry

  Hoey, Kate

  Coleman, Iain

  Hood, Jimmy

  Colman, Tony

  Hoon, Rt Hon Geoffrey

  Connarty, Michael

  Hope, Phil

  Cook, Frank (Stockton N)

  Hopkins, Kelvin

  Cooper, Yvette

  Howarth, Rt Hon Alan (Newport E)

  Corbett, Robin

  Howells, Dr Kim

  Corbyn, Jeremy

  Hoyle, Lindsay

  Corston, Jean

  Hughes, Ms Beverley (Stretford)

  Cousins, Jim

  Hughes, Kevin (Doncaster N)

  Cox, Tom

  Humble, Mrs Joan

  Crausby, David

  Hurst, Alan

  Cryer, Mrs Ann (Keighley)

  Hutton, John

  Cryer, John (Hornchurch)

  Iddon, Dr Brian

  Cummings, John

  Illsley, Eric

  Cunningham, Rt Hon Dr Jack (Copeland)

  Jamieson, David

  Jenkins, Brian

  Cunningham, Jim (Cov'try S)

  Johnson, Alan (Hull W & Hessle)

  Dalyell, Tam

  Johnson, Miss Melanie (Welwyn Hatfield)

  Darling, Rt Hon Alistair

  Darvill, Keith

  Jones, Rt Hon Barry (Alyn)

  Davey, Valerie (Bristol W)

  Jones, Helen (Warrington N)

  Davies, Rt Hon Denzil (Llanelli)

  Jones, Jon Owen (Cardiff C)

  Davies, Geraint (Croydon C)

  Jones, Dr Lynne (Selly Oak)

  Davis, Rt Hon Terry (B'ham Hodge H)

  Jowell, Rt Hon Ms Tessa

  Joyce, Eric

  Dean, Mrs Janet

  Kaufman, Rt Hon Gerald

  802

  Keeble, Ms Sally

  Plaskitt, James

  Keen, Alan (Feltham & Heston)

  Pollard, Kerry

  Keen, Ann (Brentford & Isleworth)

  Pond, Chris

  Kemp, Fraser

  Pope, Greg

  Kennedy, Jane (Wavertree)

  Pound, Stephen

  Khabra, Piara S

  Prentice, Ms Bridget (Lewisham E)

  Kidney, David

  Prentice, Gordon (Pendle)

  Kilfoyle, Peter

  Prescott, Rt Hon John

  King, Andy (Rugby & Kenilworth)

  Primarolo, Dawn

  King, Ms Oona (Bethnal Green)

  Prosser, Gwyn

  Kumar, Dr Ashok

  Quinn, Lawrie

  Ladyman, Dr Stephen

  Rapson, Syd

  Lammy, David

  Raynsford, Nick

  Laxton, Bob

  Reed, Andrew (Loughborough)

  Lepper, David

  Robertson, John (Glasgow Anniesland)

  Leslie, Christopher

  Levitt, Tom

  Robinson, Geoffrey (Cov'try NW)

  Lewis, Terry (Worsley)

  Roche, Mrs Barbara

  Linton, Martin

  Rooker, Rt Hon Jeff

  Lloyd, Tony (Manchester C)

  Rooney, Terry

  Lock, David

  Rowlands, Ted

  Love, Andrew

  Roy, Frank

  McCabe, Steve

  Ruddock, Joan

  McCafferty, Ms Chris

  Russell, Ms Christine (Chester)

  McCartney, Rt Hon Ian (Makerfield)

  Ryan, Ms Joan

  Salter, Martin

  McDonagh, Siobhain

  Sarwar, Mohammad

  Macdonald, Calum

  Sedgemore, Brian

  McDonnell, John

  Shaw, Jonathan

  McFall, John

  Sheerman, Barry

  McIsaac, Shona

  Sheldon, Rt Hon Robert

  McKenna, Mrs Rosemary

  Short, Rt Hon Clare

  Mackinlay, Andrew

  Simpson, Alan (Nottingham S)

  McNulty, Tony

  Skinner, Dennis

  MacShane, Denis

  Smith, Rt Hon Andrew (Oxford E)

  Mactaggart, Fiona

  Smith, Angela (Basildon)

  McWalter, Tony

  Smith, Rt Hon Chris (Islington S)

  McWilliam, John

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Mahon, Mrs Alice

  Mallaber, Judy

  Smith, Jacqui (Redditch)

  Mandelson, Rt Hon Peter

  Smith, John (Glamorgan)

  Marsden, Gordon (Blackpool S)

  Smith, Llew (Blaenau Gwent)

  Marsden, Paul (Shrewsbury)

  Soley, Clive

  Marshall, David (Shettleston)

  Southworth, Ms Helen

  Marshall, Jim (Leicester S)

  Spellar, John

  Martlew, Eric

  Starkey, Dr Phyllis

  Maxton, John

  Steinberg, Gerry

  Meacher, Rt Hon Michael

  Stevenson, George

  Meale, Alan

  Stewart, Ian (Eccles)

  Michael, Rt Hon Alun

  Stinchcombe, Paul

  Michie, Bill (Shef'ld Heeley)

  Stoate, Dr Howard

  Milburn, Rt Hon Alan

  Strang, Rt Hon Dr Gavin

  Miller, Andrew

  Straw, Rt Hon Jack

  Mitchell, Austin

  Stringer, Graham

  Moffatt, Laura

  Stuart, Ms Gisela

  Morgan, Ms Julie (Cardriff N)

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Morley, Elliot

  Morris, Rt Hon Ms Estelle (B'ham Yardley)

  Taylor, David (NW Leics)

  Temple-Morris, Peter

  Mountford, Kali

  Thomas, Gareth R (Harrow W)

  Mowlam, Rt Hon Marjorie

  Timms, Stephen

  Mudie, George

  Tipping, Paddy

  Mullin, Chris

  Touhig, Don

  Murphy, Denis (Wansbeck)

  Trickett, Jon

  Murphy, Jim (Eastwood)

  Turner, Dennis (Wolverh'ton SE)

  Naysmith, Dr Doug

  Turner, Dr Desmond (Kemptown)

  O'Brien, Bill (Normanton)

  Turner, Dr George (NW Norfolk)

  O'Brien, Mike (N Warks)

  Turner, Neil (Wigan)

  Olner, Bill

  Twigg, Derek (Halton)

  O'Neill, Martin

  Twigg, Stephen (Enfield)

  Organ, Mrs Diana

  Tynan, Bill

  Osborne, Ms Sandra

  Vis, Dr Rudi

  Pearson, Ian

  Walley, Ms Joan

  Perham, Ms Linda

  Ward, Ms Claire

  Pickthall, Colin

  Wareing, Robert N

  Pike, Peter L

  Watts, David

  803

  White, Brian

  Woodward, Shaun

  Wicks, Malcolm

  Woolas, Phil

  Williams, Rt Hon Alan (Swansea W)

  Worthington, Tony

  Wright, Anthony D (Gt Yarmouth)

  Williams, Alan W (E Carmarthen)

  Wright, Tony (Cannock)

  Wyatt, Derek

  Wills, Michael

  Winnick, David

  Tellers for the Ayes: Mrs. Anne McGuire and Mr. Mike Hall.

  Winterton, Ms Rosie (Doncaster C)

  Wood, Mike

  NOES

  Ainsworth, Peter (E Surrey)

  Davey, Edward (Kingston)

  Allan, Richard

  Davies, Quentin (Grantham)

  Amess, David

  Donaldson, Jeffrey

  Ancram, Rt Hon Michael

  Dorrell, Rt Hon Stephen

  Arbuthnot, Rt Hon James

  Duncan, Alan

  Ashdown, Rt Hon Paddy

  Duncan Smith, Iain

  Atkinson, David (Bour'mth E)

  Emery, Rt Hon Sir Peter

  Atkinson, Peter (Hexham)

  Evans, Nigel

  Baker, Norman

  Fabricant, Michael

  Baldry, Tony

  Fallon, Michael

  Beith, Rt Hon A J

  Fearn, Ronnie

  Bercow, John

  Flight, Howard

  Beresford, Sir Paul

  Foster, Don (Bath)

  Blunt, Crispin

  Fowler, Rt Hon Sir Norman

  Body, Sir Richard

  Fox, Dr Liam

  Boswell, Tim

  Fraser, Christopher

  Bottomley, Peter (Worthing W)

  Garnier, Edward

  Bottomley, Rt Hon Mrs Virginia

  Gibb, Nick

  Brady, Graham

  Gidley, Sandra

  Brand, Dr Peter

  Gill, Christopher

  Brazier, Julian

  Gillan, Mrs Cheryl

  Brooke, Rt Hon Peter

  Gray, James

  Browning, Mrs Angela

  Green, Damian

  Bruce, Malcolm (Gordon)

  Greenway John

  Burns, Simon

  Grieve, Dominic

  Burstow, Paul

  Gummer, Rt Hon John

  Butterfill, John

  Hague, Rt Hon William

  Campbell, Rt Hon Menzies (NE Fife)

  Hamilton, Rt Hon Sir Archie

  Hammond Philip

  Cash, William

  Hancock, Mike

  Chapman, Sir Sydney (Chipping Barnet)

  Harvey, Nick

  Hawkins, Nick

  Chidgey, David

  Hayes, John

  Chope, Christopher

  Heald, Oliver

  Clappison, James

  Heath, David (Somerton & Frome)

  Clarke, Rt Hon Kenneth (Rushcliffe)

  Heathcoat-Amory, Rt Hon David

  Hogg, Rt Hon Douglas

  Collins, Tim

  Horam, John

  Cormack, Sir Patrick

  Howard, Rt Hon Michael

  Cotter, Brian

  Howarth, Gerald (Aldershot)

  Cran, James

  Hughes, Simon (Southwark N)

  Curry, Rt Hon David

  Jack, Rt Hon Michael

  804

  Jackson, Robert (Wantage)

  Robinson, Peter (Belfast E)

  Jenkin, Bernard

  Roe, Mrs Marion (Broxbourne)

  Johnson Smith, Rt Hon Sir Geoffrey

  Ruffley, David

  Russell, Bob (Colchester)

  Jones, Nigel (Cheltenham)

  St Aubyn, Nick

  Key, Robert

  Sanders, Adrian

  King, Rt Hon Tom (Bridgwater)

  Shephard, Rt Hon Mrs Gillian

  Kirkbride, Miss Julie

  Shepherd, Richard

  Kirkwood, Archy

  Simpson, Keith (Mid-Norfolk)

  Lait, Mrs Jacqui

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

  Lansley, Andrew

  Soames, Nicholas

  Leigh, Edward

  Spelman, Mrs Caroline

  Letwin, Oliver

  Spicer, Sir Michael

  Lewis, Dr Julian (New Forest E)

  Spring, Richard

  Lidington, David

  Stanley, Rt Hon Sir John

  Lilley, Rt Hon Peter

  Streeter, Gary

  Livsey, Richard

  Stunell, Andrew

  Lloyd, Rt Hon Sir Peter (Fareham)

  Swayne, Desmond

  Loughton, Tim

  Syms Robert

  Luff, Peter

  Taylor, Ian (Esher & Walton)

  McCrea Dr William

  Taylor, Rt Hon John D (Strangford)

  MacGregor, Rt Hon John

  Taylor, John M (Solihull)

  McIntosh, Miss Anne

  Taylor Matthew (Truro)

  MacKay, Rt Hon Andrew

  Taylor, Sir Teddy

  Maclean, Rt Hon David

  Thomas Simon (Ceredigon)

  McLoughlin, Patrick

  Tonge, Dr Jenny

  Madel, Sir David

  Tredinnick, David

  Malins, Humfrey

  Trend, Michael

  Maples, John

  Tyler, Paul

  Mawhinney, Rt Hon Sir Brian

  Tyrie, Andrew

  May, Mrs Theresa

  Viggers, Peter

  May, Mrs Theresa

  Walter, Robert

  Moore, Michael

  Waterson, Nigel

  Moss, Malcolm

  Webb Steve

  Norman, Archie

  Wells, Bowen

  Oaten, Mark

  Whitney, Sir Raymond

  O'Brien, Stephen (Eddisbury)

  Whittingdale, John

  Öpik, Lembit

  Widdecombe, Rt Hon Miss Ann

  Ottaway, Richard

  Wilkinson, John

  Page, Richard

  Willetts, David

  Paice, James

  Willis, Phil

  Paterson, Owen

  Wilshire, David

  Pickles, Eric

  Winterton, Mrs Ann (Congleton)

  Portillo, Rt Hon Michael

  Winterton, Nicholas (Macclesfield)

  Prior, David

  Yeo, Tim

  Randall, John

  Young, Rt Hon Sir George

  Redwood, Rt Hon John

  Rendel, David

  Tellers for the Noes: Mr. Stephen Day and Mr. Geoffrey Clifton-Brown.

  Robathan, Andrew

  Robertson, Laurence (Tewk'b'ry)

  Question accordingly agreed to.
  Bill read a Second time.

Finance Bill (Programme)
10.14 pm
The Paymaster General: I beg to move,
That the following provisions shall apply to the Finance Bill:—

Committee
1.—(1) Clauses 1 to 3 and 16 to 53 and Schedules 4 to 11 shall be committed to a Committee of the whole House.
(2) The remainder of the Bill shall be committed to a Standing Committee.
2.—(1) Proceedings in Committee of the whole House shall be completed in two allotted days.
(2) The proceedings to the taken on each of those allotted days shall be as shown in the second column, and shall be brought to a conclusion at the times specified in the third column, of the following Table:—

TABLE

Allotted day

Proceedings

Time for conclusion of proceedings

First day

Clauses 16 to 22

7.00 p.m.

Clauses 23 and 24, Schedule 4,

9.00 p.m.

Clauses 25 to 27, Schedule 5,

Clause 28, Schedule 6, Clause 29,

Schedule 7, Clause 30

Clauses 31 and 32, Schedule 8,

Midnight

Clauses 33 to 35, Schedule 9,

Clauses 36 to 46, Schedule 10,

Clauses 47 to 49

Second Day

Clauses 1 to 3

7.00 p.m.

Clauses 50 to 53 and Schedule 11

10.00 p.m.

(3) If either of those allotted days is Thursday, the times specified for that allotted day in the third column of the Table are brought forward by three hours.
(4) On the first of those allotted days, paragraph (1) of Standing Order No. 15 (Exempted business) shall, notwithstanding sub-paragraph (a) of that paragraph, apply to the proceedings on the Bill for only two hours after ten o'clock or, if that day is Thursday, for only two hours after seven o'clock.
(5) On that allotted day, any period during which proceedings on the Bill may be proceeded with after ten o'clock (or, if that day is Thursday, seven o'clock) by virtue of paragraph (4) or (5) of Sessional Order I (provision in the event of a debate under Standing Order No. 24) made by the House of 7th November 2000 shall be in addition to that period of two hours.
(6) Sessional Order B (Programming Committees) made by the House on 7th November 2000 shall not apply to proceedings in Committee of the whole House.
(7) An allotted day is one on which the Bill is put down as first Government Order of the day.
3.—(1) The Standing Committee shall have leave to sit twice on the first day on which it shall meet.
(2) Proceedings in the Standing Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 24th May 2001.
4. When the provisions of the Bill considered, respectively, by the Committee of the whole House and by the Standing Committee have been reported to the House, the Bill shall be proceeded with as if it had been reported as a whole to the House from the Standing Committee.
The motion sets out the allocation of the various clauses and schedules of the Finance Bill between the Committee of the whole House and the Standing Committee.
The motion also sets out the timetable for the clauses and schedules to be debated in the Committee of the whole House. On the first day, it will discuss clauses and
806
schedules on the aggregates levy, and on the second day it will consider clauses and schedules on hydrocarbon oil duties and income tax.
There is a lot of business to get through on the first day, so the motion provides for a midnight finish. On the second day, there will be fewer clauses and schedules, so it provides for the normal 10 o'clock finish. It also specifies that the proceedings of the Standing Committee shall be completed by Thursday 24 May, which will allow for a total maximum of 18 Standing Committee sittings.
10.15 pm
Mr. Letwin: The programme motion has two deficiencies: it is the wrong motion, and it is wrong to have it in the first place: otherwise, it is perfect.
What is wrong with the motion? I do not quite know the answer. I do not know what error the Whips fell into, but I know what the whole process illustrates. The Paymaster General and I had a conversation some time ago in which she properly and generously offered to allow us to debate what we wanted in the Committee of the whole House. We wanted to debate the items that I described on Second Reading.
Had there not been this barbaric and unusual practice of introducing programme motions, which have never before been imposed on a Finance Bill, there would have been no problem, because there would have been agreement through the usual channels. Even Treasury Ministers, in an honest moment, will accept that, during the entire proceedings on last year's Finance Bill we never once sought to filibuster or prolong proceedings unnecessarily. We treated the Bill seriously and helped constructively to improve various parts of it. Of course we had arguments with the Government, but we never sought to create unnecessary delay.
This year, simply because the Government are wedded to programme motions, they are curtailing debate on the Finance Bill. That is shown by the fact that it has proved impossible to come up with the right kind of programme motion, because the new clauses for which time in the first day in Committee of the whole House should have been allocated—I hope that it will be allocated in a subsequent motion tomorrow—could not have been tabled at the time when the motion was constructed, because it is a rule of the House that one cannot table amendments or new clauses before the completion of Second Reading. There was a structural inability to produce a programme motion to allow the debate that is by convention allowed on the Floor of the House on matters of concern to the Opposition.
A Finance Bill is the centrepiece of our democratic system—the Gladstonian system of control—and if we cannot debate on the Floor of the House what the Opposition consider to be essential propositions related to it, we are very close to the end of parliamentary democracy. I do not say that the Government intended that result, but they brought it about through their dogmatic adherence to programme motions and their inability, or that of their business managers, to recognise that if one tries to draft such a motion in the absence of the new clauses, because under the rules of the House they could not be tabled, one will end up with the wrong debate on the wrong subject, which is what has happened.

807
The problem goes wider and relates to the very idea of programme motions. The problem is not, with the exception that I have outlined, that the substance of the motion is obnoxious—Thursday 24 May is a reasonable date—but that there is something wrong altogether with the idea that there should be imposed on Parliament a time limit for debate on matters that are necessarily complex. I admit that, on this year's Finance Bill, because there is not so much material and the matters are not so contentious, it is unlikely that our debate would have extended beyond 24 May.
Mr. Douglas Hogg: My hon. Friend made the point that these are very technical matters. He will get representations from the accountancy profession and others on the content of the Bill. That being so, does he agree that we do not and cannot know whether 24 May is, or is not, an appropriate end date?
Mr. Letwin: I was coming to that precise point. The Bill is relatively uncontroversial, with the exception of the aggregates tax in its current form, but it involves complex and technical matters, so we cannot know how the debate will carry us as we proceed. However, last year's Finance Bill, which may be a precursor of next year's Finance Bill and other future Finance Bills, was 500 pages long and dealt with immensely complex matters. On that evidence, no one can be expected to make even a reasonable guess at the right date.
We are establishing a precedent for successive attempts by the Government to guess the right date for the end of debate on a Finance Bill that, as I said, is an attack on something that is fundamental to the nature of our democracy. I do not know what, if anything, still makes the House of Commons important perhaps. Ministers regard it as wholly unimportant. However, if it has any importance, the scrutiny of Finance Bills is at the centre of that importance. The power of the House to give the Government money to spend confers on the House such power as it possesses over other matters. Had it not established the right to control taxation some centuries ago, it would not have established the power over the Executive that it then developed.
By any account, a Finance Bill is at the centre of our democracy. An attempt to guess in advance how long it will take to cash out the details of what is often an immensely complicated piece of legislation is an attempt to stifle to debate. Conservative Members will have nothing to do with that. As a result of dogmatic adherence to the idea of programme motions, the Government have managed to come up with what is, even by their own standards, the wrong programme motion. I shall therefore urge my right hon. and hon. Friends to oppose it.
10.22 pm
Mr. Edward Davey: Liberal democrat Members support the argument of the hon. Member for West Dorset (Mr. Letwin). In many debates on programme motions, my hon. Friend the Member for North Cornwall (Mr. Tyler) has expressed our principled opposition to such motions, but tonight our arguments involve both the principle and the substance of the motion on the Order Paper. As the hon. Member for West Dorset said, Opposition Front Bench spokesmen were contacted by Ministers, who asked courteously what we wished to
808
debate in the Committee of the whole House. Liberal Democrat Members made it clear that they wished to table new clauses and to debate issues, especially in relation to foot and mouth. We wished to make sure that such issues were debated in a Committee of the whole House because they are important. Foot and mouth is not a minor matter; it affects the whole country, not just rural areas, as I made clear in my speech on Second Reading.
Both Opposition parties feel strongly about that important matter, and we should be able to debate a new clause on how to reduce the tax burden on industries hit by foot and mouth. That is our main concern about the substance of the motion: it does not enable the Committee of the whole House to debate new clauses that could relieve the tax burden confronting sectors hit by foot and mouth. I anticipate that, in replying to the debate, the Paymaster General will say that there is no precedent for debating new clauses in a Committee of the whole House. However, given the grave crisis before us, I submit that we should set a precedent. What is wrong in principle with a Committee of the whole House debating a new clause to the Finance Bill? There is nothing wrong with that. It is disgraceful for Treasury Ministers to dismiss that notion as outrageous.
Mr. Letwin: Does the hon. Gentleman agree that it would be difficult for the Government to use that argument in any event, because there certainly is precedent—from last year and many other years—for debating amendments? The procedure that the Government have used in this case has prevented us from debating amendments on the Floor of the House.
Mr. Davey: The hon. Gentleman is right. The Government talk about modernising the procedures of the House, yet here we have an example of where we could modernise and debate issues of key importance to our country.
I ask Ministers to state where in "Erskine May" or the Standing Orders there is a barrier preventing us from debating new clauses. If they cannot produce that barrier, could they not come back to the House tomorrow with a new motion to enable Opposition parties to table new clauses, so that we could debate the way in which we can help the struggling sectors of our economy?
10.25 pm
Sir Patrick Cormack: This is yet another example of the Government riding roughshod over the House of Commons, and it is disgraceful. It is interesting that no Labour Member stood to defend the motion, which the Paymaster General moved in a most perfunctory manner. She did not attempt to justify it and merely said what we would be discussing.
This is a programme motion too far. The Finance Bill is—using the word properly—a unique part of the parliamentary calendar; this is where the House of Commons, properly, has full control. This is where the House of Commons, as my hon. Friend the Member for Macclesfield (Mr. Winterton) has said, must vote Supply, exercise its judgment and call the Government to account properly.
As my hon. Friend the Member for West Dorset (Mr. Letwin) said in his admirable speech, last year—notwithstanding the fact that the Government have an

809
enormous majority—the Finance Bill was improved as a result of rigorous scrutiny and proper debate. For the Government to deny opportunity in this way and to place a straitjacket on the House of Commons is an insult, not just to Her Majesty's Loyal Opposition and the other Opposition parties, but to the whole House of Commons.
Mr. Hogg: Does my hon. Friend accept that the Government have often relied on the other place to cure Bills in respect of which they have imposed a timetable but that, in respect of the Finance Bill, the other place is under particular inhibitions in curing errors?
Sir Patrick Cormack: Of course, and that is why I referred to the Bill as unique. The other place, quite rightly, has no control over supply. What it can say about financial matters is, by precedent and by statute, limited, as the Government know only too well. The motion is an insult to every single Member of the House of Commons. It is not just a question of rubbing the noses of the Opposition parties in it. The Government, with high-handed arrogance, are saying what we will do on particular days and in what way we will debate the clauses.
The hon. Member for Kingston and Surbiton (Mr. Davey) made a good point when he talked about the new clauses that we would have wished to debate on foot and mouth. We are gripped by a crisis, the like of which the British countryside has not seen for a century or more, but the House of Commons has not been given a single opportunity by the Government to debate foot and mouth. The Opposition have provided two opportunities.
There is nothing in the parliamentary calender, as far as one knows from the business announced last week, to enable us to debate foot and mouth in the foreseeable future. Yet on 23 and 24 April, it would have been possible for Members with real knowledge and experience of the countryside—we are getting stories every day, some of which are immensely tragic—to debate these things. In our new clauses, we could have made suggestions on which, we hope, the Government would look sympathetically.
Ministers always talk, as the Minister of Agriculture, Fisheries and Food did this afternoon, about wanting a bipartisan approach. They want us to tackle this great crisis together, they say. We are more than willing to do so, and, to be fair, so are the Liberal Democrats. There is no opposition to acting in that way, but when the Government set us the example of this motion, what do they expect? It is disgraceful that we should be faced with such a motion.
The hon. Member for Kingston and Surbiton mentioned precedent. When Ministers return to the Treasury, I hope that they will reflect on the precedent that they are setting tonight. When the mantle of power passes to my party—as it undoubtedly will, either at the next general election as I devoutly hope and believe, or at some subsequent one—they will not want to be ridden over as roughshod as they are riding over us. If they have the duty of scrutinising a Finance Bill from the Opposition Benches, they will not want it to be subject to diktat from the Government of the day.
A Government with a majority as immense as that enjoyed by the present Government have an obligation even greater than that of a Government with a narrow
810
majority to have regard to the niceties of parliamentary democracy. The Government have, time after time, shown scant regard—indeed, contempt—for the House of Commons. Never have they shown it more graphically than in the motion perfunctorily and embarrassingly moved by the Paymaster General this evening. I hope that every hon. Member will vote against it. I hope that Labour Members will recognise what is happening and will, at the very least, have the decency to abstain.
10.32 pm
Mr. Tom King: I have not before spoken on a programme motion, and I did not expect to do so tonight. As I listened, however, to the Minister, my hon. Friend the Member for West Dorset (Mr. Letwin) and the hon. Member for Kingston and Surbiton (Mr. Davey), I was struck by the decision to curtail any opportunity to speak about the problems faced by people in our country at present. We have questions about the Treasury position, but there will be no opportunity to move any amendment or make any proposal that might help.
That announcement followed the earlier confirmation by the Minister of Agriculture, Fisheries and Food that there will be no statement tomorrow about the rural taskforce, the chairman of which appears to have disappeared without trace. There will be no statement on whether there will be any help beyond the inadequate measures that the Paymaster General faithfully read from her brief. She told us about the Inland Revenue, value added tax, encouraging banks to be sympathetic and the small business guaranteed loans scheme. [Interruption.] I am sorry if the Paymaster General does not know that those are the Government's proposals, but that is what she said about being helpful. She may not have known what her own proposals were, but they are in the Government advertisement that is advising people on what assistance is available.
The Chief Secretary can take some pride in having played a part in accumulating a substantial Government surplus, so he cannot plead a shortage of funds for the one-off crisis that we face. He has made a point of saying, in fact, that the Government are flush with funds, and the Chancellor certainly did not understate that case in his Budget statement. Since the Chief Secretary is here, I must tell him that it is widely believed that the Treasury is blocking matters. It has been reported, and I have it on good authority, that the chairman of the taskforce, the Minister for the Environment, was going to make a statement last week—
Mr. Speaker: Order. We are debating a programme motion, and the right hon. Gentleman is going beyond its scope.
Mr. King: I accept that, Mr. Speaker. The point that I am trying to make, however, is that the programme motion allows us no opportunity to bring before Treasury Ministers the case that must be made. We want to table amendments, for which I understand no time is provided. That complaint has been made by spokesmen on the Conservative and Liberal Democrat Front Benches and is entirely in accordance with the motion.
Why do we want additional time under the programme motion? It is because the Government are concerned about tourism; I believe that the Prime Minister is genuine

811
about that. In my constituency, agriculture and tourism are closely interlinked. The hon. Member for Somerton and Frome (Mr. Heath) is in the Chamber, as are other hon. Members who know Exmoor and Dartmoor. Anyone who represents a rural constituency knows about the problems for businesses at present. At this time last year, a business in my constituency had a turnover of £25,000; for the comparable period this year, the amount was £9.47.
In those circumstances, it is no good telling people that they will receive a VAT refund or that the Inland Revenue will look sympathetically at their problems. It is no good telling a chap that he can have a guaranteed loan under the small business scheme when he will have to pay 8.5 per cent. and add to his borrowings and outgoings.
My right hon. Friend the Member for it Richmond, Yorks (Mr. Hague) made proposals in as bipartisan a way as he could and gave the Prime Minister time to consider them. Unless the Treasury is prepared to put in real money and to offer interest-free loans, we can forget the rest. I would not bother about it—it is a waste of money. If other schemes are to be proposed—
Mr. Speaker: Order. The right hon. Gentleman is a very experienced Member of the House. As I said to him, this is a programme motion; he puts a case that must surely relate to the Finance Bill itself. He must talk about the programme motion.
Mr. King: I apologise, Mr. Speaker. It is entirely my fault for not making my case earlier.
My case is that there must be time under the programme motion for Opposition Members and Government Members, who care deeply about the issues and who see inadequacies in the Bill, to move amendments. The motion does not provide enough time for that. I thus have to make the case for why more time is necessary—indeed, imperative. That needs an understanding of the situation. I am trying to point out clearly to Treasury Ministers that the worrying situation in the tourism industry needs more than temporary palliatives; we must have more time to move amendments to the Bill.
With your courtesy, Mr. Speaker, perhaps you will let me give one fact. I was talking to Business Link advisers today. They told me that people in the tourism industry initially thought that the problem would last between four and six weeks. They considered their financial situation and thought that they could just about sweat it out. However, what has just hit them is the realisation that the problem will certainly last for six months and that, because their season is only six months, this year is a write-off.
If the Government said that that was tough and that people cannot expect the Government it to help—that we cannot expect public money to be given to individual private businesses—that would be their position, although I would not agree with it.
Mr. Paul Tyler: In support of the right hon. Gentleman's point that the programme motion is wholly inadequate, he might be interested to learn that I and my right hon. and hon. Friends met representatives of all four clearing banks today. Their view is that six months is an underestimate of the time that it is likely to take to move beyond the crisis.
Mr. King: If there is not to be a statement, we must find a way to deal with the matter in the Finance Bill.
812
There must be time during its proceedings to table amendments that address the problem. The situation is grave. We are about to go into recess and will return in two weeks. During that Easter period, people will have experienced the effects of the problem in various ways—through the banks, for example. After the recess, it may be too late to deal with the matter.
I take this opportunity to tell Treasury Ministers how grave the situation is. It will not take long to prove me right or wrong.
10.39 pm
Mr. Douglas Hogg: I rise to support what my hon. Friend the Member for West Dorset (Mr. Letwin) has said. I suppose that I have spoken in a dozen programme motion debates, and it gives me no pleasure to have had to do so, but I am deeply opposed to programme motions in general. They are wholly offensive, and they are yet more offensive when they relate to Finance Bills.
I want to put before the House a number of objections, the first of which builds on a point made by my hon. Friend the Member for South Staffordshire (Sir P. Cormack). The control of Supply is the beginning of the authority of the House of Commons. If we go back in the history of the House—[Interruption.] Hon. Members may sneer, but one needs to keep a grip on history. When we got a grip on Supply, we began to diminish the control that the Executive exercised over the people. When control over Supply is lost, the control that Government have over the people is enhanced. I do not want to enhance the control that any Government have over the people—far less that lot over there. Thus on a Finance Bill more than most, a timetable motion is contemptuous of the House and its history.
I come to a point—my second, not my last—made by my right hon. Friend the Member for Bridgwater (Mr. King). In all Governments, the Treasury exercises a very great control. I suspect that, with the current Chancellor of the Exchequer, this Government seek to exercise yet greater control—but they do it from the shadows. They are seldom exposed to public argument; they do things in Cabinet Committees. [Interruption.] There is no point in hon. Members making moaning noises. I speak with authority; I have attended endless Cabinet Committees, and I speak from considerable experience.
In the end, the Treasury exercises almost total control over the affairs of other Departments, so Finance Bills are a particularly important way for the House, by amendments and new clauses, to express to Treasury Ministers—even inadequate ones, as we have now—the concerns that affect our constituents and the House. When the debate on the Finance Bill is restricted so that Treasury Ministers are not exposed to arguments from the Opposition or elsewhere, the quality of government, not to mention democracy, is seriously diminished.
There was an interesting little piece from the Paymaster General. She said that we shall be very busy on the first day in Committee on the Floor of the House. However, she did not reflect on the fact that while we may be busy on her business, she does not know what my hon. Friend the Member for West Dorset, those on the Liberal Democrat Front Benches or those on the Conservative Back Benches will table. So the truth is that we shall be

813
busy dealing with Government business, but no attention at all has been paid to the business that the rest of us will introduce. Where lies the democracy in that?
Mr. Letwin: Is my right hon. and learned Friend aware that the Treasury knows one fact—because of the way in which it has designed the programme motion, it will be necessary for hon. Members, especially those in the Opposition parties, to table amendments on 33 of 108 clauses within 24 hours of the time when it was first possible to do so, and without the benefit of consulting industry, which would be the normal practice under such circumstances? Is that not absolutely astonishing?
Mr. Hogg: It is absolutely astonishing. The Bill is 292 pages long and the timetable motion provides for two days of debate on the Floor of the House, but we have not yet had an opportunity to table a single amendment or new clause. No one can tell whether we will have sufficient time to debate the clauses that have been grouped for those days. That is an absolute scandal.
You and I, Mr. Speaker, arrived in the House at the same time, so you know I have been here a long time. Let me say in deference to my hon. Friends in the Whips office—they always like to know the intentions of Back Benchers—that I propose to stay here a lot longer. The interpretation of the Finance Bill and the consequences for the taxpayer are usually a matter of considerable difficulty for the courts, but those consequences are critical. Our ability, and that of our constituents, to pay taxes, and their liability for penalties if they get things wrong, are the consequences of the business that we do on the Floor of the House and in Committee. If debates are so constrained that the Finance Bill is not properly considered, we can be sure that the law will be in error.
Mr. Geraint Davies: Does the right hon. and learned Gentleman agree that the Bill has already been out for 10 days? I urge him to use the time available in the recess constructively to consult industry so that he can achieve the results that he wants.
Mr. Hogg: It is clear to anyone who has just heard that intervention that the hon. Gentleman, wherever he comes from, has no idea about legislation. Does he suppose for a moment that interested groups—accountants, lawyers, tax specialists, my constituents and even his constituents—have got to grips with this Finance Bill? Does he suppose that they will spend the Easter recess pondering it? That is nonsense. Only the folly of those on the Government Benches would lead to the suggestion that that would happen.
Mr. Letwin: My right hon. and learned Friend is being much too charitable to the hon. Member for Croydon, Central (Mr. Davies). I am sure that my right hon. and learned Friend realises—I do not know whether the hon. Gentleman does—that if people spent the recess considering those matters, it would not do the blindest bit of good, because the Standing Orders of the House mean that we cannot table amendments following the recess.
Mr. Hogg: That is right. I hope that I have not been unduly generous to the hon. Gentleman; that was not my
814
intention. He and the Labour party have been undermining democracy since 1997. I, for one, have had enough of it. This place is being treated in a scandalous, discourteous and tyrannical manner, and it is the business of the House to protest, protest and protest again.
Mr. Crispin Blunt: Is my right hon. and learned Friend's argument not supported by the fact that the Government know how badly they are behaving, because they have not yet dared to bring forward motion 2, under "Remaining Orders and Notices", on the conduct of my right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe) and three of my—
Mr. Speaker: Order. We are debating the programme motion.
Mr. Hogg: My hon. Friend may very well be right, but I suspect that, if I tried to expand on that line of argument, you, Mr. Speaker, would call me to order.
Mr. Bercow rose —
Mr. Hogg: It is always a pleasure to give way to my hon. Friend.
Mr. Bercow: In the context of the programme motion, what does my right hon. and learned Friend think is the relationship between the time available for debate and Treasury Ministers' comprehension of the Bill? Does he not agree that one reason why those on the Treasury Bench are reluctant to have adequate debate on the subject is that they know that allowing such an opportunity would enable the Confederation of British Industry, the Institute of Directors, the Federation of Small Businesses, the Forum of Private Business and the British Chambers of Commerce to develop in detail their critiques of the Bill?
Mr. Hogg: My hon. Friend makes a serious point. I had charge of many Bills and took, I suppose, 12 or 15 of them through the House. I was not too bad at doing that and came to one clear view: no Minister can handle more than about 30 clauses, top whack I suspect that two or three junior Ministers who are not up to the job will be responsible for the Bill. They do not like lengthy scrutiny because it proves their inadequacy. That is why they want the Bill to be completed after two days on the Floor of the House and out of Committee by 24 May. They know that an extended Committee stage—no matter where it takes place—exposes them to the criticism that they are unable to withstand because they are personally incompetent.
I want to summarise my objection—[Interruption.]
Mr. Speaker: Order. The right hon. and learned Gentleman is entitled to a hearing.
Mr. Hogg: Let me take advantage of—[Interruption.]
Mr. Speaker: Order. I gave an instruction, and I expect better from a senior Whip.
Mr. Hogg: I want to take advantage of this burble to say that I shall never be shouted down, or intimidated by, Labour Members because, in truth, I despise them. For the past four years or so, they have consistently and persistently—
Mr. Speaker: Order. I remind the right hon. and learned Gentleman that we are entitled to hear temperate language. I do not expect him use the word "despise". [Interruption.] Mr. Bercow, you talk too much.
Mr. Hogg: Never has my hon. Friend talked too much in my hearing. I am sorry that you do not feel the same way, Mr. Speaker. If "despise" is too strong, perhaps you will accept the term "hold in disregard". I hold Labour Members in disregard because, since 1997, they have consistently and persistently undermined democracy in this place. Some did it knowingly; the others have no business being here.
The significance of the fact that we are debating a Finance Bill is lost on Labour Members because they do not understand our history. They think that the Bill can be tucked away as if it were nothing. Well, it cannot. In addition, they are denying my right hon. Friend the Member for Bridgwater, who has served in the House for 20 or 30 years, the opportunity to raise on behalf of his constituents matters of fundamental importance, especially to the agricultural sector. They are also denying hon. Members the opportunity to ensure that legislation is put in proper order. Those are grave failings.
Mr. Edward Leigh: The charitable view of the Government's approach is that, to use their language, they are trying to modernise our procedures, but why does that always appear to result in less, rather than more scrutiny? Surely it will be possible for the incoming Conservative Government both to modernise our procedures and to increase scrutiny.
Mr. Hogg: My hon. Friend —my constituency neighbour—is right. When Labour Members talk about modernisation, they always mean reducing scrutiny. That is characteristic of the Government When we get back into power, it will be my business, and that of my hon. Friend, to ensure that we increase scrutiny; in fact, we will do that whichever party is in power.
10.54 pm
Mr. Tim Loughton: When I came here this evening I did not intend to make a contribution, but given the passion with which my right hon. and hon. Friends have made their it case, I felt minded to make my few points. Night after night, we have sat through the charade in the democratic process that is the debate on the programme motion. This one is a programme motion too far. Programming consideration of a Finance Bill is an absolute abuse of the House. My right hon. and hon. Friends were right to say that the perfunctory, nonchalant way in which the motion was moved by the Paymaster General was beneath contempt.
In my short time in the House, I have sat on two Finance Bill Committees, and at no point during those proceedings was there any filibustering by Conservative Members. If there had been, the Chairman would have ruled us out of order. My experience of those Committees
816
is that the longer they go on, the more the wheels fall off the Government's wagon; and the more details emerge from the clauses, the more lacking the Government's case is felt to be.
Why do the Government feel it necessary to guillotine consideration of this Bill? What is the urgency? After all, the Budget speech was over a month ago. The Government have had plenty of time to initiate these proceedings. This is the most important legislation in the parliamentary calendar, but we have been messing around with minor Bills in the past month, so why the hurry now? Will it not appear strange to the public that the day before the House breaks for a two-week recess, the Government are steamrollering through the House a programme motion to curtail debate on the most important legislation in the parliamentary year? It will appear very odd indeed to my constituents.
As my hon. Friend the Member for South Staffordshire (Sir P. Cormack) said, the Bill is unique. There might just be a case, as the Government always try to make out, for saying that Bills might be frustrated in the other place and that their Lordships might seek to prolong debate beyond the time that is legitimately required. However, that case cannot be made with the Finance Bill, because their Lordships have limited powers in that respect.
Is it not also disgraceful that the Government have singularly failed to live up to some of the timetables that they have sought to impose on measures in the Finance Bill? Only last week, we heard that the introduction of stamp duty exemptions for deprived areas, which were promised at the beginning of the new financial year, which was last week, have been postponed because the Government are incapable of coming up with the details. As we warned at the time, the measures that were heralded in the pre-Budget report, and which the Chancellor proposed in the Budget, would result in people who owned houses worth £750,000 in places such as Islington getting a £40,000 windfall. Yet it has taken the Government until now to work out that there are serious problems with the measures. The Government have failed on their own timetable, but tonight they are trying to impose a timetable on consideration of the entire Bill and its passage through Parliament. Is that not yet another abuse of the whole system?
As other hon. Members have said, the foot and mouth situation is fast moving—
It being forty-five minutes after the commencement of proceedings on the motion, MR. SPEAKER put the Question, pursuant to Order [7 November 2000].
The House divided: Ayes 303, Noes 158.

Division No. 184]

[10.59 pm

AYES

Abbott, Ms Diane

Battle, John

Adams, Mrs Irene (Paisley N)

Bayley, Hugh

Anderson, Rt Hon Donald (Swansea E)

Beckett, Rt Hon Mrs Margaret

Benn, Hilary (Leeds C)

Anderson, Janet (Rossendale)

Benn, Rt Hon Tony (Chesterfield)

Armstrong, Rt Hon Ms Hilary

Bennett, Andrew F

Atherton, Ms Candy

Benton, Joe

Atkins, Charlotte

Bermingham, Gerald

Austin, John

Berry, Roger

Bailey, Adrian

Best, Harold

Banks, Tony

Betts, Clive

Barnes, Harry

Blackman, Liz

Barron, Kevin

Blears, Ms Hazel

817

Blizzard, Bob

Foster, Michael J (Worcester)

Boateng, Rt Hon Paul

Foulkes, George

Borrow, David

Fyfe, Maria

Bradley, Keith (Withington)

Gapes, Mike

Bradley, Peter (The Wrekin)

George, Rt Hon Bruce (Walsall S)

Bradshaw, Ben

Gerrard, Neil

Brinton, Mrs Helen

Gibson, Dr Ian

Brown, Rt Hon Gordon (Dunfermline E)

Gilroy, Mrs Linda

Godman, Dr Norman A

Browne, Desmond

Godsiff, Roger

Buck, Ms Karen

Golding, Mrs Llin

Burden, Richard

Gordon, Mrs Eileen

Burgon, Colin

Griffiths, Jane (Reading E)

Caborn, Rt Hon Richard

Griffiths, Nigel (Edinburgh S)

Campbell, Alan (Tynemouth)

Griffiths, Win (Bridgend)

Campbell, Ronnie (Blyth V)

Grocott, Bruce

Campbell-Savours, Dale

Hain, Peter

Cann, Jamie

Hamilton, Fabian (Leeds NE)

Caplin, Ivor

Healey, John

Casale, Roger

Hendrick, Mark

Caton, Martin

Hepburn, Stephen

Chapman, Ben (Wirral S)

Heppell, John

Clapham, Michael

Hill, Keith

Clark, Rt Hon Dr David (S Shields)

Hinchliffe, David

Clark, Paul (Gillingham)

Hodge, Ms Margaret

Clarke, Charles (Norwich S)

Hoey, Kate

Clarke, Eric (Midlothian)

Hood, Jimmy

Clarke, Rt Hon Tom (Coatbridge)

Hoon, Rt Hon Geoffrey

Clelland, David

Hope, Phil

Clwyd, Ann

Hopkins, Kelvin

Coffey, Ms Ann

Howarth, Rt Hon Alan (Newport E)

Cohen, Harry

Howells, Dr Kim

Coleman, Iain

Hoyle, Lindsay

Colman, Tony

Hughes, Ms Beverley (Stretford)

Connarty, Michael

Hughes, Kevin (Doncaster N)

Cook, Frank (Stockton N)

Humble, Mrs Joan

Corbyn, Jeremy

Hurst, Alan

Corston, Jean

Hutton, John

Cousins, Jim

Iddon, Dr Brian

Cox, Tom

Illsley, Eric

Crausby, David

Jamieson, David

Cryer, Mrs Ann (Keighley)

Jenkins, Brian

Cryer, John (Hornchurch)

Johnson, Alan (Hull W & Hessle)

Cummings, John

Johnson, Miss Melanie (Welwyn Hatfield)

Cunningham, Jim (Cov'try S)

Dalyell, Tam

Jones, Rt Hon Barry (Alyn)

Darling, Rt Hon Alistair

Jones, Helen (Warrington N)

Darvill, Keith

Jones, Jon Owen (Cardiff C)

Davey, Valerie (Bristol W)

Jones, Dr Lynne (Selly Oak)

Davies, Rt Hon Denzil (Llanelli)

Jowell, Rt Hon Ms Tessa

Davies, Geraint (Croydon C)

Joyce, Eric

Davis, Rt Hon Terry (B'ham Hodge H)

Kaufman, Rt Hon Gerald

Keeble, Ms Sally

Dean, Mrs Janet

Keen, Alan (Feltham & Heston)

Denham, Rt Hon John

Keen, Ann (Brentford & Isleworth)

Dismore, Andrew

Kennedy, Jane (Wavertree)

Dobbin, Jim

Khabra, Piara S

Dobson, Rt Hon Frank

Kidney, David

Donohoe, Brian H

King, Andy (Rugby & Kenilworth)

Doran, Frank

King, Ms Oona (Bethnal Green)

Dowd, Jim

Kumar, Dr Ashok

Eagle, Angela (Wallasey)

Ladyman, Dr Stephen

Eagle, Maria (L'pool Garston)

Lammy, David

Edwards, Huw

Laxton, Bob

Efford, Clive

Lepper, David

Ellman, Mrs Louise

Leslie, Christopher

Ennis, Jeff

Levitt, Tom

Etherington, Bill

Lewis, Terry (Worsley)

Field, Rt Hon Frank

Linton, Martin

Fitzpatrick, Jim

Lloyd, Tony (Manchester C)

Fitzsimons, Mrs Lorna

Lock, David

Flint, Caroline

Love, Andrew

Flynn, Paul

McCabe, Steve

Follett, Barbara

McCafferty, Ms Chris

Foster, Rt Hon Derek

McCartney, Rt Hon Ian (Makerfield)

Foster, Michael Jabez (Hastings)

818

McDonagh, Siobhain

Roy, Frank

Macdonald, Calum

Ruddock, Joan

McDonnell, John

Russell, Ms Christine (Chester)

McFall, John

Ryan, Ms Joan

McGuire, Mrs Anne

Salter, Martin

McIsaac, Shona

Sarwar, Mohammad

McKenna, Mrs Rosemary

Shaw, Jonathan

Mackinlay, Andrew

Sheerman, Barry

McNulty, Tony

Simpson, Alan (Nottingham S)

MacShane, Denis

Skinner, Dennis

Mactaggart, Fiona

Smith, Rt Hon Andrew (Oxford E)

McWalter, Tony

Smith, Angela (Basildon)

McWilliam, John

Smith, Rt Hon Chris (Islington S)

Mahon, Mrs Alice

Smith, Miss Geraldine (Morecambe & Lunesdale)

Mallaber, Judy

Mandelson, Rt Hon Peter

Smith, Jacqui (Redditch)

Marsden, Gordon (Blackpool S)

Smith, John (Glamorgan)

Marsden, Paul (Shrewsbury)

Smith, Llew (Blaenau Gwent)

Marshall, David (Shettleston)

Soley, Clive

Marshall, Jim (Leicester S)

Southworth, Ms Helen

Martlew, Eric

Spellar, John

Maxton, John

Starkey, Dr Phyllis

Meacher, Rt Hon Michael

Steinberg, Gerry

Meale, Alan

Stevenson, George

Michael, Rt Hon Alun

Stewart, Ian (Eccles)

Michie, Bill (Shef'ld Heeley)

Stoate, Dr Howard

Milburn, Rt Hon Alan

Strang, Rt Hon Dr Gavin

Miller, Andrew

Straw, Rt Hon Jack

Mitchell, Austin

Stringer, Graham

Moffatt, Laura

Stuart, Ms Gisela

Morgan, Ms Julie (Cardiff N)

Taylor, Rt Hon Mrs Ann (Dewsbury)

Morley, Elliot

Morris, Rt Hon Ms Estelle (B'ham Yardley)

Taylor, David (NW Leics)

Temple-Morris, Peter

Mountford, Kali

Thomas, Gareth R (Harrow W)

Mullin, Chris

Timms, Stephen

Murphy, Denis (Wansbeck)

Tipping, Paddy

Murphy, Jim (Eastwood)

Touhig, Don

Naysmith, Dr Doug

Trickett, Jon

O'Brien, Bill (Normanton)

Turner, Dennis (Wolverh'ton SE)

O'Brien, Mike (N Warks)

Turner, Dr Desmond (Kemptown)

Olner, Bill

Turner, Dr George (NW Norfolk)

O'Neill, Martin

Turner, Neil (Wigan)

Organ, Mrs Diana

Twigg, Derek (Halton)

Osborne, Ms Sandra

Twigg, Stephen (Enfield)

Pearson, Ian

Tynan, Bill

Perham, Ms Linda

Vis, Dr Rudi

Pickthall, Colin

Walley, Ms Joan

Pike, Peter L

Ward, Ms Claire

Plaskitt, James

Wareing, Robert N

Pollard, Kerry

Watts, David

Pond, Chris

White, Brian

Pope, Greg

Wicks, Malcolm

Pound, Stephen

Williams, Rt Hon Alan (Swansea W)

Prentice, Ms Bridget (Lewisham E)

Prentice, Gordon (Pendle)

Williams, Alan W (E Carmarthen)

Prescott, Rt Hon John

Wills, Michael

Primarolo, Dawn

Winnick, David

Prosser, Gwyn

Winterton, Ms Rosie (Doncaster C)

Quinn, Lawrie

Wood, Mike

Radice, Rt Hon Giles

Woodward, Shaun

Rapson, Syd

Woolas, Phil

Raynsford, Nick

Worthington, Tony

Reed, Andrew (Loughborough)

Wright, Anthony D (Gt Yarmouth)

Robertson, John (Glasgow Anniesland)

Wright, Tony (Cannock)

Roche, Mrs Barbara

Tellers for the Ayes: Mr. Graham Allen and Mr. Mike Hall.

Rooker, Rt Hon Jeff

Rooney, Terry

Rowlands, Ted

NOES

Allan, Richard

Atkinson, Peter (Hexham)

Amess, David

Baker, Norman

Arbuthnot, Rt Hon James

Baldry, Tony

Atkinson, David (Bour'mth E)

Bercow, John

819

Beresford, Sir Paul

King, Rt Hon Tom (Bridgwater)

Blunt, Crispin

Kirkwood Archy

Body, Sir Richard

Lait, Mrs Jacqui

Boswell, Tim

Leigh, Edward

Bottomley, Peter (Worthing W)

Letwin, Oliver

Bottomley, Rt Hon Mrs Virginia

Lewis, Dr Julian (New Forest E)

Brady, Graham

Lidington David

Brand, Dr Peter

Lilley, Rt Hon Peter

Brazier, Julian

Lloyd, Rt Hon Sir Peter (Fareham)

Brooke, Rt Hon Peter

Loughton, Tim

Browning, Mrs Angela

Luff, Peter

Burns, Simon

McCrea, Dr William

Butterfill, John

MacGregor, Rt Hon John

Campbell, Rt Hon Menzies (NE Fife)

McIntosh, Miss Anne

Maclean, Rt Hon David

Cash, William

McLoughlin, Patrick

Chapman, Sir Sydney

Madel, Sir David

(Chipping Barnet)

Malins, Humfrey

Maples, John

Chidgey David

Mawhinney, Rt Hon Sir Brian

Chope, Christopher

May, Mrs Theresa

Clappison, James

Moore, Michael

Clarke, Rt Hon Kenneth (Rushcliffe)

Moss, Malcolm

Oaten, Mark

Clifton-Brown, Geoffrey

O'Brien, Stephen (Eddisbury)

Collins, Tim

Öpik, Lembit

Cormack, Sir Patrick

page, Richard

Cotter, Brian

Paice, James

Cran, James

Pickles, Eric

Curry, Rt Hon David

Portillo, Fit Hon Michael

Davey, Edward (Kingston)

Prior, David

Davies, Quentin (Grantham)

Redwood, Rt Hon John

Donaldson, Jeffrey

Rendel, David

Dorrell, Rt Hon Stephen

Robathan, Andrew

Duncan, Alan

Robertson, Laurence (Tewk'b'ry)

Duncan Smith, Iain

Robinson, Peter (Belfast E)

Evans, Nigel

Roe, Mrs Marion (Broxbourne)

Fabricant, Michael

Ruffley, David

Fallon, Michael

Russell, Bob (Colchester)

Fearn, Ronnie

St Aubyrl, Nick

Flight, Howard

Sanders Adrian

Fowler, Rt Hon Sir Norman

Shephard, Rt Hon Mrs Gillian

Fraser, Christopher

Shepherd, Richard

Garnier, Edward

Simpson, Keith (Mid-Norfolk)

Gibb Nick

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

Gidley, Sandra

Soames Nicholas

Gill, Christopher

Spelman, Mrs Caroline

Gillan, Mrs Cheryl

Spicer, Sir Michale

Gray, James

Spring, Richard

Green, Damian

Stanley, Rt Hon Sir John

Greenway, John

Streeter, Gary

Grieve, Dominic

Stunell, Andrew

Gummer, Rt Hon John

Swayne Desmond

Hague, Rt Hon William

Syms, Robert

Hamilton, Rt Hon Sir Archie

Taylor, Ian Esher & Walton)

Hammond, Philip

Taylor, John M (Solihull)

Hancock, Mike

Taylor, Matthew (Truro)

Harvey, Nick

Taylor, Sir Teddy

Hawkins Nick

Thomas Simon (Ceredigion)

Hayes, John

Tonge, Dr Jenny

Heald, Oliver

Tredinnick, David

Heath, David (Somerton & Frome)

Trend, Michael

Tyler, Paul

Heathcoat-Amory, Rt Hon David

Tyrie, Andrew

Hogg, Rt Hon Douglas

Viggers, Peter

Horam, John

Walter, Robert

Howard, Rt Hon Michael

Waterson Nigel

Howarth, Gerald (Aldershot)

Webb Steve

Hughes, Simon (Southwark N)

Wells, Bowen

Jack, Rt Hon Michael

Whitney Sir Raymond

Jackson, Robert (Wantage)

Whittingdale, John

Jenkin, Bernard

Widdecombe, Rt Hon Miss Ann

Johnson Smith, Rt Hon Sir Geoffrey

Wilkinson, John

Willetts, David

Jones, Nigel (Cheltenham)

Willis, Phil

Key, Robert

Wilshire David

820

Winterton, Mrs Ann (Congleton)

Tellers for the Noes: Mr. Owen Paterson and Mr. Stephen Day.

Winterton, Nicholas (Macclesfield)

Yeo, Tim

Young, Rt Hon Sir George

Question accordingly agreed to.
Ordered,
That the following provisions shall apply to the Finance Bill:—

Committee
1.—(1) Clauses 1 to 3 and 16 to 53 and Schedules 4 to 11 shall be committed to a Committee of the whole House.
(2) The remainder of the Bill shall be committed to a Standing Committee.
2.—(1) Proceedings in Committee of the whole House shall be completed in two allotted days.
(2) The proceedings to the taken on each of those allotted days shall be as shown in the second column, and shall be brought to a conclusion at the times specified in the third column, of the following Table:—

TABLE

Allotted day

Proceedings

Time for conclusion of proceedings

First day

Clauses 16 to 22

7.00 p.m.

Clauses 23 and 24, Schedule 4,

9.00 p.m.

Clauses 25 to 27, Schedule 5,

Clause 28, Schedule 6, Clause 29,

Schedule 7, Clause 30

Clauses 31 and 32, Schedule 8,

Midnight

Clauses 33 to 35, Schedule 9,

Clauses 36 to 46, Schedule 10,

Clauses 47 to 49

Second day

Clauses 1 to 3

7.00 p.m.

Clauses 50 to 53 and Schedule 11

10.00 p.m.

(3) If either of those allotted days is Thursday, the times specified for that allotted day in the third column of the Table are brought forward by three hours.
(4) On the first of those allotted days, paragraph (1) of Standing Order No. 15 (Exempted business) shall, notwithstanding sub-paragraph (a) of that paragraph, apply to the proceedings on the Bill for only two hours after ten o'clock or, if that day is Thursday, for only two hours after seven o'clock.
(5) On that allotted day, any period during which proceedings on the Bill may be proceeded with after ten o'clock (or, if that day is Thursday, seven o'clock) by virtue of paragraph (4) or (5) of Sessional Order I (provision in the event of a debate under Standing Order No. 24) made by the House of 7th November 2000 shall be in addition to that period of two hours.
(6) Sessional Order B (Programming Committees) made by the House on 7th November 2000 shall not apply to proceedings in Committee of the whole House.
(7) An allotted day is one on which the Bill is put down as first Government Order of the day.
3.—(1) The Standing Committee shall have leave to sit twice on the first day on which it shall meet.
(2) Proceedings in the Standing Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 24th May 2001.
4. When the provisions of the Bill considered, respectively, by the Committee of the whole House and by the Standing Committee have been reported to the House, the Bill shall be proceeded with as if it had been reported as a whole to the House from the Standing Committee.

ADOPTION AND CHILDREN BILL
Ordered,
That Mrs. Liz Blackman, Mr. Julian Brazier, Ann Coffey, Caroline Flint, Sandra Gidley, Mrs. Llin Golding, Mr. David Hinchliffe, Mr. John Hutton, Mr. Jonathan R. Shaw, Mrs. Caroline Spelman, Mr. Desmond Swayne and Ms Dari Taylor be members of the Select Committee on the Adoption and Children Bill.
That three be the Quorum of the Committee.
That the Committee have power to send for persons, papers and records.
That the Committee have power to adjourn from place to place.
That the Committee have power to appoint specialist advisers, either to supply information which is not readily available or elucidate matters of complexity relating to the provisions of the Adoption and Children Bill.—[Mr. Jamieson.]

The Colchester Institute
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jamieson.]
11.11 pm
Mr. Bob Russell: Instigating this debate gives me no pleasure. A little under 40 years ago, I was a student at the Colchester Institute when it was called the North-East Essex technical college and school of art. I am proud to include that in my curriculum vitae, and tonight I show my pride by wearing the institute's tie. What I hope will result from the debate is a pledge that the Department for Education and Employment will investigate the management and strategy of the Colchester Institute under its quango leadership.
I am grateful to the Minister for the meeting that I had with him two weeks ago, along with a representative of the lecturers. He is thus already well informed of what the local community considers to be an unacceptable state of affairs. Regrettably, despite our meeting, the institute refuses to reconsider its position.
Between 50 and 60 jobs are threatened, involving both teaching and support staff. That represents more than 10 per cent. of the core work force. The ending of full-time A-level courses has been announced. Staff, students and the public are opposed to what is happening, but the institute has refused to engage in debate to justify its actions. It is to be hoped that wiser counsel will prevail as a result of the Government intervention that I seek, and that the institute will halt what many believe to be an assault on the provision of lifelong learning that has been offered throughout its history.
The Minister is aware that the lecturers' union, NATFHE—the National Association of Teachers in Further and Higher Education—is in dispute with the institute and has not ruled out strike action over the redundancies and change of direction. A vote of no confidence in the senior management team has been passed. Union members are not alone in thinking that the institute's strategy is a shortsighted act of educational vandalism that will leave young adults in Colchester—indeed, mature students of all ages—with severely restricted options when they wish to return to academic courses.
Until a few years ago, the institute was an integral part of the democratically accountable education system. Its roots, and its democratic accountability to the local community, go back to 1886, when the Albert school of art and science was established in a building in the high street. It was run by a committee of Colchester borough council. Following the Education Act 1902, the forerunner of today's Colchester Institute transferred to the jurisdiction of Essex county council. It developed and progressed over the next 90 years, first on North Hill and then on its present site in Sheepen road. Without such parentage and continued management within the democratic accountability of local government, what we now know as the Colchester Institute would never have been conceived or developed. It is a story of progress made by a first-class education establishment responding to the wishes and aspirations of the local community. In contrast, in today's quango Britain the community's views are ignored.
The institute has 10,000 full-time and part-time students, as well as a further 3,000 on short courses over the year attending its professional training centre.

823
It provides an extensive range of courses, and in some subjects its excellence is recognised nationally, if not internationally—in music, art and catering, to name but three.
However, all is not well; all is not what it should be. If it were, tonight's debate would not be needed. The root cause lies with the previous Government's decision to remove education establishments such as the Colchester Institute from the democratic framework of local education authorities and hand them over to quangos.
The quango in charge of the Colchester Institute runs a public facility with funds provided by the public purse, but it is neither accountable nor answerable to the community that it serves. Concerned members of the community are up in arms about what is happening, but those who run the institute are operating a closed-door policy, refusing to enter into a dialogue or debate with the community.
Indeed, when lecturers decided to hold a public meeting, the institute refused to allow it to be held on the campus. Instead, it took place at the town hall. I chaired the meeting, and there were noticeable absentees at the packed gathering. The institute declined to be represented and did not even have observers. It was thus very much a one-way discussion with those present—staff, students and the public—who were unanimous in their demand that jobs should not be lost, and likewise that A-level full-time courses should not be axed.
I shall quote from two of the many letters that I have received on this matter. The first is from the mother of a student, the second from a retired lecturer. Both have given me permission to mention their names. The mother, Mrs. G. E. Phipps, told me:
"As the parent of an A-level student at Colchester Institute I feel compelled to express my concerns over the discontinuation of A-level courses. In my daughter's case she left school and went to the Sixth Form College. After two terms she decided it wasn't for her and left to take up full-time employment. She soon discovered the job she had held no prospects and the only way to find a decent career was to return to college and become better qualified.
Thanks to the Institute she had a second chance. Unfortunately this will no longer be the case. From September, for 16-year-olds who either choose not to attend or do not qualify for any of the town's sixth forms there will be no opportunity to study for A-levels in Colchester.
Another point that concerns me is the tuition of the current A-level students like my daughter and the first years who will still have the major part of their courses to complete. Although the Institute has assured us that the present students will be catered for, it is unrealistic to think this will be the case. With the A-level lecturers having no option but to take 'voluntary' redundancy in June, morale amongst staff is extremely low and the quality of teaching is bound to be affected. To add to that, the question of who will be teaching next year's second years remains."
Those are not my words but those of a mother who speaks for many. Perhaps the Minister may care to respond in particular to the concluding paragraph of Mrs. Phipps's letter. She writes:
"At a time when the Government puts so much stress on the importance of education, how can such a retrograde step be taken? With an average of about 200 applicants for A-level courses at Colchester Institute each year, how can it be allowed to so badly let the young people of Colchester down?
I do hope together we can provide a loud enough voice to reverse this decision."
I shall quote from the letter of retired lecturer Mr. Guy Scott. He worked at the institute for 25 years and was
824
head of the school of automobile engineering when he retired in 1990. Observing that he is
"very concerned at the manner in which things are being handled at the Institute",
Mr. Scott states:
"I believe the rot set in about ten years ago when the Institute was taken out of Essex County Council control and became a Corporate Body, not answerable to the local community which it was set up to serve."
He added:
"Since that time the emphasis of the Institute has swung from course provision to income acquisition."
I shall let the Minister have a copy of Mr. Scott's letter, because in some detail he sets out the demise of the school which he helped build into one of the best in the country.
So that Mr. Scott's comments are put firmly on the record, let me quote the following paragraphs:
"For all too many years morale amongst Institute staff has been worryingly low. Conditions of service have been changed and staff have been squeezed and pressurised into giving more and more, for no extra return, until the 'juice has all but gone from the lemon'. As a result they now volunteer for less and less.
Enthusiasm and drive, all so important in an establishment like the Institute, has gone; and the Institute Management including the Corporate Board must be held accountable."
He concludes:
"It cannot be right that the Corporate Board is not accountable to the community the Institute was set up to serve."
The Minister may be aware that Mrs. Phipps wrote to the Secretary of State to express concern at what is happening at the Colchester Institute. She received a reply dated 4 April from the school and college qualifications division, which provided her with the soothing words:
"The Government is committed to encouraging young people to lifelong learning."
If true, it would be very encouraging, but it is somewhat meaningless in the real world, for the letter goes on to add:
"However, education at post-16 is non-compulsory and educational establishments are not obliged to run courses that they do not wish to. Decisions about the courses that a school or college may offer are made entirely by the institution, depending on the resources that are available, and the demand for specific courses."
Should I therefore assume that the Colchester Institute is being deprived of the funds that it needs to maintain its A-level courses? If so, who is to blame: the institute, the Learning and Skills Council, or the Government?
Indeed, is the Colchester Institute acting at the behest of Government directives, either direct or indirect? In a pointless exercise, the letter from the Department for Education and Employment's school and college qualifications division advises Mrs. Phipps to write to the principal of the Colchester Institute about her anxieties. It states:
"If you are not satisfied with the response, you could then take it up with the Learning and Skills Council."
I do not believe that she will waste her time on that advice.
At first glance, the position at the Colchester Institute may appear to be a local issue, but I believe that it has national implications. Not only the Colchester Institute, but every further and higher education establishment in the United Kingdom is run by a quango.

825
The quango culture pervades so much of our public life nowadays. The democratic framework of elected accountability no longer exists in education, health services and the police. All who value democratic principles should be alarmed about that aspect of life in the first part of the 21st century. We should legislate to make our public bodies democratically accountable. I therefore maintain that we should not regard what is happening at the Colchester Institute as a local issue. It has much wider implications in our quango-run society.
Not only is the Colchester Institute run by a quango, but the body that oversees its operations—the quaintly named Learning and Skills Council—is also a quango. That organisation appears to have less influence over the Colchester Institute than the Strategic Rail Authority has over our railways.
I have no problem with the Colchester Institute wanting to run on business-like principles. Efficiency and enterprise are important. However, I object to the fact that the comprehensive provision of education opportunities appears to be of secondary importance to operating the institute as if it were a business, like a supermarket, with areas of profitability being encouraged and those perceived to be less profitable either closed down or sidelined. Education should not be run on the philosophy of "pile 'em high, sell 'em cheap". To adapt a well-known phrase, lifelong learning should be all about, "mind the quality, and feel the width".
If "lifelong learning" and "education for all" are more than soundbites, educational opportunities at a large community college such as the Colchester Institute must not be axed. The institute must continue to provide the breadth and depth of academic courses alongside all the vocational and specialist courses whose excellence is rightly acknowledged.
To say that the community of Colchester and north Essex, and even further afield, is shocked is an understatement. We are shocked by not only the decisions, but the institute's refusal to engage in dialogue with the community. The local media have become exasperated at the institute's total refusal to discuss the position with them. I have been fortunate enough to have a meeting with the principal, but I remain of the view, as do staff and students, that the institute's strategy of job losses and ending full-time A-level courses is not the right one.
As I said earlier, such is the unhappiness that staff have passed a vote of no confidence in the senior management team. That does not bode well for the future of the Colchester institute, hence my hope that the Government will investigate what is going on.
Further confusion seems to have arisen with the announcement that the principal, Mrs. Helen Parr, will leave at the end of this academic year to take up an appointment at another education establishment elsewhere in the home counties. Having been involved in drawing up the strategy of job losses and ending full-time A-level courses in Colchester, the principal will not be in place when they are implemented, if the current so-called consultation is nothing more than the cosmetic exercise that many of us fear.
826
The Colchester Institute sees its skipper jumping ship while the vessel remains all at sea, with the crew and passengers wondering about the direction in which it is sailing and unsure of the ultimate destination.
However, the principal's departure provides an opportunity for a face-saving solution for the governors. They should consider the current intentions afresh. I invite the Minister this evening to say that he will urge those responsible for the Colchester Institute—most importantly, its governing body but also the Learning and Skills Council—to take stock of the comments of the local community, staff and students before a final, irreversible decision is taken.
The regional office of NATFHE has provided me with copies of correspondence between it and the institute management. Time does not permit me to quote at length from that, but suffice it to say it shows that relationships are not good. They are perhaps best summed up in a letter of 9 March from regional officer Elizabeth Martins to the chair of the corporation, Mr. Ken Leeson. It states:
"It is NATFHE's view that meaningful consultation is not taking place and the College's policies/procedures are not being followed prior to consultation. Furthermore, there appears to be an inconsistent, inequitable and lack of transparent approach in relation to the introduction and implementation of the restructuring proposals resulting in an unfair selection of individuals for redundancy."
The letter further states that the joint trade unions proposal for using the Advisory, Conciliation and Arbitration Service was rejected by the institute's senior management team.
The overall picture of education provision in Colchester is excellent. It is one of the reasons why the town is so attractive not only to the local population, but to people who wish to move there. With the range of pre-school establishments and nurseries, infant, primary and junior schools, first-class comprehensives—none of them, by the way, remotely fitting the offensive description of being bog standard—a couple of grammar schools, arguably the best sixth form college in the country, the adult community college centred on Grey Friars, and the internationally famous university of Essex, the Colchester Institute completes an educational jigsaw picture that is, I believe, without equal.
What is being proposed is the removal of some pieces of the institute jigsaw. As such, the total picture of educational provision in Colchester will be diminished. It is not something that the community wants. Staff, students and the public are opposed to the Colchester Institute proposal. I invite the Minister to refute the claim by the institute's principal— who also describes herself as chief executive—in a letter issued to all staff just four days ago that what is happening at the Colchester Institute
"is in line with Government guidance."
It cannot be right that quangos can behave in the way that we are witnessing at the Colchester Institute. We are looking to the Minister tonight to put in motion the necessary steps to save the jobs and to retain full-time A-level courses. I invite him to use all the powers at his disposal to prevent the quango regime at the Colchester Institute from proceeding with its plans.
11.26 pm
Mr. Bernard Jenkin: I congratulate the hon. Member for Colchester (Mr. Russell) on obtaining the debate and am grateful for his permission to take part in it. I shall be extremely brief, noting how economical he has been with his time.

827
Many constituents of mine attend the institute, and many teach there. They have expressed concern to me about the present situation. It is about not just the availability of courses—we understand that A-levels are not the mainstream of the institute's work—but the way in which cutting A-level courses will affect the viability of exceptional departments such as music and, indeed, the institution's overall ethos. The institution provides vocational education in a context that also provides A-level and degree courses. That is important for everyone who attends it.
I would like the House to be aware that, on Friday, I had a private meeting with Mrs. Helen Parr, the principal of the institute. She was able to assure me that no current students attending existing courses would be affected by the changes that she proposes. She was also at pains to stress that she ran an open-door management policy and that any member of staff was welcome to see her. I asked whether I could attend such a meeting. She agreed that, provided that it was about general issues rather than particular employment issues pertaining to those members of staff, I could attend such a meeting. I hope to be able to do so and invite the hon. Gentleman to attend too, if he can.
The hon. Gentleman touched on a particular point. He asked whether it was Government policy to deprive the institute of the funds necessary to provide the courses that it currently provides. The principal described the bible of the institute as being the document entitled, "Colleges of excellence and innovation", which was accompanied by the remit letter from the Secretary of State for Education and Employment to the Learning and Skills Council. That advice has been reflected by a consultant paid for by the Further Education Funding Council, which has constructed the strategy for the institute and for A-level provision in north Essex. I ask the Minister to take responsibility for what is happening at the institute and to say as constructively as he can how things could be taken forward in a less confrontational way, with more consensus than is currently being achieved.
11.29 pm
The Parliamentary Under-Secretary of State for Education and Employment (Mr. Malcolm Wicks): I listened with interest to the concerns expressed by the hon. Member for Colchester (Mr. Russell) and congratulate him on securing this debate on behalf of his constituents. I listened also to the brief speech by the hon. Member for North Essex (Mr. Jenkin), who made some not dissimilar points.
I know that the hon. Member for Colchester is as passionately committed to maintaining and improving the provision of education and training in his constituency as he is to his beloved Colchester United. As someone who is not intimately involved with either institution, I wish them both well in coming seasons. I shall do my best to respond to his concerns. As he noted, we had a useful meeting in the Department on this very matter.
Further education colleges are independent corporations, and the governing body of Colchester Institute is responsible for management of the institute. It is that body that is responsible for the effective it management of its resources to safeguard the solvency of the college and its assets.
I noted the intervention of the hon. Member for North Essex, who urged the Government to intervene directly in the intimate affairs of that institution, but it was of course
828
the previous Government who established FE colleges as independent corporations. Although it is too late in the night to ask him whether that request for intervention represents another U-turn, he is asking me to intervene in an arrangement made by a Government so that Governments could not intervene in the business of FE corporations. I think that he is shaking his head, but I should be happy on another occasion to debate his inconsistencies with him.
The governing body and the principal are required to secure the efficient and effective management of all the college's resources and expenditure, capital assets, equipment and staff, so that the investment of public funds in the college is not put at risk. They are also required to plan and conduct their academic and financial affairs so that their total income, taking one year with another, meets their total expenditure. Those arrangements are subject to annual audit and a quadrennial inspection programme.
The institute was most recently inspected in March 1998, and it received good and satisfactory grades in its curriculum and cross-college provision. In February 2001, the Further Education Funding Council's regional office reviewed the college, with other colleges in the region, and was satisfied with the management of the college. Meanwhile, its latest external audit, undertaken by a reputable local firm, produced a satisfactory report. The institute is in financial health category A, which means that it has the financial strength to implement its strategic plans.
I should add, not least for the hon. Member for North Essex, that this Government are investing record resources in further education and our record compares well with that of the 18 years of the previous Government. I should add also that, in July 2001, the institute's principal, who is well regarded by local partners, is to leave the institute to take over a larger college.
The institute has decided that, with the introduction of the new Learning and Skills Council, and the more collaborative approach of education and training providers, it should concentrate on the provision of vocational programmes, for which it already has an excellent reputation. Indeed, my hon. Friend the Member for Harwich (Mr. Henderson) has brought to my attention some recent developments at the Clacton campus of Colchester Institute. He has been advised by the principal of the institute of additional new provision at Clacton that has been developed better to meet the vocational needs of local people. I am sure that the hon. Members for Colchester and for North Essex, who are from that region, will welcome that. The developments include the provision of call centre training, adult-friendly outreach information technology training and a variety of new vocational provision.
All that is consistent with the centres of excellence model that my right hon. Friend the Secretary of State for Education and Employment announced last November in his speech to the Association of Colleges. Our target is that half of all general further education colleges should have a vocational specialism in which they are regarded as a centre of excellence by 2004–05. The institute has kept the Further Education Funding Council fully informed of its plans, which build on a rationalisation study supported by the council's rationalisation fund.

829
As for the future, the recent introduction of the Learning and Skills Council—launched only last week, with a budget of £6 billion and about 6 million learners—ensures that that new non-departmental public body will assume responsibility for post-16 education.
I note that the hon. Member for Colchester was severely critical of the Learning and Skills Council. It has been operational for one week. No doubt his criticism is justified, but he is not its first critic, and I am sure that he will not be its last. Some were criticising it some months before it came into being. The council will include further education colleges in its ambit. They account for more than £3 billion of the total budget and have more than 3.5 million learners.
The Learning and Skills Council will be responsible for local learning strategic planning. A particular challenge for the new councils, as they take over responsibility for co-ordinating school, college and other 16-to-19 provision, will be to deliver the right combination of quality, flexibility and choice. They are charged with delivering education and training that meet local learners' and employers' needs.
That is why I have ensured that Alison Webster, the executive director of the local Essex learning and skills council—one of the 47 local learning and skills councils—has been kept fully informed of the developments at the institute. I have already drawn her attention to the concerns expressed by the hon. Gentleman about how the consultation exercise was undertaken. I know that she will want to ensure that all providers of post-16 education and training are accountable and responsive to the needs of students as well as of the wider community, including industry and commerce.
I understand of course the concerns of the people directly affected by possible job losses—the individual lecturers and support staff involved—but we also have to
830
consider the prospects of current and potential learners in Colchester. Their interests are best served by colleges and providers of learning that are demonstrably good at what they do and well managed.
I know that the institute has given a categorical assurance that existing full-time A-level students will be able to complete their courses of study at the institute. I have had assurances that there will be alternative, equally good provision of full-time A-level courses at Colchester sixth form college and at other local schools with sixth forms, and I am assured that they will respond positively and helpfully to the needs of all learners, including those who may not have at achieved very high grades at GCSE.
Indeed, the hon. Gentleman will recall that I gave him those assurances when I met him at the Department less than two weeks ago, and I shall write to him soon with the additional assurances that I have received from Alison Webster. I am equally certain that the institute will make every effort to try to help the individual members of staff who may be affected by the changes.
I am satisfied that the governing body has exercised its proper function. Its decisions are based on business and education considerations. Existing A-level students at the institute have been assured that they will be able to complete their courses of study, and there will be a choice of other local providers of full-time A-level courses for prospective students from September 2001.
The Learning and skills Council is in the lead in terms of post-16 arrangements designed to ensure that patterns of provision best meet local needs, drive up standards and encourage greater collaboration. Further education colleges have a vital role to play in delivering the high-quality education and training that people need to enable them to make the most of themselves and of the opportunities that are available to them.
Question put and agreed to.
Adjourned accordingly at twenty-one minutes to Twelve midnight.