Commons Sitting of 18 April 2002

Preamble
The House met at half-past Eleven o'clock
PRAYERS
MR. SPEAKER[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  LAND AT PALACE AVENUE, KENSINGTON (ACQUISITION OF FREEHOLD) BILL
  Read the Third time, and passed.

  LONDON DEVELOPMENT AGENCY BILL (By ORDER)
  Order for Second Reading read.
  To be read a Second time on Thursday 25 April.

Oral Answers to Questions
  ENVIRONMENT, FOOD AND RURAL AFFAIRS
  The Secretary of State was asked—
  ENVIRONMENT, FOOD AND RURAL AFFAIRS

    Modulation Proposals
    Mr. Michael Jack: What economic appraisal her Department has made of the effect on UK agriculture of the modulation proposals contained in Sir Donald Curry's recent report. [R] [46509]
    The Secretary of State for Environment, Food and Rural Affairs (Margaret Beckett): In discussion with stakeholders, others in Government, and the devolved Administrations, the Department for Environment, Food and Rural Affairs is considering the implications of the Policy Commission's proposals on modulation very carefully.
    Mr. Jack: I am grateful to the Secretary of State for that answer. Given the importance that Sir Donald Curry attached to modulation as a way of reforming UK agriculture, will the right hon. Lady commission some work to enable us to determine, for example, who the winners and losers are in the modulation stakes? Could she also help us by identifying the types of environmental goods that she thinks might be bought? Sir Donald tells us that there are many gains to be had in terms of the restructuring of UK agriculture and our rural development prospects by that means, but many UK farmers will be fearful that if we go the whole hog down his route, they will be trading in an uncompetitive situation, compared with their European rivals.
    Margaret Beckett: We are doing the kind of work that the right hon. Gentleman seeks. Let me explain further to him and the House; with his experience, I am sure that he
    682
    will understand. It depends on the exact nature of the schemes that are introduced who the winners and losers are and what the pattern is. Although he rightly says that the Policy Commission recommended that we consider modulation, we should bear it in mind that to a degree, that was the commission's fallback position. I do not think that I am misrepresenting the commission when I say that. It recommended that there should be a shift in the way that funding for the common agricultural policy is used; that if we were unable to obtain that shift as a result of more fundamental reform, we ought to consider using modulation more extensively; and that perhaps we should consider using modulation more than we propose at present, even in the run-up to change and reform. Of course, the right hon. Gentleman is right that these are serious issues, and the points that he raises are exactly the ones that we need to examine.
    As to how the funding might be used, I remind the right hon. Gentleman that the whole point is that we would wish to change the purposes for which the funding could be used and make the scheme less bureaucratic. That would involve support for rural areas in different ways, as well as possible environmental projects.
    Paddy Tipping: Although my right hon. Friend is right that our major target must be CAP reform, it may be some way away. Given that, is it her policy to increase modulation from the 4.5 per cent. target by 2006 to a higher percentage? If so, what hope has she of receiving extra resources to enable her to fund that?
    Margaret Beckett: I always live in hope. My hon. Friend raises an important issue. As part of the work to which I referred, we are considering carefully, as the Policy Commission recommended we should, whether there would be merit in increasing the percentage of modulation to which we are committed. We have concerns about the limitations on what can be done and the bureaucracy involved in people applying to schemes at present. That is partly why the rate of modulation to which we aspire was set at that level. That was regarded as practical, but we are considering afresh the advice of the Policy Commission.
    Mr. David Curry: The Secretary of State is rightly cautious about going down the proposed route. Does she recognise the dangers of erecting a surrogate green CAP, which would be even harder to reform than the present one, as the Royal Society for the Protection of Birds is a great deal more powerful than the National Farmers Union? Does she recognise that ill-defined public goods and complex schemes requiring intensive manpower and womanpower to monitor and yielding very little to farmers would not represent a significant reform or benefit? If we do go down that route, will she consider requiring farmers to group together to apply for the schemes, perhaps to encourage at last some collective working among British farmers, the absence of which is one of their great problems?
    Margaret Beckett: The right hon. Gentleman makes an interesting point. I do not think that anyone on the Labour Benches—and probably on the Conservative Benches—would disagree that we must be careful if we are successful in getting reform not to replace the current CAP with a scheme that is equally burdensome and

    683
    difficult. We all share that point of view. I also take his point about ways in which we might seek to use any change to encourage more co-operation in the farming community—another of the Policy Commission's many recommendations.
    Mr. David Drew: I should like to carry on in the same vein as the Chairman of the Select Committee on the Environment, Food and Rural Affairs. Surely in the aftermath of Curry, there is a great deal to be said about increasing co-operative working—an issue about which I asked my right hon. Friend during questions some weeks ago. Is there any better place to start than in the dairy industry, which clearly has significant problems regarding the scale of certain enterprises? The benefits of economies of scale can be achieved only by more co-operative working, which can be achieved in its own right only with encouragement. Will she talk to my right hon. Friend the Secretary of State for Trade and Industry to ensure that we look again at some of the structures in that industry that have not been helped by interference in the past?
    Margaret Beckett: My hon. Friend makes an important point about an issue that I know is of considerable concern. I have had many conversations not only with representatives of the NFU, but with individuals in the farming community, and I am aware that his concern is widely shared. The House will be aware that many of the Policy Commission's recommendations were not for the Government, let alone my Department. One of the recommendations is that we encourage the farming community to work much more co-operatively, in whatever sphere it may be.
    Mr. Peter Ainsworth: It is interesting to note how much more cautious the Secretary of State is now being on the question of modulation, which was the main thrust of Sir Don Curry's argument in his important report. Is this new tone of caution the reason why there was no mention in yesterday's Budget statement of modulation or the additional funding for which Sir Don called? Will she explain why the Budget offered not a shred of comfort for hard-pressed rural businesses, contained nothing to bolster economic activity in the countryside and promised only higher taxes? What comfort can she give that rural regeneration remains a top Government priority, and what does she propose to do now to rescue her credibility?
    Margaret Beckett: The hon. Gentleman said that I was now displaying greater caution, but I always display caution; he must have noticed that by now. I therefore reject entirely the charge that I was reckless on this issue in the past—especially if the Treasury is listening.
    The hon. Gentleman also said that there was no mention of modulation in the Budget, but I think that he and everybody else would have been very surprised if there had been, not least because, as Sir Don Curry and I made plain when the Policy Commission reported to the Government—indeed, we have continually done so ever since; I recall Sir Don doing so on "Farming Today" only a few days ago—the resources that are available are a matter for the spending review. That is not a matter for the Budget, except in terms of the very broad fiscal
    684
    envelope for the whole Government. My right hon. Friend the Chancellor explicitly said yesterday that decisions in the spending review had yet to be made.
    The hon. Gentleman said that the Budget contained nothing to bolster economic activity in rural areas. He cannot have been listening yesterday, otherwise he would have noticed the plethora of initiatives directed at assisting and supporting small businesses. Those initiatives are obviously of great value to businesses in rural areas. As to his final remarks about how I can retrieve my credibility, I do not think that they come well from somebody who does not seem to know the difference between the Budget and the spending review.
    Mr. Speaker: Chris Mullin. Not here.

    Animal Production
    John Thurso: If it is her policy to support animal production in remote areas; and if she will make a statement. [46511]
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): Livestock farming makes an important contribution to the economy of many remote areas, and the Government strongly support EU policies intended to encourage farming in those areas.
    John Thurso: I thank the Minister for that reply. Is he aware of the remarks of Sir John Marsh, chairman of the independent review group on veterinary medicines, who suggested that stock rearing in remote areas was economically unjustifiable? In the light of those remarks, what assurance can he give my constituents, for whom stock rearing is economically and socially very important, of the Government's intention to continue to support that area of endeavour? Furthermore, what is his view on the prejudice expressed by Sir John in his capacity as chairman of that review group?
    Mr. Morley: I have not read the remarks by Sir John, so I cannot comment on them. I can speak only for the Government, and we have repeatedly made it clear that we recognise the social and economic benefits of upland livestock farming. Grazing regimes are an important part of conservation programmes and conservation management. Serious issues are involved in the economics of upland grazing, but we are prepared to address them. We have put together several support programmes and packages. Moreover, we are consulting on the sheep envelope and the way in which we can use additional money and the flexibility that it provides to deal with some of the problems of remote livestock areas. They are very important and we as a Government will continue to support them.
    Mr. Adrian Flook: Many people in most, if not all, rural areas will be deeply concerned about views expressed in a report by the Countryside Agency, "Rural Proofing in 2001–02", which I briefly mentioned yesterday. To remind the House, it says:
    "Rural proofing is the process by which impact of policy on rural areas is evaluated."

    685
    Of the 11 Departments that have been asked to get involved in rural proofing, DEFRA has the worst record. When will it do more, and do it more quickly?
    Mr. Morley: With due respect to the hon. Gentleman, he may be misinterpreting what the report said about DEFRA. Ewen Cameron himself speaks highly of what DEFRA is doing and its rural programmes. I remind hon. Members that it was the Government who established the concept of a rural advocate and rural proofing. The whole idea of the job of a rural advocate is that if he thinks that the Government are not doing enough on rural proofing, he must point that out. We will take that charge seriously and respond to it.
    Mr. Speaker: Claire Curtis-Thomas. Not here.

    New Forest National Park
    Mr. Christopher Chope: What representations have been received from local authorities in response to the New Forest national park designation order. [46513]
    The Minister for Rural Affairs (Alun Michael): Eight local authorities have submitted representations in relation to the New Forest National Park (Designation) Order 2002. Seven of them raised objections to the boundary, to the proposed administrative arrangements, or to both.
    Mr. Chope: In the light of that response, can the Minister confirm that there will be a public inquiry, as the Countryside Agency promised that there would be if concerns were expressed by local authorities? Can he further confirm that that public inquiry's terms of reference will cover not only the issues relating to the boundary, but the controversy surrounding the proposed special administrative arrangements?
    Alun Michael: It is not for the Countryside Agency to take decisions about a public inquiry; it is required by the legislation. The National Parks and Access to the Countryside Act 1949 requires that an objection made by a local authority that is not withdrawn will cause a local inquiry to be held. I shall make an announcement about a public inquiry as soon as all the objections to the designated order have been received and fully considered. That is the time at which the detail of the hon. Gentleman's question should be dealt with.
    Mrs. Angela Browning: Irrespective of whether the New Forest is designated as a national park, when one approaches the area on many of the major trunk roads one is immediately struck by the number of brown tourist information signs. That is not only relevant to the New Forest, but has a read-across to other parts of the country, including the county of Devon. Rural proofing was mentioned a moment ago. Will the Minister confirm that the Highways Agency does not intend to reduce the number of brown tourist information signs in the New Forest or anywhere else, as we are hearing on our local television stations?
    Alun Michael: The hon. Lady should address her question to the relevant Minister, because it is a pretty long stretch from the question that we are dealing with.
    686
    National park status recognises the national level of importance of certain areas in terms of landscape, biodiversity and cultural heritage, as well as recreational resource. Those are the sorts of features that encourage people to go to those areas, and our policy is to try to ensure that they get the information that they need in order to find those local attractions. The way in which the national parks authorities are engaging with the regeneration of those areas is extremely encouraging.

    Climate Change
    Tom Brake: If she will make a statement on UK-US discussions about climate change. [46514]
    The Secretary of State for Environment, Food and Rural Affairs (Margaret Beckett): It is clearly important that we continue to maintain a constructive dialogue with the US on climate change. To that end, I held discussions on the subject with senior representatives of the Administration during my visit to Washington last week. In addition to ministerial discussions, UK officials are in regular contact with their US counterparts.
    Tom Brake: I thank the Secretary of State for her response, but does she not agree that the UK has worked hand in hand with the US in the international coalition to fight terrorism and it is now time for the US to work hand in hand with the UK, the EU and other communities to combat an equally important international threat to the global environment? Does she further agree that the UK's position is somewhat weakened by an increase in its CO2 emissions for the second successive year?
    Margaret Beckett: First, I agree that it is important to continue to work in co-operation with the US; we endeavour to do that. The hon. Gentleman may know that there is a high-level group in the European Union that maintains a dialogue with the US.
    People perhaps overlook the fact that President Bush's announcement in February about US domestic action related to the first Kyoto period, which ends in 2012. In the not-too-distant future, we shall need to discuss internationally what we all do when that period expires. We anticipate that discussions about the detail of further steps will begin as early as 2005. The US has decided recently that it will take action, and although it is perhaps not as stringent as we would like, we should welcome it. It is making investment available, and we also welcome that. We must encourage further moves in the right direction.
    Malcolm Bruce: May I express my frustration at the absence of the hon. Members for Sunderland, South (Mr. Mullin) and for Crosby (Mrs. Curtis-Thomas)? It means that other hon. Members and I were denied the opportunity to ask questions. It is disappointing when hon. Members table questions and do not turn up.
    However, I am grateful that my hon. Friend the Member for Carshalton and Wallington (Tom Brake) was here to press the Secretary of State not to follow the US Administration's view that trading emissions, rather than trading reinforced by regulation, is primarily the way in

    687
    which to resolve the problem of carbon dioxide. Trading, backed by the abolition of regulation, will damage, not improve the environment.
    The Secretary of State launched the trading emissions scheme in the United Kingdom. Will she acknowledge that it has had an early start, which has cost a lot of taxpayers' money, that we have some way to go to prove that trading emissions will help the environment, and that they cannot do that without effective regulation?
    Margaret Beckett: I certainly agree with the hon. Gentleman that there is a need for an effective balance and that we must use a range of instruments and approaches to tackle the serious problems. He correctly said that we recently launched our voluntary emissions trading scheme. Indeed, I am going to ascertain how it is working when I leave the House today. From the hon. Gentleman's comments I detected a slight note of criticism that the scheme was not a good idea.
    Malcolm Bruce: The UK scheme is simply not proven.
    Margaret Beckett: Well, I am glad if I misunderstood him, because it is good to have that on the record. The Kyoto protocol provides for such mechanisms and we believe that they have merit, although I fully accept that they are only part of a balanced approach.
    The hon. Gentleman rightly said that we have provided taxpayers' money as an incentive to encourage people to trade. We have done that because we believe that it could provide a substantial first-mover advantage in the long term. That also applies to other matters. We are considering an aspect of handling climate change that could provide a market of billions of pounds in the future. It is a valuable step for Britain to have the first-mover advantage and to build up experience in co-operation with business.
    I hope that I may be forgiven if I take the opportunity to pick up a point made by the hon. Member for Carshalton and Wallington (Tom Brake) to which I neglected to respond. He is right that there has been a small increase in our CO2 emissions. We must watch that, but overall, we believe that Britain is on the right course.
    Mr. Peter Ainsworth: I hope that the right hon. Lady will do more than watch the rise in CO2 emissions; I hope that she will seek to reduce them. Does she acknowledge that it is agreed on both sides of the Atlantic that tropical rain forests play a critical role in balancing the climate? In the light of that, will she confirm the Prime Minister's statement last week that all the timber supplied for the refurbishment work in the Cabinet Office was from certified sustainable sources?
    Margaret Beckett: That was certainly the contract that was placed, so far as I am aware. I know that allegations have been made, and, obviously, people are looking to see whether that contract was properly fulfilled. It was certainly the case that the Government abided by our approach, and our policy, that such timber must be supplied for all Government use.

    Genetically Modified Crops
    Jim Knight: What actions her Department has taken to ensure an even geographical distribution of trial sites for genetically modified crops. [46515]
    The Minister for the Environment (Mr. Michael Meacher): We have appointed an independent scientific steering committee to oversee the farm-scale evaluation programme of GM trials. It is content that the overall distribution of trial sites is in line with the aims of the research. It has confirmed that the distribution should reflect the geographic range over which the particular crop is grown in order, specifically, to represent the range of different management regimes that are used for the crop in the UK.
    Jim Knight: I thank my right hon. Friend for that answer, and I apologise for not being here for the beginning of questions, Mr. Speaker.
    I understand why the Government have negotiated these trials with the industry, and I appreciate that my right hon. Friend has talked about the need for improved consultation on the trials, which will be ending shortly anyway. A farmer on the edge of my constituency is particularly keen to help the Government with these trials, but the results of the consultation that we have had locally suggest that my constituents do not want them in their backyard. Why do we consistently seem to have these trials in Dorset despite my right hon. Friend's commitment to their even geographic distribution?
    Mr. Meacher: I understand my hon. Friend's concern, and I know that a number of sites in the parish of Bincombe in his constituency are involved in the current spring sowing round. I repeat that the spread of research sites aims to represent the range of management practice that is applied to crops within its geographic distribution. It is perfectly true that there is a cluster of several sites in Dorset, but that does not preclude the general principle. I must make the point, which I think my hon. Friend understands, that the sites are not chosen by the Government. The industry body SCIMAC—the supply chain initiative on modified agricultural crops—identifies the pool of candidate farms. The research bodies then select those that are most appropriate, in accordance with criteria set down by the independent scientific steering committee. That is the basis on which the selection has been made, but I take note of my hon. Friend's concerns, and they will certainly be taken into account in future.
    Mr. Keith Simpson: The Minister was careful in that reply to his hon. Friend, because he knows that this is an issue of great public concern. I acknowledge his statement that a scientific body is examining the matter, but the Government must, nevertheless, have a view on it. Will the Minister tell us why the separation distances between trial sites for GM crops are smaller in the UK than in other European countries? How can GM and non-GM crops co-exist while maintaining consumer

    689
    and farmer choice? Given the public concern over GM crops, does he believe that there will be a substantial market for them? That is a key issue for us all.
    Mr. Meacher: Separation distances were determined in negotiation with the industry to ensure that in every case, wherever possible, the amount of cross-contamination is below the 1 per cent. threshold. That threshold is reflected in the marketing arrangements that have been agreed in the European Union, and the separation distances have been fixed to reflect that. I am not aware of any differences between us and the EU. The main plant in the farm-scale evaluation trials is oilseed rape and, for ordinary, non-hybrid oilseed rape, the EU still proposes the 200 m separation distance that we use in the UK.
    We are examining the issue of co-existence. We have not had the results of the farm-scale evaluation trials, which we will not get until the summer of next year. We are considering contingency plans, whatever the results may be. That examination is in its early stages, so I cannot answer the specific point that the hon. Gentleman raised, which is a fair one, but the issue is certainly on our agenda.
    Whether there will be a long-term market is a matter for consumers, not for the Government. The Government are neither for nor against GM crops. It is for consumers to decide whether they want to eat GM food.
    Joan Ruddock: Does my right hon. Friend agree that, on the basis of the Agriculture and Environment Biotechnology Commission's report "Crops on Trial", the Government will not be able to rely on the results of the test trials to make a decision on commercialisation? Can he guarantee that there will be a proper public debate at the end of those trials, which will include the right to say no to the commercialisation of GM crops in this country?
    Mr. Meacher: Our policy is as scientifically based as it can be. We believe in sound science and its application. We need to listen to our scientific bodies, such as the Advisory Committee on Releases to the Environment, the Advisory Committee on Animal Feeding Stuffs and others, but we realise that it is important to take account of public opinion. We have asked the AEBC to advise us on how we can ensure that there is a wider public debate on this issue as the farm-scale evaluations come to an end. I only wish that it had been possible to have such a debate at a much earlier stage. There are such deeply polarised positions on this issue that it is difficult to conduct a genuine debate. We need such a debate, and the Government want to have one. We shall do our best to ensure that it is proper, balanced and fair.

    Refrigerator Recycling
    Mr. David Rendel: What steps her Department is taking to assist local authorities with the recycling of refrigerators. [46517]
    The Secretary of State for Environment, Food and Rural Affairs (Margaret Beckett): We have announced a payment of £6 million to local authorities to cover their costs from January 2002 to March 2002. An
    690
    announcement will be made very shortly regarding funding to cover local authority costs in the current financial year.
    Mr. Rendel: Is the Secretary of State aware that on 31 January the Minister for the Environment answered a question from my hon. Friend the Member for Gordon (Malcolm Bruce), in which he said that since late 1999 his Department had made frequent requests to the European Commission for formal clarification that insulating foam was covered by the regulation. He said:
    "We did not get a formal reply until June 2001. We were badly let down by the Commission".—[Official Report, 31 January 2002; Vol. 379, c. 414.]
    In the light of the comments that he made on Monday to the Select Committee on the Environment, Food and Rural Affairs, in which he apparently more or less retracted that statement, will the right hon. Lady ask him to apologise for his earlier answer not only to the House, but to my hon. Friend the Member for Gordon, to the European Commissioner and to all the local authorities who are now left with a bill of up to £40 million—not just £6 million—as a result of the mistakes made by her Department?
    Margaret Beckett: Absolute rubbish. I advise the hon. Gentleman to read the memorandum that my right hon. Friend and our officials prepared for the Select Committee. If he does so, he will find that all his questions are fully answered. My right hon. Friend tempered the high-flown language that he had used, but it is perfectly clear, as the memorandum to the Select Committee made plain, that there is a great deal of continual dialogue between the United Kingdom and the Commission and others, and that, not least at the request of the business community and local authorities, clarification continues to be sought. I do not believe for a second that my right hon. Friend owes anyone an apology. He and the Department have been most assiduous in trying to get the right result.
    Miss Anne McIntosh: Is the Secretary of State familiar with the European WEEE directive—the waste electrical and electronic equipment directive? As amended, it will extend its provisions to cover not just fridges but microwave ovens, stereo equipment, hoovers and all domestic white consumer goods. Is the right hon. Lady aware that that is causing great concern in the farming community? Many such items are dumped on farmland, and local authorities then charge the farmers for their removal. What does the Department propose to do about this?
    Margaret Beckett: We are looking closely at the directive's implications, how it can be handled, and how its purpose can be fulfilled in the United Kingdom. But I remind the hon. Lady—who, as a former Member of the European Parliament, will appreciate the distinction—that it is a directive, and that that provides some flexibility in regard to its implementation. The measure relating to fridges is a regulation, which gives no discretion: those are rules, which must be rigidly applied.

    691
    We are studying the new directive to see how we can best deal with people's concerns. I am grateful to the hon. Lady for raising a further important point.
    Mr. Jonathan Sayeed: I was surprised by the Secretary of State's answer to the hon. Member for Newbury (Mr. Rendel). I have read the evidence that the Minister for the Environment gave to the Select Committee, and it is clear that until this week the Minister blamed the European Commission for the fridge fiasco. In evidence that he gave three days ago, he effectively retracted that accusation, instead blaming everyone but himself. I understand, however, that the industry and officials from more than one Department warned him of the consequences of signing the directive, and that he chose to ignore them.
    My question is this: is that true? If it is not true, who is to blame? Does the Secretary of State accept ministerial responsibility for a monumental Government blunder that was not just predictable but predicted?
    Margaret Beckett: I am not aware of the slightest shred of evidence for what the hon. Gentleman has said. To my knowledge, no one has ever suggested that my right hon. Friend the Minister for the Environment was advised not to agree to the directive on those grounds; nor is there any evidence for anything else that the hon. Gentleman has said.
    The hon. Gentleman said that he had read my right hon. Friend's evidence, but it is clear to me that he has not understood it.

    Common Fisheries Policy
    Mr. Andrew Mitchell: If she will make a statement on the forthcoming review of the common fisheries policy. [46518]
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): The review is an important opportunity for the European Union to correct the faults of a policy which, as the Commission has acknowledged, has to a significant degree failed to fulfil its objectives.
    We will argue for a policy that is environmentally and economically sustainable, offers stakeholders greater involvement in management decisions, commands their support, and offers them a viable long-term future.
    Mr. Mitchell: As the Minister says, the 10-year term for the common fisheries policy is about to expire. As far as I am aware, there is no shred of evidence that it has had any real effect on the conservation of fish stocks. May I suggest, in a spirit of helpfulness, that now is the time to argue for the repatriation of fishing policy to nation states? If the Minister acts, perhaps we shall be able to conserve some of the British fishing industry while there is still time.
    Mr. Morley: I am not entirely sure what the hon. Gentleman means by repatriation to member states. Is he suggesting that we draw a line down the North sea and say, "Fish must not cross this line. You can follow certain
    692
    rules on this side of the line, but not on the other side"? That would be ludicrous. We must have a European fisheries management policy.
    There are weaknesses in the CFP, everyone realises that, but we are pleased that the Commission's Green Paper recognises the points being made by us in the United Kingdom and by our industry, and it is issues of this kind for which we shall be arguing.
    Lawrie Quinn: I am sure that my hon. Friend considered the contribution from the very inland hon. Member for Sutton Coldfield (Mr. Mitchell) to be important and timely, but is he aware that my constituents want to know what the Government and the European Union are thinking of doing in order to cultivate and train future fishermen, and to bring about the circumstances which we hope will result from reform of the fisheries policy?
    Mr. Morley: The European Union, through structural funds, recognises that it is legitimate for member states to use funds to support a range of training initiatives. We are doing that in the United Kingdom, for example by providing free safety training for all fishermen. I am glad to announce that, tomorrow, at the fisheries exhibition in Glasgow, I will launch a new apprenticeship scheme designed to provide training for new entrants to the fishing industry. We believe that, despite the problems of management, the industry has a good long-term future. We need to consider how to attract crew and ensure that people have a professional, safe and long-term future in what could be a very good industry for this country.
    Andrew George: Does the Minister agree that, although fish may not be that bright, we know that they are just about intelligent enough not to have hang-ups about their nationality? Seriously, does he agree that we should be concerned about the delay in the announcement of the route map for the review of the common fisheries policy? The fundamental reason why the policy has failed is over-centralisation. The main concern for the industry in this country is that any regional advisory committees that are set up should not be merely talking shops but should have real teeth and a real say in how policy is delivered in the fishing regions.
    Mr. Morley: I agree. One of the problems of the common fisheries policy is that it has been too centralised, inflexible and bureaucratic. That is why we warmly welcome the proposals in the Green Paper and the indications that the Commission intends to propose regional management structures. How those will work will be a matter for discussion and debate, and it is likely to be an evolving, stepping-stone process, but we believe that it is right to involve the industry in decision making in that way, as well as having a more regional, flexible approach, recognising the whole range of different priorities in the fishing industry in Europe, and indeed in our own country.
    Mr. Bob Blizzard: My hon. Friend will be aware that there is a strong feeling in this country that the fishing industries in many other European countries have survived the current common fisheries policy in better shape than our own. I ask him again to consider setting up a Government-industry taskforce, so that we can work

    693
    more closely with the fishing industry in a structured way, to work out, following the review process, how we may best survive what replaces the current common fisheries policy. We know that the Government cannot conjure up more fish in the sea, but I believe that we could work more closely with the industry and develop a plan for the future. We did it for the oil and gas industry—can we not do it for fishing?
    Mr. Morley: I am glad to report that, yesterday, at the high-level fisheries meeting, chaired by my right hon. Friend the Secretary of State, we had a presentation from the Fish Industry Forum on a strategy for the fishing industry. It was an excellent presentation and we agreed to hold meetings with the forum to develop its ideas in a joint working party, which certainly answers my hon. Friend's sensible proposals.
    David Burnside: As a student of history, I am sure that the Minister will agree that records that have now become public show that the Heath Government's negotiations with the European Union, then the Common Market, were among the most incompetent and damaging negotiations on behalf of any industry in the United Kingdom. Those records are well worth reading. Will he give a commitment that this country will not sign up to a new fisheries policy that the industry predicts will lead to further decommissioning of British fishing vessels, which are essential to our economy, especially in ports such as Kilkeel in Northern Ireland, and others all around the United Kingdom?
    Mr. Morley: I can certainly confirm that the hon. Gentleman is right, in that the records show that the fishing industry was sacrificed as part of a wider negotiating priority at that time, under a Conservative Government. I do not think that the Conservatives would dispute that.
    Decommissioning is but one approach to dealing with effort control and management. I concede the point that decommissioning is a double-edged sword. It has benefits for the industry in making remaining vessels more viable, but I am very sensitive to its impact on regional ports. I cannot guarantee that there will never again be decommissioning, because that depends on circumstances, but I can assure the hon. Gentleman that I understand his points, which are serious, and that they will be taken into account.
    Mrs. Ann Winterton: The Community has stated that
    "rooting out all discrimination, whether based on nationality, race or religion, is one of the basic objectives of the European Union."
    Does this not mean that within the new proposals, which I understand will now be considered by the College of Commissioners on 24 April, access to the living marine resource within Community waters shall be equal for all Community vessels, as set out in the basic principles of Community law?
    Mr. Morley: They are part of the Community law which Britain was signed up to by the Conservative Government. However, before we start on the scare stories for the fishing industry, we should remember that the important factors are access to quota and relative stability. Enlargement of the European Union does not
    694
    give new or existing member states the right to unlimited fishing in our waters because fishing is governed by the level of stability and access to quota which we do not intend to have changed or disrupted.
    Mr. Kelvin Hopkins: Will my hon. Friend confirm my understanding that the only country in western Europe successfully to maintain its fishing stocks is Norway and that it is significant that, for obvious reasons, Norway is not part of the common fisheries policy? Would it not therefore be sensible for the European Union, and maritime member states such as Britain, to look to what Norway has done to conserve stocks? Finally, does my hon. Friend agree that it is possible that some of the fish that we are catching in the North sea were unwise enough to swim out of Norwegian waters?
    Mr. Morley: Of course there are lessons to learn from other countries. We have discussions with Norway and Iceland about their fisheries management. However, their circumstances are different from ours as they are much more of a single-species fishery, which is easier to manage than a multi-species fishery such as ours in the North sea. I should also say that their fisheries management is not always perfect and that Norway has had problems in the past in relation to overfishing. The Norwegian position in the recent negotiations on deep water stocks was quite disgraceful; it was unsustainable and not worthy of a country that has always set high standards of conservation.

    North Sea
    Mr. Mark Lazarowicz: If she will make a statement on the outcome of the fifth international conference on the protection of the North sea. [46520]
    The Minister for the Environment (Mr. Michael Meacher): I represented the UK at the fifth North sea conference in Bergen, Norway, on 20 and 21 March. The outcome was an agreed declaration for further action to protect a whole range of aspects of the marine environment. I have placed copies of the declaration, together with copies of the report on progress made since the fourth North sea conference, in the Library of the House.
    Mr. Lazarowicz: I should like to welcome the progress made at the conference. As my right hon. Friend is aware, one of the issues that was covered was the problem of the dumping of ballast water by shipping in the North sea which has major and damaging consequences for native species in the oceans and seas around Britain. What steps does he intend taking to implement the recommendations of the conference in respect of the dumping of ballast water?
    Mr. Meacher: I recognise that this is a significant problem. I also attended the sixth conference of the parties to the convention on biological diversity in The Hague yesterday. I am glad to report to the House that we agreed a set of principles for international control of invasive alien species, many of which are inadvertently transferred through ships' ballast water. The UK has a major role

    695
    in the International Maritime Organisation to develop the convention to control the transfer of harmful species in ballast water. The work is ongoing and very important. Chinese mitten crabs, which have been very destructive of species in estuaries and almost certainly came to this country from ballast water, are a good example. The results from the meeting in The Hague will have a major role for the UK in preventing this from happening in future.

    Foot and Mouth Disease
    Paul Flynn: What her latest calculation is of the total sum overpaid to farmers, valuers, slaughtermen and farm cleansers during the foot and mouth disease outbreak. [46521]
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): We have identified £9.4 million of overpayment, of which £8.2 million has been recovered so far. In addition, the NAO and EU are undertaking audits of our expenditure and we await their findings.
    Paul Flynn: Has my hon. Friend studied the Comptroller and Auditor General's report on the case of Mr. Joseph Bowden, who attempted to defraud his Department of nearly £500,000? The Comptroller and Auditor General is concerned that that case was discovered virtually by accident. Mechanisms to discover such cases in the future will not be in place until 2004. Given that subsidies and compensation for farmers cost the country £5.25 billion last year—equivalent to £700 for every family in the land—should not the best mechanisms be put in place to detect all fraud, especially as most of those who are paying for such subsidies work in industries that receive not a single penny in compensation or subsidy when they themselves are in trouble?
    Mr. Morley: It is right that, wherever public funds are used, controls are necessary to ensure that fraudulent claims are not made. The points that my hon. Friend raises relate to two issues, the first of which is the recent foot and mouth outbreak. I can assure him that we are still disputing several claims. Forensic accountants are examining the number of claims being made to the Department in respect of contractors and compensation for animals. We will not pay those claims unless they are backed up by proper invoices, and are based on a justified valuation. On the management of subsidies in general, we are investing in new technology and new procedures to ensure that the public interest is protected, and that any claims have a legal basis within the common agricultural policy.
    Michael Fabricant: Is not the real concern to ensure that no similar outbreak of foot and mouth occurs in future? What steps is the Under-Secretary taking to ensure that contaminated meat is not imported into the United Kingdom, given that the number of Customs officers has still not been increased? When will he finally agree to the pleas from farmers and others—
    Mr. Speaker: Order. The hon. Gentleman's question is far outwith the range of the original question.

    Food Imports
    Mr. Geoffrey Clifton-Brown: What plans she has to overhaul the regulations governing food imports. [46523]
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): A wide range of legislation governs all aspects of food imports. In particular, regulations dealing with veterinary checks on imports of animal products from third countries are being amended to bring them up to date and fully into line with European rules. They will soon give enforcement officers the power to search personal baggage for illegal imports of meat and other animal products.
    I have also raised with the European Commission the need to tighten and clarify rules on personal imports. In addition, we have produced an action plan that details the further measures that we are putting in place to combat illegal imports entering the country.
    Mr. Clifton-Brown: My hon. Friend the Member for Lichfield (Michael Fabricant) was doing his best to pinch my lines. Under the rules of the House, I am required to draw attention to my farming interests.
    I thank the Minister for that most helpful reply. As he knows, in the past five years this country and the agriculture industry in general have suffered the devastating epidemics of swine vesicular disease and foot and mouth disease, both of which are thought to be caused by illegal food imports. The matter is therefore very urgent, and although he said that he is discussing it with the European Union, can he say when the outcomes of those discussions are likely to be implemented, and will he publish all the details of those discussions? In the light of the point made by my hon. Friend the Member for Lichfield, will he liaise with Her Majesty's Customs and Excise to ensure that more inspectors are provided, and that they police illegal food imports into this country more rigorously?
    Mr. Morley: All these issues are in the public domain, and in fact, my right hon. Friend the Secretary of State participated in a meeting with interested parties concerning the steps that we need to take now and in future. I should emphasise that immediate steps, such as talking to airlines, are being taken. In some African countries, airlines that fly to the UK question passengers about what they are carrying and remind them about the rules that are in place. Posters are being put up, and increased powers are being given to our enforcement agencies at points of entry.
    All these issues are important and we take them seriously, but I should point out that border control forms only one part of disease control. We must also give equal consideration to aspects such as animal movements and biosecurity.
    Mr. Alistair Carmichael: On the question of border control, I can tell the Minister that 15 years ago my constituency had 25 Customs and Excise officers on Shetland and 18 on Orkney. This year, we have three on Shetland to cover both island groups. That situation is replicated throughout the country and that is

    697
    what leaves us vulnerable to illegal meat imports. In the context of the loss to the economy from the foot and mouth outbreak last year, does he not agree that cuts in the number of Customs officers are false economies?
    Mr. Morley: Of course that needs to be taken into account and the costs of foot and mouth were catastrophic. I suggest to the hon. Gentleman that his question needs to be put to the Treasury Ministers, who are responsible for Customs officers. It is not a matter for my Department. However, we have commissioned a risk assessment to help us to allocate additional resources, if a case is made for them. We need to know where the risks are in terms of points of entry, and which areas we need to concentrate on and perhaps provide with more resources. Those points are being taken into account.

    Genetically Modified Crops
    Alan Simpson: What measures are in place to ensure that crops involved in GM field/farm trials are prevented from entering the animal feed chain; and how these measures are enforced. [46524]
    The Minister for the Environment (Mr. Michael Meacher): Material from the farm-scale trials is either incorporated into soil or goes to landfill. For the oilseed rape and beet crops, that is a statutory rule enforced by our GM inspectorate. The maize in the farm-scale trials is not subject to the same requirement, but the industry has agreed that it will not be used for food or feed.
    Alan Simpson: When I tabled the question, it was an attempt to discover whether we had adequate mechanisms in place to ensure non-contamination of the food chain and effective penalties to deal with transgressions. I was slightly concerned by the latter part of the Minister's answer, because I have been supplied with details of specific ways in which parts of the GM crop trials have been allowed into the animal feed chain. I know that the Minister takes contamination issues as seriously as I do, and in a previous answer he made the point that ultimately it is for consumers to decide whether they wish to consume GM products. If I can provide him with details of GM crops being fed into the animal feed chain, will he assure me that those responsible will be prosecuted, rather than fobbed off with assurances from an industry that does not enforce the standards to which the Government claim we are committed?
    Mr. Meacher: Yes, I am happy to give my hon. Friend that assurance. If he will give me details, I will follow them up and if an offence has been committed we will certainly prosecute. I am aware of two examples. In one it was alleged that cows were grazed on GM maize stubble at a farm-scale evaluation site in Dorset. We checked that report and the farmer confirmed that it did not happen. The other example was when some maize from the trials was used in a cattle feeding study at Reading university. During the study and for the period thereafter no milk from the animals concerned was allowed to enter the food chain and the animals were not used to produce meat for human consumption. My hon. Friend may have been referring to one of those examples, but if he has other evidence I will certainly follow it up.

    Hunting With Dogs
    Mr. Gordon Prentice: If she intends to publish a consultation paper setting out her proposals to amend the law on hunting with dogs. [46525]
    The Minister for Rural Affairs (Alun Michael): I am pleased to confirm that I have written to all Members of this House and of another place, and to a wide range of interest groups, seeking comments and evidence on practical issues related to hunting, as set out in my statement to the House on 21 March. A copy of the letter is in the Library of the House.
    Mr. Prentice: I have read the excellent letter penned by my right hon. Friend, but it does not constitute a consultation document. Can he cite any previous example of the Government consulting on forthcoming legislation without publishing a consultation document first?
    Alun Michael: As legislation is prepared, people have a variety of occasions to contribute to the process. In my statement on 21 March, I made very clear the principles on which legislation will be prepared, as a result of the six months of discussion and drafting. That will involve considering both aspects of cruelty and practical issues for the countryside, such as pest control, wildlife management and conservation. The process will depend on the contributions that are made and the way in which organisations wish to engage in discussion on those issues. I look forward to hearing from people who have a constructive contribution to make to the debate in the next few weeks.

Business of the House
12.30 pm
Mr. Eric Forth: May I ask the Leader of the House for the business for next week, please?
The President of the Council and Leader of the House of Commons (Mr. Robin Cook): The business for next week will be:
MONDAY 22 APRIL—Continuation of the Budget debate, in which the theme for the day will be enterprise and opportunity for all.
TUESDAY 23 APPIL.—Conclusion of the Budget debate, in which the theme for the day will be health.
WEDNESDAY 24 APRIL—My right hon. Friend the Prime Minister will propose an Humble Address to celebrate the golden jubilee of Her Majesty the Queen. [HON. MEMBERS: "Hear, hear."] I am glad that there is an all-party consensus. Second Reading of the Nationality, Immigration and Asylum Bill will follow. That will be followed by consideration of a Lords consequential amendment to the Commonhold and Leasehold Reform Bill [Lords].
THURSDAY 25 APRIL—There will be a debate on international development on a motion for the Adjournment of the House.
FRIDAY 26 APRIL—There will be a debate on the quality of life in local communities on a motion for the Adjournment of the House.
The provisional business for the week after will be:
MONDAY 29 APRIL—Second Reading of the Tobacco Advertising and Promotion Bill [Lords].
TUESDAY 30 APRIL—Second Reading of the Finance Bill.
WEDNESDAY l MAY—Second Reading of a Bill making the necessary legislative changes to national insurance following the statement by my right hon. Friend the Chancellor of the Exchequer.
THURSDAY 2 MAY—There will be a debate on Wales in the world on a motion for the Adjournment of the House. [HON. MEMBERS: "Hear, hear."' I am grateful for the approbation of the House.
FRIDAY 3 MAY—The House will not be sitting.
I should also like to inform the House that business in Westminster Hall for May will be:
THURSDAY 2 MAY—A debate on women and information technology.
THURSDAY 9 MAY—A debate on the report from the Trade and Industry Committee on the end of life vehicles directive.
THURSDAY 16 MAY—A debate on the report from the Transport, Local Government and the Regions Committee on empty homes.
THURSDAY 23 MAY—A debate on the role of the United Nations.
The House will wish to know that on Wednesday 1 May, there will be a debate relating to the promotion of the use of biofuels in road transport in European Standing Committee A.
[Wednesday 1 May 2002:
European Standing Committee A—Relevant European Union document: 15500/01, Promotion of the use of biofuels in road transport; Relevant European Scrutiny Committee Reports: HC 152-xix, HC 152-xxii, (2001–02).]
Mr. Forth: I am grateful to the Leader of the House for giving us that notification of the business. Will he please find Government time in the very near future for a debate on the future of agriculture? It is a very long time since we have had such a debate. Since the very damaging effects of foot and mouth, given that there was nothing in the Budget for agriculture or rural communities, and as it would appear that the countryside is in general revolt, I would have thought it was in the interests of the Government, and certainly of the House as a whole, that we had a full day's debate on the future of agriculture in order that we can sort out those matters.
I was interested in the announcement of consideration on 1 May of a Bill on national insurance. I know that I May used to have a political significance, of which the Government obviously do not want to remind us, but perhaps it is an appropriate day to debate such a Bill. As the Bill obviously has major tax and policy implications, will have an effect on both individuals and businesses and we will surely need a considerable amount of time in order properly to consider it, and in essence, reality and substance it is a taxation Bill, will it or at least its substantial aspects be dealt with on the Floor of the House? Will the Leader of the House guarantee adequate time in Committee, either on the Floor of the House or Upstairs, for all its implications to be considered?
National insurance increases of the kind the Chancellor mentioned yesterday represent a major policy and directional shift by the Government. I hope that we can have an assurance from the right hon. Gentleman that the House will be able properly to consider them in all their aspects.
On the Tobacco Advertising and Promotion Bill, the Leader of the House will know that, under consistent pressure, the Government have been forced to notify the Bill to the authorities of the European Union. It was only as late as 28 March that notification was finally made, as is required by a number of EU directives. Member states are obliged to notify Bills that have an impact on the internal market.
The purpose of notification is to provide an opportunity for the Commission and other member states to comment if they consider that the proposed legislation has the potential to create a technical barrier to trade. Given that, and given that it is also a requirement that any resultant substantial changes to legislation must be allowed for, can the Leader of the House tell me whether he believes we can embark on the Bill's Second Reading during the notification period or, more important, on its Committee and Report stages. I know that this is one of the obvious benefits of our membership of the European Union, but it strikes me that there are considerable implications for the procedures of this House and the timing of legislation, not least this Bill. I hope that the right hon. Gentleman can advise us how far he believes the Government can take this Bill during the period of notification, which may indeed be extended beyond the initial three-month period starting from 28 March.

701
Finally, I remind the House of the sensational developments that occurred in this place on 15 April when the hon. Member for Hayes and Harlington (John McDonnell) said to Mr. Deputy Speaker at col. 420:
"Can I ask you to reconsider the procedure for private Bills to prevent this abuse of the House by the Prime Minister?"
He went on to say in column 421:
"I believe that the process has been corrupted and tainted by the Prime Minister's intervention."
Later in column 421 he referred to communications between the City corporation and the Prime Minister, and asked in column 422 whether we could
"therefore clarify and investigate the relationship between the City corporation and No. 10".
The hon. Gentleman finally repeated his belief in column 422 that
"the process has been corrupted as a result of the Prime Minister's intervention".—[Official Report, 15 April 2002; Vol. 383, c. 420–22.]
In my 19 years in this House I do not think that I have ever heard a Government Back Bencher accuse his Prime Minister of corruption, of abuse and of tainting the procedures of the House. These are very serious allegations. Given that the Prime Minister is the custodian of the ministerial code of conduct, who will implement and police that code of conduct in the context of these very serious allegations? It is a matter for the House, and something to which we are therefore obliged to return. I hope that the right hon. Gentleman will allow time urgently and soon for the House to go into these very serious allegations, and possibly for the Prime Minister to appear so that he can answer them.
Mr. Cook: Let me seek to respond to the points that the right hon. Gentleman has raised; I will save until the end the serious issue of substance in respect of the forthcoming national insurance Bill.
On agriculture and the countryside, I am well aware of the feeling in a number of quarters in the House that it would be valuable to have a debate on the countryside. I am not resistant to that, but it has to join the many other things that we have to consider. However, I think that the right hon. Gentleman was rather unfair about spending on the countryside as farming and rural businesses have received substantial support in the wake of the foot and mouth outbreak.
On the Tobacco Advertising and Promotion Bill, the right hon. Gentleman is quite right to say that an issue is being pursued in Brussels that conforms with the regulations there. It is being pursued in parallel with the legislation here, and I would greatly regret it if the House decided to suspend proceedings on the Bill. It is a very important health measure that will literally save lives, and it has substantial support on both sides of the Chamber. I therefore hope that we can proceed in parallel with the discussions in Brussels. I am confident that my colleagues there will put up a robust case and that those in Brussels will agree with us. The Bill is not a barrier to trade but it is a barrier to cancer and therefore deserves the support of all Members.
Mr. Dennis Skinner: Tell them to get stuffed.
Mr. Cook: I thought that I had just done so, but in a rather more parliamentary way.
702
I hope that the right hon. Gentleman gave notice to my hon. Friend the Member for Hayes and Harlington (John McDonnell) that he was going to name him in his question. I note that my hon. Friend is not here. Given the extent to which the right hon. Gentleman quoted him, it would have been fair to give my hon. Friend advance notice. In mitigation, however, I am sure that my hon. Friend will be intensely flattered to have been quoted at such length by the Opposition.
On the issue of substance, I think that the right hon. Gentleman rather overdid the synthetic rage. The City of London (Ward Elections) Bill has come before the House on many occasions and has been debated exhaustively. I thought that it was supported by the Conservatives, but I may have misunderstood the Opposition's relationship with the City of London. I am sure that people in the City will read the right hon. Gentleman's observations with interest.
Technically, of course, any business motion is tabled in the name of the Prime Minister. The motion to dispose of the Bill was a collective decision of Government as, although it is a private Bill, it has been before the House many times. I assumed that the motion would have been welcomed by those Conservative Members who support the Bill. I think that the right hon. Gentleman's indignation is especially synthetic because, whereas the motion was to suspend the 10 o'clock rule, proceedings on the Bill got nowhere near 10 o'clock but had been concluded by 8 o'clock.
The right hon. Gentleman raises an issue of substance in connection with the national insurance Bill. He reminded the House that 1 May is a date of deep significance. It is the anniversary of the historic landslide with which the Labour party pushed the Conservative party into opposition. It is the date from which we were able to address the previous Conservative Government's under-investment in the health service. We are proud that, over the course of two Parliaments since 1 May 1997, we will have doubled the investment in the national health service that we inherited. The national insurance Bill is important in enabling us to do that, and for that reason will be supported by all Labour constituents, and by most Conservative constituents.
Linda Gilroy: I am sure that my right hon. Friend will have been following with interest details in the press of what is happening with ntl and ITV Digital. My hon. Friends the Members for Preseli Pembrokeshire (Mrs. Lawrence) and for Battersea (Martin Linton) and others met my hon. Friend the Minister for E-Commerce and Competitiveness this morning. We discussed the implications for competitiveness, the digital action plan, and for hundreds of jobs in the constituency of my hon. Friend the Member for Preseli Pembrokeshire—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Lady is not getting us off to a good start. We do not want statements; we must have questions. A great many hon. Members wish to speak, and I appeal to them to be very concise.
Linda Gilroy: Will my right hon. Friend the Leader of the House agree to an early debate on this very important topic, which is at a critical stage?
Mr. Cook: I fully understand the concern expressed by my hon. Friend and by many hon. Members about the

703
current crisis in digital TV. It is very important that we take forward our commitment to digital TV, as we intend to do. We must make sure that we absorb the lessons from this matter and see whether we can mitigate its impact. My hon. Friend asks for a debate on the matter. Earlier, I announced a debate on women and information technology, which will take place in Westminster Hall. I am sure that many points relevant to digital TV can be raised in the context of that debate.
Mr. Andrew Stunell: I thank the Leader of the House for his statement. Will he be able to find time for a debate on education? That is especially important, given that the Chancellor produced only a minimal amount of money for education in yesterday's Budget statement, and that there will be a national announcement on class sizes next week. My own local authority, Stockport, still receives £830 per child less than neighbouring Manchester. I know that the hon. Members for Staffordshire, Moorlands (Charlotte Atkins) and for Lichfield (Michael Fabricant) and my hon. Friend the Member for Somerton and Frome (Mr. Heath) are in the Chamber and that they share my view about the need for a debate.
Will the Leader of the House also find time for a debate on House of Lords reform? A remarkable silence seems to have fallen on that matter, which has led to rising fears of a split in Government thinking on what is a very important matter.
Will the Leader of the House also arrange for a debate on the state funding of political parties? A wide range of views appears to be emerging from the Cabinet, and some clarification of the Government's approach would be helpful. It might also help to clarify the Conservatives' approach. They have recently sent out an invitation to a
"Gold level briefing…£500 Membership…exclusive Policy Renewal Programme events, attended by…Shadow Cabinet Ministers."
Those kind of gimmicks might no longer be needed.
Mr. Cook: Perhaps I can suggest to the hon. Gentleman that he might usefully reread the Chancellor of the Exchequer's Budget statement yesterday. He will find, at column 588 of Hansard, a strong commitment from this Government to investment in education. The Chancellor clearly stated that not only did we increase the share of the national income going into education in the last Parliament, but we fully intend to raise it again in the course of this Parliament. Next to health, education is a priority for this Government's investment in public spending and we are proud of that record.
On Lords reform, the hon. Gentleman made the preposterous suggestion that there was a split within the Government on this question. As he is interested in progress on this matter, however, I advise him and the House that, this morning, I believe, the Lord Chancellor has given an interim response to the Select Committee. Of course, many of the major questions that must be addressed are those that we are considering in the period of reflection following the consultation. I assure the House that, as soon as we have reached a conclusion on this matter, I shall bring it to the House in the expectation of support. I hope that the unity that will then be shown in the House will reflect the harmony and unity within the Government on this question.
704
I am slightly surprised, however, that the hon. Gentleman should express concern about different views within the Government on state funding. We have made it clear, and the Prime Minister has made it clear, that we would welcome a public debate on the matter, and it is very important that members of the Cabinet should be free to take part in that public debate without necessarily first adopting a collective line and then seeking to impose that collective line on the party, on Parliament and on the public. I said the other day, and I am happy to read it into the record, that in 1974 I stood on the commitment of my party to introduce state funding. I believe that it would have been better had we acted on it then. Political parties are an important part of the parliamentary process. One cannot have a parliamentary democracy without healthy political parties. It is very important that we identify the least unacceptable way of making sure that they are healthily funded.
Andrew Bennett: Could we have a debate early next week on the future of the London underground before the contract for that is signed? Is the Leader of the House aware of the very considerable concern in the Select Committee that the Chancellor or one of his Ministers is not prepared to come before the Select Committee to justify the policy that he is pushing through, which would be disastrous for the London underground?
Mr. Cook: I have, of course, seen the Select Committee report, and it is on a matter on which we have had exchanges in the House previously. My position remains the same as when we last had an exchange on this point. Treasury Ministers are willing to come before any Select Committee provided that it is on matters within the remit of the Treasury. That is why a Treasury Minister has appeared before the Transport, Local Government and the Regions Committee to consider matters in relation to the landfill tax, for instance, and has appeared before the Northern Ireland Affairs Committee on a similar tax and duty issue. It was a very important principle of ministerial accountability that those Ministers with responsibility for transport or local government, for example, should appear before the Select Committee and give evidence and answer questions on those matters. It is very important that we preserve that principle of ministerial accountability because all Select Committees would be undermined if it were broken.
Mr. Henry Bellingham: Will the Leader of the House find time today to look at the case of Paul Drayson, who is the chief executive officer of PowderJect. One moment he gives £50,000 to the Labour party and, lo and behold, the next moment his company gets a £32 million order from the Department of Health for smallpox vaccine. That contract was not put out to open tender. Surely we should consider this matter. Is not a pattern of sleaze emerging in which we are seeing cash for favours? Can we have a debate on this, please?
Mr. Cook: First, PowderJect won that contract because it is one of five companies that bid for it, and it put in the best tender. That is why it got the contract; there is no other reason. If the hon. Gentleman really wants to have an honest and open debate on this question, there is one simple way in which the Conservative party can help.

705
We have changed the law so that company donations are recorded and open, and everybody knows what companies have made donations to the Labour party over the past five years. Nobody knows, except the Conservative party, who made donations to the Conservatives in the last five years of the Conservative Government. If the hon. Gentleman really wants to pursue the issue, why does he not take it up with his own party and get it to publish—it has the information—all the data on who gave it donations in the last five years of the Conservative Government?
Dr. Brian Iddon: Events in the middle east have dominated the world headlines in the past few weeks, but another equally serious dispute has been raging in the state of Gujarat. The official figures for the number of dead there are 900, but the real figure is likely to exceed 2,000. As serious allegations have been made against the state government and, indeed, against the national Government, will my right hon. Friend arrange for a statement to he made in the House so that those hon. Members with many people in their constituencies with relatives and friends in the region can be made aware of the true facts?
Mr. Cook: My hon. Friend raises a grave issue that is of deep concern to many communities in Britain because of the strong ties between our country and the sub-continent. I have followed with deep concern the mounting death toll and will look with interest at recent reports. I cannot promise him a statement, but I shall certainly draw his observations to the attention of my right hon. Friend the Foreign Secretary and will invite him to write to my hon. Friend.
Sir Michael Spicer: With reference to the answer that the right hon. Gentleman gave me last week saying that he stands ready to amend the data protection legislation so that Members of Parliament will be able to represent their constituents more adequately, will he tell us the Lord Chancellor's view on the matter?
Mr. Cook: I am happy to say that we are in discussions with the Lord Chancellor's Department, which has Ministers in this House. There is no division between us about the fact that there is an issue that needs to be addressed. Whether it needs to be addressed by legislation or by other means is a matter for exploration, but I am fully seized of the Alice in Wonderland results that some Members have experienced when pursuing constituency cases. The problem needs to be resolved.
Fiona Mactaggart: I was pleased to hear that a response has been published today to the Select Committee report. However, we have been told that it is merely an interim response, so can we have a statement on how the debate on the future of the reformed second Chamber will be conducted and on when we will have some decisions from the Government?
Mr. Cook: I am sure that this issue will be ventilated repeatedly in the Chamber, and I look forward with anticipation and delight to answering my hon. Friend's oral question in 10 days' time. However, I cannot promise a statement until we have carried out our reflection and come to a considered view. In the meantime, we have
706
given what I fully acknowledge is a holding response to the Select Committee. I hope that, in the fulness of time, we will be able to respond more fully to the major points that it raises. I welcome its report. It showed that it is possible to find a centre of gravity around which reformers can unite. I hope that we can find such a point in Parliament.
Mrs. Angela Browning: I urge the Leader of the House to reconsider his response to my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) on the issue of a debate on agriculture. We have just received the most damning report from the Countryside Agency about rural proofing across Departments, an initiative that this Government introduced. However, when I put a question about brown tourism signs to the Minister for Rural Affairs during DEFRA questions, he referred me to another Minister altogether. He suggested that I had asked the wrong person and did not seem to appreciate that DEFRA has the lead on this matter. If Ministers do not realise that, a debate on the Floor of the House may help them along the way.
Mr. Cook: I am not sure that that was quite the most convincing case that I have heard for a full day's debate in the House. I do not agree with the hon. Lady's characterisation of the Countryside Agency's report, but it certainly found areas in which further progress needs to be made. It was, of course, a report on the first year of what is a three-year strategy.
I repeat to her and to the House that I understand the real interest in the House in countryside issues. I shall certainly keep in mind the possibility of a debate on such matters should the opportunity arise. I will not disguise from the House, however, the fact that, as the Session progresses, we shall have a lot of business to get through.
John Cryer: Following the question from the Liberal Democrats' spokesman, the hon. Member for Hazel Grove (Mr. Stunell), may I ask my right hon. Friend to find time for a debate on the future funding of political parties? The idea that state funding of political parties could be introduced is something that some of us oppose on principle. I pay my subs to the Labour party, and I do not want to pay them to any other party. The idea that my taxes could go towards funding that lot over there or even to those nice, cuddly Liberal Democrats is anathema and sticks in my craw. Could we have a debate or perhaps at least a statement on the issue?
Mr. Cook: I assure my hon. Friend that if he were to contemplate paying subscriptions to any other party, he would have severe difficulty receiving the Labour Whip in the House. Of course I understand his reluctance to subsidise other parties, but I put it to him that it is very important that we find a way in which political parties can be funded—not excessively, but appropriately—and in a way that is accepted as legitimate and proper. My hon. Friend has to ask himself whether he regards the Conservative party's present way of funding as necessarily legitimate and proper and, if not, whether he is prepared to contemplate other ways in which we might go about the possibly distasteful but necessary task of funding the Conservative party.
Mr. Andrew MacKay: As the Leader of the House was in his place yesterday afternoon, he will

707
clearly recall that my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) asked the Prime Minister whether he thought it right that six Parliamentary Private Secretaries, including his own, had voted against the Government's policy on specialist schools on Tuesday. The Prime Minister replied:
"No, I believe that the position of the Government was right."—[Official Report, 17 April 2002; Vol. 383, c. 573.]
In the light of that and the fact that none of those PPSs have even resigned or been sacked, as would have been the case previously, can we have an urgent debate on the ministerial code and collective ministerial responsibility?
Mr. Cook: Of course my right hon. Friend the Prime Minister was right and the Government's policy is right, and the right hon. Gentleman would not expect me to demur on either of those propositions. However, it is fair to recall that the Division on that occasion was on a private Member's motion, about which other private Members decided on their own way to vote. We can possibly get a little too pi, simultaneously demanding that Governments should be open minded and permit open debates and that they should crack down, like Torquemada, on anyone who steps out of line, even on a private Member's motion. If we could restore a sense of proportion, it would help everyone.
Mr. Bill Tynan: Is my right hon. Friend aware of the serious allegations in the media regarding Dungavel immigration detention centre? If he is, will he consider, because of the seriousness of the situation there, whether the Home Secretary should make a statement to the House about those conditions to ensure that people understand that they are not as reported in the press, as that would give some comfort to my constituents who have raised the issue with me?
Mr. Cook: My hon. Friend raises that issue from a legitimate and proper perspective. I have seen some of the reports in the Scottish press, as he will be aware, and I am interested to hear that they do not necessarily reflect the correct and full picture, as is so often the case. That matter was raised at business questions last Thursday, since when we have approached the Home Secretary to draw his attention to it. I will ensure that my hon. Friend's remarks are also drawn to my right hon. Friend's attention.
Mr. Colin Breed: The Leader of the House may be aware of reports emanating from Jenin this morning that survivors are being pulled from the rubble of demolished houses, but will he arrange for an urgent statement on that issue next week and, perhaps in the meantime, consider offering the services of organisations, such as Rapid UK, which are used to going into disaster areas, such as earthquake zones, to assist in bringing out people who have been buried in certain situations?
Mr. Cook: The House had a full day's debate on the middle east only this week, and it was absolutely right and proper that we made that day of debate available to the House. We shall, of course, continue to keep the
708
situation under review and, if there is a case for a further statement or allowing the House to discuss that matter, we are open to taking that forward.
On the substantive issue, I am sure that the House will share the hon. Gentleman's concern at the evidence that is emerging of the humanitarian crisis in Jenin. It is vital that the Israeli Government facilitate the access of humanitarian and aid organisations to help those, especially the civilians, who appear to have been involved in the suffering during the military incursion into Jenin. I cannot respond to the hon. Gentleman at present on whether Britain could offer more specific aid or help, but I will draw his observations to the relevant Secretary of State's attention.
Helen Jones: I wonder whether my right hon. Friend can find time to debate the working of the NHS Appointments Commission—in particular, the singular, apparent reluctance of the commission to appoint people from our more health-deprived areas to sit on health bodies? When I discussed the appointments to the Warrington primary care trust with the north-west appointments commissioner recently, he was able to tell me that only the best people are appointed, but not why the best people apparently come from a very small geographical area of Warrington. Does my right hon. Friend think that there is something in the water; or is there something wrong with the commission's appointment procedures? Can we have an opportunity to debate that issue?
Mr. Cook: I can assure my hon. Friend that since we came to office, we have made sure that all appointments follow a clear standard procedure—[Interruption.] Indeed, as all the evidence shows, people have been appointed on merit. That is quite different from many of the appointments made under the Conservative Government. I recall that the chairman of the Conservative Association in my constituency became the chairman of my health trust. Against that background, I cannot comment on the particular local case to which my hon. Friend referred, but I shall obviously make sure that her concern and comments are brought to the attention of the Department of Health.
Since we introduced the new system, trusts and primary care trusts have on their boards people who are much more broadly representative of their communities than was the case in the system that we inherited. That is important because the NHS belongs to the people, and local NHS trusts must belong to the people as well.
Sir Teddy Taylor: As has been widely reported in the Channel Islands press and some parts of the British press, the Treasury is planning economic sanctions against Jersey if it does not sign the European code of conduct. Bearing in mind that a Treasury Minister told the Treasury Select Committee that the code was voluntary; that the only impact will be that money leaves the Channel Islands where it is well regulated to go to other places where it is not; and that the Channel Islands have no representative in the House of Commons, will the Government at least have a debate on the matter or issue a ministerial statement of

709
some sort? The Government have said nothing at all, despite the repeated stories, which are damaging to the Channel Islands.
Mr. Cook: I am not sure that I concur with the hon. Gentleman that the islands have no representative in the House; they appear to have a good affinity with Southend-on-Sea. I congratulate the hon. Gentleman on having time to represent people other than his own constituents. On the specific point at issue, it is important for the hon. Gentleman's constituents in Southend-on-Sea that the Government of the United Kingdom are able to negotiate, debate and commit themselves in debates in Europe that make sure that we deliver on the commitments we make.
The withholding tax, which is at the root of the hon. Gentleman's argument, was a success of British diplomacy and saw off what might otherwise have been a new European tax. We made sure that such a tax was not introduced, and dealt with the problem by providing information. It is important that all territories for which the United Kingdom speaks in foreign affairs are committed to the agreements that we make, and that embraces the Channel Islands as well.
Jim Knight: During business questions on 7 March, I asked my right hon. Friend for a debate on the membership of Select Committees, because I was concerned about the continued inclusion in departmental Select Committees of Opposition Front Benchers. My right hon. Friend referred me to a Liaison Committee meeting that had taken place that morning. I dug out the Report of Session of that meeting, point 35 of which states:
"At present some official Opposition spokesmen or Whips are serving on committees. We are strongly opposed to this in principle."
Given that that situation has been ignored by the Opposition, who are abusing the independence of Select Committees, I repeat my request to my right hon. Friend for a debate on this important issue.
Mr. Forth: He is the Chairman of one.
Mr. Cook: Indeed, but the Liaison Committee did not object to that; its comments referred specifically to the official Opposition. Whatever my sins, I am not a member of the official Opposition. I think that the right hon. Member will confirm that.
On the specific point made by my hon. Friend the Member for South Dorset (Jim Knight), I urge him to try to be a little more understanding of the problems of the Opposition; they are the smallest official Opposition for 30 years and, frankly, I doubt whether they could fill those posts without occasionally raiding their Front Bench. The Liaison Committee has expressed a bona fide concern, and I can tell my hon. Friend that there will be a debate on Select Committees and their membership next month, when we introduce the Standing Orders arising from the recent report of the Modernisation Committee. It will be relevant and in order for my hon. Friend to make his points in that debate.
Mr. Andrew Mitchell: As the Leader of the House is in such a helpful and jovial mood
710
today, will he consider holding an urgent debate on the arrogant disdain of Ministers for Back Benchers, in view of the fact that it has taken almost six months—five months and five days—for the Health Minister to respond to a letter that I wrote to him? Can the right hon. Gentleman tell the House whether that is a record, and would he advise us to set up yet another waiting list for replies from Health Ministers to our letters?
Mr. Cook: I always try to be helpful to the House, and perhaps I am in a particularly jovial mood today after such an excellent Budget statement from my right hon. Friend the Chancellor. I regret it if the hon. Gentleman has been kept waiting for correspondence and I will ensure that his comments are drawn to the attention of my right hon. Friend the Secretary of State for Health. We try to make sure that we achieve replies to hon. Members, both in written correspondence and in parliamentary questions, as quickly as possible. Some Departments are under particular pressure and some questions raise particularly difficult issues that require some time to resolve. I shall certainly make sure that the Secretary of State for Health is aware of the hon. Gentleman's concerns.
Mrs. Jackie Lawrence: May I reinforce calls for an early and specific debate on the future of digital broadcasting in the UK? The difficulties faced by ntl and ITV show that there appear to be problems with two out of the three platforms for digital TV. That raises serious competition issues and has implications for the Government's plans to switch off the analogue signal. In addition, 900 jobs are threatened in my constituency and the neighbouring constituency in west Wales.
Mr. Cook: My hon. Friend raises a serious issue. It is important that we should reflect that the recent collapse of digital TV from the ITV stable has implications going well beyond the well-publicised concerns about the football teams. My hon. Friend is aware that my right hon. Friend the Secretary of State for Trade and Industry will be opening the Budget debate on Monday, so she may wish to contribute to the debate to make sure that the issue that she raises is fully ventilated. I can assure her that my right hon. and hon. Friends at the Department of Trade and Industry are following the matter closely.
Michael Fabricant: The Leader of the House will be aware of the crisis in the automotive industry. We have seen the closure of the Ford car assembly plant at Dagenham and the closure of Vauxhall at Luton. Is the right hon. Gentleman aware that not only has there been a problem because of blockages in the channel tunnel, but that the new tax on jobs—the employers' contribution of 1 per cent.,—will cause an even greater crisis in labour-intensive industries such as the automotive industry? Can we have an urgent debate on the future of the automotive industry, in the west midlands in particular and the UK in general, and the veracity and honesty of the Government in putting a tax on jobs instead of a tax on national insurance or, rather, a tax on income tax?
Mr. Cook: If the hon. Gentleman wishes to make a speech on enterprise and manufacturing industry, he has an early opportunity to do so on Monday. I cannot do

711
better than refer him to Monday's forthcoming debate. If he takes part in that debate, I hope that he will answer the question to which we will be seeking an answer from every Conservative Member: given that we are increasing the national insurance contribution to make sure that we can double the spending on the national health service, will the Conservatives tell us whether they will match that increase and sustain it? If they are not in favour of the measures necessary to achieve that increase for the health service, are they telling us that they want more charges for the health service or less spending on the health service?
Paul Flynn: As these business questions have shown, there is an urgent need for a debate on state funding to demonstrate that the Labour party is the only party in the House that does not enjoy any part of the £20 million of state funding that will be paid in Short money in this Parliament. Is it not right that if there is to be transparency in all donations to political parties, it should stretch back over the past 25 years, so that we can demonstrate the contrast between the fantasies about sleaze in the present Government invented by the piffle artists on the Opposition Benches, and the real corruption that existed in the 1980s and 1990s, when it was said that some Conservative Members had their noses so deeply in the trough that all that was visible of them were the soles of their Gucci shoes?
Mr. Cook: I cannot improve on that.
Pete Wishart: While I am delighted that my Welsh colleagues have managed to secure yet another full day's debate on the Floor of the House to discuss Welsh issues, may I ask what we in Scotland have done to offend or upset the right hon. Gentleman and his hon. Friends? When can we expect a full day's debate on the Floor of the House on Scottish issues? Perhaps I can belatedly remind him that there will also be no local elections in Scotland on 2 May.
Mr. Cook: I can assure the hon. Gentleman that Scotland has done nothing to offend me. Were it to do so, I am sure that he would be the first hon. Member to draw it to the attention of the House. I think that he is being slightly curmudgeonly. As he said, we welcome our Welsh colleagues' opportunity for a full day's debate. I remind him that we took action, in which I took a particular interest as Leader of the House, to ensure that the nationalist parties had an Opposition Supply day. If I remember rightly, his party had half of that day.
Mr. Kelvin Hopkins: Events this week in Italy have served to highlight once again serious divisions on the economic philosophy of the European Union. On one side, there are those who want privatisation, extreme liberalisation, an attack on workers' rights and a weakening of welfare states, while on the other there are people such as our own Chancellor—he made this clear yesterday—who want to improve social protection, and those in our trade union movement who want to improve workers rights. Will my right hon. Friend make a day available for a further debate on the future economic direction of Europe?
Mr. Cook: I have just got into trouble for not having a day's debate on Scottish politics, so I would hesitate to
712
offer a day's debate on Italian politics, although like my hon. Friend I noticed the massive number of people who took to the streets to express their commitment to ensuring a secure future for themselves at work. Of course, we have taken very powerful measures to ensure that the prospects of people at work are improved. In particular, we have taken measures ensuring that many more people are at work than when we came to office—1.5 million in total—and that we have the lowest unemployment that either his or my constituents can remember in a generation.
Miss Anne McIntosh: Will the right hon. Gentleman now kindly agree to a debate in Government time next week on the vexed question of rail freight passing through the channel tunnel? The Secretary of State for Transport, Local Government and the Regions gave evidence to the Transport Select Committee last week and said that the French would put up a fence to prevent asylum seekers from storming the tunnel, as they have again done this week. However, the trains' failure to materialise is affecting constituency companies such as Potters of Melmerby as well as English, Welsh and Scottish Railways, and is costing £500,000 a day. Can we now please have an urgent debate?
Mr. Cook: I congratulate the hon. Lady on the assiduity with which she has raised this issue. I have raised her concerns with my colleagues at the appropriate Departments. We have obtained commitments from both the French authorities and SNCF that security would improve, and efforts have been made in that regard. We are not there yet, but we will continue to try.
I remind the hon. Lady that we have so far made good progress on tackling the arrival of those who are the source of the insecurity. The number of clandestines and people without proper documentation who are arriving has dropped sharply. We will continue to do all we can on our side, and to press the French authorities to do all they can on their side.
Kevin Brennan: I welcome the fact that the Government have today sent their interim response to the Select Committee on Public Administration on its report on the House of Lords. Will he give an assurance that there will be an opportunity for a debate once the Committee has had a chance to consider the Government's interim response and make its comments?
Mr. Cook: I am very happy to say to my hon. Friend that I am under no illusion that this issue will go away. There will be many opportunities for the House to return to it in future, including in two weeks' time when I answer oral questions. The Government will continue to make progress on the issue, so as to ensure that we will be in a position to examine it at some length at a future stage in this Session.
Mr. Graham Brady: The Leader of the House will know that the Government will face probable defeat in another place today on the Export Control Bill, when my noble Friend Baroness Miller of Hendon moves with cross-party support an amendment that seeks to defend academic freedom. If the Government are to persist in their policy of trying to constrain

713
academic freedom, can we have an early statement from the Department for Education and Skills about the likely effect on Britain's universities, how they will continue to attract international students, and the effect on our research base?
Mr. Cook: The hon. Gentleman creates a worry and a risk on stilts in relation to a modest aspect of the Export Control Bill. I am proud that we are introducing such a Bill; it is much needed and is based on a commitment that we made and are now carrying through. I am pleased to tell him that we are seeking to introduce amendments that will take care of concerns about academic freedom that we think are rather exaggerated, although we know that they are widely held.
Mr. George Osborne: May I press the point made by the hon. Member for Hornchurch (John Cryer), who is no longer in his place? If there is to be a debate on the state funding of political parties, as the Leader of the House says, surely that should include a debate in this Chamber. Given that he says that there is no collective Government position on the matter, will members of the Cabinet be able to speak in the debate, so that the Home Secretary can tell us why he thinks that it is inevitable, the Transport Secretary can explain how he is examining other countries' systems and the Leader of the House can take us on a trip down memory lane about his various political views?
Mr. Cook: The hon. Gentleman asks for a free debate. I should be tempted to have such a debate—having first reached agreement with the right hon. Member for Bromley and Chislehurst (Mr. Forth)—if the many right hon. and hon. Members who were Conservative Cabinet members in the past would take part and tell us exactly where they got funding from and which companies gave them donations.

NHS Plan
1.16 pm
The Secretary of State for Health (Mr. Alan Milburn): With permission, Mr. Deputy Speaker, I wish to make a statement on the next steps on the NHS plan. I am today laying before Parliament a Command Paper setting out those next steps, copies of which have been placed in the Vote Office.
The NHS plan that we published in July 2000 set out a 10-year programme to rebuild and renew the health service in our country. It diagnosed the NHS problem as follows. The principles of the NHS are right—on this side of the House we believe in an NHS that is free at the point of use, funded from general taxation, and based on need, not ability to pay. But today's NHS is the product of decades of underinvestment. It is also the product of a failure to reform. Staff—the greatest asset that the health service has—work flat out in a system which still too much resembles that of the 1940s. The NHS plan set out a 10-year programme of investment and reform based on clear national standards, more devolution of resources, greater flexibility for staff and more choice for patients.
With the economy stabilised and the public finances sorted out, the 2000 spending review was able to give the NHS the largest ever real-terms increases in resources. Two years later, anyone who says that there are no problems in the NHS has clearly got it wrong, but those who say there has been no progress have also got it wrong. Yes, there is a long way to go—it is a 10-year plan—but those who point to an NHS black hole should in fact be pointing to dozens more hospitals, hundreds more beds, thousands more doctors, tens of thousands more nurses—and a better health service as a result.
In July 2000, we acknowledged that three years of sustained funding was not enough. My right hon. Friend the Prime Minister had already said in January 2000 that we needed to match European Union levels of spending. Yesterday, my right hon. Friend the Chancellor of the Exchequer put NHS finances on a sustained footing, not for three years, but for five. Years of failure to invest in the past are now being replaced with years of investment for the future. Today, I can tell the House what that investment will give us: 35,000 more nurses, 15,000 more doctors, 40 new hospitals and 500 primary care centres. As investment grows, so the capacity of the NHS will grow.
Investment in the NHS must, however, be accompanied by changes in the way in which the NHS works. Ours is not an unconditional offer. Without those reforms, we will not get the best use of the money for the taxpayer and we will not get the improvements in service for the patient. Where we have had the courage to invest, we must now have the courage to reform. Our formula is simple: investment plus reform equals results.
First, building on the national standards already in the NHS plan, we will strengthen the system of inspection and audit to improve accountability to patients and the public. Where more resources are going in, people have the right to know what they are getting out. We will therefore legislate to establish a new Commission for Healthcare Audit and Inspection to inspect and to raise standards in health care across our country. We are clear that we need higher standards in NHS hospitals and also in private hospitals.

715
The commission will assess the performance of every part of the NHS so that the public can see that every extra pound in the NHS buys something better for patients and gets something more for taxpayers. Similar arrangements will be made for social care. We will discuss the details of both with the National Assembly for Wales.
The new commission will be independent of both the NHS and Government, and more independent than the current fragmented system. It will report annually to Parliament, not Ministers, on the state of the NHS, its performance and, most important, the use to which it has put the extra resources. The Government should not be judge and jury of the NHS. The commission will be the judge, the British people the jury.
Secondly, we can go further in extending devolution in the NHS, building on what has been achieved. The health service should not and cannot be run from Whitehall. The NHS is delivered in hundreds of different communities by more than 1 million staff. The relationships are between the local patient and the local doctor; the local community and the local hospital. However, those relationships will not work properly until central control is replaced by local accountability. After 50 years, the time has come when the sound of bedpans being dropped in Tredegar should reverberate only in Tredegar.
With national standards and inspection in place, power, resources and responsibilities must now move to the NHS front line. When we came to office, GPs controlled only 15 per cent. of the total NHS budget. Today, primary care trusts, with GPs and nurses in the lead, already control half the budget. In only two years, they will control three quarters of it. Just as the new commission will report nationally, so primary care trusts will need to report locally on how NHS resources have been spent.
The best primary care trusts, like the best NHS hospitals, should enjoy greater freedoms and more rewards. We will therefore establish new foundation hospitals and foundation primary care trusts, which will be fully part of the NHS, but with more freedoms than they have now. They will have more powers, including a right to borrow, to expand their services for patients.
Thirdly, further to the new powers that we have given nurses and others, we will radically alter the way in which staff work and introduce a new system of financial incentives throughout the health service. We will put in place new contracts of employment, not only for nurses and other staff, but for GPs and, yes, for hospital consultants, too. Our objective is to liberate the potential of all members of staff, rewarding those who do most in the NHS and, crucially, improve productivity throughout the health service.
New incentives for individual members of staff will be matched by a new system of financial incentives for NHS organisations. The hospitals that can treat more patients will earn more money. Traditional incentives work in the opposite direction. Indeed, the poorest performers often get the most financial help.
We will therefore introduce a new system for money to flow around the health service, ending perverse incentives and paying hospitals by results. The incentive will be to treat more patients more quickly, and to higher standards.
Fourthly, patient choice will drive the system. Starting with those with the most serious clinical conditions, patients will have a greater choice about when and where
716
they are treated. From this summer, patients who have been waiting six months for a heart operation will be able to choose a hospital, public or private, which has the capacity to offer quicker treatment. This level of investment means that we can grow NHS capacity as fast as it is possible to do so.
I can also say today that it is our intention to draw into this country additional overseas capacity so that we can further expand NHS services to NHS patients. As capacity expands, so choice will grow. Within three years, all patients, with their GPs, will be able to book hospital appointments at a time and a place that is convenient to them. The reforms that we are making will mark an irreversible shift from the 1940s take-it-or-leave-it, top-down service. Hospitals will no longer choose patients; patients will choose hospitals.
Reductions in waiting times to get into hospital must, of course, be accompanied by cuts in waiting times to get out. Older people are the generation that built the health service, and they have supported it all their lives. This generation owes that generation a guarantee of dignity and security in old age. Bed blocking denies both.
Mr. John Bercow: Ah!
Mr. Milburn: The hon. Gentleman ought to get a grip.
In recent months, the extra resources that we have made available have reduced the numbers of elderly patients whose discharge from hospital has been delayed. I am grateful for the help that local councils have given us in addressing this problem. Here, however, the long-term solution is not just investment, it is reform. I can tell the House today that, to bridge the gap between health and social care, we intend to legislate, as they have done in Sweden and other European countries, to give local councils responsibility—from their 6 per cent. extra real-terms increases—for the cost of beds needlessly blocked in hospitals.
Councils will need to use those resources to ensure that older people are able to leave hospital when their treatment is completed. If councils reduce the current level of bed blocking so that older people are able to leave hospital safely when they are well, they will have the freedom to use those resources to invest in extra services. If bed blocking goes up, councils will incur the cost of keeping older people in hospital unnecessarily. There will be similar incentives to prevent hospitals from seeking to discharge patients prematurely. In this way, we will provide local councils with the investment and the incentives to improve care for older people.
Taken together, the NHS plan and the next steps announced today amount to the most radical and fundamental reform programme inside the NHS since 1948. I want to pay tribute to the staff of the national health service—not just the nurses, doctors and consultants, but all the staff in the different medical disciplines, the ancillary staff, the secretaries, the receptionists, the porters and the cleaners. They represent the very best of British public service and I believe that, as a nation and as a Parliament, we should he proud of the work that they do. I know and understand the enormous pressure that they are under as the NHS plans to make these big changes. But I know, too, that they share this basic goal: to rebuild the national health service around the needs of its patients.

717
This programme of investment and reform will mean that each year, every year, waiting times will fall. Last year, the maximum wait for a hospital operation was 18 months. Today it is 15 months. By this time next year, it will fall to 12 months. By 2005, it will be six months, and by 2008, it will have been reduced to three months. By then, the average waiting time for a hospital operation will be just six weeks. It is our aim that people will no longer have to face the dilemma of having to wait for treatment or having to pay for it.
As a party and as a Government, we are committed to providing opportunities to all in our society and not just to some, so there will be more effort to prevent ill health, as well as treating it. Twenty-five thousand lives a year can be saved by the investment we can now make in preventing and treating heart disease alone.
The balance of services will shift, with more patients being seen in primary and community settings, not just in hospitals. Social services will have resources to extend by one third rehabilitation care for older people. Councils will be able to increase fees to stabilise the care home market and secure more care home beds. More investment will mean more old people will have the choice of care in their own homes rather than in care homes.
Yesterday's Budget and today's reforms mean that the NHS plan will be delivered.
I want to make two further points. First, it is a 10-year plan, as we said in July 2000. By the time of the next election, there will be real and significant improvements. However, that cannot happen overnight. It takes seven years at least to train a doctor and up to 15 years to train a consultant. Expectations will be high—I understand that—but they also need to be reasonable, and people need to understand that a 10-year plan is exactly what it says. It will take time to be delivered in full. At least now, public and patients will be able to see improvements made stage by stage, independently of Government, audited, monitored and inspected.
Secondly, there is consensus in the country on one thing: Britain needs to spend more on health care. There is no mystery about why there are no waiting lists in Germany. It has spent more, and has done so for years.
We can debate endlessly the system of finance, but one thing is beyond debate: the level of finance has to be raised. Once that is accepted, the choice is not between a system funded out of general taxation, which results in higher national insurance, and some other system that comes for free. Importing the German system of social insurance would cost the equivalent of an extra £1,000 per worker per year, and the French system would cost £1,500 per worker per year.
Labour Members believe in the NHS in our heads as well as our hearts. We believe it to be the best and fairest system of providing true health insurance, because it is based on the scale of the person's need, not the size of their wallet. It is the best insurance policy in the world.
It is now for those who want to see the NHS not reformed but abandoned, and who routinely call it Stalinist, to say honestly what their alternative is, what it would cost and how much families and pensioners would have to pay for it.
Yesterday we made a choice, and we ask the British people to make the same choice. We are proud of the NHS and of the people working in it. We are giving it the
718
money that it deserves. We are making the changes it needs. Investment plus reform equals results. We will be happy to be judged on them.
Dr. Liam Fox: I am grateful to the Secretary of State for his statement. He is right: there is a measure of consensus in the House. We all agree that more money should be spent on health in the United Kingdom. We believe that health care should be available to all irrespective of their means. The Secretary of State's statement must be judged against the criterion set down by the Chancellor yesterday, when he said that the scale of long-term investment would be matched by the scale of long-term reform. Have we had today anything like the indication of long-term reform that comes anywhere close to the increase in funding announced by the Chancellor? Indeed, the Secretary of State's words mark quite a shift in the Government's position. He said in his statement:
"Without those reforms, we will not get the best use of the money for the taxpayer".
However, the Chancellor told The Sun in November:
"I'm going to insist any additional resources must be matched by reforms so that we get the best value for money. There is not to be one penny more until we get the changes."
We believe that reform is needed, but we are not willing to give the Government a blank cheque—especially after a statement such as this, high on waffle and low on detail. I should like the Secretary of State—yes, he can get his pen ready—to give us some numbers, and some of the details of what the plans actually mean.
First, let me ask about national insurance. What will the changes announced yesterday cost the NHS as an employer, and what will be the additional cost in taxes to a consultant, a senior house officer and a ward sister on average salaries?
Where will the new auditors come from to deal with the Secretary of State's new auditing system? Please let them not be the Prime Minister's cronies in Andersen! How many are envisaged, and how much will it all cost? Who will appoint the new auditors? Will they be free to set their own budgets? The last thing we need is a new set of bureaucrats. Perhaps the most important question is this: will the auditors be able to audit private hospitals? That is especially important when NHS patients are being treated in such hospitals. Will we see the Commission for Health Improvement and the National Care Standards Commission merge with the National Audit Office, or any potential mixture involving the three bodies? [Interruption.] I see that the Government Chief Whip is up to her usual intellectual standard today, although that is not saying much.
When it comes to the question of devolved power, the Secretary of State is pulling a confidence trick. He talks of more money being available on the front line, but he does not say that there are so many strings attached that those on the front line are not free to choose how to spend it. Last week I visited the chairman of a primary care group, who told me that of the extra £13 million made available last year only £55,000 was discretionary money that he could choose how to use.
Perhaps the Secretary of State can give us one or two more details about devolved power. He talks of devolved bodies being able to borrow. Where will they be able to borrow from? Will they be able to borrow from

719
the markets? Will the borrowing happen with or without an underwriting by the Government, and how will this affect PSBR calculations?
The Secretary of State said that there would be
"New incentives for individual members of staff".
What sort of individual financial incentives will those be, how much—typically—will they be worth, and at what level will they be negotiated?
I was delighted to hear the Secretary of State talk of money following the patient: I had thought that that was one of the phrases new Labour had banned. At least he is returning to some of the right ideas. But what exactly does he mean by "importing additional overseas capacity"? Who is being imported and from where, and how will the process be funded?
Perhaps the most appalling part of the statement related to bed blocking. For more than three years, the Government were warned about the consequences of their policy of running down care homes in the community. They were warned that when they lost beds in the community they would block beds in the NHS, and that they would see an increase in the number of cancelled operations and a rise in waiting lists as well as inappropriate care. What is the Secretary of State going to do now? [Interruption.]
Mr. Deputy Speaker (Sir Michael Lord): Order. The Opposition spokesman must be given a fair hearing. We cannot have repeated sedentary interventions.
Dr. Fox: With respect, Mr. Deputy Speaker, some of the sedentary interventions were better than what we have heard from the Government Front Bench.
The Government are shifting the blame, which they always do. The blame for bed blocking now lies with local government, rather than with those who created the problem—central Government. The financial burden and the penalties will be transferred to local government: in other words, council tax payers will be fined for the Government's incompetence in terms of their care homes policy. That is a terrible indictment of this Government.
We seek detailed answers to those questions, because several things have become clear over the past 24 hours: that the Government now believe that one of the ways of helping recruitment and retention is to tax NHS staff more; that the Government have now returned to tax and spend: and that the third way and new Labour are gone.
When the Government came to power, they said no internal market, no money following the patient and no GP fundholding. Having broken their promises on taxes, they have now gone back to many of the reforms that they said in opposition they would never tolerate. They are admitting that they wasted five years for all those who use and work in the health service. They were wrong and we were right. The one word missing from today's statement was "Sorry".
Mr. Milburn: The hon. Gentleman either misunderstood or has not read our proposal on the new independent audit regime. In fact, it will mean less rather than more bureaucracy. We will put together the current arrangements, with the Commission for Health
720
Improvement, the value for money work of the Audit Commission and the private health care work of the National Care Standards Commission, in one single new body. That will make for less confusion and bureaucracy in the national health service, with clearer accountability to the public.
The hon. Gentleman did not say one word about matching extra investment either in the national health service or in social services. It is a bit rich for him to bleat about bed blocking and problems in care homes—which exist—and not to commit his party to matching the extra resources that we are allocating to social services.
On the hon. Gentleman's question about borrowing, we will put in place a new prudential borrowing regime, along the lines of the one that we are considering for local authorities. The details are in the document.
On importing staff, we envisage bringing in spare capacity from abroad—from Europe. The hon. Gentleman is very keen on his travels in Europe. Normally, the purpose of travel is to arrive at a destination. This must be the only instance of travel narrowing the mind. His mind is made up. The challenge for him is threefold: will he match our extra investment, match the extra sources of that investment and match the reforms that we have outlined? The answer for all three is no.
The public will see that, rather than wanting to reform the national health service, the Tories want to abandon it. The hon. Gentleman gave the game away when, in his secret speech in Harrogate, he said that the Tories' strategy was first to talk down the national health service, and then to run it down, as a prelude to their real agenda of selling it off. That is not the right choice for the British people.
Mr. Kevin Hughes: I warmly welcome my right hon. Friend's statement and the reforms that he outlined, but those who will be paying the extra taxes will want a copper-bottomed guarantee that their money will be spent wisely. They will want improvements to be made, and quickly. Will he assure me and the people outside who will pay the extra taxes that this massive investment will find its way to front-line services and not be lost in more red tape and bureaucracy?
Mr. Milburn: My hon. Friend makes an important and telling point. It is important that people who work in the national health service and the managers who are responsible for delivering care understand that the extra resources do not come for nothing—this is not an unconditional offer. The days have gone when public spending worked on the something-for-nothing rule. We are offering something for something and we expect big changes and improvements, but we do not expect them overnight. No magic wand can be waved and no silver bullet can be fired, but people have a right to expect a steady improvement year by year, as capacity grows and the NHS plan is implemented over 10 years, providing more staff, more beds, more buildings, new hospitals and new ways of working backed by the reforms that I have announced today.
When people put more money into the national health service they have a right to expect more out of it. That is why the new arrangements for audit and inspection, which are not supported by the Opposition, and the new obligations on primary care trusts are being brought into

721
being as quickly as possible. Some will require legislation and some will not, but in my view it is important that taxpayers see that extra resources deliver real results for patients.
Dr. Evan Harris: On the rise in tax, including a not so brave 1 per cent. on top earners such as the Secretary of State—and the Prime Minister and Chancellor, who are leaving the Chamber to count their money—to give the NHS the funding boost for which we have been calling for years, we would like to resist the temptation to say, "I told you so", but we cannot. Nor can the people who have died while waiting, the patients who suffered poor care during years of underfunding and the elderly who are stuck in hospital and who will still have to sell their homes to pay for the personal care that they thought they would get on the NHS.
The funding is welcome, but it would be more welcome if the Secretary of State apologised for his five years of the 23 years of underfunding and the two income tax cuts, for which the Conservatives also voted, because without them we could be halfway through a 10-year programme of NHS investment rather than at the start.
If the Secretary of State is serious about reform, why does he not consider truly decentralising decision making to publicly and democratically accountable local decision-making bodies instead of simply decentralising the blame and centralising the praise?
On the new financial incentives for hospital performance and the distortions, if the Secretary of State really thinks that doctors and nurses will treat patients better if he stuffs their mouths with gold, he simply does not understand the motivation of public sector health care workers. Does he really think so little of doctors and nurses? If he believes that these new people's foundation, grant-maintained hospitals that give financial incentives for admitting, discharging, operating and not operating, and the creation of an accountant's paradise, will produce no clinical distortions and improve clinical care, he misunderstands doctors and nurses in the health service. He is moving from stethoscope to spreadsheet, and that will damage patient care.
On social services, it appears that the Secretary of State, like Conservative Front Benchers, has just discovered social services underfunding and bed blocking. He has announced that he will suddenly get a grip. Does he not understand that the 1.2 per cent. real growth between 1999 and 2001, as set out in the Wanless report, was grossly inadequate, as was the real-terms cut in social services funding in the previous two years? Is he about to insist that local councils not only punish council tax payers, but cut services to the mentally ill, the vulnerable young and the disabled to avoid his fine? The real-terms increase in funding is only 3.5 per cent. now, rising to 6 per cent. this year. That is around £200 million, which is grossly inadequate for the amount of underfunding in health services.
Finally, can he assure people in Oxfordshire facing £9 million in social services cuts in the fifth year of a Labour Government that they will not have to face more cuts this year? Unless he can make that commitment and unless he apologises, people will not believe that he is serious and the Government will appear even more arrogant than they have to date.
Mr. Milburn: The hon. Gentleman said that my right hon. Friends the Prime Minister and the Chancellor of the Exchequer have left the House, and I now know why they did so. If I were the hon. Gentleman, I would be very cautious about raising national social services funding issues, given that the Liberal Democrats are cutting such funding at a local level. Indeed, as I have told him before—he has failed to answer this charge—the biggest complaint that I heard on my recent visits to Liverpool and Sheffield was the cutting by Liberal Democrats of social services expenditure for the elderly, the disabled, people with mental health problems and vulnerable children; yet the hon. Gentleman has the temerity to complain about a 6 per cent. increase in social services investment.
The problem with the hon. Gentleman and the Liberal Democrats is that they always want more money but never want change. He must recognise what everybody else recognises: if we are to get the best from the resources and improve services for patients, investment and change must go together. It is about time that he learned that lesson.
Several hon. Members rose—
Mr. Deputy Speaker: Order. This is a very important matter and many hon. Members are seeking to catch my eye. May we please have shorter questions, and perhaps shorter answers?
Tony Wright: On any test, this is a defining moment for the health service, and I congratulate the Government on what they are doing. People simply have to make up their minds: do they want to rebuild the health service, or not?
The Secretary of State talked about giving a guarantee to heart patients who face a wait of more than six months, and about introducing a true insurance approach to the health service. Under such an approach, people pay in and they know what they will get out. In talking about making step changes and step improvements to bring down waiting times, can we not tell people that that is a commitment? Can we not say, "A commission will ensure that we do that, and we will give real patient guarantees, so that we know what you have paid in, and you know what you will get out"?
Mr. Milburn: On my hon. Friend's first point, the decisions relating to the Budget and the reforms were of course important. The simple observation—I hope that it is widely shared—is that if people want world-class health care, it has to be paid for somehow. The issue is not whether we pay for it but, I suppose, how. The argument and debate about that will continue in the weeks, and perhaps years, to come. When people examine the issues carefully—as we have done, and as the British Medical Association did in 2000—they will conclude, not on the ground of destabilising the current system, but on the grounds of principle and of values, that the national health service is the right way forward for the country. However, we must ensure that we grow the capacity, and I am afraid that we must make some big changes.
We want to grow the capacity in stages. The biggest capacity constraint is the shortage of qualified staff, be they doctors, nurses, scientists or therapists. We must be

723
straight and honest with people: it will take time to grow capacity. It is no use the Opposition yelling about a 10-year plan. Yes, it is a 10-year plan, and it will take time to get there. As we improve services and cut waiting times, the offer that we can make to individual patients will of course improve. However, it is important that people understand that an enormous pot of money is now going into the national health service, but that it will be released in stages. We have to ensure that the NHS works for patients, and we will improve the services that they use progressively, rather than overnight.
Mr. Michael Jack: The Secretary of State has put great store by his improved audit arrangements, but who will set the criteria by which success will be judged? Will the auditors set it, or will he set it? In his statement, he also mentioned improvements in waiting times, but not for the first consultant appointment. What will he do to reduce targets for that?
Mr. Milburn: The right hon. Gentleman will be aware, as a Treasury Minister in a previous Conservative Government, that the Audit Commission works very independently. It has done a first-class job and its integrity and independence must be maintained at all costs in the new system. It decides what value-for-money studies it wishes to undertake and, similarly, the new commission will decide which studies it wishes to undertake. There are two forms of standard setting, including the new national service frameworks for cancer, coronary heart disease and mental health, which are drawn up between the Government, the NHS, clinicians who work in the NHS and patients who use it.
On the subject of out-patient appointments, I did mention the cuts in waiting times for in-patient treatment that are taking place. Getting the waiting times for out-patients down has been a long haul, but they are now down below the level that we inherited. As we grow the capacity, put the extra resources in and—crucially—make the reforms, we will continue to bring waiting times down so that by 2005 no one will wait more than three months for an out-patient appointment either.
Dr. Brian Iddon: Bolton has welcomed the considerable amounts of money that we have received for our health service and our social services department, but a problem remains. In 1997, we were 6 per cent. away from target funding. A letter that I received this week from the Under-Secretary revealed that the new primary care trust began its work 6.02 per cent. away from target funding, so the situation has not improved. I seek assurances for my constituents from my right hon. Friend that in the next five years the real inequalities that exist in areas such as mine will be addressed once and for all.
Mr. Milburn: My hon. Friend will be aware that a review of the way in which we distribute resources is being conducted, both in local government and in the NHS. As I have said before, I cannot give an absolute assurance for Bolton, but I recognise that the area has its fair share of problems, with high levels of morbidity and
724
deep health inequalities. Our new formula for distributing growing NHS resources is designed to address such problems.
Mr. David Curry: Will the Minister cast his mind back some five years, when the Labour Government introduced a whole new inspectorate system for local government called best value? That immense gendarmerie is now so complicated and complex that his Government are saying that they must start to dismantle it. What assurances can he give us that the inspectorate that he has announced today will not be such an enormous consumer of management time that it will divert people from the task of looking after patients? Does he realise that he has now announced a sort of amalgam of nationalised and local responsibility, so that nobody will any longer have the faintest idea of where the buck stops? Can he decide whether he or the people who know about it are running the NHS?
Mr. Milburn: For once, the right hon. Gentleman is remarkably confused on the issue. Normally, he is a beacon of light in a sea of darkness on the Opposition Benches. The position is clear. We will not have three bodies inspecting and regulating health care in our country. Instead, one body will inspect and regulate health care to common national standards, whether in the public or private sector, in primary care or in hospital-based care. Nobody, with the best will in the world—even someone with the right hon. Gentleman's creative accounting mind—can possibly make that add up to more bureaucracy when it will mean less bureaucracy.
The right hon. Gentleman knows as well as I do that we must get the right balance of national standards in a national health service, because the last thing that we want to do is to return to the position that the Government inherited in 1997, when there was a lottery of care for cancer services and drugs. We have put that right. What we have recognised, as I have been able to announce today, is that services have to be delivered locally. We need greater freedoms and more rewards for the best. We must step in where there are problems, but we must step back where there is progress.
Mr. Eric Illsley: Barnsley has exactly the same problem as Bolton: we are moving further and further away from our target funding, and that means a £6 million shortfall, which the primary care trust must address. I very much welcome what my right hon. Friend has said about the independent audit, but will it be empowered to compare health authorities throughout the country in order to show exactly where value for money is delivered, so that in areas such as Bolton and Barnsley, which administer their funding very well, we can benefit from the extra resources going into the service?
Mr. Milburn: The straightforward answer to that question is yes. That is precisely what it will be doing, so that people both locally and nationally, and particularly in this House, have an opportunity to judge how well different health services are doing in different parts of the country. That is a welcome step forward and a recognition that the national health service belongs not to me or even to the people who work in it, but to the British public, who have a right to know how well it is doing.
Rev. Martin Smyth: The Secretary of State is well aware that health matters have been devolved

725
to Northern Ireland and Scotland. Can I have an assurance that the increase in health service funding will be allocated at the same level in Northern Ireland? I have to raise the issue because this is a national health service, and over the years Scotland, Northern Ireland and England have shared the situation, providing doctors, nurses and specialists.
I want also to press the Secretary of State on whether he is absolutely sure that there will be less bureaucracy under the independent inspection—or will fewer people do the job, which has not been done well in the past, and we will continue to suffer? The British people are the jury. They have been long-suffering, but are beginning to turn and become more demanding. They will still be demanding if we do not deliver.
Mr. Milburn: It is not really my responsibility to comment on issues either to do with Northern Ireland or to do with finance in Northern Ireland. However, my understanding of what my right hon. Friend the Chancellor of the Exchequer said yesterday is that the funding increases are not just for England but for other parts of the United Kingdom.
Inspection and ensuring that we have the right number of people in place is more than anything else a matter for the new independent commission; that will not so much be a matter for me. It must decide on the level of resources and the number of staff needed in order to do the work that it needs to do, which is about improving standards and accounting for where public money is spent.
Mr. Chris Mullin: Is my right hon. Friend confident that he will have the full co-operation of the royal colleges and the British Medical Association in his effort to reduce waiting lists? He will be aware that those mighty vested interests have in the past been part of the problem rather than the solution. Is it true that the consultants are demanding a 29 per cent. wage increase in return for their co-operation? If it is, will he politely tell them that that is not on?
Mr. Milburn: I do not know about the specific figures but, clearly, negotiations are taking place with the BMA about the future of the consultant contract. There will no doubt be different points of view. It is important that people recognise that, although these are large increases in NHS investment, they must go to the right place so that we can improve services and, of course, motivate staff. As my hon. Friend will recognise, we require some profound changes—not just increases in the number of staff but changes in their working practices. We cannot have ancient, traditional demarcations among those working in the NHS standing in the way of improved patient care.
Mrs. Angela Browning: What is it about the Audit Commission that makes it insufficiently independent or professional to continue to monitor the outcomes of this Government's policy? Why is the Secretary of State dropping the Audit Commission in favour of a body that will be both judge and jury, setting targets and monitoring outcomes?
Mr. Milburn: The hon. Lady has not listened to what I have said; fair enough. Perhaps she can read my statement. I shall briefly explain. The commission will be more independent not less. At the moment, I appoint
726
people to the Audit Commission. She might think that that is a perfectly reasonable, independent system; I do not. In future, the people appointed to the Audit Commission—the commissioners—will be appointed independently from me. What is more, the commissioners will appoint the new chief inspector, who will have overall responsibility for ensuring that standards and accountability work in the NHS.
Mr. Chris Pond: Does my right hon. Friend accept that his statement will be warmly welcomed by my constituents, not least, I suspect, because one of the new hospitals that he mentioned is likely to be the community hospital in Gravesend? He will be aware that, despite quite substantial increases in resources, we have had considerable problems with social services in Kent. Will he give us an assurance that the annual report to Parliament on delivery in health services will include local authorities that, given the extra resources that they will be receiving, are failing to deliver effectively on social services?
Mr. Milburn: My hon. Friend makes an extremely important point. It is incumbent on all parts of the public services—particularly if extra investment is going into them, as it is into social and health care—to account for how money is spent and, indeed, for how standards are improving. As I said in my statement, just as we will have a new independent commission to ensure that standards are high and performance in the NHS is improving, so we will have a new independent commission for social services—effectively bringing together the social services inspectorate, which is currently part of the Department of Health, and the National Care Standards Commission. Once again, the new commission that will deal with social care inspection will be more, rather than less, independent than current arrangements.
Mr. Andrew MacKay: Just how will the increases in national insurance contributions and taxation help the NHS in the Thames valley, where due to very high housing costs, we are suffering a desperate shortage of staff and difficulty in recruiting doctors, nurses and all forms of health professionals? Surely such increases will make matters much worse.
Mr. Milburn: All of that was taken into account in discussions on the Budget and the spending review. People are talking about £200 million for the NHS in increased national insurance contributions. To put that into perspective, it is worth remembering that the NHS will be getting an extra £5 billion. The question for the Conservative party is whether it backs that level of investment—yes or no? It is a very simple question.
Dr. Desmond Turner: I too congratulate the Secretary of State on his bold measures. I am particularly glad about the extra resources for social services because, as I am sure he will be aware, one factor that contributes to bed blocking, especially in my part of the world, is a lack of capacity in the private and nursing care home market. Will he consider encouraging where necessary public reprovision of long-term care beds?
Mr. Milburn: In the end, those decisions are best taken not by me, but locally. It will be a matter—[Interruption.]

727
The hon. Member for Oxford, West and Abingdon (Dr. Harris) says no, but he is the one who continues to argue that the NHS, social services and local government are too centralised. Then, he rails against our saying that decisions are best taken locally. It is for social services and the health service to decide how best to spend the resources. There are many models of providing health and social care. Indeed, it would be good if there were more joint ventures between the public and private sectors precisely so that we could reap the benefits of both, and that way improve patient care.
Dr. Jenny Tonge: Will the Secretary of State assure the House that the extra doctors and nurses who he has trumpeted this morning will not be recruited either directly by the health service or indirectly through private agencies from developing countries that need them much more than we do?
Mr. Milburn: Yes, we are very clear that we will not be doing that.
Ms Dari Taylor: In warmly welcoming the statement, I ask my right hon. Friend how successful innovatory practices are being communicated, as there are many in existence. I bring to his attention the Medical Assessment Unit at the James Cook hospital in Middlesbrough. It is in the process of putting together a multidisciplinary, rapid reaction force—if Members will excuse the use of Ministry of Defence language—with outreach nurses and social services. It is effectively discharging 40 per cent. of patients who would otherwise have remained in hospital. This is an excellent piece of innovatory medicine—other hospitals are discharging only 10 per cent. of such patients. How are these good practices being communicated?
Mr. Milburn: First, throughout the health service and social services, as in my hon. Friend's area, there are many examples of innovation, reform, modernisation—call it what we will. The Conservative party would like to pretend that reform has not taken hold when in fact it has taken hold in all aspects of the health service. The way in which we ensure that we learn from best practice is straightforward. First, we now have a modernisation agency that can help people to improve their services. In that way, we take good practices out of the ghetto and spread them to all so that they are not just for the benefit of the few.
Secondly, it is important to get in place the right incentives. I believe profoundly that we cannot simply tell people to change but must provide the incentive for them to change. The truth is that there has never been a system using the right incentives in the national health service and perhaps in social services too. By changing the way in which money flows around the system, we are trying to put the right incentives in place so that those who do best get most money and those who do less well have an incentive to improve.
Mr. Christopher Chope: The Secretary of State makes much of this independent inspectorate reporting to Parliament. Can he guarantee that when it does report to Parliament, there will be an opportunity,
728
in Government time, to debate that report on the Floor of the House every year? Can he explain to my constituents how it will improve the morale of people who work in the national health service if their take-home pay is cut by national insurance increases?
Mr. Milburn: On the first issue, that is not a matter for me. I am trying to get rid of powers, not take them on. The Leader of the House deals with such issues. On national insurance contributions, I think that doctors, nurses, therapists, scientists and everyone who works in the national health service recognise that if we want world-class health care, we have to pay for it. The choice that we have made is to put the investment into the national health service. The choice for the hon. Gentleman, with respect, is whether he will match those extra resources.
Mrs. Joan Humble: I applaud the additional investment, especially in social services, and the announcement of additional resources to care for elderly people. That will certainly be welcomed by residents of Lancashire care homes and elderly people supported in the community. Will my right hon. Friend also discuss with local authorities the need to invest in children's services? There are increasing numbers of children at risk who need support and this is an opportunity to offer them that support.
Mr. Milburn: I agree with my hon. Friend. I am very aware of the pressures in Lancashire, which she has raised with me in the past. We have taken fully into account the problems and pressures that social services face not just in providing better elderly care services but in improving children's care services. I hope that there is an opportunity for social services to plan ahead with confidence for the medium term with a very generous settlement over three years that allows some of these problems to be addressed in a stage-by-stage way. I also hope that social services will recognise that the best way forward for children's care and elderly care is for the health service and social services to work more co-operatively together.
Mr. Richard Bacon: Does the Secretary of State agree with Mr. Stuart Emslie, a risk control expert in his Department, that the NHS loses between 16 per cent. and 20 per cent. of its budget each year through fraud and mismanagement? If he does not agree, will he tell us the correct figure?
Mr. Milburn: No, because he did not say that. The figures that the Conservative party bandy about include the costs to the national health service of staff who are off sick. I know that the NHS is a good service, but not even we have been able to solve problems universally of staff sickness for all our staff.
Jonathan Shaw: Although the chief inspector will be independently appointed, may I suggest to my right hon. Friend that one criterion for appointment might be not having been a chief inspector of any other public service?
I know of my right hon. Friend's commitment to mental health services. Waiting for treatment, either in hospital or in the community, can be debilitating for people with a mental illness and their families. Mental health is a

729
primary problem in trying to resolve the issue of rough sleepers. Will my right hon. Friend make a commitment that the additional funding will be aimed at mental health services as well as all the other health services?
Mr. Milburn: It is very important that mental health services get their fare share of the additional resources. It is also very important, in my view, that we keep a clear eye on the key priorities for the national health service, not just to get waiting times down but to improve outcomes from cancer and coronary heart disease and to improve elderly care and mental health services. I say to my hon. Friend, in the spirit of friendship and also candour, that if we try to do everything at once, we will achieve nothing at all. It is very important that we keep focused on the issues that count.
Mr. Crispin Blunt: Before the Secretary of State imposes this new level of audit and inspection, will he undertake to read last night's Reith lecture on the subject? Will he tell my constituents why they should have any confidence in his NHS plan when he has shown himself prepared to corrupt the administration of government, compromise the health care of my constituents and the welfare of health workers in my constituency in order to promote the political interests of the Labour party?
Mr. Milburn: Frankly, those comments are beneath even the hon. Gentleman.
Shona McIsaac: Is my right hon. Friend aware that many hundreds of cancer patients in Grimsby and Cleethorpes have to pay £5 to cross the Humber bridge to gain access to treatment in Hull hospitals? Will anything be done, using the extra funding, to make
730
journeys to hospital much easier for those people? I am finding it hard to convince them that the NHS is based on need, not ability to pay.
Mr. Milburn: I was not aware of the problem that my hon. Friend raises. Again, such decisions are best taken locally rather than nationally. There will be scope, more freedom and, of course, extra resources, for local health services to decide what their priorities are. However, people in the health service must understand that the extra resources do not come easy; there are strings attached. Most importantly, the health service must understand that every penny of extra investment must be properly accounted for. I do not provide the extra investment, the taxpayers do, and they must have a good deal, just like patients.
Miss Julie Kirkbride: I could not agree more with the Secretary of State when he says that the NHS cannot be run by Whitehall. He will be aware of the significant staff recruitment problems that exist in parts of the country. Can he clarify what new flexibility he is prepared to give to foundation hospitals and whether those hospitals will be able to pay in accordance with local labour market conditions as opposed to being constrained by national wage bargaining?
Mr. Milburn: As far as the foundation hospitals and pay systems are concerned, I think that the hon. Lady is aware that we are negotiating with the various trade unions a new system of pay called "Agenda for Change" for the national health service. It will seek to combine a national framework of pay with local flexibility. Foundations hospitals will be able to use those local flexibilities to give appropriate rewards to NHS staff.
Mr. Deputy Speaker: Order. It is important that we move on to the next business. However, we will be returning to debate this subject on Tuesday of next week.

Orders of the Day
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [17 April].
  WAYS AND MEANS

    AMENDMENT OF THE LAW
    Motion made, and Question proposed,

    (1) That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.

    (2) Subject to paragraph (3) below, this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

    (a) for zero-rating or exempting a supply, acquisition or importation;

    (b) for refunding an amount of tax;

    (c) for any relief, other than a relief that—

    (i) so far as it is applicable to goods, applies to goods of every description, and

    (ii) so far as it is applicable to services, applies to services of every description.

    (3) Paragraph (2) above does not exclude the making of amendments with respect to value added tax providing for relief on the acquisition from another member State of any goods in relation to which, if they were imported from a place outside the member States, relief would be given by an order under section 37 of the Value Added Tax Act 1994.—[Mr. Gordon Brown.]

    Question again proposed.

  Budget Resolutions and Economic Situation
  2.19 pm
  Mr. David Willetts: May I begin by declaring the interests that appear in the Register of Members' Interests?
  Yesterday's Budget was the first since the Government's general election victory only 10 months ago. Pundits were critical of the quality of that campaign, but something clear and important was at the centre of the political debate. Time and again, Ministers and Labour politicians were asked what would happen when the end of their planning period for public expenditure, 2003–04, was reached. It was suggested that there would have to be either a reduction in the rate of growth of public spending, or a further round of tax increases if the Government carried on increasing public spending.
  Time and again, the Chancellor and the Prime Minister went out of their way to deny that there would need to be further tax increases in the middle of the Government's second term to finance a further increase in public spending. For example, the Prime Minister was interviewed by Jeremy Paxman on "Newsnight" about the guarantee not to abolish the national insurance ceiling. Paxman said:
  "I am merely asking why you could give this guarantee last time, but you can't give it this time, and whether any reasonable person wouldn't suppose that you therefore propose to increase national insurance contributions."
  732
  The Prime Minister replied, "They shouldn't". That was on 22 May 2001, less than a year ago. In the same campaign, the Prime Minister wrote in the Daily Express:
  "We are not going to clobber people on higher incomes…We have not the slightest intention of hammering people on £30,000 and £35,000 and the higher income brackets."
  Yesterday, however, in the first Budget since those election promises were made, the Chancellor came to the House and broke the assurances that he and other Labour party members gave during the election campaign. The Chancellor took the first opportunity that arose, in his first Budget after the election, to trample on the promises that he had made to help get himself elected.
  There was no apology, nor any humility. In fact, Labour Back-Bench Members cheered the tax increases even more loudly than they had cheered the promises made to secure their election in the first place.
  Even more shocking than the cynicism with which those pledges were broken is the scale of the increase in the tax take. In the final year of the Conservative Government, the tax take was approximately £270 billion. Next year, it will be £407 billion. At the end of the Chancellor's planning period, it will be £520 billion. That is an enormous increase in the total amount of tax taken over the lifetimes of the two Labour Governments since 1997. We are entitled to ask—as we will throughout the debate—how the taxes are being increased, who will bear the burden, and what will be given by the Government in return.
  At the heart of the tax increases announced yesterday is the dramatic rise in national insurance contributions. For employees and employers, the combined rate will be a very heavy 23.8 per cent. However, the Chancellor was up to his old tricks yesterday. He referred to the national insurance increases, and to a set of measures designed to help the environment and provide specific assistance for business. We have examined the way in which he presented the changes.
  I entirely support the Government's aim of helping the environment. The Chancellor yesterday produced a set of measures to that end, and chapter 7 of the Red Book is entitled "Protecting the Environment". The measures add up to slightly less than £100 million. Some of the measures in the table to which the Chancellor referred in his Budget are marked with an asterisk, showing that their cost is "negligible".
  The Chancellor gave his attention to environmental measures with a combined impact of less than £100 million, and devoted fewer words to the proposed rise in national increase insurance contributions, worth £7.5 billion. Those proposals include the abolition, in practice, of the upper earnings limit. The Chancellor will now collect additional national insurance contributions at the rate of 1 per cent. from people's total income, including any income above the old upper earnings limit.
  National insurance now has a very odd structure, and one that no rational person would be able to defend. There are personal allowances, and rates for employers of 12.8 per cent. and for employees of 11 per cent. The latter rate has now been raised by 1 per cent., but what is to stop the Chancellor raising that figure again, by 1.5 per cent. or 2 per cent., in the future? The right hon. Gentleman has created a new revenue raiser that he will be able to use whenever he wants to raise taxes still higher.

  733
  I hope that the Secretary of State for Work and Pensions or the Chancellor will assure the House that the extra 1 per cent. added to employees' national insurance contributions will not be raised again in the future. If no such assurance is given, we will know what the Chancellor's future stealth tax is going to be. Whatever promises he makes on value added tax or personal income tax, the Chancellor will be able to return to that extra 1 per cent. on employees' national insurance contributions. Gradually—and it may take a few years—he will achieve what John Smith tried to do 10 years ago. The upper earnings limit will be abolished. Over time, the full rate of national insurance contributions will apply to the total of employees' incomes. This is the start of the process.
  James Purnell: Will the hon. Gentleman give way?
  Mr. Willetts: I should be happy to give way. I hope that the hon. Gentleman, who was a policy adviser before he became an MP, will say whether he thinks the Government should give the assurance that there will be no further increases in national insurance contributions.
  James Purnell: As someone once said, we ask the questions in this matter.
  The hon. Member for Havant (Mr. Willetts) wants to go back 10 years, but he advised the previous, Conservative Government between 1979 and 1992. In that period, the income of people in the lowest 10 per cent. fell in absolute terms by 17 per cent. He has said that he does not recognise those figures, as the Hansard record shows. However, the same figures were accepted by Nicholas Timmins, who I believe is a great friend of the hon. Gentleman's. The source of the figures is the Office for National Statistics, so they are official Government statistics. The hon. Gentleman claims to be on the side of the poor. Will he apologise—
  Mr. Deputy Speaker (Sir Michael Lord): Order. The hon. Gentleman must not begin to make a speech.
  Mr. Willetts: I hope to turn to the Government's record on poverty later in my speech. I still do not recognise the figure to which the hon. Gentleman referred.
  I want to know where the extra revenues indicated by the extraordinary figures for the increase in the tax take are being spent. The Chancellor's Budget statement focused on the national health service. This morning, I asked the House of Commons Library to supply the figures for spending on health and benefits in 1996–97, the final year in office of the previous Conservative Government. The Red Book shows that health spending will amount to £72.1 billion next year. I also asked the Library what the total of spending on benefits and tax credits will be next year. Many of those credits ought to be counted as benefits expenditure. A lot of them used to be so counted, but they have been miraculously redefined by this Government.
  I see that the hon. Member for Stalybridge and Hyde (James Purnell), who asked about poverty, has left the Chamber. It is regrettable that he has not stayed to hear my answer.
  734
  Adding together the tax credits and the social security budget, one discovers that the total increase in spending on social security and tax credits between 1996–97 and 2003–04 is bigger than the increase in health spending.
  The Secretary of State for Work and Pensions (Mr. Alistair Darling): In cash terms.
  Mr. Willetts: I am comparing cash spent on health in 1996–97 with that to be spent in 2003–04, and cash spent on benefits in 1996–97 with cash to be spent on benefits and tax credits in 2003–04. It is an entirely consistent comparison. What it shows is that the extra money—the biggest single increase—is not for health or education but for the Chancellor's personal preoccupation—tax credits—added back in to the social security budget. All those promises that we were going to save money on welfare to put the extra money into health and education have been broken, too. A big increase in welfare expenditure has been redefined and redescribed as tax credits.
  Mr. Darling: I shall happily plead guilty to spending more on pensioners and more on children. Will the hon. Gentleman not accept that, as a result of getting more people into work, we are spending about £5 billion a year less on the dole than was spent when he was advising the Conservative Government?
  Mr. Willetts: I am considering the total budget for social security and credits. I have observed that it is striking how, under this Government, the big increases in expenditure, for example, are in other areas of benefits. We welcome the fact that unemployment has fallen, but I am considering the total budget for expenditure on social security and credits. That is what has gone up—it has gone up by more than health and by more than education.
  Mr. Darling: If the hon. Gentleman looks at the figures—I know that, in these debates, he cannot wait to bury his head in the figures, a fact about which I am happy in many ways—will he not accept that expenditure has gone up because we have deliberately increased expenditure on pensions and on support for families with children? If we had not done that, the rate of spending on social security would be falling compared with that under his Government. We are spending more because we have chosen to do so on children and pensions—spending which he and the Conservative party have vehemently opposed.
  Mr. Willetts: All I can say is that the Government's original claim was that they would save money on social security to put more into health and education. We are now being told, "It's all right. Yes, we are spending a lot more on social security and credits but we've chosen to do it."
  I now want to consider whether the extra increase in expenditure on social security and credits has been effective in terms of the objective that the Chancellor and the Secretary of State set themselves—the attack on child poverty. The Chancellor will recall not just the commitment that he gave to tackling child poverty—an entirely admirable objective—but his claim during the election campaign, repeated in the Labour manifesto, that the Government had reduced the number of children who

  735
  were in poverty by 1 million. Let me quote the manifesto on which the Government were elected, which masqueraded as an accurate historical statement:
  "over 1 million children have been taken out of poverty."
  That is what the electors were told at the last election. However, I am afraid that, even buried in the Chancellor's Red Book yesterday, there was evidence that they have simply failed to deliver what was presented in the manifesto as a matter of historical fact. I shall quote from the discussion of child poverty on page 90 of the Red Book:
  "By 2000–01 the number of children in households below 60 per cent. of contemporary median income"—
  the measure of poverty that the Government used—
  "had fallen by 0.3 million compared with 1998–99 and by 0.5 million compared with 1996–97".
  There was thus no 1 million reduction in the number of children in poverty on the Government's preferred measure. The Budget showed that the performance was half that, at best. The Chancellor has shown in his own Red Book that the assertions that he made during the election campaign on the Government's record on child poverty were simply not correct.
  Mr. Michael Connarty: Will the hon. Gentleman first accept that, as we have raised the level of incomes, the median income has also gone up? We have therefore set ourselves a higher target to jump over than was ever in existence under his Government. Will he return to the question that he did not answer previously: is it not true that, during the time he was giving advice to the Conservative Government, the bottom 10 per cent. of the population's incomes fell, in real terms, by 17 per cent.? Will he therefore apologise for the advice that he gave?
  Mr. Willetts: As I said, I do not recognise the figure of 17 per cent. When I look at the Government's figures for households on below-average incomes, I see a pattern of the number of children in poverty, on various measures, rising in some periods and falling in others. In fact, if one compares the Government's record on child poverty not with 1996–97 but with a few years earlier, one finds that the Government have carefully chosen their base year—they chose a point when child poverty had gone up; child poverty was lower two years earlier. For all the huffing and puffing and extra expenditure, all they have done is to take the rate of child poverty back to what it was in 1994–95.
  I therefore question whether the policy decisions that have been taken, supposedly with the justification of reducing child poverty, have achieved the results that were claimed for them on the Government's preferred indicator. The consultation document on poverty that the Government have just released—I have not yet had the opportunity to study it, and I am sure that the Secretary of State will want to discuss it further—is an attempt to redefine the target. When they fail to achieve the target, they redefine it. I want an assurance from the Secretary of State and the Chancellor that they will continue to be judged by the measure of child poverty that they used when they first set the target. That was 60 per cent. of median income, which was clearly the measure that they
  736
  first used when they said that they were going to take I million children out of poverty during their first term, and that they were eventually going to eliminate child poverty. If, after four years, they have failed to achieve that target, it is not acceptable simply to announce that they are going to change the target. That is not good enough. I look forward to hearing an assurance from the Secretary of State that that is not the case.
  Lynne Jones: The hon. Gentleman says that he does not recognise the figures for the increase in child poverty under his Government. What figures does he recognise?
  Mr. Willetts: I recall, as I quoted them, the latest figures on the number of children in households on below-average incomes, on the measure of 60 per cent. below median income. I also recall a Social Security Committee report—I do not see the right hon. Member for Birkenhead (Mr. Field) in his place—that considered what had happened to the real value of benefits to people on the lowest incomes. That report showed that it had increased significantly during our period in office.
  I would happily have a longer historical debate, but I want to challenge the Government on why they have not met the target that they thought they had met. It is not just that they have failed to meet it, full stop—I am genuinely sure that the Chancellor was not trying to mislead us when he said, during the election campaign, that 1 million children had been taken out of poverty. When he said that in the election campaign and put it in the manifesto, he thought that it was true. Why did he think it was true, then, when it is clearly not true, now, on his own figures? The explanation is very important. Instead of putting all this effort into redefining the target, he ought to be thinking about why what he thought had happened has not happened.
  The reason for this failure is take-up. The modelling and the evidence that the Chancellor was using, to which he refers again in his Red Book, assumes that his benefits and his new tax credits were going to enjoy 100 per cent. take-up. We all see the marvellous captions and graphs that the Treasury puts into its Red Books—some of which appear in the newspapers and on the television—showing how much better off a family will be in various circumstances. Those illustrations assume that everybody receives those benefits and credits, but they do not. They do not do so because the Chancellor has made the system so complicated, and has changed it so frequently, that we face a catastrophically low level of take-up of his pet tax credits. That is why he thought that he had taken I million children out of poverty when, in fact, he had not; he had taken only half a million out of poverty.
  I once asked the Paymaster General—I am sorry that she is not here—a simple question:
  "To ask the Chancellor of the Exchequer how many families … are eligible for (i) the working families tax credit and (ii) the child care tax credit."—[Official Report, 15 November 2001; Vol. 374. c. 842W.]
  I did not get an answer about eligibility at all—I got an answer about the number of families in receipt of the working families tax credit. The Treasury will not answer questions about take-up or about the gap between the number of people who are eligible and the number who receive the benefit.

  737
  I am pleased to see that both the Chancellor and the Secretary of State are present, because I must tell the Chancellor that the Department for Work and Pensions provides much better information and explicitly investigates take-up of means-tested benefits in a way that the Treasury refuses to do. One of the problems is that, as the Chancellor gradually takes over these benefits, the level of public information, which enables us to assess take-up, declines. In fact, the only material that we have is a Department for Work and Pensions research report that suggested that take-up of the working families tax credit is running at an average of 62 per cent. among all eligible families. That is 10 per cent. lower than the take-up of the old family credit. It is running at an incredibly low 31 per cent. among eligible dual-earner couples, and at 49 per cent. among all eligible couples. In other words, fewer than half the couples eligible for the working families tax credit actually receive it. That is why the Chancellor thought that he had taken I million children out of poverty when he had not.
  The gap in the Chancellor's strategy is that he has nothing to say about how he will increase take-up, apart from spending ever more money on the advertising budget. However, the real problem is not that the advertising budget is too low but the complexity and confusion for which he is responsible. He has imposed on families an incredibly complicated set of changes that go right back to 1999. That is when he proudly announced the working families tax credit—I now quote the normally sober pages of the Financial Times—assisted by
  "Dennis the Menace, Postman Pat and a Womble."
  After he had launched the working families tax credit, he took them back to the Treasury and asked them to help him to design the next credit—and the next one.
  Between 1999 and 2003, we will have had the following: the abolition of family credit, the introduction of the working families tax credit, the introduction of the child care tax credit, the abolition of the married couples allowance, the introduction of an employment credit, the introduction of the children's tax credit, the introduction of a baby tax credit, the abolition of the working families tax credit, the abolition of the children's tax credit, the abolition of the baby tax credit, the introduction of a child tax credit, the abolition of the employment credit and the introduction of a working tax credit. That is what the Chancellor will have done between 1999 and 2003. It averages out as a new tax credit for families every six months.
  Helen Southworth: That is good, supporting families.
  Mr. Willetts: The hon. Lady says that it is good, but how many of her constituents can find their way through the system that the Chancellor has created? That is why he has the problem of low take-up.
  Further complexity was buried in the Red Book published yesterday. We thought that the changes would happen in April 2003, but that is no longer the case. Instead, the planned start is April 2003, and I hope that Treasury Ministers will give us a bit more detail about how the system is supposed to work. However, the child tax credit is no longer being introduced in one stage in 2003. Instead, we will have a process of migration whereby some people move on to the child tax credit in
  738
  October 2003 and others do not move on to it until April 2004. The Chancellor will be running two systems in 2003–04.
  At one point, the pension credit was supposed to be introduced in April 2003, but that will now happen in October 2003. The Child Support Agency was supposed to be introducing its reforms in April of this year—before that, it was supposed to be at the end of 2001—but those changes have been deferred with no new date given.
  I do not know why the Government drove information technology experts abroad with IR35, because they will need them to introduce all the changes. The danger is that, between 2002 and 2004, we shall have nothing less than a total shambles as the Government try to introduce all the new schemes. The pension credit will be on the old computer and then it will be on a new one. We do not have a date for the Child Support Agency changes and the child tax credit will he phased in over three stages. Our constituents and poor people are expected to find their way through the system so that they can enjoy the increases in their incomes that Ministers have boasted about. The danger is that people will not be able to find their way through the maze that Ministers have created. That is the problem with their record.
  Mr. Connarty: I can give the hon. Gentleman a figure. Some 1,881 families in my constituency will receive the increase in the working families tax credit that is coming in. He seemed to be suggesting—although he appeared to lose his way—that failures resulted from people's failure to take up the credit. However, he and his colleagues need to do what I am trying to do. Everyone who needs advice from me or from local authorities should be able to receive it so that they can fill in the forms correctly and take up the tax credits to which they are entitled. Will he assure me that he will campaign among his colleagues so that they will provide similar advice, thereby ensuring that their constituents receive the credits that the Chancellor is offering them? Or will the hon. Gentleman leave people in poverty because it suits his political ends?
  Mr. Willetts: Of course I want people to receive the benefits to which they are legally entitled. I urge people to take up the working families tax credit. When that is abolished, as it will be in less than a year, and reappears in a different form, I will urge them to take that up as well. I will even put in a bit of effort to try to explain the Chancellor's changes. I ask the hon. Gentleman to do something in return, however. Will he table a parliamentary question that does not just ask how many of his constituents receive the working families tax credit but asks how many are eligible for it? Will he then come back and tell the House what he thinks about the take-up of that credit? We can then have a serious debate about the problem that I am trying to draw to the attention of the House.
  The Chancellor has created a structure that is so complicated that we have a problem with take-up. If it were just a disaster for the welfare and social security system, we might be able to write it off as a tragic mistake. However, the same problem appears in a completely different area of policy that is the Chancellor's other great preoccupation. He is almost as interested in productivity as he is in creating new tax credits.
  Lynne Jones: I do not know whether this will surprise the hon. Gentleman, but I agree with his concerns about

  739
  the complexities of the tax credits. But he has not said what he would do to increase work incentives and to assist poor families. Does he agree that it would be better to put additional resources into substantially increasing child benefit and to claw the money back from better-off families through a progressive tax system?
  Mr. Willetts: Perhaps I might take this opportunity to say what I think the Chancellor should have done. He missed an opportunity when he came to office. He could have achieved everything that he wanted to achieve with the family credit. He did not need to go through four years of structural turbulence and change. All that he needed to do was put more money into the family credit.
  We argued all along that there was no evidence to support the view that it was important to deliver the in-work top-up through the payroll. We asked the Treasury about the mystical significance of paying benefits through the payroll, but it did not provide any empirical evidence to support its approach. No such evidence exists.
  In this Budget, in one respect at least, the Chancellor is following the advice that we offered him. He is returning to paying most family payments to the caring parent. He has abandoned the belief that that money needs to go through the payroll, but he has unfortunately created a new payroll benefit instead. The working tax credit, which will largely go to a different group of people, has been carefully designed so that it does not go to the people who tend to be poor. He has excluded the under-25s and they tend to have particularly low incomes. He has created a new payroll benefit, but most family payments will go back to being the benefits that they should have been all along. It is a pity that we have had to have this elaborate detour in the course of which many hundreds of thousands of people who are entitled to the tax credits have not been able to receive them.
  Lynne Jones: Although the hon. Gentleman is correct to say that the take-up of family credit was higher than for the working families tax credit, the evidence is that that occurred merely because the family credit was in existence for longer. His solution would still face the problem of inadequate take-up. For family credit, take-up was about 75 per cent.
  Mr. Willetts: The take-up of family credit was, indeed, rising, and I hope that the take-up of the tax credits will rise. The increase in the take-up of the family credit is another reason why the Chancellor's policy in 1999 was a mistake. He had something that was becoming widely understood, and the take-up of family credit was up to 91 per cent. However, instead of sticking with the credit, he believed in a year-zero fallacy. Labour Members believed that nothing had happened before 1997 unless it was terrible.
  The Chancellor could not bring himself to say that the incomes of people in low-paid jobs had already been boosted by family credit and that he wished to put more money into it. He had to pretend that there was no help for low-paid families before 1997, and that is why he had to have a new benefit with a new name so that he could write family credit out of history. That is part of what he did, and the losers are those who have suffered from the
  740
  catastrophic fall in take-up. I hope that the take-up of the Chancellor's new tax credits will rise. However, the chances of the take-up of the new working tax credit becoming high are pretty slim. Let us hope that he achieves a high level of take-up.
  I am trying to argue that the problem is not a one-off. I am arguing that exactly the same can be seen with productivity—the other thing with which the Chancellor is preoccupied. His record on productivity is exactly the same as with all his credits—endless initiatives, with the aim of improving the productivity of the British economy.
  As with the attempt to reduce child poverty, it would also be a very good thing if our economy's productivity were to increase. We would like productivity to improve, and in every Budget—this one is no exception—we see a long list of specific measures that are supposed to improve the productivity of the British economy. Meanwhile, what happens to its productivity? The answer is that it is somewhere around average and, if anything, its performance is declining compared with our historical record of the past few years.
  The Chancellor's measures to increase productivity are having no effect whatsoever on productivity. Given that we as a country spend rather more on information technology and have been at the head of its introduction—ahead of many countries in euroland—we would expect, other things being equal, our productivity performance to exceed theirs. In fact, our productivity performance is roughly similar to the European average, despite unusually high spending on IT, suggesting that we are significantly underperforming in all other respects. So we have exactly the same phenomenon—we have endless fiddling, tinkering interventions, with no impact on the thing that the Chancellor claims he is trying to address.
  The pattern with this Chancellor is that he is best at the things in which he is not interested. His biggest single triumph as Chancellor was to take his hands off monetary policy and give independence to the central bank. [Interruption.] Yes, we now recognise that that has been a great success. We support it and believe that it has significantly improved the conduct of British macroeconomic policy. The Chancellor's giving the conduct of monetary policy to an independent central bank has worked. Since then, however, he has put his restless intellectual energies and those of his Department into other objectives—productivity and the tax credits—and that is where he is failing to deliver. He is best at the things that he gives to others and worst at the things that he insists on fiddling with himself.
  Mr. Steve Webb: For the record, will the hon. Gentleman remind the House of which of the three main parties included the independence of the central bank in its 1997 manifesto?
  Mr. Willetts: I thought that there were only two main parties. I presume from the hon. Gentleman's leading question that perhaps the party that he represents advocated an independent central bank. My right hon. Friend the Member for Fylde (Mr. Jack) is in his place, and he will know that we had already made progress towards that policy before 1997. Nevertheless, it has been a great success, but if the Chancellor looks at his table on long-term interest rates, he will clearly see that those rates were already falling in the mid-1990s, as we gave greater operational independence to the Bank of England.

  741
  I will not cavil, however. We welcome the achievement of the independent central bank, but the Chancellor should not then have started to fiddle with other things instead. The more attention a policy gets, the less successful its delivery. That is the tragedy of his chancellorship. We would like the Chancellor or the Secretary of State to tell us about some of the other things about which they promised they would be radical, but on which the Budget was almost completely silent.
  What has happened to the savings gateway and the child trust fund? We were told that that was the transforming idea for this Parliament and that it would change the nature of the welfare state. Needless to say—this is typical of the Government—there are three pilot projects in obscure parts of the country, with a report due in two or three years. The Government got their headlines during the last election campaign by promising radical delivery of that policy, but absolutely nothing has happened.
  What about pensions? In the past few months, there has been a catastrophic decline in people's prospects of enjoying an income from their funded pensions when they retire, as one company scheme after another has closed to new members. That is a direct consequence of the decision that the Chancellor took in his 1997 Budget to impose a new tax on pension funds. What does he have to say about that in his Red Book? He says that
  "the Government is concerned that a number of employers have taken the opportunity to reduce their pension contributions."
  He can say that again.
  The prospect of millions more people being dependent on means-tested benefits in future as a result of the closure of their final salary pension schemes is the most important single change currently taking place that will affect the Department for Work and Pensions, so the Government's being concerned is really not good enough. I hope that the Secretary of State will attempt in his speech to say what the Government will do about that very serious problem.
  The Conservative party has been open-minded about the reform of health care. The Chancellor's Budget statement, the Red Book and today's statement make it clear that the Government have a closed mind. They do not believe that we can learn from the continent of Europe how to organise health care in future. I think that we can learn from Europe. The Budget represents a missed opportunity, and the reason why the Opposition will not support the Budget tax increases in the Divisions on Tuesday is very simple.
  The Chancellor looks to the continent of Europe when it comes to increasing the tax burden, regulating the labour market and imposing new burdens on business. In other words, he copies the worst aspects of the continental European model. However, when it comes to how health care systems are organised in continental Europe and how those systems ensure the mixed financing of health care, which clearly works and is a success story, he closes his mind and rules out options that can be developed by learning from how things are done on the continent. He has got things exactly the wrong way around. He should learn from the things on the continent that work, not from the things there that do not work. That is why we oppose the Budget.
  2.56 pm
  The Secretary of State for Work and Pensions (Mr. Alistair Darling): Talking of continental Europe, I understand that the shadow Secretary of State for Work and Pensions is going to Germany tomorrow to address his sister party on the revival of conservatism. One cannot help but have a great deal of sympathy for the audience that he will address. I hope that what he has to say tomorrow will be rather more illuminating than what he had to say about the Budget this afternoon. I am sure that his audience will be absolutely fascinated by his critique of the wiring of the Child Support Agency computer system and by the fact that his mind has gone completely blank in relation to what happened to poverty 10 years ago, when he was advising the then Conservative Government.
  Had the man from Mars arrived in the Chamber this afternoon, he would have been forgiven for not believing that this is the first day of four-day Budget debate, not least because the shadow Chancellor is not even in the Chamber—let alone opening the debate, as used to be the case on such occasions. The shadow Secretary of State certainly could not be accused of concentrating on the big picture. He had precious little to say about health. In particular, he could not tell us whether the Conservative party proposed to match the increased funding that we announced yesterday. He could not tell us whether he believed that we should spend more or less on the fight against poverty and helping families with children. He had absolutely nothing to say on the economy—which, after all, ought to be central to any Budget debate.
  One of the key differences between this debate and the Budget debates that we used to have years ago is that my right hon. Friend the Chancellor set out his Budget proposals yesterday from a position of almost unprecedented strength and stability in the British economy. Five years ago and in successive Budgets, we set a course for stability in the economy not just for one or two years, but for the long term. We took the necessary tough decisions right at the start of that Parliament, and we took more necessary decisions yesterday.
  It is interesting that the shadow Secretary of State gave us credit for one policy—giving independence to the Bank of England. As he rightly said, that has been one of the principal ingredients in building that long-term economic stability. The hon. Gentleman then had the gall to say that the Conservatives were secretly in favour of that policy and were working towards something that we always thought they opposed. That casts new light on what was going on in the Treasury when they were in government: they were making steady progress towards something that they said on every occasion they were against.
  Indeed, the only time that I ever heard Conservative politicians say that they were in favour of an independent Bank of England was when a Chancellor left office. When they made their resignation speeches, they said that they were in favour of something that they had always said they opposed. Perhaps that explains why 10 years ago to this very year, the Conservative Government presided over a catastrophic mess in the economy, which largely contributed to their defeat four years later.
  Sir Michael Spicer rose—
  Mr. Darling: I shall now give way to somebody else to whom Labour Members owe a great deal, because he, too, contributed substantially to his party's defeat five years ago.
  Sir Michael Spicer: On the Monetary Policy Committee and the independence of the central bank, is it not the case that, if that has been a success, one reason is that the Government have been protected from their own Back Benchers when they have pressed the Government to break the inflation target? When I was on the Treasury Committee, we were constantly faced with Labour Members trying to get the Government to break the inflation target. Is it not right that the reason why the Government have not is that they are hiding behind the Monetary Policy Committee?
  Mr. Darling: The hon. Gentleman knows a thing or two about the trouble that Back Benchers can cause their Government. If the last Prime Minister were here, he would have something to say about the hon. Gentleman; indeed, my recollection is that he had a very unparliamentary term for the hon. Gentleman and some of his colleagues.
  We gave the bank independence, which helped to produce stability, low interest rates and lower mortgage rates, but we have introduced other important policies. The latest figures show that 1.5 million more people are in employment, which is a significant achievement when the House remembers that in the mid-1980s more than 300,000 young people were on the dole for over a year; today's figure is about 4,500, which is a measure of how far we have travelled and the changes that we have made. It is not just about the monetary decisions we have made, but about the other decisions that the Chancellor has made.
  Yesterday, building on that strength and stability, the Chancellor outlined the three challenges facing us: encouraging enterprise; taking the next steps to end child poverty and providing more support for families with children, as well as making work pay; and building on our investment in public services, especially the health service, to which I shall return shortly.
  Mr. Michael Jack: Will the right hon. Gentleman give way?
  Mr. Darling: I want to deal with the steps that we have taken over the past five years to achieve our goals, but before doing so, I shall give way to the right hon. Member for Fylde (Mr. Jack) who, I recall, spent many happy years in the Treasury secretly working towards the independence of the Bank of England.
  Mr. Jack: May I refresh the right hon. Gentleman's memory? The British economy has been growing for the past 10 years—five years under the Labour Government, and five under the Conservative Government. Yesterday, the present Government reaffirmed the 2.5 inflation target which we set and worked towards. We strengthened public finances, admittedly after a period of economic difficulty resulting from a cyclical downturn. Will the Secretary of State at least acknowledge that under the
  744
  chancellorship of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), the foundations for the strength of the British economy were put in place?
  Mr. Darling: I know that the right hon. Gentleman is a great supporter and admirer of the right hon. and learned Member for Rushcliffe (Mr. Clarke), if not his predecessors. He referred to economic difficulties; they could also be characterised as two of the longest and deepest recessions of the last century. In the five years since we came to office there have been two economic downturns, the most recent caused by what happened in the United States last year. The key difference between Britain now and Britain in the past, not just under the right hon. Gentleman's Government, to be fair, but under Labour Governments as well, is that we could weather those downturns because we took steps to ensure that we have a fundamentally strong economy.
  I dare say that, later in our debate, the good professor will bleat about what we ought to have been done in the first two years of the last Parliament. However, because we made a difficult and tough decision to stick to the spending totals that we inherited, we were able to repay huge amounts of debt to put the economy in a much stronger position. That is the key difference between what we have done in the past five years under the stewardship of my right hon. Friend the Chancellor and the miserable rollercoaster regime of the last Government, of whom the right hon. Member for Fylde was a member.
  We established stability; building on it, we have been able to switch spending to our priorities. In addition, because we have cut debt and unemployment, we have been able to release resources to spend on public services and help families and pensioners, which simply did not happen in the past. It is worth remembering that as a result of the reduction in debt interest payments, we have released £8 billion and saved almost £5 billion in unemployment costs because we have been able to help more people into work. By cutting debt and unemployment, we have been able to tackle the backlog of under-investment that we inherited.
  All that has been going on for the past five years. Yesterday, my right hon. Friend the Chancellor set out the way in which we can build on that work, setting out both the money that is now available for the next spending review period and, critically, plans to put more money into the health service, which everyone agrees is necessary.
  Several hon. Members rose—
  Mr. Darling: Before I deal with what we are doing to get people into work, I happily give way to my hon. Friend the Member for Falkirk, East (Mr. Connarty).
  Mr. Connarty: My right hon. Friend may cover the point I wish to make when he talks about work. The Opposition gave money away to their friends when they privatised the utilities, but we took it back to create the new deal and put people back into work. They looked after the few, but we looked after the many, which is why we have the reward of so much employment while they had so much unemployment.
  Jonathan Shaw: But they were thinking about doing what we did.
  Mr. Darling: My hon. Friend the Member for Falkirk, East is right, but my hon. Friend the Member for Chatham

  745
  and Aylesford (Jonathan Shaw) is also right: we do not have the slightest doubt that the hon. Member for Havant will maintain that the Conservatives were secretly working towards a windfall tax on the utilities, but never got round to telling us that that was their policy.
  It is worth reflecting that the figures from my right hon. Friend the Minister for Work show that the number of people in work has reached a new high of more than 28 million. Last month saw the third consecutive monthly fall in the number of people claiming unemployment benefit. I have never sought to make too much of one month or even a short run of favourable figures but, bearing in mind the dire predictions last autumn, particularly by the shadow Chancellor, whose judgment on this is as flawed as it is on other subjects, it is a significant achievement that, because of the strength of the economy, we have got more people into work.
  Despite that, however, we must do much more; many people are still not in work, but ought to be. A key step in the Budget is to make sure that we break down the barriers that prevent people from getting work; in particular, we must make work pay. The Budget will be remembered for a significant and major change in tax and benefit policy. For years, people have argued and campaigned for the integration of the tax and benefit system; we are starting that process with the working tax credit and the child tax credit, which the Chancellor announced yesterday. The Budget builds on the measures that we have already taken to make work pay; it supports children, whether their parents are in or out of work; it tackles child poverty; and it ensures, critically, that the tax and benefit system helps people when they most need it—for example, when they first start work or are looking after young children.
  It is important that the House realises the difference that the Budget makes; perhaps the few Opposition Members present can tell their colleagues about that difference, because it will be directly relevant when they come to knock on their constituents' doors in a few years' time. The working tax credit, which helps single earners with wages of up to £10,500 a year and couples with incomes of up to £14,000 a year, provides significant assistance in ensuring that people without children, as well as people with children, realise that getting into work will result in a big difference to the money in their pocket. As the Chancellor said yesterday, the child tax credit will help families with incomes of up to £58,000; it will make a real difference by reducing the amount that many individuals pay in tax and will help many people.
  Our central economic objective is to get more people into work, as that is the best way of getting people out of poverty and opening doors for them that would otherwise remain closed. As a result of the new deal and other measures we made work possible, but we still had to do more to make sure that we tackled a problem in the welfare system that we inherited—making sure that it is worth while to take up a job. Over the past five years, we have introduced measures such as the minimum wage and the working families tax credit, all of which were opposed by the Conservatives. It is pretty clear from what the hon. Member for Havant said that they are still against those measures, and will remain so.
  The Budget takes those measures a step further. It will make work pay significantly more than benefits and it extends the help already available to families with children to all single people and couples on low incomes.
  746
  From next April the working tax credit will provide extra help for people over the age of 25. For example, for a couple with no children it will pay at least £183 a week—that is £53 more than at present. For a single disabled person, it will pay £22 more than now. A lone parent working full-time will be guaranteed £237 a week, as well as help with child care, making work pay £70 more than income support.
  That will make a real difference—something that never happened in the 18 years during which the hon. Member for Havant supported the Government or advised them behind the scenes, no doubt working secretly towards a policy of giving more to people when they got into work. Perhaps I will go to Germany tomorrow to see what else he was working towards but not telling us.
  It is critical, as we have always said, that new rights are matched by new responsibilities. We announced previously that as we extend the new Jobcentre Plus network across the country, we will require everybody of working age on benefit to come in for work-focused interviews. There will be more conditions attached to the receipt of benefit, because we believe that it is only right that if we offer more assistance to get into work, people ought at the very least to know about it, and an increasing number of people will be required to do something actively to help themselves become independent. Last autumn I announced the new StepUp programme, which will start later this month in six areas and will be extended to 20 areas by the end of this year.
  We have found that where we require as a matter of course that people go on a two-week gateway in preparation for going on the new deal, there is a better chance of them getting into work, so we will extend that on a compulsory basis not just in central London, but to Manchester, Swansea and Dundee. It is extra help with more responsibility, and it works.
  We are also tackling a problem with which all hon. Members are familiar: older people who are continually drifting in and out of work. Because people cannot join the current new deal if they have been out of work for 18 months, many people miss out. Now, if they have been unemployed in any 18 of the past 36 months, they can join the new deal for the over-25s. Again, that is valued help and the evidence is that it works.
  Jim Knight: Can my right hon. Friend confirm that the measure will also help seasonal workers? There are many in my constituency in the seaside towns of Swanage and Weymouth who go into employment during the summer when work is available in the tourism industry and then leave it in the winter. They fall out of many of the statistics and certainly out of eligibility for the new deal. Will the new measure make them eligible for such help?
  Mr. Darling: Those are precisely the people about whom we are concerned. Until now, because they came in and out of work, there was never a long enough period for us to help them. I cannot tell my hon. Friend when the programme will be extended to his constituency, but the preliminary evidence is that it works and we want to extend it.
  As the Chancellor said yesterday, I shall shortly announce a national campaign with employers and others to help get more lone parents into work. I am convinced that

  747
  we can do far better to get more lone parents into work. For obvious reasons, they are often much more motivated than others to get into work, and we are offering them more help and support. It is worth bearing in mind the fact that because of the interventions that we introduced, there are well over 100,000 fewer lone parents on income support than there were when we came into office.
  By building on stability, setting our priorities and cutting unemployment, we have been able to do more not just to make the country more economically efficient, but to make it a fairer country where more people can participate and get on. Sadly, the previous Government not only neglected that, but in many cases virulently opposed it.
  Jonathan Shaw: Does my right hon. Friend agree that one aspect of people taking part and being treated fairly is that they have some protection in work? There have been 400 additional union agreements with employers this year, and we should be pleased about that. Working in partnership means that people have some sort of protection. I do not believe that the Opposition thought about that when they were in government.
  Mr. Darling: The Opposition were never too hot on looking after people who worked. They were the party which said, for example, that the minimum wage would cost 1 million jobs. The shadow Chancellor said that, and he has a rocky record on reliability. He was wrong on that, and my hon. Friend's comments are right.
  I turn to the measures that we announced yesterday to help families and children and the progress that we are making towards ending child poverty. It is an awful pity that although my hon. Friend the Member for Stalybridge and Hyde (James Purnell) asked the hon. Member for Havant a number of times—having given him notice of the question three weeks ago—the hon. Gentleman's mind was blank about what happened when he was the principal adviser to the Conservative party on these matters some 10 years ago.
  It is worth reflecting that in total, following all the personal tax and benefit changes that we have introduced since 1997—
  Mr. Deputy Speaker: Order. May I remind the right hon. Gentleman that he should address the Chair?
  Mr. Darling: I shall address you with great pleasure, Mr. Deputy Speaker. I was about to tell you of the good things that we have done since 1997. Following the changes that we have made, families with children will be on average £1,200 a year better off after inflation, and the poorest 20 per cent. of families will be on average £2,400 a year better off after inflation. That is a measure of how much we have done in five years.
  Mr. Ernie Ross: My right hon. Friend will recall that when he spoke to the all-party group on poverty at the end of February, he promised that a consultation document would be issued shortly on how the Government measure child poverty. Can he say more about that?
  Mr. Darling: Yes, I can. The hon. Member for Havant mentioned the document that we published. He had the decency to say that he had not read it, before going on to denounce its conclusions.
  748
  For the past three years the Government have published in their "Opportunity for All" series three separate measures of poverty—absolute poverty, persistent levels of poverty and relative poverty. We also set out measures of deprivation in relation to education, health and so on. All of them are important.
  Over the past year or so, academics and others have asked whether we would consider measuring poverty in different ways, as is the case in other countries. Indeed, the hon. Member for Havant said that we should go to other countries with open minds to see what is on offer. That is precisely what we are doing. When he is travelling round Europe looking at health systems, perhaps he should also look at the way in which poverty is measured there.
  We are setting out in clear terms what we have done and possible alternative ways of measuring poverty, many of which owe much to Professor John Hills of the London School of Economics. The Government are neutral on whether or not we change the measures that we use. We have an open mind. We are consulting and we will hear what people have to say. One thing is important, however. On any measure whatsoever, child poverty in this country is coming down. The Conservatives could never say that.
  It is obvious, especially in respect of relative poverty, that as a result of what we are doing, even at a time when the country's wealth is growing spectacularly, we are narrowing the gap between the richest and the poorest in the country. That is a measure of how much we are doing. The child tax credit which comes in next year will for the first time provide a single system of income-related support for families and children. That in itself will make a major contribution towards the eradication of child poverty.
  Mr. Willetts rose—
  Mr. Darling: I dare say that all the time—and I did not know it!—the hon. Gentleman was working towards an anti-poverty strategy. Let us hear all about it.
  Mr. Willetts: I have a simple question for the Secretary of State. I look forward to reading his paper. Of course there are many ways of measuring child poverty, but we need an assurance that the target which he, the Chancellor and the Prime Minister set of taking 1 million children out of poverty and eliminating child poverty using the measure of 60 per cent. of median income still stands. The right hon. Gentleman can measure poverty in many different ways, but his target was formulated in terms of 60 per cent. of median income. Does he stand by that target?
  Mr. Darling: The target that we set was to eradicate child poverty within a generation, and by 2004 to be a quarter of the way towards that. The public service agreement target is in place and we will stick to it. I am happy to tell the hon. Gentleman that we are about a third of the way towards meeting it in time, and about a third of the way along in terms of the number of children removed from poverty. I thank him very much for raising that point; I much appreciate it.
  Mr. Willetts rose—
  Mr. Darling: I have answered the hon. Gentleman. He asked me about the PSA target, and I said that we were

  749
  sticking to it. [Interruption.] I shall give way to the hon. Gentleman shortly, but I want to make some progress. I am very conscious that he overstayed his welcome; I do not want to do the same.
  Let me return to the child tax credit. One of the big differences that it makes is that, for the first time, the tax system will recognise parents' obligations towards their children and the new demands that they bring. It allows parents to get help when they need it most and to take a break from their work without the catastrophic drop in income that they might otherwise have suffered. It treats families equitably. Alongside child benefit, on which it builds, the child tax credit provides support to families with incomes of up to £58,000, paid to the main carer. Some 90 per cent. of families will benefit, and many Budget commentators have noted the great effect that the policy has on so many families. Despite yesterday's national insurance increase, many families will gain from substantial reductions in the amount that they pay because of its implementation.
  To pave the way towards the more generous credit, we will increase the child allowances in income support and jobseeker's allowance by £3.50 a week from October this year. That will mean that the amount paid to parents on income support to help them support their children will have gone up by 85 per cent. since 1997. We are also introducing other measures such as the extension of support for child care costs to help with approved child care in people's homes. That will particularly help people on shift work, who have had difficulties in the past.
  All in all, we are introducing measures that will make a great deal of difference to many people and families in this country. Every single measure is opposed by the Conservative party. I listened to what the hon. Member for Havant had to say about these measures, but it returned us to the same problem that the Conservatives have with health. What they are against is spending more money, whether on health, tackling poverty or supporting families. I have considered the hon. Gentleman's argument; indeed, he has produced the same one month after month, so I can assure hon. Members who do not usually attend such debates that they get no better. He has a familiar style and always returns to the same point: he is against complexity. However, he has had to admit, as even the professor who speaks for the Liberals admits, that no matter what happens, support must be provided for people on low incomes. Inevitably, that means making some sort of assessment of people's need and income, but when it comes down to it, the Conservatives are against the fact that we are spending more money. When they say that they want a simpler system, they really mean that they want a meaner one. The hon. Gentleman kept mentioning family credit, hut when we consider the family credit system to which he is so attached, we see that it is far from simple. Like the basic state pension, people think that it is simple, but it is complex when it is considered in detail.
  When the Government came to office, lone parents were receiving an average of about £58 a week from family credit. By November last year, after the introduction of the working families tax credit, they were getting an average of more than £88 a week—£30 a week more. The amount will increase again as a result of the Budget. That is what upsets the Conservatives: the fact that we are spending more money.
  750
  So the argument is not about whether to help families on low and modest incomes, but about the level at which that help is set. There is nothing complex about that, as the hon. Member for Havant will find out when he knocks on doors at the next election. Even if he cannot do the maths, he will find that the voters can, just as he found when he proposed the abolition of the winter fuel payment, on which I seem to remember that the maths was also straightforward. Opposition Members need to focus on this point: for families with an income of less than £50,000 a year, the child tax credit will guarantee support for a first child of £26.50 a week, compared with only £11 in 1997. For families with an income of less than £13,000, it will guarantee an income of £54.25 a week, whether the parents are in or out of work. That is almost double the help that was available in 1997; it is about £28 a week more.
  Even if the Conservatives cannot do the maths, families can. So too can pensioners, about whom the hon. Gentleman's argument is exactly the same. He is against the fact that the pension credit, which will take effect next year, will benefit about half of all pensioners. On average, it will give pensioner households about £400 a year. If the hon. Gentleman is against that, it is fine by me, but he will have some explaining to do. Not only are pensioners who pay tax not affected by the national insurance changes announced yesterday, but as their tax allowances are increasing above inflation next year, we will take a further 170,000 of them out of tax all together.
  I find it very surprising that the hon. Gentleman had so little to say about health, especially as his party has had quite a lot to say—and very illuminating it has been, although unintentionally so.
  The Chancellor of the Exchequer (Mr. Gordon Brown): Perhaps he will be talking about it in Germany.
  Mr. Darling: As my right hon. Friend says, that might be what the Germans are getting tomorrow.
  We have heard the Conservatives set out exactly the same approach on health that the hon. Gentleman has set out on families and pensions. They use exactly the same strategy: they rubbish the extra investment, say that it is impossible to do anything and then argue for cutting the money. The Conservative health spokesman said at a private meeting—it is a shame that he did not make the remark at a public meeting, but fortunately, somebody has made it public for us—that the Conservatives' strategy is to persuade people that the health service will not and cannot work, and then to argue that people should pay for their own health care in what he calls "self-pay". We can be clear what "self-pay" is, as the BUPA price list is on the internet and bears close examination, especially for people who will not get health insurance easily and would have to pay through the nose. The good doctor also said that he wanted to reduce public spending and that the most difficult part was to argue the Conservative alternative. He is not the only one. When I appeared on last night's "Newsnight", I saw that the shadow Chancellor was in some difficulty when he was asked about the Conservative alternative. After 18 years in government and five in opposition, he still does not know what the Conservative policy on health is.
  Surely the central point is that there is cross-party consensus about the fact that the health service needs more money. Yet the Opposition cannot say whether they

  751
  would spend the same as us, or more or less than us. The question is fairly simple. We have said how much we think should be spent on the health service in the next five years, but the Conservatives cannot say whether they would match it.
  Helen Jones: Does my right hon. Friend agree that the Conservatives' difficulty stems from their deep hostility to the provision of public services? Far from seeing public services as a way of liberating and supporting individuals, they have always seen them as a burden, which is why they are so reluctant to pay for them.
  Mr. Darling: The shadow Chancellor may secretly be working towards the same policy as ours. Perhaps that will be revealed on some suitable occasion. Many Conservatives have had an ideological objection to the national health service since it got going.
  Mr. John Bercow: No.
  Mr. Darling: Come on; not even the hon. Gentleman can persuade me of that.
  Mr. Bercow: I have used it for more than 30 years.
  Mr. Darling: The hon. Gentleman would probably have used anything that he could have got his hands on all his life, but that still does not tell me that he is philosophically attracted to it.
  People's ability to use the health service freely and on the basis of need is not only a question of social justice. It also makes economic sense. I can understand the Conservatives' aversion to equality or some sorts of fairness, but it does not make economic sense to take the route that they now appear to be taking. There is a consensus that more money needs to be spent, and there are two sources from which it can be obtained.
  Mr. Jack: Will the Secretary of State give way?
  Mr. Darling: One moment; the right hon. Gentleman may wish to comment on this point, as he probably comes from the other wing of the Conservative party.
  There are two sources of money, one of which is taxation. We have made it very clear that that is the best and fairest way of raising the money that our health service needs. The alternative is fees and charges. People can get insurance, but fees and charges would remain.
  The Conservatives will have to face up to a problem as they travel around the world in search of a solution. They might want to fly to the United States to see what is on offer there. The Americans have a system of private insurance, and the average family insurance premium for the health service is about £100 a week. Problems would soon arise if we took that route. One does not have to go far in the United States before meeting people who say, "If you are very poor, you have Medicare; if you are fairly well off and in a company scheme, your company provides your health insurance"—that is a cost on the company, of course—"but if you lose your job you often lose your health insurance." Americans who are on the
  752
  equivalent of our welfare-to-work programmes often say, "I'd love to go to work, but I'm terrified about health care for my children." Very many Americans are not covered, so they do not have health care. If that is what the Tories want, let them tell us, because that is the choice—taxation or the American style.
  Despite everything that the Conservatives have led us to believe, they appear to have a new-found attraction to matters European, so why do not they take a day trip on the Eurostar to France? If they want social insurance, let them look at its cost. It costs French employers about £60 a week per employee. That is the reality of social insurance. Opting for what the shadow Health Secretary calls self-pay would mean that the sick pay for being sick.
  There is a respectable argument to be had about this, so if the Conservatives want a debate, let them set out their policy. We believe that taxation is the fairest and the best way to fund the health service; they believe that it should be based on fees and charges. Whereas the shadow Chancellor says that he has not yet made up his mind and the hon. Member for Havant is vague, the shadow Health Secretary has made his view very clear: he has said in terms that he wants self-pay and that the great untapped market in Britain is health insurance.
  If we are to have this great debate, I ask Conservative Members this. Under the Tory scheme, who pays, how much will they pay, and what will happen if they cannot? Until the Tories answer those questions, their credibility on this matter will be absolutely zero. In many people's eyes they have always been suspect on the health service, but if they cannot tell us who pays, how much they will pay and what happens if they cannot, people will have every right to believe, and to be fearful, that if the Conservatives got back into power the health service would be anything but safe in their hands.
  Mr. Jack: May I take the Secretary of State back to the previous passage of his argument? Does he agree that the formulation of health policy is difficult? The Government's track record is as follows: first, accept Conservative plans; then, change through the 10-year NHS plan; and now, the Wanless plan. The Government have been in office for five years and have had three goes at trying to design a health care policy, and we still do not know whether it is correct. Is this not a complex and difficult matter?
  Mr. Darling: Some aspects of health care are extremely complex and many decisions are difficult—I grant the right hon. Gentleman that—but the decision on whether to fund the health service from taxation or to make people pay through fees and charges is pretty simple: one has to choose between one or the other. No amount of travelling to Europe, the United States, or anywhere else in the world will solve the Conservatives' problem. They will have to answer the question. If they believe not in funding the health service through taxation, but in self-pay—as the shadow Health Secretary explicitly said—they must tell us who pays, how much, and what happens if they cannot. If they cannot do that, they are in real difficulty.
  Mr. Michael Weir rose—
  Mr. Edward Davey: Will the Secretary of State give way?
  Mr. Darling: The idea that the Liberals have the answer is laughable.

  753
  I shall give way to both hon. Members, then move to a swift conclusion before I outstay my welcome.
  Mr. Weir: The public funding of the health service is probably one of the few things about which I would agree with the Secretary of State. I want to add to the questions that he asked of Conservative Members. Under their proposed system, what would happen to those who are already long-term ill or disabled and cannot get health insurance at a reasonable cost?
  Mr. Darling: The hon. Gentleman makes a good point. Anyone who examines the small print of a private health insurance document will note that it seems absolutely great until one becomes ill or old. Today I asked someone to look on the Internet at three of the main private health insurers' prospectuses. They all quote prices, but all have asterisks and footnotes saying, "If you are over the age of 60, you need to write separately and we will give you different rates."
  The hon. Gentleman is probably right that this is the only thing that we agree about, but I am sure that he will acknowledge that one of the reasons why we have been able to increase health spending in Scotland by so much is that it is part of the United Kingdom, which has a Labour Government.
  Mr. Davey: As the Secretary of State knows, the Liberal Democrats and the Labour party agree that the health service should be paid for primarily through taxation. Can he explain how years four and five of the health service spending increases announced by the Chancellor yesterday will be paid for? Will they require any extra taxation?
  Mr. Darling: If the hon. Gentleman looks at table C5 in the Red Book, that will all be explained to him. When it comes to giving us lectures on public spending, I remind the hon. Gentleman of what the Prime Minister said to his leader yesterday. The Liberal Democrats have commitments that would fill this Chamber three times over, all to by financed by 1p on income tax.
  The differences between the two major parties are very clear. We have set out a clear course for building economic stability and for increasing investment in our public services. We will ensure that we do more to fight poverty and to help families with children; pensioners; and, in particular, the health service. We have clear, published plans that work, compared with a Conservative party that is increasingly evasive about its real intentions. Frankly, until the Conservatives are prepared to be straight about how much more or less they would spend and what their charging policy on the health service would be, they will have very little credibility.
  I believe that the people of this country will trust our judgment and our belief in fairness and enterprise far more than they are tempted by the Conservative alternative. I commend the Budget to the House.
  3.36 pm
  Mr. Steve Webb: When our constituents see Prime Minister's questions, they often ask us, "Why do you lot always shout at each other and why are you always disagreeing? When you agree with someone, why don't you say so?" I therefore want to begin my remarks
  754
  on behalf of the Liberal Democrats by saying that there are significant elements of the Budget that we welcome and agree with.
  We very much welcome, and indeed had called for, the increased spending on the health service—a key issue in the Budget that I shall return to later.
  On the specific areas for which the Secretary of State for Work and Pensions is responsible, we welcome several of the changes to the children's tax credit arrangements which were announced yesterday. We welcome the fact that the difference between support for children whose parents are out of work and for those whose parents are in work has been levelled up. We particularly welcome the fact that that takes effect from October, as there was no requirement on the Government to do that—they could have started from April 2003, so it will be six months early.
  I welcome the fact that the threshold at which support runs out altogether has risen from £42,000 to £58,000. Like several other hon. Members, I should perhaps declare an interest. So generous is the child tax credit that from April 2003 I will be entitled to it. It does make me start to wonder what is going on when even I start to be entitled to additional tapered support with the costs of my children. Nevertheless, raising that threshold has prevented some two-earner families from losing out.
  I welcome the fact that the Government are addressing child care in one's own home, which will benefit people with irregular working patterns, among others.
  Those are welcome, desirable changes, and it is important to put that on the record.
  Lest my hon. Friends become too nervous and start drifting out of the Chamber more rapidly than they otherwise would, I should say that we have some important concerns to raise with the Secretary of State. On the child tax credit, it is not correct to say that the change that the Chancellor announced has avoided creating losers. I shall use the example of a professional couple who are both on £30,000 a year—say, senior public service workers such as a teacher and a nurse who have made some progress in their professions. At present, they get the full tax credit, which will be about £540 next year. From next year, when they have to add their incomes together, they will get nothing at all. In addition to the £300 or so each of additional national insurance, they will lose a £500 tax credit, so they will be £1,000 worse off overall.
  If a scheme were defined from scratch, it is debatable whether it would provide for couples with a combined income of £60,000 to receive a means-tested version of support. That would be odd. However, they have been given the money. A few years ago, the married couples allowance was taken from them; a year later, they were given the children's tax credit to replace it. Two years later, in one fell swoop, they will lose £500 pounds on top of national insurance increases.
  My colleagues and I sympathise with the view that direct taxation had to increase to pay for the health service. Although we would have used a different method, the national insurance rise is not an unreasonable way to finance the increases. However, removing a lump sum of £500 from hard-working families, some of whom work in the public services, is a swingeing loss on top of other tax rises.

  755
  Will the Secretary of State reflect on the fact that those families have got used to having the £500, which will be taken from them overnight next April, and consider a transitional arrangement whereby families who have already benefited from the tax credit can retain it? Obviously, new families will not be entitled to it, but should not existing families have some protection? A tax rise of £1,000 in one go is substantial, and the Treasury should think again.
  The Secretary of State used the phrase "making work pay". The Government constantly suggest that work always pays, but there is an exception that they have failed to tackle. Owner-occupiers who do not work can get their mortgage paid through income support, or whatever it will be called, or private insurance. When they take a job—of 16 hours a week under income support rules—they lose every penny of mortgage assistance. Perhaps the Secretary of State or the Financial Secretary can tell us whether work pays for families in that position.
  Mortgages are a substantial part of the household budget, and if people lose all support when they take a low-paid job they can be worse off. The Government fail to grasp the nettle of housing costs. They have postponed reform on housing benefit, but, if anything, they have allowed private insurance to play a bigger role in providing help for people with mortgages.
  I stress to the Financial Secretary that successive Governments have imagined that pushing mortgage support into the private market relieves the state of a burden. However, it creates a deeper unemployment trap. I know of constituents who have private mortgage insurance and cannot touch work because private insurers are even fussier than the Department for Work and Pensions. When anyone takes a job, all support stops and it cannot be given again. I hope that the Treasury will consider that new unemployment trap, which will become worse if, for example, house prices start to fall from their peak and there is negative equity. If unemployment rises by even a little, people who are increasingly likely to have private insurance will find that working does not pay. They are an important and growing group, which are excepted from the Government's goals.
  If the Government had come clean about child poverty, we might have supported them and said, "Well done." On any definition, taking 500,000 people out of poverty is an achievement of which to be proud. However, we are disappointed, to put it charitably, by the way in which the Government have handled the matter. Instead of admitting that they promised to take 1 million children out of poverty but that they have barely done half the job, they tried to fiddle the figures.
  On "Newsnight" recently, the Secretary of State said that when the Government claimed they would take 1 million children out of poverty, they meant that some children might fall into poverty if they took no action; that had not happened, so that accounted for some of the children. Politicians are mocked enough for breaking promises. If the Secretary of State says that he will take 1 million children out of poverty, one imagines that he means 1 million children who are currently in poverty. That is not an unreasonable assumption.
  The hon. Member for Havant (Mr. Willetts) tried to intervene when the Secretary of State made his confession. He said that the first goal was to take
  756
  1.1 million out of poverty by 2004 and that the Government were a third of the way there in time and in numbers. The same Secretary of State sat in the "Newsnight" studio and claimed that the Government had achieved their goal of getting 1 million children out of poverty. The Chancellor made the same claim during the general election campaign. The Secretary of State has now admitted on the record that the Government are a third of the way towards getting 1 million children out of poverty. Who was right—the Chancellor in the general election campaign or the Secretary of State today? I know of old that when the Secretary of State engages in fevered conversation with a ministerial neighbour, he is uncomfortable.
  There is a serious debate to be held about child poverty. As the Secretary of State said, a report has been commissioned, inviting comments on how the Government should measure child poverty. It was published in good time for our debate this afternoon. It would be disrespectful to the hon. Member for Havant to suggest that I had leafed through it during his contribution. I therefore speculate on its contents. I shall be charitable, as is my wont, towards the Government, and assume that the wider debate about defining poverty is the sort of discussion that I called for when they published the figures last week, rather than an attempt to get off the hook about missing their original target. I shall assume that they will retain the target and be judged against it. In that context, I welcome the document.
  If we are to have a popular front against child poverty, we must do it in a way that folk can grasp, not through percentages of medians below thresholds.
  James Purnell: I confirm that the hon. Gentleman welcomed the figures because I heard him speak at the End Child Poverty Campaign meeting last week. He said he believed that different methods of examining figures should be used. However, I am not clear from that meeting or his comments today whether he supports the child tax credit or whether he is worried about the means-testing involved, as he said last week.
  Mr. Webb: If the hon. Gentleman consults the record, he will discover that I led for the Liberal Democrat party in the debate on the children's tax credit and that we voted for it. There is no ambiguity about that.
  Mr. Willetts: I think that the hon. Gentleman means the child tax credit.
  Mr. Webb: I do. The hon. Gentleman is right; I got the name wrong, as did the Secretary of State on several occasions. That probably proves a point.
  Perhaps the Secretary of State would be so kind as to record my comments as representation No. 1 in response to his consultation paper. I believe that we should have a measure of child poverty that permits headline figures, not 50 indicators. The "Opportunity for All" approach and the thick documents that the Government have produced are right to highlight the fact that poverty is multidimensional, but the political sting is taken out of it because they contain no summary of progress. Instead, we get, "This measure's gone up, that measure's gone down, this measure's unmeasurable." The latter is the most common problem with the Government's figures. We want a

  757
  summary of progress on tackling poverty that catches the public's imagination and has relative as well as absolute dimensions.
  The Government are right to have a poverty target that is about one's standard of living relative to society. We do not want to freeze the target in the Victorian or post-war eras. As we become more prosperous, our expectations for our children increase and any good poverty measure should provide for that. The Secretary of State will be familiar with the "Breadline Britain" studies of the 1980s and 1990s. They were not perfect, but they asked people what they needed to be a part of society.
  People could grasp the basics—for example, that children should be able to have a family holiday once a year, and new, not second-hand clothes; that parents should be able to afford to send children on school trips rather than keeping them off sick because they could not afford it. The studies surveyed the number of children who could not get those items. If we track them over time, the list changes. Fifty years ago, having a television was not a necessity, but nowadays a child whose parents cannot afford a television is probably missing out at school. The list changes but a Government who ensure that no child has to live in a damp, draughty house or miss out on a school trip and who make progress on those matters are rewarded.
  The Chancellor has been accused of doing good by stealth and putting money into tax credits but hoping that nobody will notice because there is no public support for tackling poverty. However, poverty is defined obscurely. If we defined it in a populist way, many people would say that they wanted their children to have a holiday or new shoes and that therefore they wanted that for other people's children. They would sign up to the expenditure.
  I support the Government's relative measure. I should like them to set out a headline measure—of course, there will be reams of supporting statistics—for which the Government can be held to account. I hope that that is a constructive response to the consultation process.
  At the risk of deviating from being constructive, I want to draw to the House's attention a line in yesterday's Budget speech relating to the treatment of teenage single parents. It has not attracted a great deal of attention, but it was a rather strange line. It stated that teenage single parents who are not living with their parents should not be allowed council houses. That rang bells, and I have done some research on the matter. In 1996, The Independent referred to a speech made by the right hon. Member for North-West Hampshire (Sir George Young) at the Conservative party conference as long ago as 1993. It states that
  "the then housing Minister Sir George Young invoked an image of teenage girls leaping up the council house waiting lists with new babies".
  This is the origin of the present idea.
  The concept was taken up with enthusiasm by the right hon. Member for Wokingham (Mr. Redwood) in 1996. This is rather intriguing. I am again quoting from The Independent:
  "Mr. Redwood, whose Conservative 2000 Foundation will be launched on Wednesday, said young mothers should be housed in hostels rather than leapfrogging 'the couple in their twenties who decide to wait before having a child' in the queue for council housing. He deplored the assumption that 'the illegitimate child is the passport to a council flat and a benefit income'."
  758
  The most intriguing aspect of all this is the Labour party's response as reported at the time:
  "John Prescott, Labour's deputy leader, said: 'The Tories want to return to the 19th century and put mothers and babies in the workhouse.'"
  The newspaper went on to describe the scheme proposed by the right hon. Member for Wokingham:
  "Mr. Redwood's hostels would offer a mix of studying, working and childcare".
  If I understand the provision correctly, that is precisely what the Government are proposing. The idea resurfaced in the social exclusion unit's paper of 1999, which advocated something similar. There are two possible responses. One is to assume that new Labour has adopted a right-wing Conservative agenda. Far be it from me to suggest that. The alternative response is to suppose that this proposal is entirely benign and that the Government are saying that chucking teenage single mums into council flats and leaving them to rot is not a good idea. I am with them on that. I think we would get that far together.
  The question is, what is going to happen instead? What will be the element of coercion in this proposal? Perhaps the Secretary of State, or whoever is going to wind up this debate, could respond to that question. How much coercion will there be? To what extent are existing teenage single mums in council flats going to be forced out against their will? To what extent are the incoming teenage lone parents going to be forced to live in hostel-type accommodation? Are we talking about a small number of units of good-quality, supportive accommodation that will provide a basis for work and child care, or are we talking about large institutions?
  Miss Anne Begg: May I give the hon. Gentleman an example from Aberdeen? The Foyer organisation is a voluntary sector organisation working with the homeless. It takes lone parents and helps them, gives them support, and ensures that they will be able to sustain any kind of tenancy. It also assists them in the job market, helping them into work. It often has to help people to overcome a drug habit, and gives a high level of support to very disadvantaged youngsters in Aberdeen. My right hon. Friend the Secretary of State has visited it more than once; he complains that we keep taking him there. It is an excellent model of how we should be helping young people to come out of poverty and a dreadful lifestyle and into accommodation and work that they can sustain.
  Mr. Webb: We would all agree that that is entirely desirable. Will the hon. Lady reflect, however, on whether that sort of project would work if the lone parents in question had been forced to go there? Presumably they go there of their own free will at present, because they are attracted by what is on offer. The key question is whether lone parents in this position will be enticed by what these schemes have to offer. If so, they will probably be queueing up.
  If the schemes are as good as the hon. Lady suggests, if they are to be extended nationwide, and if the money is going to be put in to them, great. People will not need forcing, because the schemes will be an attractive alternative to being left to rot in a council flat. My suspicion, however, is that that is not exactly what is

  759
  being proposed. The amount of detail is very scant. We have looked through the documents, and we have found scarcely an item about the provision.
  Mr. Willetts: I might be able to help the hon. Gentleman with the history of this idea. He has referred to discussions that took place on it pre-1997. He omitted to say that the Prime Minister made great play of it in 1998 in one of the Labour Government's classic welfare crackdowns. We get those every few months. At that time, there was a welfare crackdown story on the front page of the Daily Mail, with a signed piece by the Prime Minister, which stated that teenage lone parents should not have houses of their own and that they should all go into hostels. He spun that idea for a week in 1998. Nothing happened then, and we have no reason to believe that anything will happen this time.
  Mr. Webb: I am not sure whether I welcome the idea that nothing will happen this time. We have been reflecting on what the Conservatives might have done, had they been allowed to continue. Perhaps they would have taken action on this front; perhaps that is where they were heading. They have not needed to do anything, however, because the present Government have taken up that agenda.
  Miss Begg: The hon. Gentleman has still not given us any evidence as to why he thinks that this Government are proposing what he seems to think is a worst-case scenario. Where is the evidence for that?
  Mr. Webb: The hon. Lady is well versed in the language of new Labour, and the rights and responsibilities agenda. What will be proposed here, as in so many elements of the welfare reform package, is compulsion. In this Budget, lone parents with children under five are going to be compelled to have interviews on pain of loss of benefit. The partners of the unemployed and of the disabled are also going to be compelled to go in for interviews.
  Rosemary McKenna: Will the hon. Gentleman give way?
  Mr. Webb: In a moment. Compulsion is central to the new Labour agenda. That is why I suspect—more than that; I am almost certain—that coercion will be central to this proposal. If the hon. Member for Cumbernauld and Kilsyth (Rosemary McKenna) wants to tell me that there will not be any compulsion, I shall be delighted to hear it.
  Rosemary McKenna: Will the hon. Gentleman tell me what is so wrong with ensuring that young, vulnerable people come for an interview to see how they can be assisted into work and into a better lifestyle?
  Mr. Webb: If all these things are so good for people, why do we have to force them to do them? That is the key question. If the provision is self-evidently good for people—if they are being offered support, not threats—why do they need forcing?
  The Financial Secretary will have the chance to respond to the debate and to put on record today whether there will be compulsion in these schemes. I will happily take
  760
  an intervention from him now if he would like to tell us the answer. This is a simple yes or no question. He does not want to intervene on me because he cannot say whether there will be compulsion. This is why we want to put this on record.
  Mr. Darling: I am aware that I spoke for a long time earlier, but I can answer that point. For the avoidance of doubt, it is a condition of receiving benefit that anyone of working age comes in for an interview to find out what help is available. Will the hon. Gentleman tell me what is wrong with that? If it is obligatory to send our children to school, surely it cannot be too great an obligation to say to someone, "You have got to find out what help is on offer." Even for the hon. Gentleman, that was a daft point.
  Mr. Webb: The House will have noticed that the Secretary of State did not answer the question. The question was: will teenage single mothers be forced out of council flats into hostels, or some sort of supportive accommodation?
  The Financial Secretary to the Treasury (Mr. Paul Boateng): That was not the question.
  Mr. Webb: The Financial Secretary says that that was not the question. It may not he the question that he wants to answer, but it is the question that I am asking. We have not had an answer. The House has not been told whether teenage single mums will be forced into hostel-type accommodation. We do not know how big the accommodation will be, or what level of support it will provide. We do not know what the penalty for saying no will be.
  If these projects are to be paragons of virtue, like the Foyer project that the hon. Member for Aberdeen, South described, they will be wonderful. People will queue up to get into them, and we will not need to use force. If they are not, there might be some resistance, which is where the Secretary of State's penchant for using force will come in. The House will notice that that possibility has not been denied.
  Mr. Connarty: I am amazed. I now know why my colleagues in England dislike the Liberals so much. The hon. Gentleman's use of this scenario is a scare tactic. Does he not think that there is something wrong with saying that we will leave people socially alienated and excluded? That is what happens to people who are slapped into council flats with no support and no compulsion to go and see an expert who has strategies to get them out of their social exclusion and alienation. The hon. Gentleman wants to leave those people to languish, and he should take responsibility for that. That is what he is advocating at the moment.
  Mr. Webb: The hon. Gentleman is entirely wrong. The only distinction between my approach and his is that I want to offer teenage single mums the chance to have such attractive accommodation and he wants to force them into it. He obviously thinks that they may not find it attractive. We have had no denial of that. If that

  761
  accommodation is attractive, why are the Government so afraid that teenage single mums will not take it up that they are forcing them to do so?
  Mr. Connarty: Will the hon. Gentleman give way?
  Mr. Webb: No. We have pursued that issue sufficiently.
  Mr. Menzies Campbell: Will my hon. Friend give way?
  Mr. Webb: I suppose I should give way to both my right hon. and learned Friend and the hon. Gentleman.
  Mr. Campbell: Does my hon. Friend remember the terms of the speech that the Chancellor of the Exchequer made to the House of Commons yesterday? He said:
  "Where there are lone parents under 18 who cannot live with their family, the policy is that, instead of independent tenancies, they will have supported housing that combines accommodation with counselling and help with child care."—[Official Report, 17 April 2002; Vol. 383, c. 587.]
  Is not the ambiguity that my hon. Friend is highlighting a direct result of the ambiguity of the Chancellor's speech?
  Mr. Webb: My right hon. and learned Friend is exactly right. We have looked through the documents and we cannot find any clarification on this issue. I invited the right hon. Members on the Treasury Bench to intervene, but no one has explained the position, which means that it must be compulsory. We can come to no conclusion other than that teenage single mums will be coerced into taking up this accommodation. If that is in their interests, why do they need to be forced to take it up?
  Mr. Connarty: It was interesting that the right hon. and learned Member for North-East Fife (Mr. Campbell) used the correct term "supported housing", not "hostels" or "institutions". Even Women's Aid in Scotland has supported housing for women who are alienated and excluded from society. The hon. Member for Northavon (Mr. Webb) does not seem to accept that single parents who are out of a family situation become broken away and hide from society. There needs to be some way of compelling them to go for an interview with someone who can help. There is nothing wrong with compelling people to go for interview with someone who will help them, if the alternative is social unrest, which is what the hon. Gentleman seems to be arguing, because he thinks that it is good for Liberal Democrat votes.
  Mr. Webb: There was a slightly bizarre conclusion to the hon. Gentleman's intervention. At least he is honest about being comfortable with compulsion and coercion, but it is not clear whether the Secretary of State is because he will not tell us. The part of the Chancellor's speech that my right hon. and learned Friend referred to said that lone parents under 18 will not have an independent tenancy. If it is not an independent tenancy, what is the difference between supported housing and a hostel? I do not know what this accommodation will be like.
  The other substantial area of the Budget that we should touch on is the plans for health spending. My hon. Friend the Member for Kingston and Surbiton (Mr. Davey) asked the Secretary of State to clarify the Government's plans
  762
  and to say whether there is a hole in them. The Government have set out detailed spending plans for the national health service for five years, but detailed tax and revenue plans for only three years.
  The Secretary of State referred my hon. Friend to table C5, which contains the grand totals and which I have read, but Budgets do not spell out which taxes that percentage of gross domestic product will come from. They do not give that detail several years ahead. In response to my hon. Friend, the Secretary of State failed to put on the record whether more discretionary tax increases will be required to fund the planned health service spending. If the Secretary of State or the Financial Secretary think that there is a danger of the wrong impression being given on the record, I am happy to give way so that they can clarify whether any further discretionary tax rises will be needed, over and above those that have already been announced, to meet the spending plans for the health service that were given yesterday. They do not want to intervene, because they do not want to answer that question. The chances are that there will need to be more discretionary tax rises, and they should come clean about it.
  That brings me to the central point of the Budget. A year ago the Labour party wrote its manifesto. There are two possibilities. One is that it knew it would have to raise direct taxes to pay for improved public service, and it failed to disclose that fact, which would be dishonest. The other is that it did not know it would have to raise taxes to improve public services, which would be incompetent. I shall not judge whether the Government are dishonest or incompetent, but they must be one or the other.
  Yesterday's tax rise was predicted by us during the election campaign, by the Institute for Fiscal Studies and by all independent commentators. It was predicted that the Government would have to raise direct taxation to pay for their public spending plans. They declined to tell the electorate that. It would have been better to come clean, because they would then have had a stronger mandate for the tax rises that they announced yesterday.
  The Chancellor rejected the notion of hypothecation, so yesterday's national insurance rise was just a general tax rise; it would go into the pot with other tax rises, which would pay for public spending. There was no link, not even between the 1 per cent. on national insurance and the health service, because most of that 1 per cent. will not be spent on health but on pensions and other services, or it will go into the national insurance fund surplus.
  The Chancellor rejected hypothecation for one reason: he did not want the cyclical effect of the economy to undermine the funding of the health service. I gave him, in my usual generous way, an offprint of an article that I wrote for New Economy, the journal of the Institute for Public Policy Research. [Interruption.] Indeed, it made his day. He promised to take it to bed with him, but he obviously did not read carefully the section about how we should deal with the ups and downs of tax revenues. The Chancellor does that all the time. He sets fiscal targets that work over the economic cycle.
  Mr. Edward Davey: Cyclically adjusted.
  Mr. Webb: Cyclically adjusted, as my hon. Friend says. The Chancellor of the Exchequer does not expect every year to meet all the rules: he says that we will meet

  763
  them over the cycle. The health service could be funded in precisely the same way. National insurance rates, if that were the hypothecated tax, could be set so that over the cycle the health service was funded in a predictable and stable way. In the good years it would raise more than was needed, in the bad years it would raise less, and when those figures were cyclically adjusted, as the Chancellor is so fond of doing, there would be no problem. That is not a fundamental objection to linking tax and spending.
  The electorate do not trust the Government on tax because they failed to tell them at the election that they would need to raise taxes, and then went and did so yesterday. We need a method whereby the electorate know that they can trust politicians on tax. Politicians could bind themselves to spending every penny of a particular tax on a particular service and not siphon that money off. If the public were asked to pay more, they would know where the money was going. It would not need an Audit Commission report or anything else: they would know by statute.
  The Chancellor said that he wanted a debate on how public services should be funded.
  Mr. Adrian Bailey: Will the hon. Gentleman give way?
  Mr. Webb: No, because I am about to finish.
  These ideas will be a way of reconnecting the public with taxation. The Government and the Liberal Democrats both want good tax-funded public services. We are united on that against the Conservative vision. The danger is that, if the Government blow it by raising taxes that they did not tell people about and do not spend them entirely on the things that people want, the public will not give a second chance to parties that believe in tax-funded public services and they may be seduced by the Conservative dogma.
  In a spirit of constructive friendship, I say to the right hon. Gentlemen on the Government Front Bench that the Government should come clean on tax and link what they are spending with what they are raising, and then the public may trust them. By not telling people during the election what they intended to do and then putting taxes up yesterday, they betrayed the public.
  4.8 pm
  Mr. Eric Illsley: I do not intend to follow the same route as the hon. Member for Northavon (Mr. Webb), except to say that I do not believe that the Government are dishonest or incompetent. We can debate hypothecated taxation, but the hon. Gentleman said himself that if we had hypothecated taxation, money could be spent year on year in a certain area to the detriment of other areas. As for whether the public knew that we were going to raise taxes to fund the national health service, up until yesterday the world and his dog knew that we would do that.
  The hon. Member for Havant (Mr. Willetts) said that Labour is comfortable only when it raises taxes to spend money. That is not the case at all. Labour Members do not welcome tax increases. Like anyone else, we would rather the health service were funded, as it has been funded in the past five years of the Labour Government,
  764
  through the good stewardship of the economy. The money has been available because of increased employment—1 million people are back in work—and increased tax revenues. It would be much better to fund the health service in that way, but if it needs extra funding I am not afraid to say to my constituents, "Yes, taxes must increase to provide you with the national health service that you want." Over the past year or so, the public have made it clear exactly how they want their national health service to operate. They want more money put into the service. I am comfortable with the increase in taxes to fund the national health service.
  As I have said, it is Labour's prudent management of the economy that has allowed considerable investment in our public services over the past few years without those tax increases. I shall not repeat the list that was given yesterday, but it included low interest rates, low inflation—the lowest for many years—and higher employment. I believe that only this week unemployment fell again.
  I welcome the extra money for working families: increases in the working families tax credit, working tax credit and child tax credit. Those moves will greatly assist my constituents. The extension of the new deal is also welcome. Over the last few years my constituency has experienced high unemployment, but, although the level is still slightly higher than the national average, it has fallen recently as a direct consequence of the Government's policies.
  I look forward to the pension credit that will be introduced next year. That too will help many of my constituents, especially those who qualify for pensions under the mineworkers pension scheme or who qualified for it prior to 1975, before it was index linked. A very small occupational pension has prevented such people from obtaining other benefits.
  I welcome the tax concessions for small businesses. Because of our attempts to regenerate the Barnsley area over the past two years, we have had to seek assistance for such businesses—surprisingly enough. I am happy to say that my constituency contains some world-leading small businesses. I also welcome the reductions in beer duty for micro-brewers and local brewers. I should declare an interest as honorary adviser to the northern branch of the Licensed Victuallers Association. The move will help breweries in rural areas and rural pubs; one of the issues in such areas is the decline of the traditional country pub.
  I am pleased to see that my right hon. Friend the Financial Secretary to the Treasury is present, as he is responsible for the climate change levy. I am glad that electricity produced from coal mine methane will be exempted from the levy. Only a few days ago, my right hon. Friend opened a plant in my constituency that converts methane leaking from old coal mines to electricity in order to power a local glass factory. I understand that next year such methane will be exploited on some 80 sites.
  While I am on the subject of glass, let me say—I know my right hon. Friend will expect me to make this point—that the glass industry has been hit hard by the climate change levy, especially as a result of the exemption and rebate system that revolves around the integrated pollution prevention and control regulations. A company registered under the regulations will receive an 80 per cent. rebate.

  765
  I understand that, to qualify, a company must melt glass. Some companies use a lot of electricity, but do not melt products in order to make glass. They may bend substances, for instance to make motor-car windscreens; some, such as Potters Ballotini in my constituency, use 100 per cent. recycled glass—coloured glass. That is an environmentally friendly operation in itself. Such companies, however, are subject to the full rate of the climate change levy.
  Potters Ballotini must pay £160,000 per annum, in return for which it receives only £2,000 in national insurance rebate. It points out that because it uses 100 per cent. recycled materials, it should not be subject to a levy that is intended to make companies focus on being environmentally friendly and on emissions targets. I hope my right hon. Friend will look again at the way in which the IPPC regulations affect such companies. I have heard it said many times that the climate change levy is revenue-neutral, but it is not revenue-neutral for the companies paying £160,000 in order to receive £2,000.
  As I have said, I welcome the extra funds for the NHS and the five-year stabilisation plan. As I said after the statement by the Secretary of State for Health, however, my constituency and others are in a bizarre position: NHS funding appears to be decreasing when examined against target funding for the health authorities involved. It is a question of distribution.
  Last year my authority received 98.5 per cent. of the funding target; at the end of the current year, it will have received 97 per cent. of that target. Although more money is going into my health authority and the NHS in general, the amount provided for its core functions appears to be falling. That 3 per cent. shortfall equates to some £6 million, which the health authority simply could not find. In fact, its budget was rejected by Trent regional health authority on two occasions because it simply could not find a way of disguising a £6 million shortfall, or making any further efficiencies to reduce the amount. It had already taken £1.5 million out of the budget through efficiencies.
  Mr. Peter Viggers: The hon. Gentleman has put his finger on an important point. Ministers consistently tell us that NHS spending is increasing. In my area, the Portsmouth and South East Hampshire trust has been called on to make 2 per cent. efficiency savings in consecutive years. It says that its budget is way below what it needs. I am talking about the sixth largest hospital trust in the country, which received no stars in a recent survey. The hon. Gentleman has identified the difference between the Government's claims and reality.
  Mr. Illsley: I entirely understand the hon. Gentleman's point. Similar points were made following the statement by my right hon. Friend the Secretary of State for Health.
  I readily admit that the amount being spent on the health service is increasing, but the manner of its distribution, and the fact that it is sometimes attached to initiatives, tends to move it away from the core. That is one of the main problems in my area. Initiatives have been imposed on the health authority—the other day the pro-chancellor of Hull university described the syndrome as "initiative-itis"—to which the money is tied. It is tied to an initiative and to a target. That tends to move the money away, because part of the health service
  766
  concentrates on achieving the target. Meanwhile, another part of the service may receive less money and experience neglect.
  My area is desperately short of general practitioners. Apart from, I think, Sunderland, it has the fewest in the country. We had a training surgery providing initiatives with the aim of recruiting and training more GPs, but the funds had to be withdrawn because the health authority had to concentrate on other initiatives and targets imposed by the Department of Health.
  We have experienced shortfalls year on year. It is not just under the present Government that my health authority has been underfunded. More than a year ago, inappropriate prescribing by GPs led to a shortfall of about £1 million. Perversely, this year—because we have addressed the issue—we have more problems because prescribing is very good. GPs are now prescribing according to the Department's instructions in terms of best practice. That has increased the cost of prescribing and left us with a £2 million shortfall, as part of the overall £6 million.
  We would appreciate some targeting of funding for the health service. The new independent audit and review must assess each health authority to determine which are providing value for money, but doing so on a shoestring because they are underfunded, and which are being wasteful. We must ensure that there is a balance of the scarce resources.
  My local health authority has the worst rates of lung cancer, heart attack and stroke in the Trent region, which covers most of south Yorkshire and north Derbyshire, and probably among the worst in the whole country. We have among the lowest rates of heart attack survival and the highest of morbidity. A recent Commission for Health Improvement survey of Barnsley district general hospital came out with the bald statement that anyone aged between 35 and 75 admitted to that hospital suffering from a heart attack had a 50 per cent. higher chance of dying than in any other hospital in the country. That alone tells me that our funding problems must be tackled.
  We hope that the NHS audit will solve the problem. I have yet to get an answer to a question that I have been asking for many years. We are 3 per cent. short of our target, but no one can tell me why my local health authority, which probably has among the highest need in the country, continues to be underfunded. When they consider the whole idea of the distribution of funds for the national health service, I hope that the Government will revisit the targets and sort out those problems.
  I am also concerned about other public services, and especially those delivered through local government. A few years ago, we were promised a review of standard spending assessments, but that appears unlikely to occur according to the time scale set out last year. We were looking for a vast improvement in the mechanisms for local government funding, reflecting need rather than proceeding on the current formulaic basis.
  My local authority has been underfunded ever since 1990, when poll tax capping was introduced. This is the area in which the public come face to face with the delivery of services, and they often find that the service that they expect cannot be provided because of lack of funding.
  Our education funding has improved dramatically, with grants now given directly to schools to improve facilities, and I very much welcome the new school building

  767
  programme. I am happy to say that the rate of staying on at school post 16 has improved in my constituency, as has our performance at GCSE, which has traditionally been poor. However, the services known as the "other services block", such as street cleaning and environmental services, have suffered over the past few years as the Government have, quite rightly, targeted education. I hope that they will look again at the funding of local government.
  Housing, and the lack of money being made available to local authorities to meet the demands of repairs and other services, continues to be a problem. The Government have set out their policies on council housing clearly: sell it off to other landlords, form aim's-length management companies or simply maintain the status quo. Tenants in my area voted against sell-offs and the Government will not allow the local authority to construct an arm's-length company, because its rating in housing management is only two stars rather than three, so we are left with the status quo and council tenants cannot get repairs or improvements to their properties because the funding is not available. I hope that the Government will do something about that in the near future.
  This is the point at which I usually say something about excise duties, but as none of them was increased yesterday there is very little to say. Let me repeat yet again, however, that cigarette smuggling remains a problem. It is a huge industry—a black economy—in my constituency. I agree that cigarette prices need to be increased for health and social policy reasons, but that tends to increase smuggling in areas such as mine.
  I warmly welcome the Budget and the fact that the Chancellor has grasped the nettle and taken the right decision on the future funding of the national health service. I fully support him on that and look forward to a much improved NHS in my constituency.
  4.26 pm
  Sir Michael Spicer: The hon. Member for Barnsley, Central (Mr. Illsley) said that raising taxes is not enough. I agree.
  I declare my interests as set out in the register.
  It is highly appropriate that we should be debating today the work and pensions implications of a Budget that has produced the highest tax rise on jobs since Labour introduced the selective employment tax in 1966—and this on top of a substantial tax on pensions in a previous Budget.
  The proclaimed essence of the Budget is a massive £8.5 billion tax increase on jobs to pay for more health spending. If we are to go down the crude tax-and-spend route, the first question to ask is, will it do the trick? Are taxes set to go even higher? What about other expenditure requirements, such as defence, education, transport and indeed pensions?
  Liberal spokesmen have popped up throughout the afternoon demanding more discretionary tax increases. One of them asked for more to be spent on education, and another wanted more money for social services, and now the hon. Member for Northavon (Mr. Webb), in his line of questioning to the Minister, seemed to be asking for yet more discretionary taxation.
  768
  The Wanless report, published yesterday, argues that if all the extra funding for the NHS is to be found through taxation, tax may have to rise by an average of £5 billion every year for the next 22 years. To put that in perspective, if the whole amount of the extra revenue were placed on income tax, it would rise by 2p in the pound each year, reaching a maximum of 66p in the pound, just to cover health funding alone, never mind extra spending on pensions, education and the rest—the mind boggles.
  The Chancellor seems to be contenting himself with a massive one-off tax rise of almost £9 billion next year, and an implicit claim that the Government will match future expenditure to economic growth. A critical issue, therefore, is whether the target for economic growth—2.5 per cent. in this Budget—is likely to be met. So far, the Government have had luck on their side. In part because of the strong economy inherited from the Conservatives, and in part because of a massive expansion of imports into our economy, we have had reasonable economic growth over the past few years.
  That is unlikely to continue in future. On the contrary, genuine investment-led growth is grinding to a halt.
  The one word that the Budget dare not speak is productivity. Even the Government's recent White Paper did not include a table showing productivity rates over the past 10 years. That is strange and does not follow precedent. Table 1.1 on page 3 of the White Paper "Productivity in the UK" published in November 2000 shows that the average productivity rate was 2.1 per cent. between 1990 and 1997, declined to 1.6 per cent. between 1997 and 1999 and has been 1.9 per cent. thereafter. Since its publication in that report, table 1.1 has never been seen again. It has been airbrushed from all subsequent publications on productivity.
  Despite this censorship, the secular decline in the rate of productivity ever since the Government took office remains a fact of life. We know this to be true because the Chancellor of the Exchequer admitted as much in a recent interview on the "Today" programme. The issue is not whether productivity rates have fallen, but why. That question is absolutely critical to a proper assessment of the Budget.
  The rate of productivity is the performance measure of the structural changes occurring in the economy. The figures tell us that the rate at which the competitiveness and efficiency of the British economy was catching up and even overtaking other countries under the Conservative Government has now slowed down and gone into reverse under Labour. This is why, from being the sixth most competitive country in the world in 1997, we have crashed to 14th place and the plummet shows no signs of slowing down. The rate of investment has crashed from a peak of 13 per cent. in 1998 to 2 per cent. in 2001. Last week's figures show that inward investment fell by more than one third last year and that our European Union share fell from 26 per cent. to 19 per cent.
  Not surprisingly, as a result, old ailments are beginning to recur. Since 1998 there has been a dramatically steep rise in our balance of payments deficit from an annual average of around £5 billion in the first half of the 1990s to nearly £20 billion in the second half. If that reversal of the fundamentals of our economic fortunes had been unavoidable it might at least have been forgivable. It might also have been insolvable. It was avoidable, is unforgivable and remains unsolvable. It requires, above all, a change of Government.

  769
  There are at least four reasons why the necessary investment to improve productivity and competitiveness will never be forthcoming under a Labour Government. Special circumstances apply to the present Labour Government, but the general rule persists: in the end a free-enterprise economy always comes unstuck under a Labour Government, even one as fortunate as the present Government in their inheritance from the Conservatives.
  Mr. Mark Hendrick: I thank the hon. Gentleman for giving way. Does he accept that the reduction in inward investment is to some extent due to the fact that Britain remains undecided on the euro and many inward investors would like us to take a decision on that? Does he also accept that his party's position, which is for Britain never to join the euro, would lead to an even bigger drying up of inward investment?
  Sir Michael Spicer: I shall turn to the euro in a moment. However, in the past the rate of inward investment has been high and it is still higher than that in most euro countries. So that argument does not wash. Indeed, in a moment I shall argue that the Government's commitment to enter the euro is one of the problems currently affecting confidence.
  The first reason why the Government's economic policy will end in tears is that Labour does not understand capitalism and free enterprise. Many Labour Members do not even try to understand capitalism because the basis of their ideology and motivation into politics is antithetical to it.
  One might say that the dividing line between old and new Labour is between those who try to comprehend the ways of competition and free enterprise and those who contemptuously do not. In practice, the distinction does not matter very much because it all comes down to the same thing in the end: free enterprise never works very well under Labour. The reason is that free enterprise, especially the incentive to invest, requires confidence, particularly confidence that the rules of enterprise will not be changed meretriciously as they were twice for Railtrack investors and as they were for investors in power stations faced with a sudden moratorium on gas.
  Helen Jones: I am grateful to the hon. Gentleman for giving way. If free enterprise worked so well under the Conservative Government and people were so motivated to invest, can he explain why nearly 20 per cent. of the manufacturing industry in my constituency was destroyed?
  Sir Michael Spicer: I cannot speak for the companies in the hon. Lady's constituency; perhaps they were not very efficient. I have no idea. However, I can refer to the massive growth in the late 1980s and early 1990s which the Government inherited. They had managed to keep the momentum going, but it is now on the brink of slowing down. The hon. Lady must accept that productivity and investment rates are so low compared to what they were five or six years ago that Britain is on the brink of a severe economic problem which is reflected in the volume of imports and other factors that I have mentioned. I certainly cannot speak for the hon. Lady's constituency as I do not know the circumstances there, but there is a dramatic change in the structure and the fortunes of the British economy.
  Mr. Connarty: As we are talking about capitalism which I studied long and hard when I took my degree in
  770
  economics, is it not the case that the great capitalist economy of the USA has a much larger balance of payments problem than the UK yet, despite the events of 11 September, it has strong growth and is fundamentally a thriving capitalist economy apart from the fact that it imports more than it exports?
  Sir Michael Spicer: In recent years, because of the strength of the dollar and the fact that US companies would pay in US paper—a commodity which reflects the strong internal economy—the US has imported more than it has exported. That is a matter for the US economy to put right. I accept entirely what the hon. Gentleman says. The US cannot continue using paper to pay its way in the world, at least without depreciating that commodity. The hon. Gentleman makes a good point but I am talking about the UK economy, which in many respects is unlike that of the US. The Americans make almost a conscious decision to use their paper to buy in goods. Our economy is increasingly being forced to buy goods because it is not sufficiently competitive to pay its way. There is a fundamental difference between the American economy, which is highly competitive in most sectors, and the British economy.
  The fundamental point is that Labour does not really understand how capitalism and free enterprise works. This is illustrated by its chopping and changing on Railtrack, the sudden moratoriums on power stations and financiers being faced with dramatically changing rules for the funding of London Underground.
  At best, new Labour sees the private sector as providing a reserve of funds to be turned on and off at the will of the Government. Capital markets simply do not work in that way. Investors cannot be ordered around, otherwise they take their capital away, and there are signs that they are beginning to do precisely that.
  The second reason for falling confidence under Labour is regulation, which has been mentioned today. It is partly a matter of the sheer quantity and the burden of the new rules, but it is more significantly a matter of their quality and direction. Together, the new regulatory regimes add up to socialism by stealth, and investors do not like it.
  The Labour Government have contorted and perverted a regulatory structure laid out by the Conservatives to ensure maximum competition when they privatise utilities and certain state monopolies. The Utilities Act 2000 gives powers and roles to the regulatory bodies that have nothing to do with improving economic performance, let alone competition, and everything to do with socialist ideology, specifically the redistribution of income.
  The gas and electricity regulator is empowered to relieve fuel poverty. The telecommunications regulator sets out to ensure universal coverage, the Financial Services Authority must achieve social banking as a priority, the water regulator must ensure fair investment, and the rail regulator must provide a total transport strategy. Ofgem has even been used to try to protect jobs in the mining industry through its implementation of the gas moratorium. It would seem that the prospect even exists of regulators coming together to agree a total strategy for governing the commanding heights of the economy. As I say, this is socialism by stealth and investors do not like it.
  As the hon. Member for Preston (Mr. Hendrick) said, the question also exists of the Government's commitment to entering the single European currency. Investors know

  771
  that we would either enter at a rate that would be a permanent and artificial handicap for British sales to the continent of Europe, or that the Government would be forced to take action through interest rates to lower the value of the pound, which would prove inflationary and further undermine British competitiveness. Indeed, if they were carrying out the rules of the Monetary Policy Committee—assuming, as we were discussing earlier, that it were still an independent body—they would have to raise interest rates at that point, which would itself prove counter-productive. Contrary to the hon. Gentleman's suggestion, the whole process of commitment to entry is a destabilising factor.
  Mr. Hendrick: The Monetary Policy Committee would not raise interest rates, because if were joining the euro, the interest rate would, by definition, have to be the same as that of the European Central Bank.
  Sir Michael Spicer: There is considerable argument as to whether we would have to be within an equivalent of the exchange rate mechanism, but I am talking about the process of entry into the euro. The Government would be faced either with an artificially permanently uncompetitive rate at which to enter—that would certainly scare off industry from investing in this country—or they would try to talk down or work down the rate of the pound. As a result, inflationary pressure would come into play and the MPC would have to put up interest rates.
  Mr. Hendrick: If we entered the euro as a result of a referendum, the Government would not try to manage the exchange rate; the markets would take care of it.
  Sir Michael Spicer: I should be delighted if that were so, and that is exactly how exchange rates should operate. They should be market-led, and should reflect the economies of the countries in question. However, that principle is denied under the permanent and indefinitely fixed exchange rate that entry into the euro requires. It is exactly because we do not want fixed rates that some of us are dead against the euro. Whether one is against it or not, my point is that the very commitment to enter the euro is itself a destabilising factor in British economic policy.
  The final element of destabilisation is taxation. Despite the denials and obscurantism of the Chancellor and the Prime Minister, taxes have gone up continuously under Labour. In 1994, they constituted 34 per cent. of gross domestic product. They rose to 36 per cent. in 1997, to 37 per cent. in 1999, and to 38 per cent. in 2001. According to the Red Book, yesterday's Budget will push that figure above 40 per cent. in a year's time. Of course, this Budget is the one in which Labour has broken its cover; it has been outed as a high spend, high tax party.
  It is not just investors who will be put off. At a level of more than 40 per cent., taxes are bound to be regressive, and will hit the standard of living of people on lower incomes. What does all that add up to? Britain's economy, which was one of the most dynamic in the world, is moving back to being one of the more sluggish. Once that happens, the spiral will be downwards. More public spending will mean even higher taxes. That will mean lower growth, which will lead to yet higher taxes, and so on. That downward spiral is implicit in this Budget.
  772
  The challenge for a future Conservative Government is to reverse the spiral, as past Conservative Governments have done, by removing the shackles from businesses and by releasing the energy not only of the private sector but of the so-called public services. However the Government caricature such matters, new ways will have to be found of running and funding public services. In particular, we must break up the monopolistic position of the providers, and return powers—especially purchasing powers—to the customer. Achieving that—particularly improving the effectiveness of health care provision expenditure—by adopting one of the many funding models that operate throughout the world is the debate that the Government should have launched today, and in which they seemed to want to engage as recently as last year. At some point during this winter, they seemed suddenly to change their mind, and retreated into old-fashioned socialist dogma. That has pleased their own Back Benchers and got them cheers, but we shall have to see what the result of that shift will be.
  Mr. Connarty: The hon. Gentleman should consider what happened when we introduced the market into other utilities. The trend has been towards monopoly, not competition. As an expert told many of us in the parliamentary group for energy studies in some detail last night, that is particularly true in the energy field. There are three major energy suppliers in Europe. What we have is not a free market, with lots of competing small suppliers that help the consumer, but large monopolies that, without regulation, would force prices up. It is the regulator that keeps prices down for the consumer. Free market capitalism always leads to monopoly, because monopoly leads to super-normal profit, which is the whole purpose of capitalism.
  Sir Michael Spicer: I shall not only defend my position; I shall tell the hon. Gentleman how wrong he is. Contrary to what he has just said, one massive effect of the electricity legislation that as the Minister I piloted through the Commons was the complete break-up of monopoly power. We had a monopolist—the Central Electricity Generating Board—but now we have a multitude of companies, only one of which has more than 9 or 10 per cent. of the British generating market. That is absolutely contrary to the hon. Gentleman's argument. The same applies to the distribution side of the industry—an outcome that we did not fully expect. The hon. Gentleman is factually 100 per cent. wrong. Given that he obviously knows something about this field, and that he attended last night's lecture—I was not there myself—I am very surprised that he takes the view that he does.
  Mr. Connarty: As has been pointed out, 10 Downing street's electricity is supplied by a French company that bought London Electric. Such developments are happening throughout Europe. No. 10 would be paying much higher prices if were not for the fact that a regulator controls domestic prices.
  Sir Michael Spicer: I do not know the hon. Gentleman's views about the future of Europe. If he wants a united Europe, he should be pleased about the free flow of capital. Personally, I am very relaxed about the free flow of capital around Europe; I simply object to the fact that the rules are such that our capital does not flow into

  773
  continental Europe as easily its capital is allowed to flow into Britain. The hon. Gentleman's basic point that free enterprise leads to monopoly—a good socialist thing to say—is the exact opposite of what has happened. In fact, we broke up a thoroughly inefficient state monopoly—the CEGB—that was running massive overcapacity. Now, prices have come down and there is tremendous competition. We have a thriving industry, into which people want to buy because it is thriving. That is the exact opposite of the hon. Gentleman's argument, and I am very grateful to him for making it.
  The sadness for the country of the Labour party's change of heart on a more radical approach to funding for public services, especially the health service, is that it will further delay the time that our people will benefit from the quality of service to which other countries have become accustomed. We discussed health yesterday and today, but Labour Members have not once accepted that other comparable countries with different funding systems have much better health systems. We are looking at those systems because they are better. It is no good shutting our eyes and denying that there is a better way. The result has been that the British taxpayer is paying for our people to receive treatment on the continent of Europe that they cannot get here. Sadly, that will continue to happen for longer because of the Government's refusal to consider alternatives ways to give consumers the purchasing power that they have in other countries.
  Those methods do not necessarily require lower funding by the state. For example, France does not spend much less than we do, but it gives the consumer more power, so monopolies are broken up and the health service is provided far more effectively. Because the Labour party has balked on that issue, the electorate will turn against it. This is a turning point in the electoral fortunes of the Labour party and it will be left to the Conservatives to pick up the challenge and put things right in the future.
  Mr. Deputy Speaker (Sir Alan Haselhurst): It probably has not escaped the attention of hon. Members that the average length of speeches by Back Benchers so far has been 21 minutes. If that continues, we shall hear from few other hon. Members this afternoon.
  4.52 pm
  Miss Anne Begg: Before I commend the aspects of the Budget that will encourage people into work, make work pay and bring more children out of poverty, I must tell the hon. Member for Northavon (Mr. Webb), who unfortunately is no longer in his place, that it will come as a big surprise to my constituents with severe disabilities who have moved from hospital wards to supported accommodation, run by such worthy organisations as Cornerstone, Archway and the Richmond Fellowship—I am sorry if I have missed any Aberdeen organisations out—that they are regarded by him as living in an institution. Other disabled constituents have moved out of the family home into supported accommodation to gain more independence, but—according to the hon. Gentleman—they are now living in an institution. The biggest surprise of all will be felt by the hundreds of pensioners who live in sheltered housing complexes, if the Liberal Democrats now believe that that means living in an institution too. Many of our constituents already live in supported housing—that is the exact phrase that the Chancellor used yesterday—for very good reasons. I do
  774
  not understand why the Liberal Democrats have taken against such accommodation for lone parents under 18, as the Chancellor mentioned yesterday.
  Mrs. Annette L. Brooke: My hon. Friend the Member for Northavon (Mr. Webb) was making a point about choice. He expressed the strong concern that people might be coerced into certain actions and wished to be assured that they would be able to choose. In fact, Liberal Democrats welcome many schemes around the country in which young people are supported.
  Miss Begg: We take a slightly different view of the case. If people are vulnerable and in need, we should not leave them to their own devices. This case concerns lone parents under 18, which in England and Wales means that they are under the legal age at which they can get married. In Scotland, young people can marry at 16 without their parents' consent. However, we could be talking about children as young as 14 or even younger. The earliest age at which young girls get pregnant is about 14, and some are no longer able to live in the family home—as the Chancellor said yesterday. We do not think that such vulnerable young people—some of them are still children—should be left alone in a council house. They should be in supported accommodation. It is not a matter of choice—children should not live alone.
  Mr. Connarty: I remind my hon. Friend of the landmark case in my home town of Monklands. A 16-year-old obtained a legal judgment to the effect that she should be allocated housing on her own. She was allocated housing in a flatted block, but she was violently and sexually assaulted in her flat within a few months. It was an unprotected and unsupported environment, and we think that we should do better for those young people.
  Miss Begg: I agree absolutely with my hon. Friend. I detected nothing in what the Chancellor or the Secretary of State for Work and Pensions have said that would suggest that any coercion will be used to make lone parents under 18 live in accommodation that is not suitable for the purpose.
  I commend what the Budget will do to encourage people into work, to make work pay and to bring children out of poverty, and I shall concentrate my remarks on those aspects. Not long after the introduction of the working families tax credit and the minimum wage, I received an irate letter from a constituent who complained that everything was being done for children but nothing was being done for those of working age who were in work but on low incomes. He claimed that he would be better off on benefit than he was in work. I asked the Library to do some calculations, and he was right. Because of the way in which housing benefit, jobseeker's allowance and other benefits worked, some people in full-time work would have been better off not working, so they had no incentive to work. Those people felt left out and unable to share in the growing prosperity.
  One answer to the problem is to raise the minimum wage and I am glad to see that it is increasing, albeit not as fast as I would like. I accept the arguments about the need not to destabilise the economy and we do not want unemployment to start increasing, as the Opposition

  775
  claimed would happen when the minimum wage was introduced. Unemployment did not increase, and I still think that the minimum wage should be increased further.
  I welcome the new employment tax credit introduced in the Budget. It will ensure that people such as my constituent, who are just above any kind of minimum income but paying high housing costs—as often happens in Aberdeen—will have an incentive to work. The figures for the employment tax credit cited by the Chancellor yesterday show that a single-earner couple will have a guaranteed income of £183 a week, while a family with one child will have an income of £237 a week.
  The integration of the employment credit and the working families tax credit to form the new working tax credit will make it absolutely certain that in all cases work pays. I know many hon. Members find it difficult to persuade constituents who are looking for work in the low-wage end of the economy to take such work unless in every circumstance their constituents will be better off. The working tax credit will ensure that.
  I also welcome the extension of the new deal. I remember many people in Aberdeen asking why we needed the new deal—unemployment in Aberdeen is extremely low: 1.5 or 1.8 per cent.—when anybody who was any good would get a job anyway. Therefore, it was argued, the only people who were not in jobs, particularly young people, were those whom nobody would employ. In fact, the opposite proved the case. Youth unemployment in my constituency has dropped by about 80 per cent. because there are jobs if people of working age are ready for them.
  It is interesting that a fairly affluent constituency such as mine has benefited from many of the Government's policies, such as the minimum wage and the working families tax credit, and that is because most of my constituents are in work but often in low-paid jobs. There are many highly paid jobs in Aberdeen—we have a fairly buoyant economy—and because of the oil industry, there are also many service industry jobs. There is a need for cleaners and there is a lot of bar work available in the local hostelries. Very often, those involved are paid low wages, so they obviously benefit from the minimum wage and the working families tax credit. Well over 1,000 families-2,000 in the case of the minimum wage—have benefited from the working families tax credit in my constituency alone.
  Any extension of the new deal to those over the age of 25 who have gone in and out of work—a pattern we see in Aberdeen—is welcome. I have seen constituents who have been out of work for just over six months but do not yet fit into any of the new deal categories. They have felt left out—that somehow, Government policies have not catered for them—so I am glad that they no longer do.
  I undoubtedly welcome the increases in the working families tax credit and the disabled persons tax credit. It is very important that disabled people share this country's increasing prosperity, and one of the best ways of doing so is by entering the labour market. In Aberdeen, there are jobs available if such people are given support to get them.
  Perhaps the biggest barrier to getting back to work, particularly for lone parents and other working parents, is the issue of child care. The problem is not just affording
  776
  child care—the Government have gone some way to solving that problem by introducing the child tax credit—but finding appropriate child care. That problem is faced by those who work shifts. There is much shift work in Aberdeen, and there is a lack of child care. Any help that the Government can give to encourage more people into the child care business would be welcome. If people are going back to work, why should they not become child minders? That would certainly ease difficulties in Aberdeen. There is certainly a need for high-quality child care.
  I particularly welcome the move toward integrating the tax and benefit systems. Until those systems come together, there will always be poverty traps and always some who lose out. I hope that there will be a seamless system. If everybody has to declare their income, eventually those who do not receive enough will get money back, and those who receive too much will pay tax. We will therefore remove the stigma of means testing and ensure that any help is well targeted.
  I also commend the Government's work on bringing children out of poverty. I know that there was huge controversy last week over the Government's figures, but by any measure, 500,000 children is a lot. That was not an accident; it did not happen because the economy improved or it just so happened that parents went back to work. It was specifically because this Government were the first in history to introduce measures aimed directly at tackling child poverty. As a result, 1.4 million children have been lifted out of absolute poverty, and 500,000 out of any relative poverty.
  I have not had tune to read it, but I welcome the Government's consultation document on measuring child poverty because it is time we had a proper measure that everybody can trust and understand. There is more to poverty than just income.
  By any measure, the Government have done well in reducing childhood poverty. I was surprised at the amnesia displayed by the hon. Member for Havant (Mr. Willetts). The reason so many children were living in poverty when we were elected was that when the previous Government were in office, from 1979 to 1997, the number had multiplied by a factor of three. If the then Government had made a promise to take 1 million children out of poverty in 1979 and had done it, there would be no children in poverty now. It is important to have a clear definition of poverty and that the Government continue to pursue these measures.
  With those comments, I commend the Budget to the House. There is no doubt that its proposals mean that more and more families will move up the income scale and be able to share in the country's prosperity.
  5.5 pm
  Mr. Michael Jack: I am grateful to be called to speak in the debate. I remind the House of the declarations of my business interests that are properly put into the Register of Members' Interests.
  I congratulate the hon. Member for Aberdeen, South (Miss Begg) on a characteristically good speech about her constituency. I sympathise with some of her observations about the child tax credit and child care. I congratulate the Government on responding to representations that I and many others have made on helping parents who work irregular hours to have child care provided in their own

  777
  home. That will be of particular benefit to those working in the care and nursing home business. They have to work antisocial hours, and this will mean a great deal for them.
  Mr. Connarty: Will the right hon. Gentleman give way?
  Mr. Jack: Perhaps the hon. Gentleman would be so kind as to let me make a little progress, in the light of your comments, Mr. Deputy Speaker.
  I also welcome the fact that venture capital trusts will be used in inner cities. I still feel that it is an indictment on us all, in the 21st century, that we have some really bad spots of urban dereliction. We struggle to get to grips with them but they are often the centre of so many social and crime problems.
  Finally, I welcome the Government's acknowledgement that some more money will have to be found in the Budget for social care. I hope that some effort will be made to ensure that some of that resource goes into child care, in the sense of being responsible for children. Like every other right hon. and hon. Member, I was shocked by the information that came out of the Victoria Climbie inquiry. We hope that this will never happen again but, to a certain extent, that is possible only if child safety is given the resource that it needs.
  Mr. Connarty: I do not know the right hon. Gentleman's interests. It is possible that I may be called to speak next, but I would lose that opportunity if I left the Chamber and would then be debarred from speaking. The right hon. Gentleman has not declared his interests, so if he speaks in favour of or against something and has an interest to declare about a particular organisation, I would be grateful if he named it as he speaks.
  Mr. Jack: If I had felt that there was anything so specific, I would have done, but I followed the precedent that has been followed throughout the debate of making it clear that I have business interests as a non-executive company director and as chairman of an agricultural consultancy company. I do not propose to say anything about that, or the business that the company trades in. Those declarations are properly and publicly made and we have all followed that precedent. I have made it clear to the House that I have business interests and am grateful to the hon. Member for Falkirk, East (Mr. Connarty) for allowing me to tell him a little more about some of the things that help to inform me about the real world in which I live. It illustrates the fact that many on the Labour Benches have little understanding of the world of business, because they have not been directly involved in it.
  One of the areas that I hoped the Budget might touch on was Britain's responsibility in the world to deal with the sources of discontent that have given rise to some of the terrorist outbreaks that we have seen. Perhaps the Financial Secretary could consider giving some form of credit or tax allowance to encourage British companies to invest in those parts of the less developed world where the growth of good markets and good business may help to be an antidote to the discontent that manifested itself in the terrorist events of 11 September. Our private companies have a tremendous record of involvement in the less developed world. We can be proud of that role,
  778
  but we should give them some encouragement, especially in those hot-spot areas identified by the Foreign and Commonwealth Office. That would be of particular value.
  The detail of the Budget can be interesting. One note—Rev Bn 20—is entitled "Denying tax relief to bribes". Even when I was in the Treasury, I was not aware that we gave tax relief for bribes. In the fevered discussion about donations, the note may offer some interesting further reading.
  Our debate has already touched on the tax burden borne by our citizens, and on the tax increases in this and previous Budgets under this Government. The Centre for Economics and Business Research has produced some figures that paint a rather different picture of the tax burden in this country. The centre found that, after deductions,
  "British families have only 68 per cent. of their total gross annual income left to spend."
  That is less than France, where the level is 75 per cent.; in Spain and Italy it is 61 per cent. The level in Germany is 66 per cent. The finding is interesting, because the figures will worsen as a result of the changes in national insurance announced yesterday.
  I want to bring another matter to the Financial Secretary's attention. In 1981, as a Back Bencher, the present Secretary of State for Foreign and Commonwealth Affairs initiated an attempt to assess the impact of the Budget on the direct and indirect tax paid by individuals. The present Labour Government found the results deeply embarrassing when they came to power, and concocted a set of words to explain why they would not provide that information. They said that the request was unrealistic and that they could not meet it.
  With respect to the Government, they must realise that it is legitimate for Members of the House of Commons to seek that information, and that the Labour party in opposition requested it first. Will the Financial Secretary say whether the Treasury will reconsider its position? The previous, Conservative Government provided the information, even though it was embarrassing to them. It would be useful if the Government continued to provide the figures.
  It is all a matter of openness. In that connection, does not the Financial Secretary also think that more information should be regularly released about what is happening to the UK economy in cash flow terms? I keep tabling questions asking for projections of tax revenues, but am always told that the matter is too difficult. However, I am also told that 18 people in the Treasury are busy working on projecting tax revenue. If they are employed to make such projections, why cannot we—the representatives of the people and the taxpayers of this country—know what is happening to the cash flow of the economy? That information would give us more sense of the dynamics involved.
  The question of what comes next has already been raised in the debate. Anatole Kaletsky's perceptive column in The Times this morning draws attention to the work being done by the Institute for Fiscal Studies. The institute has calculated that sustaining the real annual spending growth of 4 per cent. projected in the Red Book would require that an additional increase in taxation amounting to some £6 billion would have to be announced in each Budget of the next Parliament. That is the

  779
  institute's opinion, and I appreciate that much can change. However, the point is that more tax is in prospect, unless other factors—as yet unknown to us—change.
  The article, like others, points out that the rather subtle change in national insurance has allowed the Chancellor to get around his promise not to raise the higher rate of tax by sneaking in an additional 1 per cent. tax on all higher-rate taxpayers.
  The Chancellor has done something else that is significant: he has ended the contributory principle of the national insurance fund. Most people pay national insurance contributions because they think it a good thing to do so. The most recent report from the Government Actuary found that 0.9 per cent. of the national insurance fund goes to the national health service. That proportion will now be much larger.
  We have witnessed the true birth of hypothecation under this Government, but at the same time the end of the contributory principle. Other hon. Members have noted in this debate that the Government from now on will use the national insurance fund as some sort of cash milch cow.
  The Red Book contains a whole list of the Government's tax measures. One of the items that I was interested to note was the amount of money that will be paid for the research and development tax credit. It will rise from £200 million in the current financial year to plateau out at £400 million for the next two financial years. What is the reason for that plateauing? Do the Government not think that the measure will suck in more and more investment to be relieved? In business terms, the changes in employers' national insurance are comparable with putting another 3p back on corporation tax.
  There are also some other interesting things. I am delighted that the Government have come to their senses and ended their love-in with the film industry in their changes to film tax relief. That, at least, is a note of realism that I applaud. The Government will get some flack from the City, however, in response to some of the changes, particularly in terms of foreign companies. The Government were right to consider that question, but they will find some difficulties there.
  The other mysterious thing is the oil fraud strategy. We all know that there may be some funny goings-on in relation to red diesel, but the build-up in the countering of fraud seems to be incredibly slow, given that, in year three, according to the Red Book, a projected £550 million will be put in as a result of this exercise. It will be very interesting to learn more about that matter.
  I am surprised, too, that we have not heard anything from Ministers about the National Audit Office's observation that VAT fraud amounts to some £6.4 billion to £7.3 billion of lost revenue. If that nut could have been cracked, the Government would not have had to raise the national insurance contribution by anything like the amount by which it has been increased. I admit that exercises are under way in relation to fraud, but if £6.4 billion to £7.3 billion is going missing and there is no discussion on the Treasury Bench about additional resources to go into that area, that says something about where the Government's priorities lie.
  I shall comment briefly on expenditure on health. I was interested in the observations of Patience Wheatcroft, whose column in The Times I have grown to enjoy.
  780
  She contrasts Mr. Fred Goodwin with Mr. Wanless, from whom he took over as chief executive of NatWest bank, and writes that Mr. Goodwin would have been harder than Mr. Wanless—rather than giving the money away first, he would have got the reforms. I want to share with the House the thought that, in delivering this health care package, one of the problems that the Government will face will be actually getting people in for treatment.
  The Wanless report gives us some counsel. First, it points out that it is difficult, in various scenarios, for spending growth of between 7.1 per cent. and 7.3 per cent. to be spent wisely on the health service; that is pushing it. It is not surprising that paragraph 5.54 of the report refers to the problem of the shortage of doctors, which it predicts for after 2005:
  "If 20 per cent. of GP and junior doctors' work were shifted to Nurse Practitioners, this would eliminate any potential capacity constraints in doctor numbers."
  That is worth considering. However, it continues:
  "On this basis, the demand for nurses would increase by around a further 10 per cent. This could be filled if 12.5 per cent. of nurse workload could shift to health care assistants (HCAs). But on the basis of a transformation rate of 1.5, this would require additional recruitment of almost 70,000 HCAs in addition to the projected increase in demand of 74,000. Although there is scope to increase the number of HCAs, it may be difficult to recruit this many HCAs on top of the current workforce of around 350,000."
  The whole report is littered with ifs, buts and assumptions. If the Government's policy on health care is founded on solving such problems, that illustrates the difficulty of spending the money quickly to deliver front-line services.
  I hope that some of the money will contribute to relieve the wait to see consultants. Under the current arrangements in my area, as far as the Blackpool Victoria hospital is concerned, since January 2000, large numbers of specialties have vastly increased waiting times, which are well above the Secretary of State's current target of 15 weeks—soon to be 13 weeks for the first consultant appointment, I think. In only those disciplines in which clinical priority was changed by the waiting lists initiative has there been any decline in waiting times. The worst-case scenario is neurosurgery; someone with a brain problem has to wait 72 weeks to have it sorted. That is unacceptable, but I hope that the problem will be solved. I also hope that the policy will mean that the Blackpool Victoria hospital will get an additional CT scanner. I say that because I fight for the health care interests of my constituents and because I am personally dependent on the national health service. We want rapid progress.
  I draw attention to another contrast. I talked to the new chairman of our primary health care trust who was involved with the primary care group until this month. He told me that it had taken him nine months of battling to try to get more chiropody services into the local health authority. No one could understand why what he described as "foot care maintenance" mattered. Now that he is the chairman of the primary health care trust, he says that he will change that. However, people have had to wait nine months to receive chiropody services, and we have all received letters from elderly people who desperately need help. This issue illustrates the problem and the complexity of the task of trying to put the health service right.
  My right hon. and hon. Friends are right to examine alternatives. We should not be criticised because we have the courage to consider different approaches. We share

  781
  the common agenda of wanting better health care in this country. I am glad that we at least share such common ground, and I am grateful to have had the opportunity to contribute to the debate on the Budget.
  5.21 pm
  Rosemary McKenna: I am grateful to be able to take part in this important debate. We should welcome the gracious comments of the right hon. Member for Fylde (Mr. Jack) at the beginning of his speech. It was nice to hear such words from a Conservative Member.
  I congratulate my right hon. Friend the Chancellor on a superb Budget that will be of major benefit to all the people of the United Kingdom. It is worth noting the impact that it will have on Scotland, where it is good news as it will provide an extra £2.7 billion for public services over the next three years. That is equivalent to £528 per man, woman and child in Scotland. A further £5.5 billion will be provided in years four and five.
  The 2002 Budget will go down in history as the one in which the Labour Government began to reverse decades of under-investment in the national health service and returned it to the type of health service that people want and deserve. The development of modern techniques and the fact that people are living much longer create an even greater burden. I believe that the vast majority of people understand that massive investment is required to make the health service, in the words of my right hon. Friend the Chancellor,
  "the best insurance policy in the world."—[Official Report, 17 April 2002; Vol. 383. c. 592.]
  I refer those Members who argue that the public will not understand our policy and will not continue to support the Labour party to the words of the taxi driver who brought me to Westminster this morning. His comments will certainly reassure Labour Members as we all know that London taxi drivers are a great barometer of public opinion. He said, "We want a good health service and we know we have to pay for it." His views reflect what the vast majority of people think. They want an NHS that is free at the point of need and that is not based on anyone's ability to pay.
  The reforms demanded are crucial. We need an audit commission, and I welcome the creation of such an independent body. My right hon. Friend the Secretary of State for Health made it clear just how independent the process will be. There must be an explanation for why some areas of the country are so much better served than others. I hope that the commission will provide such an explanation, as well as the accountability that has been sadly lacking in the health service for a long time.
  I also welcome the improvements in the help given to working families through tax credits, which will further help people into work. I wholeheartedly support the efforts to get people into jobs because that is the only way to begin to lead people out of poverty. That is the principal way in which we can achieve our target of eradicating the scourge of child poverty. I agree with my hon. Friend the Member for Aberdeen, South (Miss Begg)—she put it so well—that helping even one child out of poverty is worth celebrating. It is appalling that, in 2002, so many children are denied the prosperity of the majority.
  782
  I will continue to work with others in my constituency to improve take-up. I assure the hon. Member for Havant (Mr. Willetts) that Labour Members continue to remind the Secretary of State about that very important issue.
  I was appalled at the attitude of the hon. Member for Northavon (Mr. Webb) and the scare tactics that he used. I was a housing convenor in the mid-80s and one of the things that worried me most was having to give young, pregnant, vulnerable girls the keys to flats because we were putting them into such a dangerous position. To have to look after a young baby in isolation and without support is probably one of the most frightening experiences in the world. As a mother of four, I completely understand what that is like. Fortunately, I was never left alone, but it must be absolutely terrifying. That is why we should welcome the proposals in the Budget statement.
  Supported living accommodation is needed. In my constituency, we have the first foyer project in Scotland, and it grew from a council initiative. Way back in the late 1980s, together with the YMCA, we set up supported accommodation not just for girls, but for young vulnerable people, and that has grown.
  Mr. David Rendel: We welcome that initiative only if it is voluntary.
  Rosemary McKenna: Believe you me, those young people welcome it, and it is not appropriate in this day and age to put young pregnant girls—some are 14 years of age and all are under 18—who cannot be supported by their parents into a situation that would make their lives worse. They are vulnerable financially and sexually. What happens to some of those young girls is just unbelievable, and we want to ensure that they become responsible citizens and better parents. Surely that is the aim of all hon. Members.
  My constituency has benefited greatly from the Budget and certainly since the Labour Government were elected in 1997. We have an unemployment statistic of 3.5 per cent.—a reduction of 43.3 per cent. since 1997. That is an amazing figure in anyone's book. I also congratulate our local jobcentres on developing their own initiatives. They have not waited for instructions to be handed down from on high. They have encouraged people into work, and they have done some superb work.
  The people of Cumbernauld and Kilsyth will benefit hugely from the child tax credit, and even more families are benefiting from the working families tax credit—more than my hon. Friend the Member for Falkirk, East (Mr. Connarty) says benefit from it in his constituency. More than 1,700 families benefit from it in my constituency.
  Mr. Connarty: May I correct my hon. Friend? In fact, I said that it was 1,881.
  Rosemary McKenna: I am sorry: I misheard. The number in my hon. Friend's constituency just beats mine. My aim is to get even more people to benefit from that credit and to continue the work on its take-up. Helping people to stay in work is very important. That is why we have to make work pay.
  The additional assistance for child care is also greatly welcomed. In my constituency, that is particularly welcome for those who need to have their children looked

  783
  after at home. A great many of those in the work force in my constituency work shift patterns. Many of the jobs are in distribution, with a 24-hour working day. Having child care in the home will make a huge difference to those people; indeed, it will be a good reason for more individuals to get into work. At the moment, a lot of women are prevented from working and cannot take up much-needed jobs.
  I welcome the guarantees for pensioners, especially those on state pensions or small occupational pensions. People who were able to provide for their retirement often found themselves in a poverty trap; the Budget will make a tremendous difference to them. Many pensioners in my constituency have asked me to thank the Chancellor because they are better off than they have been for many years: we should not be afraid to express such sentiments. Eight hundred and fifty businesses in Cumbernauld and Kilsyth will benefit from the cuts in the starting rate for corporation tax and the small business rate, as well as other measures to encourage enterprise and new business. New businesses are crucial to future employment prospects, and the Chancellor has provided genuine incentives to improve the business rate.
  I am delighted that the Budget will benefit everyone, but I have one concern. How are areas like Cumbernauld and Kilsyth, where people are not highly paid but where there is low unemployment, to help adjoining communities with unacceptably high unemployment? Areas of deep deprivation and poverty, which often adjoin successful constituencies are one of the biggest challenges facing the Government. A significant target for us is to find a way to help them out of poverty.
  Cumbernauld and Kilsyth give a sincere welcome to the Budget. We are a hard-working community; most people are in employment, but are not on high incomes. We hoped that the average income would rise in the near future; a well-known Scottish footballer, Henrik Larson, suggested that he would move to the constituency but, sadly, he has changed his mind, disappointing 50 per cent. of my constituency; I do not know what the other 50 per cent. are saying.
  It is a great honour to be a member of a Government who have made a commitment to improving our public services. The Budget will ensure that resources will be available to both the Government and the Scottish Executive to deliver improved public services. I believe in our public services, and I want them to be the best in the world.
  5.32 pm
  Mr. Andrew Hunter: I draw attention to a registered interest: I am non-executive director of a hotel or catering conference company that is relatively labour-intensive, so I anticipate that it will be adversely affected by some of the provisions in the Budget.
  I originally intended to make just two points. Bearing in mind the edict of the Chairman of Ways and Means, I shall restrict myself to one point which, however, I shall extend a little by regretting the fact that the hon. Member for Barnsley, Central (Mr. Illsley) is no longer in the Chamber. I appreciate that he has legitimate business elsewhere, but I was genuinely interested in his contribution to our debate. There appear to be affinities
  784
  between Barnsley and Basingstoke. My constituency is situated in a relatively affluent part of the country, but has pockets of deprivation. I therefore identified with the hon. Gentleman's observations about Barnsley. In particular, our health authority has incurred a recurring deficit. Both today and yesterday, I listened carefully to all the Government's statements and observations; I have yet to hear, but look forward to doing so, clarification of the way in which the Government's increased expenditure plans will bear on health authorities with a historic recurring deficit.
  I shall confine my further comments to just one point: the impact of the Budget on industry and commerce. Earlier in the debate the Secretary of State referred to the unprecedented strength and stability of the economy—I believe that I quote him accurately. It would be churlish to deny that that is the case in many respects, and I give credit to the Government for that. However, it is not the whole story.
  During the previous Parliament, according to the Confederation of British Industry, business was burdened with an extra £6 billion a year in tax and some £5 billion in the estimated cost of red tape. Even before yesterday's Budget, those burdens have been impeding companies' ability to win orders and create jobs.
  There is a further down side to the current generally healthy situation. The Government have so far only paid lip service to another important matter—the burden of bureaucracy on UK businesses, which increases remorselessly. Opposition Members have grown accustomed to pointing out that there has been the equivalent of one new regulation every 26 minutes of every working day during the lifetime of the Government. Whether or not that figure is disputed, it is irrefutable that UK businesses are spending more and more time filling in forms and less time chasing orders and creating jobs. Consequently, the UK is becoming a less attractive place to do business.
  That is potentially very serious for a constituency such as Basingstoke—there are many similar constituencies, especially in the south-east of England—where a great deal of the locally based economic activity flows from inward investment. Over the past five years the UK has fallen from ninth to 19th in the league of world competitiveness, according to my figures. My hon. Friend the Member for West Worcestershire (Sir Michael Spicer) had slightly different figures, but we are making essentially the same point.
  The Government inherited a legacy of low taxation, a mobile work force and low non-wage costs for employers, but that legacy has largely been eroded. We have lost and are losing much of our advantage. That is important to towns with a high-tech industry component, such as Basingstoke. The Minister may recall the table that appeared earlier this week or perhaps last week in The Times, which showed that in towns such as Newbury, Basingstoke, Woking and Bracknell, the rate of unemployment has increased relatively dramatically over the past year or so, admittedly from a very low base. Our productivity growth used to be faster than that of the United States, but under the present Government productivity growth is slowing.
  Mr. Hendrick: Does the hon. Gentleman accept that the gradual increase in the rate of unemployment in the

  785
  towns that he mentioned is due to the nature of the industries in those towns—high-tech industries, which have been greatly affected by the downturn in the high-tech sector in America?
  Mr. Hunter: Of course that is right. I briefly pointed out that the downturn in the American economy is a significant contributing factor, but there are also other factors. My general point is that the UK is becoming a less attractive place for inward investment, which has consequences for employment in areas such as those that I have mentioned.
  On trade, we keep reminding the Government that the UK's share of world exports has fallen and continues to fall. Our balance of trade has been in deficit every month for the past four years. I make those points simply to counter the Government's assertions about the strength and stability of our economy. Although I do not substantially disagree, I am saying that those factors are not the only picture, because there are other growing areas of concern that are relevant to the Budget, as I shall explain. The experience of my constituents is that, over the past five years, taxes have increased; public services have generally become worse; and business has borne the brunt of increased taxation. The essential point that I want to make is that from the point of view of business, the tragedy of the Budget is that some of its positive features are wholly negated by the increases in national insurance contributions.
  The positive features are commendable. One of them relates to payroll burdens and the Government's response to the findings of the Carter report. They have responded, albeit modestly, and acknowledged that businesses have been hit severely by payroll burdens in the past four years. Nowadays, businesses are acting as unpaid tax collectors and administrators for the Treasury with regard to the working families tax credit, stakeholder pensions and student loan repayments, and no doubt in other respects. The Budget's payroll burden measure goes some way towards addressing the issue.
  On the extension to large companies of the research and development tax credit scheme, I think that we are entitled to remain agnostic until we know the precise details and have seen the measure in practice. It is right that the Government should encourage companies to invest in research and development, but as a general rule, they can best do so by creating a climate that is favourable to the growth of business. That climate will consist to a significant degree of low taxes and fewer regulations, rather than a tax credit scheme that is burdensome to operate.
  Mr. Hendrick: Will the hon. Gentleman give way?
  Mr. Hunter: I hope that the hon. Gentleman will forgive me, but I wish to accelerate my remarks so that other hon. Members may contribute.
  We know about the measures that the Chancellor has announced with regard to corporation tax and capital gains tax, but they are all very small fry. They account for virtually nothing and fade into insignificance in comparison with the increases in national insurance contributions, which represent a £4 billion-a-year tax on jobs starting next year—the equivalent of an increase of almost 3.5 per cent. in corporation tax. The impact will
  786
  vary from company to company, but every company, and also the self-employed, will be hit. As has been pointed out in this debate and earlier during questions on the statement, the largest employer in this country is the national health service.
  So it is happening again: for virtually every business, the overall tax burden will increase. Digby Jones, director general of the CBI, said yesterday that the Budget brings a net increase of £2.5 billion in the cost of doing business in the United Kingdom.
  Most commentators are saying today that the Government have taken an enormous gamble, and I am sure that that is an accurate assessment. There was media speculation, not supported by my own observations, that some Labour Members had the jitters earlier this week when a national opinion poll stated that 70 per. cent of the population remain unconvinced by the argument that higher taxation is the way forward for public services. Irrespective of whether that is so, I am certain that we will see jitters in the years to come.
  5.45 pm
  Gillian Merron: I very much welcome the Budget, not least because of the greater security that it gives to jobs in the city of Lincoln, where unemployment is just two fifths of what it was in 1997. In an already increasingly vibrant economy, the reduction in red tape for small businesses will be greatly welcomed by the local branch of the Federation of Small Businesses. The tax cuts for more than 1,600 businesses in Lincoln will also help to continue the positive local developments.
  Engineering has received a great boost from the exemption from the climate change levy that has been given to the combined heat and power industry. I have worked for some time on behalf of Alstom, the largest private employer in my constituency, which makes gas turbines. Following its representations, I led an all-party group of MPs to meet my right hon. Friend the Financial Secretary to press for an exemption from the climate change levy. In an attempt to hold him to ransom, I reminded him that the heat and light that was being provided to Whitehall through a combined heat and power system was driven by a Lincoln-made gas turbine. Clearly my attempts were successful, and there was no need to get Lincoln to pull the plug on Whitehall.
  There have been two years of unrelenting damage to the combined heat and power industry, and I hope that the exemption will be part of a mix of measures that are needed to deliver the Government's target of doubling combined heat and power output by 2010. I urge the Government to continue to take action and give support. Nevertheless, this step is extremely welcome and greatly increases job security at Alstom.
  I turn now to the health service. Over the next five years, the Government will spend nearly half as much again as they are spending now. I know how warmly that is welcomed in Lincoln, where people have demanded—and, indeed, deserve—a better health service. The extra money that my right hon. Friend announced yesterday is extremely welcome. It gives the health service a financial footing that mirrors its place in people's lives and affections.
  However, as has been acknowledged, extra money is just part of the solution. I want to press for a shift in approach, because we have the opportunity to do that.

  787
  Disease prevention must be much higher up the agenda than it is currently. The funding for the NHS is long term and. as I am sure hon. Members agree, prevention is better than cure. Not only will prevention save the NHS billions of pounds in the long term, but it will improve the quality of life that people can enjoy.
  In 1996, coronary heart disease—the single leading cause of death in this country—cost the health service £1.6 billion, yet only 1 per cent. of that money was spent on prevention. Diabetes and its associated complications account for just under one tenth of the whole NHS budget. The incidence of adult obesity has tripled in the past 20 years, so that one in five adults is dangerously overweight, as is one in 10 children under the age of four—twice as many as 20 years ago. Obesity carries a tremendous cost—£500 million per annum for the health service, but also a personal cost in sickness, and, sadly, premature death for many thousands each year. This is a serious matter that needs serious and dedicated action.
  The Budget is about much more than extra money for the health service. It also covers reform and independent inspection of standards. However, we must plan carefully to ensure that we move from having a national poor health service to a national good health service. Sport and exercise is proven to improve mental and physical health and to tackle many life-threatening conditions; I have mentioned some of them.
  The Government should take positive action to encourage people of all ages and backgrounds to take part in more sport and exercise. I am sure that the film "Bend It Like Beckham" will do a tremendous amount for women's football—that is not lost on Lincoln City Ladies—and especially for Asian women's football. However, we need a plan to improve the uptake of exercise and sport as part of a national health service strategy. I shall make some specific suggestions.
  First, the Government should ensure that primary care trusts and groups, doctors and nurses better understand the role that sport and exercise can play in promoting healthy living. We should set national physical activity targets, as already happens in Scotland. We should ensure that health improvement modernisation plans include specific guidance on physical activity. General practitioner exercise referral schemes need long-term funding. They currently receive only short-term funding, the provision is patchy, and the Department of Health does not keep statistics on them. We must move beyond that.
  Secondly, the Government could consider amending planning law to ensure that private developers pay a business contribution towards improving sport and recreation facilities. In Lincoln, the Ruston Marconi sports ground was recently acquired by Ashtenne Holdings for development. I share and have expressed the tremendous local anxiety about the provision for sport and recreation in that part of the city. We need better, not worse facilities. A change in the law would assist the local community in bringing pressure to bear to ensure that we have better facilities.
  Thirdly, we should promote and quantify local authorities' role in sport and recreation. We expect local councils to provide facilities and a number, including Lincoln, find that such provision is under extreme
  788
  financial pressure. It is difficult for councils to make the provision that they would like. I urge the Government to ensure that the review of local government finance takes account of our expectations and funds them accordingly. We must make a decision about the role of local authorities. I believe that they play a strong role in making local provision as part of a national health strategy.
  As sponsor of a ten-minute Bill that advocated tax relief to community amateur sports clubs, I welcome that move in the Budget. I know that the Lincoln canoe club and Lincoln Wellington athletics club, which has offered to help me train for next year's London marathon after my first appearance in the Lincoln 10 km run this year, will welcome that support as well as the £20 million to renovate and improve community sports facilities.
  I would like to finish by referring to the Wanless report, and to its conclusions and recommendations, which state:
  "The Review has concluded that the UK must expect to devote a significantly larger share of its national income to health care over the next 20 years."
  The report goes on to say that there are five factors which would result in the health service needing fewer resources. One of those factors is
  "more success in public health".
  It is clear to me that, in addition to the extra funding and monitoring, we must have a greater emphasis on prevention, not just on cure.
  There is something for everyone in this Budget—we have the framework and the resources; I hope that we can make it work for the benefit of people in this country.
  5.55 pm
  Mr. David Rendel: I am delighted to have the chance to participate in this debate. I want to speak mainly about education and students in particular. It is interesting that those two subjects were scarcely mentioned in the Budget speech yesterday. It is also interesting that the Government have chosen not to allocate a particular day to the subject of education during the Budget debate. After all, it is the subject that they originally based their whole government on, saying that it was the most important aspect of public spending. Now it seems to have dropped way down the list of priorities, and I deeply regret that.
  I want to make two other quick points before I move on to education, the first of which concerns the question which was, in a sense, at the heart of the Budget—that of the 1p extra tax on incomes for health. This is an interesting concept because it is neither a direct income tax nor a direct national insurance tax. Under this new tax, 1 p is being levied on everybody's income above a certain basic allowance, which is very similar to how an income tax works. Indeed, if one were beginning to introduce an income tax with no suggestion of its being progressive, that is exactly what it would be: 1 p tax on income above a certain allowance.
  On the other hand, national insurance for employees is at present levied above a certain allowance, as is income tax, but it also has a top-level cut-off. In that sense, it is very different from this new tax, which goes right the way through the income scale up to the top. Although, sadly, this new tax is not as progressive as the present income tax system, it is nevertheless closer to an income tax than to a national insurance tax. It is interesting, by the way,

  789
  that people talk about a I p levy, because, of course, 2p will be levied on income: 1 p from the employee and 1p from the employer.
  If anyone doubts that there is a close connection between the new tax and income tax, it is worth thinking about what would have happened at the last general election if the Labour party had pledged in its manifesto not to raise national insurance contributions, but had made no such pledge about income tax. If it had done that, it could have done precisely what it did yesterday. It could have said, "All right, we will introduce a new 1 p levy on income tax—because we did not promise not to raise income tax—but you can be sure that we won't touch national insurance. That is not changing at all." It could then have done precisely what it did yesterday, and said, "We are keeping to our pledge, because we are only raising income tax." That demonstrates clearly that the Government are simply playing with words when they claim that they have kept to their pledge not to raise income tax, by raising only national insurance.
  Mr. Connarty rose—
  Mr. Rendel: I shall give way, but I will take only one intervention.
  Mr. Connarty: The Chancellor said that everyone, businesses as well as individuals, will benefit from a better health service. It is correct to levy the business community as well as the working population.
  Mr. Rendel: I did not say that it was not right to levy the employers. That was not the point I was making. I was saying that the employees' side of the provision is much more like an income tax than a national insurance contribution. The Chancellor's and the Labour party's pretence that they have carefully kept to their pledge because they have raised only national insurance and not income tax is, frankly, an attempt to fool the populace at large, but I do not think that they will be fooled.
  I also want to make a brief point about social services. We were promised today that there would be a 6 per cent. increase in the amount allocated for social services. That is desperately needed, as everyone in the country knows that social services are particularly underfunded at present. What horrified me in the Secretary of State's statement this afternoon was that he seemed to think that 6 per cent. was going to be enough. He seemed to suggest that, with that increase, it would to be easy for local authorities to end the problem of bed blocking, and to take everyone out of hospital who was ready to come out. Indeed, he threatened that he would fine local authorities if they did not do that.
  In West Berkshire, we have had cuts worth much more than 6 per cent. Our social services funding has been cut by about 30 per cent. in the past few years. In spite of that, West Berkshire is still spending 50 per cent. more than its standard spending assessment—more than the Government say it should be spending now, let alone when it has taken on the extra people who are blocking the beds in our hospitals. If my local authority is fined in future for failing to take people out of hospital when it has been given this pitiful amount compared to what is needed, it will feel very hard done by, and I would not blame it.
  790
  I shall now deal with the problems of students and education as a whole. It is a glaring omission that students were not mentioned in the Chancellor's speech. There was little about education, and almost nothing about higher education. The only time he mentioned higher education was when he said that
  "education will receive the priority to deliver further substantial improvements, not just in our schools but also in"—
  here it comes at last—
  "our universities and colleges."—[Official Report, 17 April 2002; Vol. 383, c. 588]
  That was the only mention of higher education, and there was no mention at all of students.
  Liberal Democrats welcome the extra money for universities and colleges. Although the figures came out in a parliamentary answer to a question that I tabled, the Government have not yet fully admitted that funding per student from the public sector has fallen by 6.7 per cent. since Labour came to power in 1997. It would therefore take more than 7 per cent. to put that back up even to the figure the Government inherited from their predecessors. It is welcome that we are at last getting some of that money from the public sector.
  That money may be going to universities and colleges, but nothing is going into the student finance package. That is a criminal failure by the Government to finance a sector of the public service that desperately needs more funding. It is in line with what we are told the Chancellor keeps saying to the Prime Minister and to the Secretary of State, which is that whatever happens in the student finance review, there will be no more money overall. Most of us had hoped that that was the Chancellor's position, and that the Prime Minister and the Secretary of State would have the strength to overrule him and to insist that more money should be available as a result of the student financial review to be published in the summer. It looks as though that will not be the case.
  That is odd, because the Labour party is well aware of how many votes it lost in the general election on this issue. At the end of last year, the Chairman of the Select Committee on Education and Skills said that the Government had
  "got the collywobbles…after a successful campaign by the Liberal Democrats during the election."—[Official Report, 6 November 2001; Vol. 374, c. 144.]
  He said that that was why they had set up their student financial review.
  The Secretary of State has explicitly recognised that debt is a great barrier to access, which the Government are rightly determined to improve. She said:
  "I recognise that for many low income families fear of debt is a real worry and could act as a barrier to higher education. I want to make sure that our future reform tackles this problem."
  How can it tackle the problem when no more money will be made available?
  It is also odd because of the effect on students. Students now leave university with an average debt of £10,000 and rising. The National Audit Office has confirmed the danger to the student population that that lack of finance is causing. It reported on student participation, and

  791
  confirmed that people from poorer backgrounds are significantly less likely to participate in higher education following the Government's changes. It said:
  "Since 1998–99…final removal of the means tested grant is likely to have widened the gap between social classes."
  Is that what the Government were elected to do?
  The NAO has reported that 47 per cent. of students have to take on work to fund their educational experience. According to the National Union of Students, full-time students work on average II hours a week—what does that do to their educational experience? Research at Newcastle university suggests that 35 per cent. of students with a job would get a higher-class degree, and a better grade for every year they spent at university, if they were not in employment.
  For all those reasons it is odd that the Government have failed to put more into student finance this year, but one thing is even odder. At the heart of this Government and this Budget has been the theme of the NHS and what should be done to improve it. This afternoon's statement made it clear that the Secretary of State for Health expects to employ some 15,000 more doctors as a result of these changes. Doctors have to undertake not just a three-year but a five-year course, at least, before even qualifying—and they must undertake much more training after that. The five-year course must often take place in London, which is one of the most expensive areas for students.
  For doctors, it is not just a question of a 10,000 debt when they leave university. Even now the amount averages £13,350, and 40 per cent. of those qualifying end up with a debt of at least £15,000. The sum is increasing constantly as the new system becomes fully operational.
  My early-day motion 875 was tabled some time ago. It refers to the problems of students who undertake long courses. It has attracted signatures from Irish Members and nationalist Members, and I am pleased to say that there are signatures from Labour Members as well as members of my party. Sadly, however, there has not yet been a single signature from a Conservative Member. The Conservatives are simply not interested in the problems of students undertaking long courses.
  In case anyone has any doubts about the disincentive caused to those considering taking up medical careers, let me point out that the intake of one London medical school this year consists of some foreign students—that is good news, of course, because it means more money—and some students who have been educated at independent schools. Not one of those students was educated in the public secondary school sector—there is a disincentive for you.
  If we really want to encourage those from poorer backgrounds to enter the medical service, we must do something about the funding of medical students. It is idiotic to aim for an increase of 15,000 in the number of doctors in this country unless we are prepared to ensure that there is a much smaller financial disincentive for those who want to take medical courses at medical schools. We need a bit of joined-up government, between the health and the education services.
  Many students and their parents had assumed that the current review would lead to a better, more generous financial package. The Chancellor has now made it clear
  792
  that students can expect nothing overall. The Government admitted that they were shocked by the effect of this issue on their vote at the general election. Well, students and their parents will have one last chance, before the spending review is out, to send the Government the message that we need more money for student finance. That chance will come on 2 May, and I hope that the voters will take it.
  6.8 pm
  Helen Jones: It is a pleasure for me to speak in this debate, especially on a day when we have heard a statement describing how the increase that the Chancellor announced for the health service yesterday—the largest-ever sustained increase in health service resources—will be implemented.
  This is a good Budget for my constituents. The child tax credit will provide a tremendous boost for many of my constituents on very modest incomes. The same applies to other measures announced by the Chancellor, such as the raising of pensioners' income threshold, which will take many pensioners out of the tax system altogether. That will be a marvellous boost for many of my constituents who have very small occupational pensions to top up their state pensions.
  What I expect my constituents to welcome most of all, however, is what the Chancellor has announced for public services. They will welcome not only the health announcement, which builds on the £43 billion that we have already committed to the public services up to 2004, but our plans for education. Contrary to what the hon. Member for Newbury (Mr. Rendel) said, the Chancellor made it clear yesterday that education spending would continue to rise as a proportion of national income and that there would be an immediate £100 million extra for school improvements.
  Those announcements are both economically and morally right. They are economically right because a sound economy can afford to invest in its public services, and if we are to create a society in which people are prepared to take risks, be enterprising and start new businesses, we need the underpinning of public services that makes them feel secure in doing that. The announcements are morally right because they show clearly that we have an obligation to one another in society and that we can achieve more by acting together to provide communal services than by acting alone.
  I support the arguments for extra investment in public services that the Chancellor advanced yesterday. The Conservatives continually denigrate those services and have set out on a sustained mission to try to convince the public that public provision cannot and will not work, as a prelude to further privatisation. That is the same argument that we heard from the last Tory Government, but simply packaged more prettily. It is based on the fundamentally flawed belief that public services, far from being a help to individual effort, are a hindrance to it, and that libertarianism produces a better society.
  That idea is based on a fundamental misunderstanding of the history of this country. All the great advances for individuals have been achieved through public provision at a very basic level: the provision of clean water, sewerage and mass vaccination did more for people's health than any individual effort could achieve. Public housing took people out of slums, and the creation of a

  793
  public education system allowed individuals to achieve their potential in a way that was unknown several generations ago.
  I always cite my own family as an example, not because we are in any way exceptional but because we are so typical. My grandparents brought up their children in the direst poverty. My older relatives still remember what it was like to have to struggle to pay the doctor if a child was ill or a new baby was born. There was no hope of staying on in education past 14. Yet my grandmother lived to see her grandchildren born in national health service hospitals, living in decent public housing and going to university. That was achieved not because we were clever or because we worked hard—I do not believe that my generation ever worked harder than my grandparents did—but because the public provision was in place to make it possible.
  We have to achieve that again for a new generation. Quite rightly, the public services that we put in place have raised expectations. People demand more of the services that we provide now. That is why what my right hon. Friend the Health Secretary said about a clear and proper audit of the extra provision for the health service is so important. Governments have a duty to tax fairly and spend wisely, but our individual citizens also have the right to expect that we will make it clear that the extra spending is truly improving provision.
  Hon. Members' readiness to support that will speak volumes about their beliefs about the future direction of this country. The Conservatives' position is clear, however much they may try to obfuscate it: it is Thatcherism with a smile. They talk about better provision of public services and about the disadvantaged, while at the same time they are committed to cutting public spending to 35 per cent. of gross domestic product. That would have a profoundly regressive effect, giving tax cuts to people on higher incomes. The poorest and those on modest incomes will have to pay for it.
  The hon. Member for Woodspring (Dr. Fox) kindly told us exactly how the Conservatives plan to pay for health care. They want more people to take out private medical insurance. The trouble with that is that schemes do not take on people who are sick, have a long-term chronic condition or are elderly. The Conservatives want more of what they call "self-pay". Do they mean hip operations that cost between £5,000 and £8,000, cataract operations that cost between £1,500 and £2,500 or people having to pay to see the doctor? They have not explained exactly what is involved, but it is clear that their plans would put an end to medical care free at the point of need, which has always been the key to health provision in this country.
  In my view, it is much fairer and more equitable to fund health care through direct taxation, as the Government have decided to do. We must also be honest enough to tell people that we expect to see changes in the service for the money that we put in. There is no longer a something-for-nothing deal. Public services must be much more responsive, because what was appropriate for people's needs in the 1950s is not appropriate in the 21st century.
  We have already seen that the public sector can deliver more responsive services if it is given the opportunity to do so. Examples are NHS Direct, walk-in centres and the personal medical service pilots. The one in my
  794
  constituency has been able to tailor its services to the needs of the population and train its front-line staff to do much more.
  The money will provide an opportunity to look carefully at the services that are currently provided and ask some fundamental questions about them. For understandable reasons, health care has been focused on acute services. I trust that now, with the extra money going in and the primary care trusts coming on-stream, we will be able to spend much more on community services.
  The right hon. Member for Fylde (Mr. Jack) rightly mentioned the need for more chiropody and podiatry services. They are not glamorous services that attract a great deal of publicity, but they do more to keep elderly people mobile, prevent them from developing other diseases and keep them out of hospital than other services in the acute sector. Similarly, we need to make sure that therapy services are properly delivered and that we integrate hospital and community provision so that people have a proper package of care when they come out of hospital. That will end the revolving-door syndrome whereby patients leaving hospital do not get proper therapy and therefore have to be re-admitted.
  The health service can be flexible and respond to changing needs only if we invest in front-line staff and allow them to take the lead in developing services. They are often fizzing with ideas. We have to accept that some of those ideas will not work, but we cannot make progress without drawing on the experience of the staff, not simply the extra doctors and nurses whom the Wanless report makes it clear are required, but other health service staff. Many are on low grades, but they have a great deal of experience to offer the health service. We should design a proper career path that rewards their commitment to public service with the ability to progress. The Government have made a start by allowing health care assistants to train as nurses and I hope that there will be more progress in future.
  I conclude with a few words about education, which I hope to expand on at some future date. The Government have improved standards in primary education beyond recognition through use of the literacy hour and the numeracy hour, which, it is fair to say, were viewed with great suspicion at the beginning. We now need to focus on how we deal with secondary education, and to ask some fundamental questions about the values that we want to pass on to our children, and what they ought to be learning to equip themselves for a vastly more complex world than we ever had to face. We must address not just the teaching of basic subjects, but how we teach our young people to deal with the vast amount of information that they receive through various media. We must teach them how to discriminate between, and value, types of information.
  We must look carefully at the practical skills that children need, and we need seriously to consider when we should begin language teaching in our schools, because we in this country have not been good at that. We must also look at how to develop scientific literacy—not just the teaching of science, but an appreciation of how science has changed our world and how people can learn to assess scientific risk—because recent examples have shown that our society is very poor in that regard.
  We can consider many things, but the key is that this Budget has given us secure funding for public services, which will allow us to ask those questions and to build

  795
  up our services for the future. That will enable us not merely to firefight in the public sector, but to develop the best possible provision for the people of this country. That is why it is a good Budget. It enables our people to look forward to the future with confidence, and I hope that the House will support it.
  6.21 pm
  Mr. Peter Viggers: I am fortunate to be called late in this debate, because it gives me a chance to follow the hon. Member for Warrington, North (Helen Jones), who, in a thoughtful and obviously sincere speech, expressed a point of view with which I fundamentally disagree. This Budget is one of the worst that I can recall. Why, oh why, do Chancellors not follow the example of Mr. Derick Heathcoat-Amory, who, in a lengthy Budget speech some years ago, changed the excise duty on chicory—and nothing else? More Chancellors should realise that, as they tinker, they do damage.
  When I was a Parliamentary Private Secretary to the Treasury, I discussed with others the fact that any measure taken by a Chancellor of the Exchequer inevitably damages somebody. The then Chancellor was quite proud of his measure to reduce the duty on environmentally friendly, "green" petrol. He said, "There is a change that won't damage anybody at all", but it virtually drove out of business the main manufacturer of anti-knock additive to lead petrol. I gather that that manufacturer was a strong supporter of the Conservative party. Every change damages somebody.
  Although they are probably not directly relevant to my remarks, I should declare my interests, which are properly recorded in the register.
  This Budget is extremely damaging: it is damaging to employment, through the 2 per cent. increase in national insurance, and to investment. Anyone listening to yesterday's statement would have thought that the Chancellor was actually helping oil companies in the North sea; in fact, he was adding a 10 per cent. duty on profits. The Budget was far too complicated, consisting as it did of various children's benefits and working families tax credits. I gather that the take-up rate for the working families tax credit is about 31 per cent. This Chancellor simply cannot resist tinkering. We would be better off without this Budget and, in my view, without this Chancellor.
  I am not the only one to think so. The "Lex column" in today's Financial Times, which refers to "Tax tinkering", deserves extensive quotation:
  "If you want to raise the rate of income tax, the simplest thing to do is raise the rate of income tax. That, however, would be too straightforward for Gordon Brown. Hemmed in by an election promise to raise neither the basic rate nor the higher rate of personal income tax, he has furtively accomplished the same thing by introducing an additional I per cent national insurance contribution on all earnings…This is evasion, not avoidance, of the election promise.
  If this were the first time that Mr Brown had introduced needless complexity in pursuit of some private whim, it would he bad enough. The Chancellor is, however, a serial offender. He has turned the British tax system into a monstrous thing, riddled with complexities and inconsistencies."
  We have a bad tax system that is far too complicated. If the Chancellor were a company director he would be banned, and if he were a bookie he would probably be warned off the course.
  796
  The Labour view, well expressed by the hon. Member for Warrington, North in her thoughtful speech, is that the Government know best and that any problem can be resolved by Government. That is why the top rate of tax is now effectively 41 per cent., but for those earning between £28,000 and £30,000 it is effectively 51 per cent. because of the total of the national insurance payments.
  My right hon. Friend the Member for Fylde (Mr. Jack), who is of course a former Financial Secretary and knows what he is talking about, made a very good point when he said that we should look globally at taxation. That is true. If someone works overtime and earns £50, half of it will go in tax and national insurance. If he then spends £25 on petrol for his car and a packet of cigarettes, more than 90 per cent. of those overtime earnings will go to the Government in revenues of one kind or another. Perhaps it is time for a study that shows the inter-relationship between direct taxation and indirect taxation. We are being very heavily taxed and little money is left with which individuals can make their own choices.
  We forget also that universal benefits cost around I per cent. to 1.5 per cent to administer, but means-tested benefits cost some 10 or 11 per cent. on average. The increase in means-tested benefits under this Government is costing a great deal in administration. For example, in the past four years, the Government have introduced five new tax credits for families, scrapped four of them and introduced two more. That level of complexity is confusing and expensive. Occasionally I meet constituents who really know their way around the tax and benefit system and they are usually doing well. However, for most of us it is far too complex. The present tax system is beyond many people's comprehension, take-up rates are poor, it is unfair and expensive, it encourages dependency and it discourages independence.
  The main theme of today is work and pensions and I wish to return to a point that I put to the Secretary of State on Monday during questions. I am glad to see that he is in his place today and I congratulate him on that. Unlike many of his Front-Bench colleagues, he is a good attender in the House and we appreciate that. My point was that the Government and the Chancellor, in his single biggest act of taxation, changed the rates of advance corporation tax on pension funds, thereby damaging them—perhaps irreparably.
  I made the point that millions of people in their 30s and 40s now find that pension funds are phasing out final-salary schemes. Those people will no longer be able to make provision for their retirement. The Secretary of State responded by saying that, not for the first time, I had misled the House. He pointed out that reductions in value on the stock exchange and longevity were more responsible for changes in pensions funds and the phasing out of final-salary schemes than was advance corporation tax. That is not true, because pension fund trustees can take account of long-term variations in stock exchange values. They know that values on the stock exchange go down as well as up, and they can plan for the long term with the advice of their actuaries. They can take a view on long-dated bonds and AAA-rated bonds and invest for the long term so as to allow the pension fund to reflect the requirement for pensions to be drawn from it. Longevity is also taken into account by actuaries when they advise the trustees on the proposed benefit schemes.

  797
  Final-salary schemes are being phased out because the Chancellor, in his biggest single stealth tax, which he introduced in his first Budget in 1997, has placed a massive burden of £5 billion a year on pension funds. The cumulative effect is that many pension funds are phasing out their generous final-salary schemes and introducing instead money-purchase schemes. I repeat the point that I made on Monday: millions of people in their 30s and 40s will be deprived of the independence in retirement for which they were hoping. They will be forced into dependency. One is forced to believe that this Government do not want to encourage independence.
  Mr. Hendrick: Will the hon. Gentleman give way?
  Mr. Viggers: I am sorry, but I shall not give way to the hon. Gentleman, who has intervened frequently this afternoon.
  I think that the Government like to have people on means-tested benefits. They estimate that between 56 and 59 per cent. of pensioners and 40 per cent. of people generally are on means-tested benefits. According to departmental estimates, 65 per cent. of pensioners will be on means-tested benefits by 2050. We on the Conservative Benches deplore that and believe that independence is the single most important thing that people seek. This Government have done a massive amount to destroy that.
  6.31 pm
  Mr. John Bercow: This has been a good, stimulating and robust debate, to which so far no fewer than 13 right hon. and hon. Members have contributed. It was opened with his usual style and incisiveness by my hon. Friend the Member for Havant (Mr. Willetts), the shadow Secretary of State for Work and Pensions, who offered the House a forensic dissection of the complexities and minutiae of the Government's tax credits policy. The Secretary of State followed, with what I must confess, by his standards, was a highly humorous and witty speech—though I am sorry to say that, in my mind at any rate, that did not compensate in any way for its relative lack of intellectual substance.
  The Secretary of State was followed by the hon. Member for Northavon (Mr. Webb), who gave us a scholarly disposition on a range of Government policies. When I observe the hon. Gentleman, I am always rather worried on his account. He has so many brains that I am always a little apprehensive that at any moment one or other of them might spew forth from his head and on to the Floor of the Chamber. He made a good speech and I enjoyed listening to it, as I did to that of the hon. Member for Barnsley, Central (Mr. Illsley), who offered a penetrating critique of the Government's climate change policy based on his experience in his constituency. I am sure that it was greeted with respect and understanding on both sides of the House.
  My hon. Friend the Member for West Worcestershire (Sir Michael Spicer) commented with authority and expertise on the Government's tax policies, the declining competitiveness of UK plc and the alarming problems of the productivity gap. There was a potent contribution from my right hon. Friend the Member for Fylde (Mr. Jack), who is a distinguished former Financial Secretary to the Treasury. He focused among other topics on venture
  798
  capital and the burden of corporation tax. My hon. Friend the Member for Basingstoke (Mr. Hunter) offered a general critique of the Government across the field of public policy, including their failures in respect of economic performance and the delivery of public services.
  The hon. Member for Lincoln (Gillian Merron) talked about energy, the health service and her particular pleasure in respect of Government policy in the Budget on community amateur sports clubs. The hon. Member for Newbury (Mr. Rendel) lamented the Government's position on student finance. We had a powerful contribution just a few moments ago from my hon. Friend the Member for Gosport (Mr. Viggers), one of the merits of which from my selfish point of view was to remind me of how moderate in my criticisms of the Government I am progressively becoming. I am grateful to him for providing a yardstick against which I must measure my efforts in future.
  I hope that I have not missed out too many hon. Members. The hon. Member for Aberdeen, South (Miss Begg) made a powerful speech, but I shall not be hypocritical about it. Sadly, I was not present for most of it, but I am well aware that that was my loss and not hers.
  The hon. Member for Warrington, North (Helen Jones) made a brilliant, skilful, eloquent, passionate and sincere contribution to the debate. I recall, as she will with some pain and anguish, that I lavishly complimented her in a newspaper interview about a year ago. Whether there is any causal relationship between that compliment and the inexplicable fact that she continues to languish on the Government Back Benches, I know not, but I do not wish to embarrass her any further.
  Mr. Simon Burns: Why not?
  Mr. Bercow: Because I am a naturally generous-spirited fellow, and I do not wish to damage the hon. Lady's prospects in any way.
  In the short time available to me, I wish to focus on a number of aspects relating to business, the children's tax credit, national insurance and the health service. On business policy and the contents of the Budget impacting on companies, we will certainly look dispassionately and constructively at the research and development tax credit, the Government's proposals for VAT reform, the pilot schemes to encourage the provision of training and the attempted reduction in the payroll burdens on business following the Carter report—burdens that have been substantially imposed by the very Government who are now pledging to review them.
  Similarly, we will look critically but with interest at the Government's policy on gains from substantial shareholdings, on tax relief for intellectual property and other features of the Budget that have been highlighted in contributions this afternoon. However, I have to say to the Financial Secretary to the Treasury, who is winding up for the Government, that any progress in relation to enterprise, any assistance to companies that has been provided and any betterment of the business climate that might result from particular measures in this Budget must be viewed in the context and against the background of two important facts. First, the consequence of the changes—let us be explicit and say the huge increases—in national insurance contributions will be extremely damaging to large numbers of companies the length and

  799
  breadth of the United Kingdom, as the authentic representatives of British business, whose word I trust on these matters, have eloquently testified over the past 26 hours.
  These measures must be viewed in the light of the damaging regulatory imposts that have spewed forth from Whitehall since May 1997. The Government said just before they were elected that they would not impose burdensome regulations upon business because they understood that successful businesses must keep costs down. Since then, they have progressively increased regulatory burdens so that the sea of regulation with which businesses have to contend is deeper and more hazardous than at any time in the history of the United Kingdom.
  As my hon. Friend the Member for Basingstoke said, the Government have imposed one regulation every 26 minutes of the working day. In 2001, from the Treasury alone, we had no fewer than 188 regulations in the form of statutory instruments, running to 1,352 pages—a veritable cure for insomnia—and weighing 4.074 kg. That is the record of a Government who do not understand business, have not worked in business, have never run a business and have certainly never owned one. That is the context in which we must view what they say now.
  The Government have talked with enthusiasm and no little pride about their child tax credit and the measures that they are taking, the better to assist families. As a number of my right hon. and hon. Friends have pointed out over the past 24 hours, that must be considered in the light of the fact that between October 1999 and April 2003 the Government will have introduced five new such credits, withdrawn four of them and then added another two on top. Many of those measures require substantial swathes of regulation if they are to become effective in practice, and that means regulation on businesses. When we talk about regulation on businesses, we do not mean businesses including small businesses, we mean predominantly small businesses. Some 99.6 per cent. of companies in Britain employ fewer than 100 people; at my last examination of the matter, they accounted for approximately 57 per cent. of the private sector work force and they now generate about half our national output. Those companies are being belaboured by the regulatory leviathan so favoured by this Administration.
  We know that the increase in national insurance contributions will hurt some people badly. It has been imposed even though, on 29 May last year, in a debate on the "Powerhouse" programme towards the end of the election campaign, the present Secretary of State for Trade and Industry said that there was no question that national insurance contributions would be increased. She said that the Government had no such plans, and she added that it simply would not happen.
  In defiance of those apparent commitments, the increase has happened. The Forum of Private Business said yesterday that the additional bill would be £2,361 a year for companies with 10 employees. For any firm daring to grow and become more prosperous, to generate greater wealth and employ up to 100 people, the additional national insurance burden as a result of yesterday's Budget will be £23,606.
  800
  The change also has a relevance for public services. My hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) pointed out to me today that each of the six secondary schools in his constituency will each face an extra bill of £40,000 a year as a result of the 1 per cent. increase in employer national insurance contributions. I think that even the Financial Secretary will be able to do the arithmetic readily enough. The extra bill will amount to almost a quarter of a million pounds a year for those schools.
  In the education service, for 361,200 teachers, the extra bill will be £79 million a year. The police service has 124,970 officers, and the additional bill there comes to £32 million a year. The NHS is now the largest employer in western Europe, following the collapse of the Red Army. The extra national insurance bill for the NHS as a consequence of yesterday afternoon's deliberate and calculated imposition by the Chancellor is £336 million a year.
  That is the reality of what is about to be implemented by the Government. They say that the purpose is to finance improvements in health, and that those improvements will be accompanied by reform. However, before the Budget, I made a cursory examination of speeches by the Prime Minister, the Chancellor, the Chief Secretary to the Treasury and the Secretary of State for Work and Pensions. Since 1998 there have been no fewer than 23 references to the matter but, although we have had the extra £100 billion in taxation and some of the promised increases in expenditure, we have not had the reform.
  The Secretary of State for Health made a statement today, but on reform he gave us only woolliness and gimmickry on a grand scale. Problems of bed blocking and cancelled operations—77,818 of the latter last year—persist. The problem that there are more people waiting to see a consultant remains—there are 113,000 more of them since the Government came to office. The problem that our NHS has more administrators than beds persists and is exacerbated almost every day. To be precise, there are 12,290 more administrators than there are beds.
  All those problems persist because we have a monolithic, bureaucratic, over-centralised, inflexible and unresponsive system. About £10 billion a year is wasted in the NHS in various ways.
  A little while ago, I praised the hon. Member for Warrington, North generously and perhaps extravagantly. She spoke about the danger that more people will have to pay for operations. She is a keen student of the facts of political debate, and she must know that, last year alone, an extra 250,000 people in this country did just that, even though they had no insurance.
  The two-tier system already exists under this Government. Many Conservative Members, including those who have used the NHS for decades of our lives, do not think it right that people should have to use their life savings to save their lives. That is what is happening under this new Labour Administration.
  I shall take no lectures from the Financial Secretary, and certainly none from the Secretary of State for Work and Pensions. I hail from the wing of the Conservative party whose members pay mortgages and buy their own furniture. I have used the NHS for 35 years of my life. I did not go to a Scottish public school called Loretto, and I will not take lectures from the Secretary of State about

  801
  the importance of standing up for and tailoring policies that are in the interest of people who do not have money. I believe in treating people on the basis of their need. We have an open mind about how to improve health care, and the Labour party has a closed mind. It has learned nothing over the past five years, and it is arrogant and stupid enough to think that it has nothing to learn in the course of this Parliament either.
  This Government have failed on their public service agreement targets. They have failed on truancy, they have failed on numeracy levels for 11-year-olds, and are failing now in terms of the growth of passengers on the railway system. They are failing in terms of the reduction of congestion on our roads, which increased in 2001 by 3 per cent. They are failing in relation to their criminal justice targets, too. They say that they want to cut robbery; they are failing to do so.
  The Government know how to tax and they know how to spend, and, as my right hon. and hon. Friends and millions of people the length and breadth of the country are increasingly aware, they also know how to waste money on a monumental scale. They have failed, and they are failing. With their approach, they will continue to fail.
  The Government have been sussed. That is why they are becoming rattled—they have no new ideas. They have lived by spin, and they will die by spin. They are a useless shower.
  6.46 pm
  The Financial Secretary to the Treasury (Mr. Paul Boateng): This has been a good debate. I fear that its tone and content plummeted with the contribution of the hon. Member for Buckingham (Mr. Bercow). I would not dream of lecturing him; it is not in my nature. I feel called on, however, to counsel him slightly, which is in my nature. The last person whom I witnessed using visual aids at the Dispatch Box, as he has just done, was one Neil Hamilton. We all know what happened to him. I would hate the hon. Member for Buckingham to end up in freak show television. He is due for another destination entirely—languishing on the Opposition Benches for many years to come.
  In this Budget, we are building on the prudence of our first five years in office the principles for the next 50 years. I say that in the light of two contributions that I have heard from Opposition Members. If I may, I should like to compare and contrast them, as one was invited to do in response to exam questions of the sort set by the professor—the hon. Member for Northavon (Mr. Webb), who speaks for the Liberal Democrats on this issue—and even, I suspect, from time to time, by the hon. Member for Havant (Mr. Willetts), in his own mind at any rate.
  The two contributions in question came from the right hon. Member for Fylde (Mr. Jack) and the hon. Member for West Worcestershire (Sir Michael Spicer). They were interesting and contrasting contributions. That of the right hon. Member for Fylde was reflective and considered. It bore all the hallmarks of someone who has been responsible for the publication of the Red Book, and it raised a number of important issues, not least about oil fraud. I am bound to say that, just as Calais was found to have been carved on the heart of Mary Tudor, so oil fraud will be found—when that unhappy day comes—to have been carved on mine. I will therefore write to the right hon. Gentleman about his detailed points in relation to oil fraud.
  802
  A contrasting speech was made by the hon. Member for West Worcestershire. His contribution was that of an energetic Europhobe and a fanatical free marketeer, who characterised the Government's economic policy in the most grotesque way. For him to suggest, having heard yesterday's Budget speech by my right hon. Friend the Chancellor of the Exchequer, that the Government had a downer on competition and did not recognise the benefits of the market parodies beyond belief what the Government have stood for over the past five years.
  The hon. Member for Buckingham invited the House to consider what has been said about the Budget by those responsible for industry, business and the creation of wealth in our society. I am happy to do that. I refer him to the comments of Mr. Digby Jones of the CBI, who said that the Chancellor had left businesses in no doubt that he was committed to encouraging enterprise. The tax improvements, he said, including those relating to the red tape burden, were welcome. He especially welcomed the financial help for small businesses gaining accreditation as Investors in People. Although the two sides of the House disagree about the issues and about the balance of the Budget, to characterise the Budget, as the hon. Member for West Worcestershire sought to do, as anti-competitive and anti-market does not do justice to my right hon. Friend the Chancellor's statement.
  Sir Michael Spicer: Will the Minister at least accept that the Government have fundamentally changed their minds about tax and spend in the past six months? Is that why the Prime Minister has been going around looking so washed out over the past few days?
  Mr. Boateng: I do not accept that, or the hon. Gentleman's description of the Prime Minister, any more than I recognise his description of the state of the British economy today. We must not forget what we inherited from the Conservative party.
  Mr. Oliver Heald: Will the Financial Secretary give way?
  Mr. Boateng: No, not at the moment. Conservative Members do not like being reminded of their past, but they will have to hear about it for a bit.
  We inherited from the Conservatives in 1996–97 a debt that was 44 per cent. of national income. Three years ago, we brought it down to 36 per cent. and, last year, it was 31 per cent. That is in stark contrast to the United States, which has a debt of 41 per cent., the euro area as a whole—this will be music to the ears of the hon. Member for West Worcestershire—which has a debt of 53 per cent., and Japan, which has a debt of 59 per cent.
  The difference between us and Conservative Members is that we have the prudence and capacity to manage the economy, whereas they are incompetent and have a wanton disregard for sound public finances. That was the Conservative party's legacy. The Labour party is now the party of government—that rankles with all too many Conservative Members—and we have cut interest debt payments by £8 billion and saved almost £5 billion more on the cost of unemployment.
  The hon. Member for Buckingham is concerned about waste. What about the waste of idleness and the obscene waste of unemployment? That is what Conservative

  803
  Members were responsible for when they had stewardship of our economy. We have made the Bank of England independent, a step that the shadow Chancellor described at the time as damaging to the future of this country. Conservative Members have changed their minds. I listened to the right hon. Member for Fylde, and I could actually believe—this may stretch the imagination of some of my hon. Friends—that, somewhere deep in the bowels in the office of the Financial Secretary to the Treasury, he was secretly working away at just such a plan. However he did not have the guts to implement it. It took a Labour Government and a Labour Chancellor to do that, and the economy has benefited ever since.
  We have freed up the resources for public services in a sustainable and responsible way. We are delivering on our commitment to improve the public services in the Budget. That was recognised by my hon. Friends the Members for Barnsley, Central (Mr. Illsley), for Aberdeen, South (Miss Begg), for Cumbernauld and Kilsyth (Rosemary McKenna), for Lincoln (Gillian Merron), for Warrington, North (Helen Jones), for Falkirk, East (Mr. Connarty), for Preston (Mr. Hendrick) and for Stalybridge and Hyde (James Purnell). All of them recognised in their contributions what the Government have done for the public services.
  This Budget rightly places an emphasis on health—I want to deal with that in detail in a moment—but my hon. Friends have also recognised what we have done for education and law and order in their constituencies. Importantly, my hon. Friend the Member for Lincoln also emphasised in referring to community sports clubs what we have done for social cohesion—what we have done about the business of bringing together people and communities.
  Yes, we are desperately concerned as a Government about the importance of social inclusion. Yes, we are concerned to take the practical measures necessary to bring together sections of our community, one of which has been mentioned in the debate: teenage mums—girls under the age of 18 who find themselves with child. Yes, we are determined to do all we can to bring them back into the mainstream of society, to give them the opportunities to gain an education and to make work pay for them. Yes, we are absolutely determined to use all the
  804
  resources and measures at our disposal to ensure that they do not just allow themselves, or that they are not allowed, to languish alone, unsupported and isolated, in council estates or in unfurnished or furnished bedsits throughout the country.
  Yes, there is another way: it is right to make available the resources by which those young girls can be helped in supported accommodation. For those who speak for the Liberal Democrats to characterise that as a form of compulsion is a travesty of what we seek to do. This is a matter not of compulsion, but of support and encouragement.
  Mr. Willetts: Is the Financial Secretary aware that in an article headed "Why we should stop giving lone teenage mothers council homes" that appeared in the Daily Mail on 14 June 1999, the Prime Minister announced that that was the Government's policy, and that nothing has been done in the three years since then?
  Mr. Boateng: My right hon. Friend the Chancellor has taken forward that cause in the Budget, as he has a range of other issues.
  The Budget sets out our response to three key challenges. The challenge of enterprise involves a low-taxation environment, incentives for investment and innovation and support for small businesses. There is the challenge of child poverty and family prosperity. We are helping families to help themselves with a radical reform of the tax and benefits system. All families with an income of up to £58.000 a year will be better off. There is also the challenge of the public services, which were starved of investment under two decades of Conservative rule.
  We are seeking to address decades of underinvestment in the NHS. The Opposition have failed to explain in all their wanderings, like flying Dutchmen going from place to place, how they will deliver the resources necessary for the NHS. Above all, they have failed to say how they would pay for the NHS and who would do the paying. We know who would pay—the public, through charges and private insurance. The Budget defends the NHS and takes forward our economy. I commend it to the House.
  Debate adjourned.—[Mr. Caplin]
  Debate to be resumed on Monday next.

  Former British Coal Employees
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Caplin.]
  6.59 pm
  Mr. Kevin Barron: I wish to raise an issue that was raised by my hon. Friend the Member for Leigh (Andy Burnham) on 7 November last year: the dilemma of canteen workers and cleaners who used to work for British Coal and its forerunners. The debate on 7 November was well attended.
  My hon. Friend the Minister for Industry and Energy met nearly two dozen Members of Parliament in the Department of Trade and Industry on 13 November. He listened to what we said about the situation and heard our many points about the plight of former Coal Board canteen workers and cleaners. At that meeting, I made a handwritten note that the Minister acknowledged that
  "an injustice had been done between those who were registered and those weren't"
  under equal pay legislation. He also said that he would see if there was a mechanism for making an ex gratia payment, as he was anxious for the Department to make progress on mining issues.
  The Government have made good progress on mining issues, and have learned in the past five years that the legacy of the coal industry runs deep and wide, ranging from cleaning up the environment to compensating workers who have become victims of ill health. It is claimed that there are many victims, not least the women who worked in the industry, who were denied equal pay, given fewer holidays and refused help with concessionary fuel, and who received inferior pensions because they were women. Their fight for justice turned into what can only be described as a war of attrition between the unions in the industry and the Government which went on for many years.
  Those women did not have claims in on time, as the legislation stipulated, but many of my hon. Friends and I believe that that was not their fault. As my hon. Friend the Minister pointed out in a letter to me today, it was the responsibility of union representatives to keep their members informed; if the claims had been lodged in a timely manner, the problem would not have arisen. Somewhere along the line, someone did not process their claims. Since our meeting with the Minister, there have been two lobbies of Parliament by those ex-workers. I was invited to the second one on 21 March, which was addressed by the president of the National Union of Mineworkers, Arthur Scargill.
  Mr. Kevin Hughes: I was invited to that meeting by women with claims in my constituency. Did my right hon. Friend, like me, find it bizarre that that was the only lobby of Parliament in which the sole speaker was the president of the NUM? All those women had travelled down to London to lobby their MPs, but the only person allowed to speak was Arthur Scargill.
  Mr. Barron: I did indeed find it bizarre. It was the only parliamentary lobby I have ever attended at which the person sitting on the platform asked people to ask questions, then said if there was time MPs could ask, not answer, questions. I dare say that many right hon. and
  806
  hon. Members would love all lobbies to be like that; we could go along and ask questions of people who had come to make a case to the House.
  At that meeting, the NUM president once again claimed that in April 2001 the then Minister for Energy and Competitiveness, my right hon. Friend the Member for Neath (Peter Hain), had agreed to pay women who did not have a valid claim under the legislation. I have spoken directly to my right hon. Friend, who categorically denies the allegation made by Mr. Scargill.
  I have a copy of my right hon. Friend's letter dated 23 April 2001 which outlines what was agreed between the Department of Trade and Industry and the NUM regarding the women who had valid claims under the legislation. There is no mention in the agreement of any promise of payment to women who did not submit a valid claim. There were three points in the agreement: first, the level of compensation that the women would get; secondly, the minimum payment that they would get; and thirdly, an agreement to fund arrears of subscription and an administration fee in accordance with the ruling handed down at York county court on 2 October 2000.
  The third point may sound a little obscure to my hon. Friends, so I shall clarify it. They may be interested to know what the York county court case was about. I have a copy of the court's decision. The court was in fact the Barnsley county court, which happened to be sitting in York that day. No reason is given for that.
  In 1999 the DTI offered a settlement to the women who had valid claims, and some of them accepted. Included in the 1999 offer from the DTI was an offer of indemnity against the women having to pay money to the NUM out of their settlement. As some hon. Members know, the NUM asks ex-members to sign a form agreeing to pay arrears of subscriptions and an administration fee if their claims are successful. The women who had agreed the DTI settlement therefore refused to pay the union, given that they had indemnity. As I understand it, the level of settlement would have meant the women handing almost all their compensation over to the NUM.
  As a consequence of the women's refusal, the National Union of Mineworkers took three of the women to court—its own ex-members—in a test case. The women were defended by the DTI, but the NUM won the case. It won the right to take a cut of the women's compensation money.
  When the rest of the cases were settled by agreement in April last year, the Government gave the NUM £1.7 million under the terms of the agreement to which I referred,
  "on the basis that the Union would not seek to recover those costs from the compensation amounts being paid to each former canteen worker—who will therefore receive their full entitlement without any deductions."
  The NUM can hardly justify seeking to recover those legal costs, because it was paid a further £600,000 to cover legal costs incurred over the years in connection with the claims. Out of a total settlement of some £14 million the NUM received £2.3 million. Some people might argue that legal costs paid for in the 1980s and 1990s were paid out of the women's contributions while they were at work.
  When the former canteen workers and cleaners who had received no compensation lobbied Parliament on 21 March, I asked Mr. Scargill whether, if the

  807
  Government were to offer ex gratia payments to those women, he would want any of it. He said that he would not. I should think not, given that none of the women had submitted valid claims. It is clear that his union had not represented their interests in the matter.
  Hon. Members may be interested to know that the NUM is making a huge profit from the operation of the current compensation schemes for chronic bronchitis, emphysema and vibration white finger. Former coal miners suffering from those industrial diseases who approach the NUM are advised to use a firm of solicitors, Raleys, in Barnsley. When their claims are submitted to Raleys, they are asked to sign a form agreeing to pay fees to the NUM. I have spoken to ex-miners who thought on that basis that the NUM was progressing their compensation cases, but it is not doing so. It is the solicitors who are progressing their claims. One of the fees that they agree to pay to the NUM by signing the form is an administration fee of 3 per cent., up to a maximum of £750, which is different in total from that of the canteen women. The other fee is NUM contribution money for a maximum of three years, which is not dissimilar to the amount that the NUM attempted to take from the canteen workers and cleaners who settled with the DTI in 1999.
  I have an example of how much the NUM receives by getting the claimant to sign the form, but letting someone else do the work. The example involves a man who made a successful respiratory claim. Out of the total amount that he received—£6,390—the NUM was paid an administration fee of £184 for pointing him in the direction of Raleys solicitors, plus £308 for back payment of union dues. Some £492 was thus paid to the NUM. Even on claims in which compensation is low, the NUM still takes at least 15 per cent. from claimants through Raleys. Raleys itself is paid large amounts of money by the DTI to administer the scheme, as are other claims handlers, so the firm is not on its own in that respect.
  In an answer that I received today to a parliamentary question that I tabled last week, the up-to-date figures show that Raleys has received £4.8 million for chronic bronchitis and emphysema claims and £3.2 million for vibration white finger claims. If we look at how much money is paid to claimants through Raleys, we see a total for respiratory diseases and vibration white finger of some £60.5 million. That is the total that has been paid through Raleys to claimants in the area that my hon. Friends the Members for Doncaster, North (Mr. Hughes) and for Barnsley, East and Mexborough (Jeff Ennis) and I represent.
  If we accept that the vast majority of Raleys claimants are NUM members and that the bulk of the money paid is for final settlement—indeed, this must be the case because, as my hon. Friends know, interim settlements are only £2,000 per claimant—it is reasonable to assume that the NUM, on the basis of its lowest fees of 15 per cent., has had or will have at least £9 million out of that money for doing nothing more than getting its members to sign up to Raleys solicitors in Barnsley. Furthermore, about 40 per cent. of the claims are settled posthumously, so they are taking dead men's money.
  It is clear that the union has been taking millions of pounds for doing very little, while the former canteen workers and cleaners have been left out in the cold
  808
  through no fault of their own. We need to find a solution to this mess. In his letter to me today, my hon. Friend the Minister reiterates his difficulties in finding a legal basis to solve the problem. However, he says that he will continue to explore whether there is any reasonable way of addressing the matter. I hope that a mechanism can be found to make these women an ex gratia payment of at least the minimum sum that was paid out to their more fortunate colleagues in last year's settlement. The NUM was a party to the dilemma in which these women find themselves, so I think that it should also make a contribution to them in an act of solidarity, given that millions of pounds have gone into its coffers over the past few years for doing next to nothing.
  I hope that my hon. Friend can tell us about how he would like to make progress with me and other hon. Members on justice for these mineworkers, who have been left out in the cold through no fault of their own.
  7.14 pm
  The Minister for Industry and Energy (Mr. Brian Wilson): I congratulate my right hon. Friend the Member for Rother Valley (Mr. Barron) on securing this debate and on bringing this issue before the House. He extended his comments, perfectly properly, in order to draw parallels between the treatment of various former miners and former NUM members. I think that the court of public opinion will be very interested in his comments about the NUM's behaviour. However, I shall restrict my remarks, for reasons that I am sure my right hon. Friend understands, to the subject of canteen workers and cleaners.
  The subject has become very familiar to me and to all Labour Members who are present. Indeed, the Minister for Employment and the Regions, my hon. Friend the Member for Hull, West and Hessle (Alan Johnson), stood in for me in a similar debate on 7 November. I appreciate that this continues to be a matter on which there are strong feelings within the coalfield communities. I have experienced those, having gone out of my way to encounter the people involved at first hand. I wish that it was within my gift, or that of any Minister, to resolve the issue in a simple, straightforward and just way.
  Before discussing the details of where we are now, it might be useful briefly to recap the history of the equal value issue. Originally, certain British Coal women workers, mainly cleaning and canteen staff, lodged claims under the Equal Pay Act 1970, which required
  "like pay for like work".
  The claims lodged in the 1970s proved unsuccessful, and in the event British Coal won the litigation. The 1970 Act was amended in 1983 so that claims could be made on an equal value basis. Subsequently, a majority of the women who had lodged the earlier claims went on to lodge equal value claims. In all, between 1986 and 1992 around 1,300 women lodged claims at the employment tribunal.
  The amended Act enabled the women to seek compensation if they could show that they were being paid less than men in comparable jobs. British Coal resisted that on the grounds that the legislation did not apply to their situation. The arguments about those legal technicalities went on for many years, culminating in hearings in the Court of Appeal and in the House of Lords. Settlements were reached with members of the

  809
  Union of Democratic Miners and, subsequently, several members from the NUM. However, the NUM urged the majority of its members to hold out.
  To fast forward a full decade, a deal to settle the outstanding claims was finally brokered in April last year by the then Minister for Energy and Competitiveness, my right hon. Friend the Member for Neath (Peter Hain). Under that agreement, all the women with valid claims lodged with an employment tribunal stood to receive settlements based on length of service, the average settlement being around £10,000. It was also agreed that those who had accepted British Coal's earlier offer would, as they had lodged a claim, receive top-up payments, ensuring that all those eligible would receive settlements on the same basis. I am pleased to say that almost all—98 per cent—of those with tribunal cases have now been paid.
  Up until that point, it was clearly a story of a Labour Government accepting an historic liability and acting in an extremely honourable way towards a group of people who had registered claims that had not been paid out during previous years. Unfortunately, as we all know, the story did not end there.
  When the deal was brokered last April, it was apparent that some women who had not lodged equal value claims at the industrial tribunal might otherwise have had valid cases for compensation. It now appears that there may be more than 3,000 such individuals—more than twice the number of those with valid claims. I recognise that at that time, between 1986 and 1992, they may not have been informed of the possibility of making a claim or may have been let down by those acting on their behalf.
  The trade unions were well aware of the equal value rules and the procedures that had to be followed. In such matters, it would have been the responsibility of union representatives to keep their members and former members informed.
  Jeff Ennis: I thank the Minister for giving way on that point. He is very well briefed and he knows that the issue is not quite as simple as that—in fact, it is extremely complicated. In my constituency I sent out forms to about 100 of my former canteen workers and cleaners who fall into this category. I received 79 back, of which only 42—or 53 per cent.—were from NUM members. The other 47 per cent. were either in a different trade union or, in 33 per cent. of cases, not in any trade union. I therefore accept that to some extent the NUM is culpable as regards the situation of their members. However, some women who were not trade union members received no advice at all. My canteen workers are not especially interested in who is to blame; they want to know who will sort out the mess. Arthur Scargill and the NUM will not do that, and I hope that—
  Mr. Deputy Speaker (Sir Michael Lord): Order. The hon. Gentleman has timed his intervention wrongly. However, he should not make a speech.
  Mr. Wilson: Obviously, we could debate the matter for much longer than half an hour. I cannot begin to tackle the list of reasons why, between 1986 and 1992, each woman did not register a claim or have a claim registered on her behalf. The bottom line is that although 1,300
  810
  people registered claims, and there were channels for communicating information, others have emerged—in some cases, 10 or 15 years after they should have registered a claim—who have not done that. I am now confronted with that problem.
  As I said, the trade unions were well aware of the equal value rules. I did not mention a specific trade union. Although the Administration at the time were very different, steps were taken to communicate the fact that the claims could and should be registered. I acknowledge the specific difficulties that existed in coalfield communities, especially in the earlier part of the period that we are considering, but they cannot explain the failure to take action that was clearly so much in the interests of members, especially women members. I cannot help wondering whether the interests of male union members would have been so lightly regarded.
  Whatever the reasons for claims not being made or pursued, there is no legal basis on which British Coal or the Department of Trade and Industry can simply pretend that the claims were legally registered. The terms of the Equal Pay Act 1970 impose a time limit on bringing a claim before an employment tribunal—a time limit of six months from the termination of employment. There is no discretion to extend that limit. Anyone who fails to register a claim in the employment tribunal system within six months of termination of employment does not have a legally valid claim to equal value pay under the terms of the Equal Pay Act, and is not eligible for any payment.
  It is important to note that the legislation does not apply only to the coal industry, but to all employment sectors. Of course, I sympathise with the women who are in the position that we are discussing, and I have therefore agreed to reconsider whether anything can be done for them. I am giving the matter detailed consideration; I have gone down several avenues in an attempt to find a solution. I have listened carefully to representations. However, none of the options that I have identified so far can overcome two key difficulties.
  First, there is no legal basis for paying out money on large numbers of claims that have turned up more than a decade late when there is no other legal reason for doing that. Secondly, it is hard to understand how special treatment for British Coal employees would not be unfair to all those other people who have had claims disqualified under the tribunal system because of time barring. I ask my right hon. and hon. Friends to consider carefully the significance of that point. All hon. Members have such people in their constituencies. In resolving one apparent anomaly, we would create a much bigger one. The 2,000 claims did not appear until the 13 had been settled. In the same way, if the other 2,000 were somehow settled by sleight of hand, tens of thousands of people throughout the country who have had tribunal claims time barred would be in the same position as the 2,000.
  Mr. Barron: I understand the difficulty that my hon. Friend outlines, but, as he said, many of the problems occurred under a former Administration. I know that some of the cases relating to equal pay claims were around in 1985. A constituent, Mrs. Peggy Craig, who, in the 1970s, took over from a man as manageress in the canteen at the coal mine where I worked, received letters in 1985 from her union, the NUM, about the action that it was taking. The case did not progress. That was partly to do with the battle in the courts between the National Coal Board and

  811
  the Government. The Government were trying to frustrate small victories that the unions gained on behalf of their members. Much of the problem stems from the war of attrition that I mentioned earlier. That did not apply in any other industry to my knowledge. It makes the people whom we are considering a special case for that reason, if not in law.
  Mr. Wilson: As I said earlier, if we start going into every individual case to find out why a claim was not registered in 1986 or 1987, that would be an extremely complex matter to determine. Let me assure the House that every legitimate case will throw up an anomaly with someone else who will have a different set of circumstances attached to their case. An awful lot of injustices occurred during that period, in the coal industry and in society in general. The idea that the Government can now address retrospectively 10, 15 or 20 years later every tribunal case that was not registered as a result of these injustices is evidently unsatisfactory.
  I want to nail the untruth that an assurance was given to Mr. Scargill in April 2000 that these claims were going to be dealt with. As my right hon. Friend the Member for Neath confirmed, no such undertaking was given. Incidentally, I have looked at the press coverage on the day after that meeting, and there was not a word from Mr. Scargill about unregistered claims. The coverage was all about the 1,300 registered claims, which have been met in full at a cost to the Government of £14 million—honour due and honour paid to the credit of this Government—and what we are talking about here are the 2,000 or more claims that have subsequently turned up, which were not registered within the proper time frame or, indeed, until a decade or more later.
  I want to say something about addressing historic injustices when there is a legal basis on which to do so. My right hon. and hon. Friends have referred to what we are doing in that context. This is not about the money. If one looks at the amount of money that is going into the
  812
  coalfield communities as a result of actions taken by this Government, it is clear that the amount of money involved in dealing with this issue is absolutely tiny. What is not tiny is the fact that there is no legal basis for addressing these claims under the tribunal system, and that to do so would create an anomaly that would represent a gross injustice to all the other people who have time-barred claims under the tribunal system before and after the episode that we are discussing.
  I shall give the House an example of what we have done to try to address real injustices, when there has been a legal basis to do so. On 11 December, I announced that, following the consultation process, I was persuaded that a number of miners who were dismissed in connection with the 1984–85 strike and not subsequently re-employed by British Coal were harshly treated. I concluded that the most appropriate way forward would be to enhance the pensions of those miners in recognition of the years of further service they had lost. I am about to write to the interested parties about the process that will be followed, and to ask them to inform former miners who think they might qualify for a pensions enhancement to register their interest.
  On coal health, we have addressed the liabilities of the past that were ignored for 20 years. On low pensions, we have picked up the injustices of the past that were ignored for 20 years. On dismissed miners, we have picked up the injustices of the past that were created almost 20 years ago. On the issue of canteen workers, there is a genuine difficulty in picking up injustices of the past that involve claims that should have been registered 10 or 15 years ago and that were not brought to our attention until 2001 when a Labour Government had come to power. I think that my colleagues can understand that difficulty. I do not expect Mr. Scargill and his like to want to understand it. I have placed our general record on dealing with historic injustices in the coalfields in front of the House tonight, and I believe that we have a very good story to tell.
  Question put and agreed to.
  Adjourned accordingly at twenty-eight minutes past Seven o'clock.